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ANNUAL REPORT
Contents
Overview
04
Our People
20
Message from our Chairman and CEO
08
Environmental, Social and Corporate Governance
Board of Directors
10
Annual Financial Report 2024
12
14
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 3
Annual Report 2024 | City Chic Collective Overview
CUT FOR CURVES. ALWAYS.
For over two decades, City Chic
has been the global destination
for curve fashion, specialising in
plus-size apparel, occasionwear,
lingerie and footwear. We operate
in 76 stores across Australia and
New Zealand.
CIty Chic has a strong presence
online in Australia, New Zealand,
the United States and across
partner channels, globally.
City Chic is the fashion
destination, specialising in fit,
with a purpose to...
empower all curvy
women to explore
their personal style.
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 5
Annual Report 2024 | 2024 Snapshot
2024 Snapshot
$131.6m
SALES
22.9m
481k
76
ANNUAL ONLINE TRAFFIC2
ACTIVE CUSTOMERS1
NUMBER OF STORES
56%
546
ONLINE PENETRATION3
EMPLOYEES
1Active customers include customers who have shopped online, in stores and omni-
channel in the last 12 months; excludes wholesale and marketplace customers.
2Online represents websites and online marketplace sales; based on last 12
months revenue to remove seasonality impacts.
3Traffic to Online excludes traffic to Online Marketplaces.
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 7
abates and the economy recovers. It was pleasing to
see the business perform better in the last quarter of
FY24 and in the first two months of FY25 with GM$ up
28% on the pcp driven by an increase in average selling
price of 58% . We look forward to providing a further
trading update at the AGM.
STRATEGIC UPDATE
Set out below are the key strategic pillars that we
believe will underpin our success:
1.
Amplifying our focus on HER – our valued
customers.
We're focused on the high value customer that can
deliver the margin needs of the business. We have
refreshed our brand and are talking in a different
tone of voice to our customer. Most importantly, we've
continued to delight her and exceed expectations with
our net promoter score now at 72.
2. Revitalizing our product assortments with a keen
emphasis on higher-value products.
In the product area, we've revitalised our product
assortment to move with what our customer is
demanding from us through category and lifestyle
planning and making our range more versatile. We have
listened to her as she told us she's looking for more
Elevated Essentials.
3. Simplifying our business operations and driving
down costs.
In FY23, the cost of doing business was $132 million
in total and $101 million for the continuing business.
In FY24, we brought this down to $84.2 million, or by
17%. Approximately $8m of these savings was due to
lower volume and $8.8m was from actions taken by
the business. These actions included the changing of
our US fulfillment partner to make fulfillment variable to
sales in the US, the impact of this will be seen in FY25.
The 2024 financial year was another challenging period
for City Chic. Inflation and cost of living pressures on
households in Australia and the USA significantly
reduced consumer demand. These pressures were
and continue to be felt throughout the economy and
particularly in the middle and lower socio-economic
demographics and in discretionary spending sectors
such as apparel retailing.
City Chic was not immune to these economic forces.
In fact, the impact we observed on demand (especially
in Australia) was more significant than in the global
financial crisis. Notwithstanding the difficult economic
environment, our market research tells us our customers
still love the brand and the product but that interest
rates and inflation have materially reduced their ability
to spend on discretionary items.
In this context and following on from the previous
financial year, we have continued to implement
measures to ensure the company can trade through
these inflationary times and return to profitability.
Through FY24 we have:
• Completed the business transformation. This includes
a City Chic brand and product refresh, a shift to focus
on high-value customers that deliver strong margins.
• Reduced our inventory to normalised levels.
• Evolved our product to more versatile lifestyles.
• Divested Avenue and Evans, moving away from
the low-value (and more economically challenged)
customer.
• Right-sized our cost base with $20.3 million in cost
outs.
• Materially reduced complexity and cost of logistics.
We believe these measures will restore the business
to profitability in FY25 and provide the platform for the
business to stabilise and grow as and when inflation
Message from
Our Chairman and CEO
Annual Report 2024 | Comments by our Chairman and CEO
We expect a further $11.5 million of annualised reductions
to our cost base to get it to $72.7 million, on a like for like
basis. This will bring our total reduction in cost of doing
business from actions taken by the business to $20.3
million, of which 85% has already been achieved.
TRADING AND OUTLOOK
In the first eight weeks of FY25, the positive momentum
we saw in the second half of ‘24 has continued as the
strategy delivers a further uplift in gross margin dollars
and average sell price. Our focus on new product
that the customer is demanding and strong marketing
campaigns with a refreshed tone of voice are working.
Total gross margin dollars are up 28%, with trading
margin above 61%, a huge 17.7 percentage points up
on last year. Revenue is down 9%, as the first eight
weeks of FY23 was a period of high discounting to
clear stock that drove unit volume and revenue, but
not profitability. That is our goal now. At a gross margin
level, comparative stores are up around 13% with total
stores gross margin up 8%, even with the 11 closures.
We're focused on stores and getting their recovery,
and we're seeing material improvements in the per
store revenue. However, they still have a way to go
to return to what I would say is acceptable per store
sales. The ANZ online business has driven large margin
improvements, up 68% in gross margin on the prior
corresponding period as we stopped the inventory
clearance. Revenue is only down 13% as the activity
last year drove revenue. It will take time to recover
customers in this channel. However, it's positive to be
so close to revenue at materially better margins and
outlines the future opportunity.
Traffic in the first eight weeks is up 25% as we
implement our brand refresh. New tone of voice and
focused marketing efforts on the high value customer.
Conversion is more challenging due to cost-of-living
pressures, however this will come back.
The USA gross margin is up 20% with revenue down
13%, outlining the recovery we have made to trading
and getting back to the CC USA business that was
leveraged and very profitable. Our website in the US is
up 68% in gross margin dollars as we stopped the outlet
and clearance that plagued FY23, and partnered are flat
in both revenue and gross margin dollars as they were
a little impacted by the warehouse move and deliveries
in July.
CONCLUSION
The past two years have been undeniably difficult for City
Chic, its customers, team and shareholders. Customers
have seen inflation eat away their real incomes which, in
turn, has seen City Chic impacted by reduced demand
and basket sizes. As a consequence the business has
had to be right-sized which has resulted in the loss
of many hard-working and valued team members.
Shareholders have suffered a catastrophic reduction in
the value of the company.
We believe we have now completed the necessary
transformation of the size and scope of the company
to enable it to reset, weather the current economic
headwinds and grow and prosper as inflation abates.
We look forward to a more normal FY25, a return to
profitability, and a consequent revaluing of the company
that better represents its future prospects.
CHAIRMAN MICHAEL KAY
CEO & MANAGING DIRECTOR PHIL RYAN
Michael Kay
Chairman
Phil Ryan
CEO & Managing Director
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 9
Board of Directors
Chairman and Non-Executive Director
Non-Executive Director
MICHAEL KAY
MEGAN QUINN
PHIL RYAN
Chief Executive Officer and Managing Director
Michael Kay joined the City Chic Collective Limited Board on 1 October
2018 as an independent non-executive director and was subsequently
appointed Chairman on 9 November 2018. Mr. Kay has significant
listed company experience, as detailed more fully below, and is also a
non-executive director of Guild Group Holdings Limited.
A qualified lawyer, Mr. Kay brings a broad range of commercial
experience to the Board. Mr. Kay was Chief Executive Officer and
Managing Director of McMillan Shakespeare Limited (ASX: MMS)
for six years and previously held a number of senior executive roles
at AAMI including Chief Executive Officer. He also spent 12 years in
private legal practice specialising in commercial law.
Annual Report 2024 | Directors
Megan Quinn joined the City Chic Collective Limited Board in October
2012 as an independent non-executive director. She has more than
30 years' international experience as a senior executive, advisor, and
Non-Executive Director across a broad range of industries including
financial and professional services, retail, luxury, healthcare, consumer
and digital.
Ms Quinn is recognised as an entrepreneur and global brand expert for
her game-changing role as a co-founder of NET-A-PORTER. She brings
exceptional customer, governance, strategic, marketing, operational
and business skills, with particular strength in people experience, digital
transformation, disruption, innovation, service and risk.
Phil Ryan is the original Brand Director of City Chic. In 2006, Mr. Ryan
led a team of six people that created the brand. He is responsible for
the strategic direction and operational leadership that has seen City
Chic take a market leading position in the global plus size industry.
Under Mr. Ryan's leadership City Chic now has more than 76 stores in
Australia and New Zealand. Online sales represent ~65% of total sales
globally and in the US, City Chic trades exclusively in a digital capacity.
Mr. Ryan has driven successful partnerships with Nordstrom, Macy's,
and Bloomingdale's in the USA.
Mr. Ryan is a global authority in the plus size consumer. He has
over 25 years’ experience in senior and strategic retail apparel
management. Mr. Ryan's family had a fashion manufacturing, wholesale
and retail business called Ambition in the 1980’s and 1990’s and from
this he knows all areas of a rag trade business; from the cutting table
to the retail shop floor.
Non-Executive Director
NEIL THOMPSON
Neil Thompson joined the City Chic Collective Limited Board on 5
August 2021 as an independent, non-executive director.
Mr. Thompson has over thirty years of financial, operational and
strategic experience from a broad range of roles and industries with
global reach, including freight and logistics, industrial products and
software sectors.
Mr. Thompson is currently Chief Financial Officer at Education
Horizons, a leading provider of education software and a Potentia
Capital portfolio company. He was previously Finance Operating
Partner at Potentia Capital (private equity) and prior to that Chief
Financial Officer of Ascender HCM (a payroll software and services
company). He is also a director of the Australian World Orchestra.
NATALIE MCLEAN
Non-Executive Director
Natalie McLean joined the City Chic Collective Limited Board on 5
August 2021 as an independent, non-executive director.
Mrs. McLean has over 25 years of retail experience having worked
in senior positions domestically in Australia and internationally with
companies including Giordano, Rip Curl and the Cotton On Group.
Mrs McLean has extensive experience across operations, product,
marketing and commercial areas of the retail sector including
partnership strategies and geographic growth. Mrs. McLean is
currently the CEO of the emerging brands at the Cotton On Group and
a member of the Cotton On Foundation.
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 11
Leading a world of curves means putting our customer
first, and creating experiences that makes her feel
courageous; feel empowered to embrace her
individuality; and to respect and love the skin she is in.
She is not only our customer; she is a member of our
team, and she is our leader. We respect and listen to her.
We value the learnings we gain from her coming from
different backgrounds, experiences, and perspectives.
These learnings enable us to develop beautiful products
and create exceptional customer and work experiences
that understand, respect and meet the diverse needs,
preferences and goals she has. We endeavour to make
her feel good at every touchpoint and we are committed
to continuing to deliver on this promise, at all levels of our
business, as our global footprint expands.
Our commitments also extend beyond her. We seek to
be a boundaryless organisation that ensures all team
members, regardless of gender identity or minority
group membership, have equal opportunity to enter,
learn and develop within our business.
We know that true workplace diversity recognises
and values the contribution of people from different
backgrounds, experiences and perspectives. The CCX
Diversity Policy is underpinned by a suite of policies and
practices that provide the support and structure needed
to facilitate these opportunities for each individual that
enters our workforce. We support the well-being of our
people through unlimited access to EAP which includes
suite of specialist helplines specifically tailored to the
needs of minority groups. Our learning initiatives and
social/culture calendar aim to increase awareness and
empathy, and promote our people building genuine
connections across all levels of the organisation.
Who we are & how we do things
Diversity & Inclusion
Our ‘Core Capabilities’ are at the
foundation of our culture; they support
our goal and purpose to “lead a world
of curves.” Our Core Capabilities are the
skills and behaviours we use as guiding
principles to lead, grow and deliver
exceptional experiences for her, our
customer.
WE PUT HER FIRST
She is at the heart of every decision;
WE ARE PASSIONATE CONNECTORS
We love what we do, and we work as
one team;
WE KNOW IT, OWN IT, DO IT
We are knowledgeable, we are
accountable, and we are disciplined;
WE MOVE FAST, KEEP IT SIMPLE AND
THINK BIG PICTURE
We act decisively, react quickly and are
measured in our approach;
WE ARE FEARLESS AGILE THINKERS
We express ideas, take calculated risks,
and embrace change.
Our People
Annual Report 2024 | Our People
City Chic’s FY24 WGEA median gender pay gap was 65%. There are several factors that can influence the
companies statistics, so it is important to explain the context to ensure the results are not misleading. The gender
pay gap is not the same as equal pay for equal work.
Given the nature of City Chic’s business (plus size women’s fashion), there are only a limited number of roles that
are appropriately open to gender diversity. City Chic has a total 536 employees and 3.5% are male. Of our retail
workforce, 100% are female as this has proven to make our customers feel most comfortable in their shopping
experiences. Of the 19 males employed by City Chic, all work in the support office. This means the median salary
for males only reflects a minority of support office salaries, while the median salary for females is influenced by a
larger number of retail and entry-level positions.
Of the roles held by men with equivalent roles held by women, there is no evidence of any gender pay gap in City
Chic and we are committed to reviewing all salaries and salary bands on an annual basis to ensure equal pay for
equal work is maintained.
The proportion of women
employed at different levels across
the company as at the end of the
reporting period was as follows:
2 of 4 non-executive directors on the Board are women;
2 of 5 Board members (including non-executive and
executive directors) are women.
BOARD MEMBERS
1 in 3 C-Suite leaders is a woman
C-SUITE
LEADERSHIP
TEAM
69%
MANAGERS
87%
DIVERSITY OBJECTIVES
GENDER DIVERSITY
Seek to maintain gender diversity in the composition of the Board and the C-Suite Leadership
Team of no less than 30% of each gender.
Achieved
Continue end-to-end ‘Job Access’ assessment for all areas of the HR lifecyle to ensure optimal
access to employees with a disability or impairment.
Achieved
Commence corporate partnership with Dress for Success to provide fundraising support and
clothing to women seeking independence through employment.
Achieved
FY24 DIVERSITY OBJECTIVES
ACHIEVEMENT
Our diversity strategy is supported by the following objectives established for FY25:
Seek to maintain gender diversity in the composition of the Board and the C Suite Leadership Team of no less than
30% of each gender.
Maintaining standards of equal pay for equal work across the business by conducting an annual review of salary
bands and ensuring employees sit within these bands on the basis of skill, qualifications and experience, not gender.
Review and update the City Chic Recruitment and Selection Policy and Guidelines to incorporate a focus on gender
balance at all levels of the support office.
FY24 DIVERSITY OBJECTIVES
Objectives established for achieving diversity (including gender diversity) and progress towards achieving them
during FY24 are set out below:
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 13
Annual Report 2024 | Acting Ethically & Responsibly
ESG across our supply chain
Seeking to create safe and respectful working environments for all workers in our
supply chain has long been, and remains, an overarching priority and focus. This year
we continued to shift our focus on consolidating our supply chain and embedding key
policies. As we placed more emphasis on tracing high risk materials and regions, it led to
streamlining our supply chain where possible.
Our goal remains to work together with all our global partners to have a more positive
impact to people and planet.
People continue to be a focus for our organisation as we aim to improve
the lives of workers in our supply chain.
We consider every worker in our supply chain an extension of our own business and we
are working together with our factories to ensure safe and fair working conditions for
all of their employees. Our Ethical Trade program, developed and refined by our long
serving team committed to improving practices, outlines our expectations for ourselves
and our partners in our supply chain and seeks to hold us to account when it comes to
human rights impacts associated with producing our product.
Environmental, Social and
Corporate Governance
We commit to source product in a recognised, responsible, and transparent supply chain.
Social Responsibility
It is important for us to continue to map all levels of our supply chain to understand all potential supply chain
risks. As we continue to trace through these layers, we are committed to publishing our supplier list with regular
updates.
4
7,129
42
Sourcing Regions
Workers in Tier 1
66%
Female Workers
Tier 1 Factories
•
Continued to make progress against our Modern Slavery Act roadmap
•
Strengthen our Forced Labour policy and tracing process
•
Completed living wage focussed audits on top tier factories
•
Enhanced our chain of custody policy and process for all tiers of the product sourcing supply chain
•
Achieved “NICE” Rating on the latest (2023) Oxfam ‘Naughty or Nice’ list, recognising our
commitment to working towards paying a living wage
•
Ranked in the top 40% of companies assessed in the ‘Behind the Barcode Report’ / Ethical Fashion
Guide by Baptist World Aid
•
Continued our engagement with key NGO’s
Our FY24 Highlights
BOTTOM 20%
TOP 20%
Tier 1: Factory & Production workshops (includes approved sub-contracting CMT units)
Tier 2: Fabric Mills & Accessories Suppliers, Dying & Printing Mills
Tier 3: Yarn & Spinning mills
Tier 4: Raw material sources (including farms)
OUR SUPPLY CHAIN TIERS
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 15
Working together to empower workers and give them a voice in the supply chain
Working with factories to recognise that a minimum wage does not always equal a living wage
As part of our Worker Voice Program, we were excited to roll out our worker survey tool to more factories and
new regions such as Bangladesh. The worker surveys are conducted alongside our factory social audits and are
in addition to our worker hotline and grievance mechanisms, as another channel to talk to factory workers about
key themes such as:
•
Modern Day Slavery
•
Labour Practices
•
Health & Safety
•
Worker Satisfaction
Enhancing our worker voice tools is a key initiative to help support us in gaining a more direct line to all workers.
It gives us the ability to contact workers by sending them surveys, training materials, and information to empower
workers to have a voice about their individual working conditions.
We commit to do our part in closing the gap between living wage and minimum wage. We recognise that multi
stakeholder initiatives are the best way to drive change and we look to global benchmarking to help determine
a basic living wage by region. Through our audit process we train and then ask our factories to establish a living
wage calculation. We believe this empowers all factory owners in understanding what a living wage is made up
of and how their wages paid compare. It is important for us to monitor progress of all factories and as a result we
have developed our living wage tracker by recording factories that are:
•
Paying living wage
•
On track to living wage = Paying above minimum wage
•
Paying minimum wage (but does not equal living wage)
Through the course of the year, we have worked with our auditing partners to develop a road map to implement a
deeper wage gap audit in key factories.
Annual Report 2024 | Acting Ethically & Responsibly
As part of our modern slavery risk assessment, we identified that cotton production right back to farming was
a high-risk issue that we need to better understand and address. CCX is committed to taking steps to try and
ensure our supply chain does not source directly or indirectly from known regions that openly engage in the
use of forced labour, in line with our responsibilities under the UN Guiding Principles on Business and Human
Rights. In addition to strengthening our ban on known regions that endorse the use of forced labour, we have
implemented a more diligent tracing program and associated plan for remediation. We worked closely with key
suppliers to educate them on key indicators and documentation required to comply with a robust chain of custody
process. It is important for us to monitor and validate our processes to assess their effectiveness, and where
possible we seek input from third parties to help audit our processes.
MODERN SLAVERY UPDATE
The right of every worker in our supply chain to enjoy safe and healthy working conditions in an
environment where they are not exploited
The Factory Audit Risk rating is made up of the factory's social audit score along with consideration of the severity
of any non-conformance issues identified.
A red risk rating means an audit score below the average and non-conformances are associated with a higher
corrective action plan priority, along with potentially a shorter timeframe to remediate. They do not include any
zero tolerance issues.
We seek to partner with the vendors in our supply chain to ensure working conditions are clean and safe and
workers are not performing any unsafe work. As we continue to streamline our sourcing regions, we seek to
check and monitor the working environment of workers in our supply chain through the use of our third-party
auditors.
New suppliers are onboarded into our Ethical Trade Program and as we audit factories, we assign a risk rating to
help prioritise corrective actions. Our audit program is one part of our vendor onboarding, and it supports and sits
alongside our other ethical trade initiatives.
We understand that not all factories will be at the same stage in their ethical trade journey, however, we seek to
partner with factories who also are committed in coming on this journey with us. Our overall audit risk ratings and
tracker have been updated to reflect our scorecard across our total group of factories and we are pleased to see
our average audit score improve.
We completed our pilot Living Wage focussed audits, to help us understand the gap between current wages and
a liveable wage in top tier factories. This also gave us visibility on how workers were recruited and renumerated
over longer periods than what a regular audit would report.
FY24 AUDIT RISK RATINGS
RED
AMBER
GREEN
65.9%
26.8%
7.3%
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 17
Annual Report 2024 | Acting Ethically & Responsibly
We care for the environment and the management of waste in our
supply chain
Implementing Initiatives to help Manage & Reduce our Footprint
Environmental Sustainability
As part of our audit program, we seek to ensure that all textile processing and waste
management is in line with the legislation of the manufacturing country.
Our audits include environmental and waste management checks for
1.
Legal Authorisations – such as the (EIA) Environmental Impact Assessment
2. Solid & Hazardous wastes
3. Wastewater, Air Emissions and Noise
4. Energy & Water reductions
We request factories only use Oeko-tex 100 certified mills, which forms part of our
Tier 2 onboarding.
Our current focus is on those areas where we believe we can help create a more
positive and immediate impact on our planet, while continuing to offer affordable
product to our customers. These areas include assessing opportunities to utilise
preferred materials across product and packaging.
•
Continued to use a selection of preferred fibres into select range of product
•
Continued to develop and introduce more sustainable packaging options
•
Continued to build knowledge & capacity for future climate strategies
•
Engaged key industry experts on climate risks
Our 2024 Highlights
Preferred Materials
FIBRES
PACKAGING
The fibres and materials we choose to use in our supply chain contribute to our overall impact and footprint.
We recognize that we need to work towards understanding where there is opportunity to use more sustainable
fibres. As a first step, we have initially introduced into a small amount of our product ranges a selection of
“better” choice fibres in which we have conducted diligent chain of custody processes to help certify that these
fibres were sourced responsibly and were used in our product.
•
Organic cotton / Traceable cotton
•
Recycled polyester
•
Recycled Nylon
•
Linen
We have been working with our distribution partners to develop satchels for eCommerce sales that have a
high recycled plastics content. Our distribution centres (DC) in Australia transitioned their satchels to a minimum
of 65% made from recycled materials, and our DC in the USA have commenced the introduction of updated
satchels from recycled materials.
This initiative will help contribute to reducing our footprint and driving a more positive impact on our planet.
We have developed and sourced garment labels and hangtags that are made from recycled materials, which
we will introduce in the new year onto our new products.
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 19
Annual Report 2024 | Directors' Report
20
31
107
105
104
44
45
53
Directors' Report
Remuneration Report
Auditor's Independence Declaration
Independent Auditor's Report to the Members
of City Chic Collective Limited
Annual Financial Statements
Corporate Governance Statement
Shareholder Information
Corporate Directory
Annual Financial
Report 2024
Directors' Report
The directors present their report, together with the financial statements, on the consolidated
entity (referred to hereafter as the 'Group', 'consolidated entity' or 'City Chic') consisting of City
Chic Collective Limited (referred to hereafter as the 'company', 'parent entity' or 'CCX') and the
entities it controlled at the end of, or during, the 52-week period ended 30 June 2024.
The following persons were directors of City Chic Collective Limited during the whole of the financial period and up
to the date of this report:
Michael Kay
Megan Quinn
Neil Thompson
Natalie McLean
Phil Ryan
City Chic is an omni-channel retailer specialising in plus-size women’s apparel, footwear and accessories. Its omni-
channel model comprises of a network of 76 stores across Australia and New Zealand (ANZ); and websites operating
in ANZ and the USA, as well as marketplace and wholesale partnerships in both regions.
The business made the strategic decision to sell the Avenue brand during the current period and to exit the EMEA
region and the Evans and Navabi brands during the prior period. The financial statements have reflected this
decision, with the profit and loss presented for the continuing operations in ANZ and USA and Avenue and EMEA
presented as a discontinued operation. The Avenue business has been sold to a third party subsequent to year-end
and is disclosed as an Asset held for sale at 30 June 2024. The Evans business and EMEA inventory has been sold
to a third-party during the period via an asset sale and purchase agreement.
Directors
Principal activities
There were no dividends paid, recommended or declared during the current or previous financial period.
Dividends
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 21
Annual Report 2024 | Directors' Report
During FY24 City Chic executed a number of business transformation initiatives to ensure that the Group can return
to a position of strength in what continues to be a challenging economic environment for our customers.
In August 2023 City Chic completed the sale of Evans in the UK and in June 2024 announced the sale of the
Avenue business in the US, which was completed during July 2024. This, along with a brand refresh as part of its
product and marketing initiatives creates a dedicated single brand offering focused on the core, higher value City
Chic customer in ANZ and the USA through its City Chic stores, websites and partnership agreements.
The Group saw strong improvements through FY24 in the key operating metrics of Gross Margin and Average Sell
Price (ASP), with Q4 GM% c. 28 percentage points above the prior corresponding period (pcp) and ASP up 60% in
the same period. Its customer numbers remain strong at c. 481,000 and the customer is still highly engaged in the
brand with a Net Promotor Score of 72.
City Chic has also undertaken a significant right sizing of its cost base to create a more streamlined operation. Total
actions taken or to be taken following the sale of Avenue are expected to deliver $20.3 million in savings, $8.8
million of which are in the FY24 results and the balance of $11.5 million to be realised in FY25.
Managing the inventory level down remained a key focus in FY24, particularly in H1 to reflect current economic and
demand conditions, however this had a negative impact on margins. The Group ended the year at a normalised
inventory level of $30.7 million, down 42.8% from $53.8 million at 2 July 2023. Proceeds from the sale of Evans
and Avenue (received post year-end), along with the capital raise (for which $14.5 million was received prior to 30
June 2024 and $3.1 million received post) are being used for working capital and to pay down the multi-currency
debt facility to $10.0 million. The debt facility has also been extended to December 2026 and financial covenants
replaced with clean-down requirements (which requires City Chic to repay all drawn down amounts under the
facility to nil for at least seven consecutive days) twice per annum, no less than three months apart, effective from
19 July 2024. City Chic has already satisfied the first of the two clean-down requirements for the year ending 30
June 2025.
Consistent with the prior year, the consolidated statement of profit or loss and associated notes has been presented
separately for continuing business and discontinued operations, by separating EMEA and Avenue from the FY24
and FY23 comparative information. The Group achieved revenue from continuing operations in FY24 of $131.6
million (FY23: $183.5 million), representing a reduction of 28.3%. The underlying EBITDA loss from continuing
operations is $8.4 million (FY23: $15.9 million). The net loss after tax for continuing operations in FY24 was $38.4
million (FY23: net loss $34.2 million).
Operating and financial review
CHANGES TO MACROECONOMIC CONDITIONS AND CONSUMER DISCRETIONARY SPENDING
The Group has a significant exposure to the economy of the countries in which it operates. There are a
number of general economic conditions, including interest and exchange rate movements, CPI inflation,
geopolitical tensions, overall levels of demand, economic and political instability and government
fiscal, trade, monetary and regulatory policies, that can impact the level of consumer confidence
and discretionary retail spending. These conditions may affect revenue from sales to customers and
insufficient liquidity to maximise opportunities or maintaining operations. Management are actively
monitoring and managing the associated risks with daily monitoring of key metrics and adjusting areas
of operation based on both internal and external sources of information that provide insights into any
changes in demand within the economies in which it operates. During the reporting period the Group
executed a number of revisions to its debt facility to better reflect the anticipated trading performance of
the business and expected working capital needs.
COMPETITION
The Group operates in a retail environment and financial performance is sensitive to the current state
of, and future changes in, the retail environment in the countries in which it operates. The retail fashion
market also continues to consolidate and feel the effects of globalisation. City Chic will continue to offer
customers fit, quality and value for money and maintain a high online penetration and a nimble and fast
supply chain that adapts to changes within customer buying patterns.
Material business risks
In response to City Chic’s strategic marketing and product initiatives, the positive momentum in Average Sell Price
and Gross Margin Contribution seen during Q4 FY24 has continued into FY25. These initiatives will focus building
the base of higher value customers in ANZ and the US providing further support to the Average Sell Price, Gross
Margin metrics and driving a higher annual customer spend closer to historic levels. Post the sale of Avenue, the
Group has retained a significant active customer base of circa 481,000, growing 25% since 2019. While the current
economic conditions continue to impact discretionary spend, recent commentary on the potential for interest rate
easing in the medium term may improve consumer confidence and demand.
City Chic has entered FY25 with a healthy inventory position allowing it to return to a more agile supply chain and
more normalised inventory buying patterns. It is seeing positive customer response to this new inventory.
Following the business restructuring and cost reduction programs commenced in FY24 and continuing in FY25, City
Chic has a cost base more aligned to current levels of demand, allowing it to better leverage returns as revenue
grows.
The board and management team believe that the single brand offering, focus on the higher value City Chic
customer and ongoing cost management will enable the Company to grow profitably as the current recessionary
conditions recede.
Outlook
The Group operates in an environment of change and uncertainty. There are a range of factors, both specific to the
Group and general in nature which may impact the operating and financial performance of the Group. The impact
of these risks is regularly reviewed for their possible impact.
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 23
Annual Report 2024 | Directors' Report
ENVIRONMENTAL CHANGES
The Group is exposed to risks arising from environmental changes, including climate change, scarcity of
natural resources and the continuing global development of legislation and regulations in this area. Many
of these risks are greatest in the Group's supply chain activities and these activities and the related risks
are largely managed through the principles laid out in our corporate social responsibility disclosures.
The Group manages environmental risks, such as droughts and floods, along with the threat of raw
material scarcities by diversifying its vendors and material sourcing. The Group has dedicated resources
to ensure continued compliance across all regulatory requirements in the markets operated in by the
Group.
ETHICAL SOURCING AND MODERN SLAVERY
The Group is exposed to reputational and regulatory risk with regards to ethical sourcing and modern
slavery. City Chic is committed to sourcing product in a recognised, responsible, and transparent supply
chain, including taking steps to try and ensure our supply chain does not source directly or indirectly
from known regions that openly engage in the use of forced labour in line with our responsibilities
under the UN Guiding Principles on Business and Human Rights. The Group continues to enhance
and strengthen its ethical trade program with a focus on building a more transparent supply chain and
tightening its tracing of high-risk products, regions or raw materials to manage risks in relation to modern
slavery and to ensure continued compliance across all regulatory requirements in the markets operated
in by the Group.
INVENTORY LEVELS
A failure to maintain appropriate inventory levels may adversely affect the Group’s operating and financial
performance. The Company seeks to manage this risk through regular monitoring of inventory quality
and targeted stock levels.
BUSINESS TRANSFORMATION RISKS
The Group has recently changed logistics providers in the US. Failure to smoothly transition this change
may impact the customer experience and sales. The Group is continuing to monitor service level
standards and forecasting as well as engagement with 3PL providers. The Group is also implementing of
a number of cost reduction initiatives which, if not achieved, will impact the cost structure of the business.
These initiatives will be closely overseen by the board and senior management.
EXCHANGE RATES AND DUTIES
The Group relies significantly on imported products (directly sourced or via local or overseas wholesalers)
and as a result the cost of the product may be subject to movements in the exchange rate of the
Australian dollar. The Group also has operations in the USA which provide a natural hedge against
currency movements on purchases. Any additional risk in exchange rate movement is monitored and
can be mitigated through the use of forward hedging. However it is noted that no hedges have been
put in place in FY24.
WORKPLACE HEALTH AND SAFETY (WHS)
The Group has 546 employees as well as the customers who visit physical stores across ANZ. The
Group has a high focus on WHS with regular WHS Committee meetings, investment in training and
development of its employees being a high priority.
TECHNOLOGY AVAILABILITY & CYBERSECURITY
The Group operates in an increasing complex environment in regard to reliance on technology and
the increasing threat to cyber security. This increasing reliance and the changing regulatory landscape
means that the related risk of any disruptions to systems, networks and data also continues to grow. Any
events or cyber security breaches could cause significant business and reputational damage, adverse
regulatory action (including legal proceedings) and financial impacts on the business.
Whilst it is not possible to reduce the cyber security risk to zero, Management is actively working to
materially reduce these risks by increasing our investment in our cyber control environment, following
the Australian Cyber Security Centre’s “Essential Eight” and the NIST Cybersecurity Framework. Cyber
security is overseen by our Board, Audit and Risk Committee and Group Executives, and external cyber
security consultants are used to test and validate cyber security procedures that have been implemented.
LITIGATION RISK
At the close of FY24 City Chic commenced proceedings in the Supreme Court of NSW against iCare (the
NSW Workers Compensation insurer) and the NSW State Insurance Regulatory Authority disputing the
basis and calculation of historical insurance premiums. This matter has been ongoing and provided for
in the balance sheet.
OTHER KEY RISKS
The Group outlined key financial and operational risks in the Sale of Avenue, Business Transformation
and Equity Raising Investor Presentation released to the ASX on 21 June 2024.
Significant changes in the state of affairs
On 18 June 2024, the Group signed a definitive agreement to divest its US based Avenue business ("Avenue") to
Full Beauty Brands (FBB) for US$12 million (c. A$18 million, less working capital adjustments of c. $3 million). The deal
was completed on 8 July 2024, subsequent to year-end, via an asset purchase agreement. The sale of the Avenue
business has also facilitated the exit of the US warehouse contract with a move to a new provider for the remaining
business, with a significantly lower fixed cost structure.
In connection with the sale of Avenue, City Chic’s lender has agreed to reduce and extend its current debt facility
to December 2026. The extended facility will mature in December 2026 and will step down to a limit of $10 million
(from $20 million) on 19 July 2024. Under the terms of the agreed facility, current covenants will be replaced with a
requirement to complete clean downs (which requires City Chic to repay all drawn down amounts under the facility
to nil for at least seven consecutive days) twice per annum, no less than three months apart.
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 25
Annual Report 2024 | Directors' Report
Likely developments and expected results of operations
Environmental regulation
Certain likely developments in the operations of the consolidated entity and the expected results of operations
in financial years subsequent to the period ended 30 June 2024 are referred to in the preceding operating and
financial review and outlook.
The consolidated entity is not subject to any significant environmental regulation under Australian Commonwealth
or State law.
Matters subsequent to the end of the financial period
As noted above, the Group divested of its Avenue brand in a deal that was agreed prior to year-end but settled on
8 July 2024 and connected with the sale of Avenue, reduced and extended its debt facility.
The Group also undertook a capital raise prior to year-end. The Placement and institutional component of the
Entitlement Offer were successfully completed on 21 June 2024, raising approximately $14.5 million (before
costs). The Retail Entitlement Offer closed on 10 July 2024 with valid applications for entitlements received raising
approximately $0.1 million. The shortfall of approximately $3.1 million (before costs) was allocated to the underwriter
of the Retail Entitlement Offer.
No other matter or circumstance has arisen since 30 June 2024 that has significantly affected, or may significantly
affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs
in future financial years.
As noted in the prior year accounts, the Group divested the Evans business and EMEA inventory via an asset sale
and purchase agreement (the Agreement). AK Retail Holdings Limited (AK Retail Holdings), acquired the Evans
brand, intellectual property and customer base under the Agreement that was signed and closed on 3 August 2023.
The Agreement also included the sale of all the inventory in City Chic’s EMEA business.
Under the Agreement, AK Retail Holdings has paid City Chic a total cash consideration of £8.0 million (c. A$15
million). Net of transaction costs, and the closure of City Chic’s UK warehouse, the consideration is c. £6.4 million
(c. A$12 million). City Chic agreed with its 3PL provider to close its UK warehouse which also supports its European
operations. As a result, the Navabi business also ceased trading in August 2023. City Chic retains the right to trade
under the City Chic and other non-Evans brands in Europe, the Middle East and Africa (EMEA) in the future.
Information on directors
MICHAEL KAY
MEGAN QUINN
TITLE:
Chairman and non-executive director
QUALIFICATIONS:
B.LLB
EXPERIENCE AND EXPERTISE:
Michael Kay joined the City Chic Collective Limited Board on 1 October 2018 as an
independent non-executive director and was subsequently appointed Chairman on
9 November 2018. Mr. Kay has significant listed company experience, as detailed
more fully below, and is also a non-executive director of Guild Group Holdings
Limited. A qualified lawyer, Mr. Kay brings a broad range of commercial experience
to the Board. Mr. Kay was Chief Executive Officer and Managing Director of McMillan
Shakespeare Limited (ASX: MMS) for six years and previously held a number of
senior executive roles at AAMI including Chief Executive Officer. He also spent 12
years in private legal practice specialising in commercial law.
OTHER CURRENT DIRECTORSHIPS:
Mr. Kay is currently Chairman of Omni Bridgeway Ltd (ASX: OBL) (formerly called
IMF Betham Limited (ASX: IMF) (since July 2015).
FORMER DIRECTORSHIPS (LAST 3
YEARS):
None
SPECIAL RESPONSIBILITIES:
Chairman of the Board; Member of the Audit and Risk Committee (ARC); Member of
the People, Culture and Remuneration Committee (PCRC)
INTERESTS IN SHARES:
1,250,000 ordinary shares
INTERESTS IN OPTIONS:
None
INTERESTS IN RIGHTS:
None
TITLE:
Non-executive director
QUALIFICATIONS:
GAICD
EXPERIENCE AND EXPERTISE:
Megan Quinn joined the City Chic Collective Limited Board in October 2012 as
an independent non-executive director. She has more than 30 years' international
experience as a senior executive, advisor, and Non-Executive Director across a
broad range of industries including financial and professional services, retail, luxury,
healthcare, consumer and digital. Ms Quinn is recognised as an entrepreneur and
global brand expert for her game-changing role as a co-founder of NET-A-PORTER.
She brings exceptional customer, governance, strategic, marketing, operational and
business skills, with particular strength in people experience, digital transformation,
disruption, innovation, service and risk.
OTHER CURRENT DIRECTORSHIPS:
Ms. Quinn is currently a non-executive director at Reece Limited (ASX:REH) (since
August 2017) and The Lottery Corporation (ASX: TLC) (since June 2022).
FORMER DIRECTORSHIPS
(LAST 3 YEARS):
InvoCare Limited (ASX:IVC)
SPECIAL RESPONSIBILITIES:
Chair of the PCRC; Member of the ARC
INTERESTS IN SHARES:
None
INTERESTS IN OPTIONS:
None
INTERESTS IN RIGHTS:
None
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 27
Annual Report 2024 | Directors' Report
NATALIE MCLEAN
TITLE:
Non-executive director (appointed 5 August 2021)
QUALIFICATIONS:
B.Bus, GAICD
EXPERIENCE AND EXPERTISE:
Natalie McLean joined the City Chic Collective Limited Board on 5 August 2021 as
an independent, non-executive director.
Mrs. McLean has over 25 years of retail experience having worked in senior
positions domestically in Australia and internationally with companies including
Giordano, Rip Curl and the Cotton On Group. Mrs McLean has extensive experience
across operations, product, marketing and commercial areas of the retail sector
including partnership strategies and geographic growth. Mrs. McLean is currently
the CEO of the emerging brands at the Cotton On Group and a member of the
Cotton On Foundation.
OTHER CURRENT DIRECTORSHIPS:
Mrs. McLean does not hold any other listed company directorships.
FORMER DIRECTORSHIPS
(LAST 3 YEARS):
Mrs. McLean has not held any other listed company directorships in the last three
years.
SPECIAL RESPONSIBILITIES:
Member of the ARC; Member of the PCRC
INTERESTS IN SHARES:
10,900 ordinary shares
INTERESTS IN OPTIONS:
None
INTERESTS IN RIGHTS:
None
NEIL THOMPSON
TITLE:
Non-executive director
QUALIFICATIONS:
B.Ec
EXPERIENCE AND EXPERTISE:
Neil Thompson joined the City Chic Collective Limited Board on 5 August 2021 as an
independent, non-executive director.
Mr. Thompson has over thirty years of financial, operational and strategic experience
from a broad range of roles and industries with global reach, including freight and
logistics, industrial products and software sectors.
Mr. Thompson is currently Chief Financial Officer at Education Horizons, a leading
provider of education software and a Potentia Capital portfolio company. He was
previously Finance Operating Partner at Potentia Capital (private equity) and prior
to that Chief Financial Officer of Ascender HCM (a payroll software and services
company). He is also a director of the Australian World Orchestra.
OTHER CURRENT DIRECTORSHIPS: Mr. Thompson does not hold any other listed company directorships.
FORMER DIRECTORSHIPS
(LAST 3 YEARS):
Mr. Thompson has not held any other listed company directorships in the last three
years.
SPECIAL RESPONSIBILITIES:
Chair of the ARC; Member of the PCRC
INTERESTS IN SHARES:
223,529 ordinary shares
INTERESTS IN OPTIONS:
None
INTERESTS IN RIGHTS:
None
PHIL RYAN
TITLE:
Chief Executive Officer and Managing Director
QUALIFICATIONS:
MBA, B.Bus
EXPERIENCE AND EXPERTISE:
Phil Ryan is the original Brand Director of City Chic. In 2006, Mr. Ryan led a team of
six people that created the brand. He is responsible for the strategic direction and
operational leadership that has seen City Chic take a market leading position in the
global plus size industry. Under Mr. Ryan's leadership City Chic now has more than
76 stores in Australia and New Zealand. Online sales represent ~65% of total sales
globally and in the US, City Chic trades exclusively in a digital capacity. Mr. Ryan
has driven successful partnerships with Nordstrom, Macy's, and Bloomingdale's in
the USA. Mr. Ryan is a global authority in the plus size consumer. He has over 25
years’ experience in senior and strategic retail apparel management. Mr. Ryan's
family had a fashion manufacturing, wholesale and retail business called Ambition
in the 1980’s and 1990’s and from this he knows all areas of a rag trade business;
from the cutting table to the retail shop floor.
OTHER CURRENT DIRECTORSHIPS:
None
FORMER DIRECTORSHIPS
(LAST 3 YEARS):
None
SPECIAL RESPONSIBILITIES:
Chief Executive Officer; Managing Director
INTERESTS IN SHARES:
557,912 ordinary shares
INTERESTS IN OPTIONS:
2,161,235 ordinary shares issued under CCX's 2019 Employee Share Plan and
escrow provisions
INTERESTS IN RIGHTS:
2,339,819 performance rights over ordinary shares
'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 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes
directorships of all other types of entities, unless otherwise stated.
*N. Thompson and P. Ryan shareholdings include additional shares purchased in the capital raise in June 2024 but were only
allocated to them on 2 July 2024.
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 29
Annual Report 2024 | Directors' Report
Company secretary
Meetings of directors
On 21 July 2023, Ms Jacquie Shanahan, who has extensive experience across company secretariat, legal and
governance roles, joined as Company Secretary and General Counsel.
On 21 July 2023, Mr Peter McClelland, Chief Financial Officer, was also appointed as an additional Company
Secretary.
The former Company Secretary was Marta Kielich. Ms Kielich was appointed to the position of General Counsel and
Company Secretary on 7 July 2020 and resigned on 21 July 2023.
The number of meetings of the company's Board of Directors ('the Board') and of each Board committee held during
the period ended 30 June 2024, and the number of meetings attended by each director were:
Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee.
A number of Board Meetings were held on short notice and as such not all directors were able to attend. All directors attended
all scheduled in advance board meetings.
*Phil Ryan is not a member of either the PCRC or ARC but was invited to attend these meetings and his attendance was noted
in the minutes.
Full Board
PCRC
ARC
Attended
Held
Attended
Held
Attended
Held
Michael Kay
35
35
2
2
4
4
Megan Quinn
34
35
2
2
4
4
Natalie McLean
35
35
2
2
4
4
Neil Thompson
30
35
2
2
4
4
Phil Ryan*
35
35
-
-
-
-
Retirement, election and continuation in office of directors
At the 2023 Annual General Meeting ("AGM") held on 22 November 2023, 94.76% of the votes received supported
the re-election of director Neil Thompson as part of the Company's constitution that specifies all directors must
stand for re-election at least every three years.
a. Introduction
This report outlines the remuneration strategy, framework, and other conditions of employment for key management
personnel and details the role and accountabilities of the Board and relevant Committees that support the Board
on these matters. Key management personnel (KMP) are those persons having authority and responsibility for
planning, directing and controlling the activities of the entity, directly or indirectly, including all directors.
Key management personnel of the consolidated entity were also the key management personnel of City Chic
Collective Limited (the parent entity) for the years ended 30 June 2024 and 2 July 2023. The key management
personnel consisted of the following directors and senior executives of City Chic Collective Limited:
Name
Role
Non-executive directors:
Michael Kay
Chairman and non-executive director
Megan Quinn
Non-executive director
Natalie McLean
Non-executive director
Neil Thompson
Non-executive director
Executive directors:
Phil Ryan
Chief Executive Officer and Managing Director
Other key management personnel:
Peter McClelland
Chief Financial Officer
Remuneration report (audited)
The remuneration report, which has been audited as required by section 308(3C) of the
Corporations Act 2001, outlines the key management personnel remuneration arrangements for
the Group, in accordance with the requirements of the Corporations Act 2001 and its Regulations.
The remuneration report is set out under the following main headings:
(a)
Introduction
(b)
Remuneration strategy and policy
(c)
Remuneration framework
(d)
Remuneration outcomes for key management personnel
(e)
Service agreements
(f)
Disclosures relating to share options and performance rights
(g)
Additional disclosures relating to key management personnel
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 31
Annual Report 2024 | Directors' Report
b. Remuneration strategy and policy
The People, Culture and Remuneration Committee (referred to hereafter as the “PCRC” or the ‘Committee’) is
responsible for assisting and advising the Board in relation to remuneration arrangements for its directors and
executives. The performance of the consolidated entity depends on the quality of its directors and executives. The
remuneration philosophy is to attract and retain talented and motivated executives who can enhance the Group’s
performance through their contributions and leadership.
The Board and / or the PCRC may, from time to time, appoint and engage independent advisors directly in relation
to remuneration matters. During the reporting period, PWC, remuneration consultants were engaged by the Group,
through the PCRC and provided a range of independent advice and information relevant to a range of remuneration
matters, in particular incentive structures for executives. While the PCRC obtained independent advice, it did not
receive any remuneration recommendations as defined by the Corporations Act 2001 (Cth). PWC was paid $17,260
for these services.
Remuneration policies are developed to provide market competitive remuneration arrangements that support the
attraction, engagement and retention of talented team members, and that are aligned with company’s interests.
PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION
USE OF REMUNERATION CONSULTANTS
PRINCIPLE 3
Alignment to program
participants' interests:
•
rewards capability and
experience;
•
reflects competitive
reward for profitable
growth and the
achievement of key
business objectives which
drive value creation over
the medium term; and
•
provides a clear structure
for earning rewards.
PRINCIPLE 2
The reward framework is
designed to align executive
reward to shareholders'
interests. The Board
have considered that it
should seek to enhance
shareholders' interests by:
•
including economic profit
as a core component
of plan design and the
successful execution of
strategic or operational
initiatives; and
•
attracting and retaining
high calibre executives.
PRINCIPLE 1
The objectives of the Group’s
executive remuneration
framework are as follows:
•
competitiveness and
sustainability;
•
acceptability to the
Group's strategic and
business objectives
and the creation of
shareholder value;
•
performance linkage/
alignment of executive
compensation;
•
transparency and
acceptability to
shareholders.
c. Remuneration framework
In accordance with best practice corporate governance, the structures of non-executive directors and executive
remuneration are separate.
(i) NON-EXECUTIVE DIRECTORS' REMUNERATION
Non-executive directors receive fees and do not receive share-based payments or other incentives. The Chairman's
fees are determined independently to the fees of other non-executive directors and are based on comparable roles
in the external market. The Chairman does not participate in any discussions relating to determination of his own
remuneration. The PCRC review non-executive directors’ fees and payments annually. The PCRC may, from time
to time, receive advice from independent remuneration consultants to ensure non-executive directors' fees and
payments are appropriate and in line with the market.
ASX listing rules require the maximum aggregate non-executive directors' remuneration be determined by a general
meeting. The most recent determination was at the Annual General Meeting held on 21 November 2019, where the
shareholders approved a maximum annual aggregate remuneration of $1,000,000. The PCRC has reviewed the fee
and deemed the maximum annual aggregate remuneration is still appropriate.
Up to 23 November 2023, non-executive chairman and non-executive directors’ fees set for FY24 were as follows:
Role
Remuneration (per annum,
exclusive of superannuation)
$
Base fee for Non-Executive Chairman
200,000
Base fee for Non-Executive Director
100,000
Additional fee for Chair of the ARC
20,000
Additional fee for Chair of the PCRC
10,000
Role
Remuneration (per annum,
exclusive of superannuation)
$
Base fee for Non-Executive Chairman
160,000
Base fee for Non-Executive Director
80,000
Additional fee for Chair of the ARC (unchanged)
20,000
Additional fee for Chair of the PCRC (unchanged)
10,000
Following the release of the Group’s FY23 results at the November 2023 AGM and reflecting on the Group’s
performance, the non-executive chairman and the non-executive directors elected to reduce their fees by 20%
for the remainder of FY24 and until otherwise determined. This was in addition to the 16.7% reduction in director's
fees already taken in February 2023 (FY23). The non-executive chairman and non-executive directors’ fees from 23
November 2023 were as follows:
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 33
Annual Report 2024 | Directors' Report
(ii) EXECUTIVE DIRECTORS AND OTHER KEY MANAGEMENT PERSONNEL (KMP)
The Group aims to reward executives based on their position and responsibility, with a level and mix of remuneration
that has both fixed and variable components, as well as a blend of short and long-term incentives. Executive
remuneration comprises base pay and benefits, short-term incentives, long-term incentives, and superannuation
contributions.
FIXED REMUNERATION
Executives receive a base pay and benefits which reflect their roles, experience and level of responsibility. This
is reviewed annually to ensure the executive’s pay is competitive with the market. Other benefits include car and
travel allowances.
SHORT-TERM INCENTIVES
The PCRC reviews the short-term incentives (STI) for executives and employees annually. If the PCRC determines
that STI should be made available for executives and/or employees, the cash incentives ('bonuses') are payable
should the Group achieve pre-determined targets following finalisation and announcement of the full year audited
results. Using value creation targets ensures variable awards are only available when value has been created for
shareholders and when profit is consistent with the business plan.
The PCRC considers the appropriate targets and KPIs to link the STI plan and the level of payout if targets are
met. This includes setting any maximum payout under the STI plan, and minimum levels of performance to trigger
payment of STI.
As a result of the Group’s performance, no amount is payable to the KMPs as STI in FY24.
LONG-TERM INCENTIVES
The Group’s long-term incentives ('LTI') rewards executives for high performance and ongoing commitment over a
three to five-year horizon and recognises the important role executives play in delivering the long-term growth of
the Group.
As outlined in the notice of meeting for the 2023 Annual General Meeting, the PCRC spent a considerable amount
of time considering the remuneration of executives in this period of unprecedented global uncertainty, and it was
determined that the Company’s and Shareholders’ interests would be best served over the course of FY24 by
management focussing rebuilding and delivering a return to profitability. In this context, the FY24 Performance
Rights under the Equity Incentive Plan, had an EBITDA performance condition measured over a three-year period
and a service condition measured over four years for the CEO and a three-year period for other KMP.
Given the three-year performance period only the first year has been accounted for in the FY24 results.
VOTING ON THE REMUNERATION REPORT AT THE 2023 ANNUAL GENERAL MEETING (AGM)
At the 2023 AGM the Group received a vote of 72.24% in favour of the adoption of the remuneration report and
27.58% against. As more than 25% of the votes were cast against the resolution, this constitutes a first strike for the
purposes of the Corporations Act. In response to this, Directors sought feedback from shareholders to understand
key concerns. Shareholders generally indicated that their concerns were largely unrelated to remuneration, but
reflected broader frustrations with the Group’s performance. As detailed in the Operating and financial review and
the Significant changes in the state of affairs, the Group has undertaken several key initiatives in FY24 and into
FY25 that it believes will address these concerns.
The key strategic initiatives include:
•
the divestment of the Avenue business allowing single brand offering focused on the core City Chic customer
in ANZ and the US;
•
new product delivering improved operating metrics (Average Selling Price and Margin);
•
business simplification and cost reduction programs; and
•
balance sheet initiatives.
Tranche
Grant date
Performance
period end date
Fair Value
Opening
balance
2 July 2023
Granted
Vested
Expired/
forfeited
Balance at
the end of
the period
2C
13/11/2018
30/06/2023
$0.995
2,300,000
-
-
(2,300,000)
-
5A
22/11/2023
30/06/2027
$0.340
-
2,860,235
-
(520,416)
2,339,819
5B
19/02/2024
30/06/2026
$0.550
-
4,860,181
-
(346,640)
4,513,541
Total Performance Rights
2,300,000
7,720,416
-
(3,167,056)
6,853,360
3
21/11/2019
30/06/2024
$0.739
6,298,457
-
-
(2,593,482)
3,704,975
3
03/03/2020
30/06/2024
$0.731
667,464
-
-
-
667,464
3
16/09/2020
30/06/2024
$0.970
474,576
-
-
-
474,576
Total Loan Funded Shares
7,440,497
-
-
(2,593,482)
4,847,015
LONG TERM INCENTIVE PLANS
The Group’s long-term incentive plans are equity based and comprise Performance Rights issued under the Long
Term Incentive Plan (LTIP) and Loan Funded Shares issued under the Loan Funded Share Plan (LFSP). Performance
Rights and Loan Funded Shares on issue during the current year were:
The Board also assessed a range of targets for the FY24 LTIP program. Given the uncertainty of economic conditions
the EBITDA target was applied to the FY24 LTIP to align management’s focus on delivering profitability through this
current cycle. The Board acknowledges that these targets may change with future LTIP programs to align with
changing conditions.
Specifically, in relation to FY24 remuneration and ongoing through FY25: Non Executive Directors fees remain
discounted by 20% (since the AGM); The CEO’s fixed remuneration remains discounted by 16.7% (since the AGM);
and no short-term incentive was awarded for FY24.
Note: The impact from the forfeiture of 2,593,482 loan funded shares under Tranche 3 has been reflected in the statements of
profit and loss and the share-based payment reserve. The actual share buy back and cancellation of the loan funded shares will
occur in the next financial period.
As the Group EPS for the year ended 2 July 2023 finished below the minimum performance threshold, all Tranche
2C expenses related to the performance rights were reversed at 2 July 2023, with no more to recognise due to not
meeting non-market vesting condition. The rights themselves lapsed in August 2023 and there is nil P&L impact in
FY24.
LTIP TRANCHES
Vesting conditions of the LTIP tranches are set out below.
Tranche 2C
Vesting Condition 1
Continued service to August 2023, with no holding lock on resulting shares.
Vesting Condition 2
Group EPS (underlying before income tax and share-based payments) performance in
accordance with the following schedule:
Group EPS for the year to 30 June 2023
Proportion of Tranche 2C Performance Rights
held that will satisfy Vesting Condition 2
Below $0.1125 (1.5 x FY202018 EPS)
Nil
$0.1250 ≤ EPS $0.1200 (1.6 x FY202018 EPS)
50%
$0.1200 ≤ EPS $0.1275 (1.7 x FY202018 EPS)
75%
EPS ≥ $0.1275
100%
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 35
Annual Report 2024 | Directors' Report
LFSP TRANCHE
•
Loan Funded ("LF") shares are issued at the Company's share price on the ASX at the time of issue.
•
The Company advances money to pay for the subscription price of the LF Shares (Loan).
•
The Loan has an interest payable of 1.9% and is repayable on the earlier of cessation of employment (6 or 12
month grace periods may be applied) or 7 years from the agreement by the Board to issue LF Shares under
the Plan (Vesting Period is 5 years to 30 June 2024).
•
The Company's recourse in the event it seeks to recover the Loan is limited to the LF Shares. Where a
Participant does not repay the Loan by the repayment date, the Participant is deemed to have agreed to sell
to the Company pursuant to an employee share scheme buy-back, that number of LF shares required to repay
the Loan to the Company.
•
The Company will apply the after-tax amount of any dividends payable in respect of a Participant's LF Shares
towards repayment of the outstanding balance of the Loan.
•
The LF Shares offered are subject to Vesting Conditions, which if not met, the unvested LF Shares will be
forfeited and bought back by the Company at the issue price and the Loan will be deemed repaid.
Tranche 5A and 5B
Vesting Condition 1
The sole Performance Condition requires the Company to achieve at least the threshold
Earnings before Interest Tax Depreciation and Amortisation (EBITDA) Margin on the
expiration of the three-year performance period commencing 3 July 2023 and ending
on 28 June 2026
Vesting Condition 2
5A: Continued service up to and including 30 June 2027
5B: Continued service up to and including 30 June 2026
Weighting
EBITDA Margin
Percentage of FY24 Performance Rights that will satisfy the
Performance Condition
100%
10% (threshold)
30%
Between threshold and
stretch
Straight line pro rata basis between threshold and stretch.
15% (stretch)
100%
Tranche 3
Vesting Condition 1
Continued service to 30 June 2024.
Vesting Condition 2
Compound annual growth rate (CAGR) in the Group's earnings per share after tax
(ADEPS) prescribed by the Board over the 3 year period commencing on 1 July 2019, in
which case (subject to satisfaction of Vesting Period Condition) the LF Shares held will
vest in accordance with the following vesting scale:
AEPS 3-year CAGR from 1 July 2019
Proportion of Tranche 3 LF shares that will satisfy Vesting Condition 2
12.5%
25%
20%
100%
12.5% ≤ ADEPS CAGR ≤ 20.0%
Straight-line pro rata vesting between 25% and 100% (inclusive)
Vesting Condition 2 was eligible for testing on 3 July 2022. The ADEPS 3-year CAGR from 1 July 2019 to 3 July 2022
was 16.8% meeting the performance threshold for Vesting Condition 2. The proportion of Tranche 3 LF shares that
will satisfy Vesting Condition 2 is 66.3%. The Group has recognised $0.1m in expense in FY24. Vesting Condition 1
have been met at the end of FY24.
d. Remuneration outcomes for key management personnel
AMOUNTS OF REMUNERATION
Details of the remuneration of key management personnel of the consolidated entity are set out in the following
tables.
Peter McClelland has decided to leave the business with his last day being the 18 October 2024 and after this he will receive 4
months in lieu of notice.
(A) In accordance with AASB 119 Employee Benefits, accrued annual leave and long service leave is classified as other long-
term employee benefit.
(B) The cost of equity-settled transactions is 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 multiplied
by probability of vesting. 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.
Given the current CCX share price is below the loan value it is unlikely any participants will exercise their entitlements
however the loan only expires 10 years after the grant date and as such the rights remain in place.
The LF shares issued under the Plan have been treated as 'in substance options' which have been valued using
a Modified Binomial Lattice option pricing model which allows for varying exercise price. The resulting value is
amortised over the vesting period on a probability adjusted basis. The probability is assessed with consideration of
management's expectation of future earnings and the financial hurdles for vesting.
An agreed set of protocols were put in place to ensure that the remuneration recommendations would be free
from undue influence from key management personnel. These protocols include requiring that the consultant
not communicate with affected key management personnel without a member of the PCRC being present, and
that the consultant not provide any information relating to the outcome of the engagement with the affected key
management personnel. The Board is also required to make inquiries of the consultant's processes at the conclusion
of the engagement to ensure that they are satisfied that any recommendations made have been free from undue
influence. The Board is satisfied that these protocols were followed and as such there was no undue influence.
2024
Cash
salary & fees
Total
short-term
Post employment
Superannuation
Other leave
benefits (A)
Share-based
payments (B)
Total
$
$
$
$
$
$
Non-executive directors:
Michael Kay
176,923
176,923
19,462
-
-
196,385
Megan Quinn
98,462
98,462
10,831
-
-
109,293
Neil Thompson
108,461
108,461
11,931
-
-
120,392
Natalie McLean
88,461
88,461
9,731
-
-
98,192
Executive directors:
Phil Ryan
767,000
767,000
27,500
77,361
361,146
1,233,007
Other key management personnel:
Peter McClelland
521,635
521,635
27,500
61,975
229,178
840,288
1,760,942
1,760,942
106,955
139,336
590,324
2,597,557
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 37
Annual Report 2024 | Directors' Report
(A) In accordance with AASB 119 Employee Benefits, accrued annual leave and long service leave is classified as other long-term
employee benefit.
(B) The cost of equity-settled transactions is 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 multiplied by
probability of vesting. 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. In 2023 the balance represents a release in the accrual for Tranche
2C which did not meet the vesting conditions, partly offset by remaining Tranches.
*Negative share-based payments and proportion of remuneration as a result of reversal of LTIP accruals from prior periods.
2023
Cash
salary & fees
Total
short-term
Post employment
Superannuation
Other leave
benefits (A)
Share-based
payments (B)
Total
$
$
$
$
$
$
Non-executive directors:
Michael Kay
226,154
226,154
23,185
-
-
249,339
Megan Quinn
123,077
123,077
12,944
-
-
136,021
Neil Thompson
133,077
133,077
13,996
-
-
147,073
Natalie McLean
113,077
113,077
11,892
-
-
124,969
Executive directors:
Phil Ryan*
938,837
938,837
27,500
88,235
(667,890)
386,682
Other key management personnel:
Peter McClelland
496,596
496,596
27,500
49,221
-
573,317
2,030,818
2,030,818
117,017
137,456
(667,890)
1,617,401
Fixed
Remuneration
At risk - STI
At risk - LTI
Cash bonus
forfeited**
Name
2024
2023
2024
2023
2024
2023
2024
2023
Executive director:
Phil Ryan
71%
148%
-
46%
29%
(94%)*
-
324,167
Other key management personnel:
Peter McClelland
73%
76%
-
24%
27%
-
-
180,833
The proportion of remuneration linked to performance and the fixed proportion assuming full STI is received and
that the LTI fully vests are as follows:
*Negative LTI represents reversal of LTIP accruals from prior periods and leads to fixed remuneration greater than 100%.
** There were no cash bonus paid or payable during the current and previous period.
e. Service agreements
f. Disclosures relating to share options and performance rights
Remuneration and other terms of employment for key management personnel are formalised in service agreements.
Details of these agreements are as follows:
ISSUE OF SHARE OPTIONS AND PERFORMANCE RIGHTS
There were no options issued to key management personnel as part of compensation during the period ended 30
June 2024 (2 July 2023:nil).
There were 3,711,936 performance rights issued to key management personnel as part of compensation during the
period ended 30 June 2024 (2 July 2023:490,419 performance rights issued and forfeited).
There were no loan funded shares issued to key management personnel as part of compensation during the period
ended 30 June 2024 (2 July 2023:nil).
The number of performance rights over ordinary shares and loan funded shares held by key management personnel
as at 30 June 2024 are shown below
All non-executive directors stand for re-election at least every 3 years and have no notice period, no annual
remuneration review, no eligibility for short-term incentives, no eligibility for long-term incentives, no severance
period, no termination benefits and no other benefits.
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
Phil Ryan
Title:
Chief Executive Officer and Managing Director
Term of agreement:
None
Details:
• Notice period of 6 months • Remuneration review at board discretion • Eligible for short-
term incentives • Eligible for long-term incentives • No severance period • No termination
benefits (except for statutory entitlements) • No other benefits
Peter McClelland
Title:
Chief Financial Officer
Term of agreement:
None
Details:
• Notice period of 6 months • Remuneration review period every 12 months • Eligible
for short-term incentives • Eligible for long-term incentives • No severance period • No
termination benefits (except for statutory entitlements) • No other benefits
Tranche
Performance rights
Loan funded shares
Name
5
3
Phil Ryan
2,339,819
2,161,235
Peter McClelland
1,372,116
-
Total
3,711,935
2,161,235
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 39
Annual Report 2024 | Directors' Report
Name
Value of rights granted
during the period
$
Value of rights vested
during the period
$
Value of rights lapsed
during the period
$
P Ryan
795,539
-
(88,471)
P McClelland
754,664
-
-
Values of performance rights over ordinary shares granted, vested and lapsed for directors and other key
management personnel as part of compensation during the period ended 30 June 2024 are set out below:
2024
2023
2022
2021
2020
Underlying Earnings before Interest Tax Depreciation
and Amortisation (EBITDA) Margin
(6.9%)
N/A
N/A
N/A
N/A
(Loss) / profit before income tax for continuing
underlying operations
N/A
($67.9m)
$39.5m
$35.6m
$20.1m
(Loss) / profit before income tax for continuing underlying
operations (before share-based payments)
N/A
($69.0m)
$35.8m
$38.8m
$22.9m
EPS (underlying before income tax and share-based
payments) - Tranche 2C
N/A
(29.8) cents
15.5 cents
17.3 cents
11.9 cents
Profit after income tax for continuing operations
N/A
N/A
$29.0m
$24.9m
$13.8m
ADEPS (underlying after income tax) - Tranche 3
N/A
N/A
12.5 cents
11.1 cents
7.2 cents
ADDITIONAL INFORMATION
The following earnings information reflects the basis for which financial hurdles are considered for the share-based
payments and measure executive performance in delivering long term growth of the Group:
N/A – refers to metric not being applicable to LTIP for that relevant financial year.
*N. Thompson and P. Ryan shareholdings additions were part of capital raise in June 2024 but were only allocated on 2 July
2024. P McClelland participated in the retail placement in July 2024, purchasing an additional 148 shares.
g. Additional disclosures relating to key management personnel
SHAREHOLDING
The number of shares in the company held during the financial period by each director and other members of key
management personnel of the consolidated entity, including their personally related parties, is set out below:
Balance at the
start of the
period
Received
as part of
renumeration
Additions
Disposals/
other
Balance at the
end of
the period
Directors' shareholding
Michael Kay
1,000,000
-
250,000
-
1,250,000
Neil Thompson*
100,000
-
123,529
-
223,529
Natalie McLean
10,900
-
-
-
10,900
Phil Ryan*
378,956
-
178,956
-
557,912
-
-
-
-
-
Other key management personnel
-
-
-
-
Peter McClelland*
10,284
-
-
10,284
-
-
-
-
-
Total
1,500,140
-
552,485
-
2,052,625
The directors do not have performance rights or loan funded shares.
PERFORMANCE RIGHTS HOLDING
The number of performance rights over ordinary shares in the company held during the financial period by each
director and other members of key management personnel of the consolidated entity, including their personally
related parties, is set out below:
Balance at the
start of the
period
Granted
Vested
Expired/
forfeited
Balance at
the end of the
period
Phil Ryan
1,200,000
2,860,235
-
(1,720,416)
2,339,819
Peter McClelland
-
1,372,116
-
-
1,372,116
Total
1,200,000
4,232,351
-
(1,720,416)
3,711,935
LOAN FUNDED SHAREHOLDING
The number of loan funded shares in the company held during the financial period by each director and other
members of key management personnel of the consolidated entity, including their personally related parties, is set
out below:
Balance at the
start of the
period
Granted
Vested
Expired/
forfeited
Balance at
the end of the
period
Phil Ryan
2,161,235
-
-
-
2,161,235
Total
2,161,235
-
-
-
2,161,235
OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL AND THEIR RELATED PARTIES
There were no transactions that occurred with key management personnel and their personally related parties.
This concludes the remuneration report, which has been audited.
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 41
Annual Report 2024 | Directors' Report
There were no unissued ordinary shares of City Chic Collective Limited under option outstanding at the date of this
report.
There were no unissued ordinary shares of City Chic Collective Limited under performance rights outstanding at the
date of this report. Refer to the remuneration report for details of performance rights.
There were no ordinary shares of City Chic Collective Limited issued on the exercise of options during the period
ended 30 June 2024 and up to the date of this report.
There were no ordinary shares of City Chic Collective Limited issued on the exercise of performance rights during
the period ended 30 June 2024 and up to the date of this report.
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 period, 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.
The company has not, during or since the end of the financial period, indemnified or agreed to indemnify the auditor
of the company or any related entity against a liability incurred by the auditor.
During the financial period, the company has not paid a premium in respect of a contract to insure the auditor of
the company or any related entity.
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.
Shares under option
Shares under performance rights
Shares issued on the exercise of options
Shares issued on the exercise of performance rights
Indemnity and insurance of officers
Indemnity and insurance of auditor
Proceedings on behalf of the company
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial period by
the auditor are outlined in Note 30 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial period, 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.
There are no officers of the company who are former partners of Ernst & Young.
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.
Non-audit services
Officers of the company who are former partners of Ernst & Young
Rounding of amounts
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is
set out immediately after this directors' report.
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
MICHAEL KAY
Chairman
28 August 2024
Sydney
PHIL RYAN
Chief Executive Officer and Managing Director
Auditor's independence declaration
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 43
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Auditor’s independence declaration to the directors of City Chic Collective
Limited
As lead auditor for the audit of the financial report of City Chic Collective Limited for the financial year
ended 30 June 2024, I declare to the best of my knowledge and belief, there have been:
a.
No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit;
b.
No contraventions of any applicable code of professional conduct in relation to the audit; and
c.
No non-audit services provided that contravene any applicable code of professional conduct in
relation to the audit.
This declaration is in respect of City Chic Collective Limited and the entities it controlled during the
financial year.
Ernst & Young
Yvonne Barnikel
Partner
28 August 2024
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Independent auditor’s report to the members of City Chic Collective Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of City Chic Collective Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at 30
June 2024, consolidated statement of profit or loss and other comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash flows for the year then ended,
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:
a.
Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2024
and of its consolidated financial performance for the year ended on that date; and
b.
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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
financial report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
45
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Liability limited by a scheme approved under Professional Standards Legislation
Inventory valuation
Why significant
How our audit addressed the key audit matt er
At 30 June 2024 the Group’s consolidated statement
of financial position includes inventories with a
carrying value of $30.7m (excluding those classified
as held for sale), representing 22% of total assets.
As detailed in Note 12 of the financial report,
inventories are valued at the lower of cost and net
realisable value. Inventory is held at geographically
diverse locations at various third-party distribution
centres and retail stores.
The cost of inventories includes elements relating to
the cost of freight, customs duties, foreign exchange
rates and certain warehousing charges. Judgements
were involved in the process of allocating these costs
to inventories.
There is judgment involved in determining the cost of
inventories and in assessing net realisable value,
estimating the value of inventory which may be sold
below cost and determining the net realisable value of
this inventory. Such judgements include the
expectations of future sales price, future sales
volumes and inventory clearance plans, including the
cost to dispose of any excess inventory.
Inventory valuation was a key audit matter due to the
value of the inventory balance relative to total assets
and the various judgements required in determining
its valuation.
Our audit procedures included the following:
►
Assessed whether the Group’s inventory
costing methodologies, specifically in
relation to freight, customs duties and
warehousing charges, were consistent with
the requirements of Australian Accounting
Standards.
►
Assessed the effectiveness of relevant
controls in relation to the inventory costing
process, and on a sample basis assessed the
accuracy of the Group’s inventory valuation
methodology including recalculating the
foreign exchange translation.
►
Assessed the basis by which the Group
determined that inventory was recorded at
the lower of cost and net realisable value,
including the estimated costs to sell and
rationale for recording specific adjustments
to value inventory below cost, where
required.
►
Examined sales margins achieved to assess
the Group’s process for identifying specific
slow-moving inventories, historical inventory
turnover and expected future sales and
assessed the appropriateness of any
adjustments to the value of inventory below
cost as determined by the Group.
►
Performed an analysis of shrinkage results
and provision calculations.
►
We also assessed the adequacy and
appropriateness of the disclosures in the
Notes to the financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Impairment assessment of indefinite life intangible assets
Why significant
How our audit addressed the key audit matt er
At 30 June 2024 the Group’s consolidated statement
of financial position includes brand intangible assets
and goodwill with a total carrying value of $15.9m
(excluding those classified as held for sale),
representing 11% of total assets.
As disclosed in Note 15 of the financial report, the
assessment of the impairment of the Group’s
indefinite life intangible assets incorporated
significant judgments and estimates, based upon
conditions existing at 30 June 2024, specifically
factors such as forecast revenue and gross margin,
forecast costs, discount rates and terminal growth
rates.
The judgments and assumptions relate to the
sustainability of future performance, market and
economic conditions. The significant assumptions
used in the impairment testing referred to above are
inherently subjective.
The disclosures in the financial report disclose the
assumptions made in the impairment testing and the
market conditions at 30 June 2024.
Accordingly, we considered the impairment testing of
indefinite life intangible assets and the related
disclosures in the financial report to be a key audit
matter.
Our audit procedures included the following:
►
Assessed the Group’s determination of the
cash generating unit used in the impairment
model, based on our understanding of the
nature of the Group’s business and the
economic environment in which it operates.
We also considered internal reporting of the
Group’s results to assess how earnings and
indefinite life intangible assets are monitored
and reported.
►
Assessed whether the Group’s impairment
assessment was in accordance with
requirements of the Australian Accounting
Standards.
►
Assessed the revenue and gross margin
forecasts used by the Group, as outlined in
Note 15 of the financial report, by assessing
the reliability of the Group’s historical
forecasts, our knowledge of the business and
corroborating assumptions with external
information, where possible.
►
Evaluated the appropriateness of discount
rates and terminal growth rates applied in
the impairment model with involvement from
our valuation specialists.
►
Tested the mathematical accuracy of the
impairment testing models and assessed
whether the models were consistent with the
latest Board approved forecasts.
►
Performed sensitivity analysis on key
assumptions including revenue and cost
forecasts in the impairment model.
►
Assessed the adequacy and appropriateness
of the disclosures included in the financial
report.
47
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Assets Held for Sale
Why significant
How our audit addressed the key audit matt er
At 30 June 2024, the Group classified $12.2m as
assets held for sale, net of liabilities associated with
the operations, due to the decision by the Group to
sell its Avenue business in the US as disclosed in Note
5. This balance mainly comprises inventory, brand
intangible and goodwill. An impairment loss of
$40.5m was recorded in the year ended 30 June
2024 upon reclassifying the assets as held for sale to
measure them at the lower of their carrying amount
and fair value less costs to sell. The sale of assets
associated with Avenue was completed subsequent to
year end. Comparative figures were adjusted for this
discontinued operation in the consolidated statement
of comprehensive income.
The Group exercised judgement in estimating the
appropriate allocation of goodwill to the held for sale
group and measuring the impairment loss associated
with the net assets classified as held for sale and in
the allocation of results between the discontinued and
continuing operations.
Accordingly, we considered the classification and
impairment of assets held for sale and the related
disclosures in the financial report to be a key audit
matter.
Our audit procedures included the following:
►
Assessed whether the assets met the
requirements for classification as a
discontinued operation and presentation as
held for sale, including initiation of the sales
process as at balance date, management’s
commitment to sell and the likelihood of the
sale completing within 12 months of balance
date.
►
Inspected the underlying documentation
including the sale and purchase agreement
for the contractual terms associated with the
Avenue sale, which defines the assets to be
divested including any liabilities or
obligations retained or created.
►
Agreed the carrying amounts of the assets
held for sale to underlying accounting
records and assessed the Group’s allocation
of goodwill to the assets held for sale group.
►
Involving our valuation specialists we
evaluated the fair value assessment made by
the Group, including comparing the key
assumptions adopted in determining fair
value against available market data and the
signed sale agreement.
►
Assessed the restatement of the current and
comparative figures in the consolidated
statement of comprehensive income for the
discontinued operations.
►
Assessed the adequacy and appropriateness
of the disclosures included in the financial
report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Going concern
Why significant
How our audit addressed the key audit matt er
In assessing whether the financial statements should
be prepared on a going concern basis, the Directors
are required to consider all available information for a
period of at least 12 months from the date of signing
the financial statements. In conducting their
assessment, the Directors have concluded that there
are no material uncertainties which may cast
significant doubt over the Group’s ability to continue
as a going concern over this 12 month period.
At 30 June 2024, the Group has net current liabilities
of $1.3m. We considered the assessment of the
Group’s ability to continue as a going concern to be a
key audit matter. This is a result of:
►
The current financial position and
performance of the Group
►
The judgements within the cashflow forecast
in the assessment period and the period
beyond, and
►
The significant judgement required to
conclude that material uncertainty which
may cast significant doubt over the Group’s
ability to continue as a going concern, is not
present.
Our audit procedures included the following:
►
Evaluated the Group’s going concern
assessment with reference to forecast
cashflows and supporting assumptions.
►
Reviewed post year-end cashflow
movements including the use of proceeds
from the sale of Avenue, and proceeds from
the capital raise.
►
Challenged the key revenue, margin and
fulfilment cost assumptions in the forecast
period, comparing these against historical
actual outcomes.
►
Enquired with board and management as to
their knowledge of events or conditions that
would cast a significant doubt on Group’s
ability to continue as a going concern, as well
as events post managements assessment.
►
We considered the Group’s access to the
funding facilities as disclosed in Note 2 to the
financial statements, considering the limits
of the facilities and the Group’s compliance
with the requirements to clean down for a
period of at least 7 consecutive days twice in
any financial year and no less than 3 months
apart in the forecast period.
►
We assessed the possible mitigating actions
identified by the Group in the event that
actual cash flows are below forecast,
specifically the ability to defer and or not
spend discretionary capital expenditure.
►
Assessed the adequacy and appropriateness
of the disclosures included in the financial
report.
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the
information included in the Company’s 2024 annual report other than the financial report and our
auditor’s report thereon. We obtained the directors’ report that is to be included in the annual report,
prior to the date of this auditor’s report, and we expect to obtain the remaining sections of the annual
report after the date of this auditor’s report.
Our opinion on the financial report does not cover the other information and we do not and will not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
49
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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 on the other information obtained prior to the date of this
auditor’s report, 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 Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating 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.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
►
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
►
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
►
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
►
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
►
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
►
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30
June 2024.
In our opinion, the Remuneration Report of City Chic Collective Limited for the year ended 30 June
2024, complies with section 300A of the Corporations Act 2001.
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 51
Annual Report 2024 | Annual Financial Statements
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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.
Ernst & Young
Yvonne Barnikel
Partner
Sydney
28 August 2024
City Chic Collective Limited
Consolidated statement of profit or loss and other comprehensive income
For the period ended 30 June 2024
Consolidated
Note
2024
2023
$'000
$'000
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
Revenue from continuing operations
6
131,607
183,513
Interest and other revenue
7
706
439
Expenses from continuing operations
Purchase and inbound-related costs of inventory
(56,669)
(98,771)
Fulfilment costs
(18,149)
(33,489)
Cost of sales
8
(74,818)
(132,260)
Selling, general, and administrative expense
Employee benefits expense
8
(36,848)
(40,875)
Depreciation, amortisation and impairment expense
8
(20,507)
(15,775)
Rental-related recoveries, concessions and expenses
8
(4,349)
(2,919)
Other expenses
8
(31,495)
(26,285)
Finance costs
8
(3,553)
(3,751)
Loss before income tax benefit from continuing operations
(39,257)
(37,913)
Income tax benefit
9
848
3,704
Loss after income tax benefit from continuing operations
(38,409)
(34,209)
Loss after income tax benefit from discontinued operations
5
(54,551)
(65,569)
Loss after income tax benefit for the period attributable to the owners of City
Chic Collective Limited
25
(92,960)
(99,778)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation - continuing operations
47
843
Foreign currency translation - discontinued operations
86
2,207
Other comprehensive income for the period, net of tax
133
3,050
Total comprehensive loss for the period attributable to the owners of City Chic
Collective Limited
(92,827)
(96,728)
Total comprehensive loss for the period is attributable to:
Continuing operations
(38,362)
(33,366)
Discontinued operations
(54,465)
(63,362)
(92,827)
(96,728)
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 53
Annual Report 2024 | Annual Financial Statements
City Chic Collective Limited
Consolidated statement of profit or loss and other comprehensive income
For the period ended 30 June 2024
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
Note
Cents
Cents
Earnings per share for loss from continuing operations attributable to the
owners of City Chic Collective Limited
Basic earnings per share
26
(16.5)
(14.8)
Diluted earnings per share
26
(16.5)
(14.8)
Earnings per share for loss from discontinued operations attributable to the
owners of City Chic Collective Limited
Basic earnings per share
26
(23.4)
(28.3)
Diluted earnings per share
26
(23.4)
(28.3)
Earnings per share for loss attributable to the owners of City Chic Collective
Limited
Basic earnings per share
26
(39.9)
(43.0)
Diluted earnings per share
26
(39.9)
(43.0)
City Chic Collective Limited
Consolidated statement of financial position
As at 30 June 2024
Consolidated
Note
2024
2023
$'000
$'000
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
Assets
Current assets
Cash and cash equivalents
10
21,434
12,414
Trade and other receivables
11
6,641
7,583
Inventories
12
30,748
53,798
Income tax refund due
9
332
2,632
Other assets
13
2,805
4,113
Assets held for sale
5
12,631
13,203
Total current assets
74,591
93,743
Non-current assets
Plant and equipment
14
9,923
13,341
Trade and other receivables
11
83
90
Right-of-use assets
16
27,568
56,998
Intangibles
15
17,873
64,488
Deferred tax
9
10,897
9,015
Total non-current assets
66,344
143,932
Total assets
140,935
237,675
Liabilities
Current liabilities
Trade and other payables
17
37,025
50,996
Lease liabilities
16
12,108
12,429
Borrowings
18
17,500
1,500
Income tax
9
162
-
Provisions
19
5,731
6,861
Other liabilities
20
2,855
3,917
Liabilities directly associated with assets held for sale
5
476
646
Total current liabilities
75,857
76,349
Non-current liabilities
Lease liabilities
16
29,023
47,535
Provisions
19
903
931
Other liabilities
20
32
137
Total non-current liabilities
29,958
48,603
Total liabilities
105,815
124,952
Net assets
35,120
112,723
Equity
Issued capital
23
195,531
182,167
Reserves
24
(25,058)
(29,258)
Reserves directly associated with assets held for sale
24
-
2,207
Accumulated losses
25
(135,353)
(42,393)
Total equity
35,120
112,723
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 55
Annual Report 2024 | Annual Financial Statements
City Chic Collective Limited
Consolidated statement of changes in equity
For the period ended 30 June 2024
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
33
Total equity
Issued
capital
Share-based
payments
reserve
Foreign
currency
translation
reserve
Loss reserve
Retained
profits /
(Accumulat-
ed losses)
Consolidated
$'000
$'000
$'000
$'000
$'000
$'000
Balance at 4 July 2022
182,167
(16,840)
(1,144)
(10,991)
57,385
210,577
Loss after income tax benefit for
the period
-
-
-
-
(99,778)
(99,778)
Other comprehensive income for
the period, net of tax*
-
-
3,050
-
-
3,050
Total comprehensive
income/(loss) for the period
-
-
3,050
-
(99,778)
(96,728)
Transactions with owners in
their capacity as owners:
Share-based payments
-
(1,126)
-
-
-
(1,126)
Balance at 2 July 2023
182,167
(17,966)
1,906
(10,991)
(42,393)
112,723
* Other comprehensive income for the period, net of tax includes an amount of $2,207,000 relating to discontinued operations.
Total equity
Issued
capital
Share-based
payments
reserve
Foreign
currency
translation
reserve
Loss reserve
Accumulat-
ed losses
Consolidated
$'000
$'000
$'000
$'000
$'000
$'000
Balance at 3 July 2023
182,167
(17,966)
1,906
(10,991)
(42,393)
112,723
Loss after income tax benefit for
the period
-
-
-
-
(92,960)
(92,960)
Other comprehensive income for
the period, net of tax
-
-
133
-
-
133
Total comprehensive
income/(loss) for the period
-
-
133
-
(92,960)
(92,827)
Transactions with owners in
their capacity as owners:
Contributions of equity, net of
transaction costs (Note 23)
13,364
-
-
-
-
13,364
Share-based payments (Note
22)
-
923
-
-
-
923
Recycling of FCTR on
discontinued operations
-
-
743
-
-
743
FX Impact
-
194
-
-
-
194
Balance at 30 June 2024
195,531
(16,849)
2,782
(10,991)
(135,353)
35,120
Note reference
23
24
24
24
25
City Chic Collective Limited
Consolidated statement of cash flows
For the period ended 30 June 2024
Consolidated
Note
2024
2023
$'000
$'000
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
34
Cash flows from operating activities
Receipts from customers (inclusive of GST, VAT and sales tax)
206,444
344,463
Payments to suppliers (inclusive of GST, VAT and sales tax)
(224,613)
(310,660)
Government grants received
-
7
Interest received
283
86
Other revenue
423
681
Interest and other finance costs paid
(1,284)
(1,888)
Income taxes refunded / (paid)
1,913
(2,924)
Net cash from/(used in) operating activities
21
(16,834)
29,765
Cash flows from investing activities
Payments for property, plant and equipment
14
(1,485)
(2,280)
Payments for intangibles
15
(960)
(1,595)
Proceeds from disposal of business
15,305
-
Payments related to disposal of business
(3,305)
-
Net cash from/(used in) investing activities
9,555
(3,875)
Cash flows from financing activities
Proceeds from issue of shares
23
14,549
-
Payments related to issue of shares
(1,185)
-
Proceeds from borrowings
18
27,497
26,500
Repayment of borrowings
18
(11,497)
(39,000)
Repayment of lease liabilities
(13,382)
(11,247)
Net cash from/(used in) financing activities
15,982
(23,747)
Net increase in cash and cash equivalents
8,703
2,143
Cash and cash equivalents at the beginning of the financial period
12,414
9,953
Effects of exchange rate changes on cash and cash equivalents
317
318
Cash and cash equivalents at the end of the financial period
10
21,434
12,414
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 57
Annual Report 2024 | Annual Financial Statements
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 1. General information
The financial statements cover City Chic Collective Limited as a consolidated entity consisting of City Chic Collective Limited
and the entities it controlled at the end of, or during, the period. The financial statements are presented in Australian dollars,
which is City Chic Collective Limited's functional and presentation currency.
City Chic Collective Limited (ASX Code: CCX) is a listed public company limited by shares, incorporated and domiciled in
Australia. Its registered office and principal place of business is:
151-163 Wyndham Street
Alexandria, NSW 2015
Telephone: (02) 9059 4300
A description of the nature of the consolidated entity'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 28 August 2024. The
directors have the power to amend and reissue the financial statements.
Note 2. Material accounting policy information
The accounting policies that are material to the consolidated entity are set out either in the respective notes or below. The
accounting policies adopted are consistent with those of the previous financial year, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. The adoption of these
Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the
consolidated entity.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. The
Group is in the process of assessing the impact of the following:
Summary
Application date of
standard
Application date
for Group
AASB 2020-1 Amendment to Australian Accounting Standard –
Classification of Liabilities as Current vs Non-current and AASB 2022-6
Amendments to Australian Accounting Standard –Non-current Liabilities
with Covenants
1 January 2024
1 July 2024
AASB 18 Presentation and Disclosure in Financial Statements
1 January 2027
1 July 2027
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, where applicable, the valuation
of financial assets and liabilities at fair value through profit or loss, financial assets at fair value through other comprehensive
income.
Financial reporting period
The company reports within a retail financial period. The current financial year represents a 52-week period ended 30 June
2024 (2023: 52 week period ended 2 July 2023). This treatment is consistent with s323D Corporations Act 2001.
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 2. Material accounting policy information (continued)
Critical accounting estimates and judgements
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 consolidated entity'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 3 'Critical accounting judgements, estimates and assumptions'.
Offsetting financial assets and liabilities
Financial assets and financial liabilities have been offset and the net amount presented in the statement of financial position
where the consolidated entity currently has a legally enforceable right to set off the recognised amounts and intends either to
settle on a net basis, or to realise the asset and settle the liability simultaneously.
Going concern
The Directors have prepared the financial statements on a going concern basis, which assumes continuity of normal business
activities and the realisation of assets and the discharge of liabilities in the ordinary course of business.
The Group incurred a loss from continuing operations after income tax for the year ended 30 June 2024 of $38,409,000 (2
July 2023 loss of $34,209,000). During the year, the group divested the Evans business and EMEA inventory for a total cash
consideration of £8.0 million (c. A$15.3 million). At 30 June, City Chic had also agreed to divest the Avenue brand to Full
Beauty Brands (FBB) for total cash consideration of US$12.0 million (approximately A$18.0 million, less working capital
adjustments of ~$3.0 million).
At 30 June 2024, City Chic was also in the process of completing a $17.6 million Equity Raising comprising a fully underwritten
institutional placement and a partially underwritten retail entitlement offer. As at 30 June 2024, $14.5 million (before costs)
had already been raised and a further $3.2 million (before costs) was raised in July 2024.
While the Group was in a net current-liability position as at 30 June 2024 of ($1.3 million), it is noted that this was prior to the
receipt of the additional $3.1 million of capital raised in July 2024. The loan amount as at 30 June 2024 of $17.5 million was
fully repaid in July 2024 as part of the reduction in the facility to $10.0 million and therefore City Chic has already satisfied the
first of two clean-down requirements for the year ending 30 June 2025. Net operating cashflow was negative for the year
ended 30 June 2024. While there remains uncertainty as to impact of the current economic environment on discretionary
spend, the Directors have reviewed the forecasted cash flows to 31 August 2025 in conjunction with the monthly forecast cash
position and the Groups utilisation of the banking facility. Based upon this review, the Directors are satisfied with the
Company’s ability to pay its debts as and when they fall due, making the going concern assumption appropriate at the time of
signing.
In making this determination, the following factors have also been considered by the Directors:
•
The sale of Avenue and EMEA has materially reduced the group’s operating costs and exposure to lower margin
businesses;
•
The return to a single brand offering focused on the higher value City Chic customer in ANZ and the US;
•
The implementation of a more agile supply chain facilitating greater flexibility in managing purchases;
•
Normalised inventory with new product purchases more aligned to customer demand;
•
A strategic refresh of the brand through various product and marketing initiatives; and
•
Reduced support centre costs including wages and overheads and a more variable cost structure for its US
warehousing.
These actions have resulted in a higher average selling price and margin contribution through H2 FY24 and into FY25 and a
significant reduction in City Chic’s cost base and improvements in its operational flexibility.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only.
Supplementary information about the parent entity is disclosed in Note 34 'Parent entity information'.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of City Chic Collective Limited
('company' or 'parent entity') as at 30 June 2024 and the results of all subsidiaries for the period then ended. City Chic
Collective Limited and its subsidiaries together are referred to in these financial statements as the 'consolidated entity'.
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 59
Annual Report 2024 | Annual Financial Statements
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 2. Material accounting policy information (continued)
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity
when the consolidated entity 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 consolidated entity. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity 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 consolidated entity.
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 consolidated entity 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 consolidated
entity 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.
Foreign currency translation
The financial statements are presented in Australian dollars, which is City Chic Collective Limited's functional and presentation
currency.
Foreign currency transactions
Foreign currency transactions are translated into City Chic Collective Limited's functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at financial period-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.
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
consolidated entity'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 consolidated entity'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.
Assets held for sale
Assets 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 be classified as held for sale, they must be available for immediate sale in their present condition and
their sale must be highly probable.
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 2. Material accounting policy information (continued)
An impairment loss is recognised for any initial or subsequent write down of the assets to fair value less costs of disposal. A
gain is recognised for any subsequent increases in fair value less costs of disposal of assets, but not in excess of any
cumulative impairment loss previously recognised.
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.
Assets classified as held for sale are presented separately on the face of the statement of financial position, in current assets.
The liabilities classified as held for sale are presented separately on the face of the statement of financial position, in current
liabilities.
Financial assets
Financial assets are initially measured at fair value. Financial assets are recognised in the Group’s statement of financial
position when the Group becomes a party to the contractual provisions of the instrument. Transaction costs are included as
part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently
measured at either amortised cost or fair value depending on their classification. Classification is determined based on both
the business model within which such assets are held and the contractual cash flow characteristics of the financial asset
unless an accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the
consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no reasonable
expectation of recovering part or all of a financial asset, its carrying value is written off.
Financial assets at amortised cost
A financial asset is measured at amortised cost only if both of the following conditions are met: (i) it is held within a business
model whose objective is to hold assets in order to collect contractual cash flows; and (ii) the contractual terms of the financial
asset represent contractual cash flows that are solely payments of principal and interest. The amortised cost of a financial
asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the
cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity
amount, adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortised cost of a financial
asset before adjusting for any loss allowance.
Impairment of financial assets
The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are either measured
at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon
the consolidated entity's assessment at the end of each reporting period as to whether the financial instrument's credit risk
has increased significantly since initial recognition, based on reasonable and supportable information that is available, without
undue cost or effort to obtain. Refer to Note 11 'Trade and other receivables' for further information.
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.
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.
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 61
Annual Report 2024 | Annual Financial Statements
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 2. Material accounting policy information (continued)
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.
Comparative amounts
Where management has considered appropriate to achieve more relevant and reliable presentation of the entity's financial
performance, the presentation of certain items in the financial statements has changed since the prior year. Where this re-
presentation of results requires reclassification of comparative amounts, the comparatives have been re-presented to achieve
more relevant and reliable presentation and comparability.
The material accounting policies adopted are consistent with those of the previous financial year and corresponding current
reporting period, except for the policies stated below.
Note 3. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates, judgement in accounting
policy 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.
Allowance for impairment of inventories
The provision for impairment of inventories assessment requires a degree of estimation and judgement. The level of the
provision is assessed by considering the recent sales experience, the ageing of inventories and other factors such as end of
life or terminal inventory, that affect inventory obsolescence. Refer to Note 12 'Inventories' for further information.
Goodwill and other indefinite life intangible assets
The consolidated entity tests annually, or more frequently if events or changes in circumstances indicate impairment, whether
goodwill and other indefinite life intangible assets have suffered any impairment, in accordance with the accounting policy
stated in Note 15 'Intangibles'. The recoverable amounts of cash-generating units have been determined based on value-in-
use calculations. These calculations require the use of assumptions, including estimated discount rates based on the current
cost of capital and growth rates of the estimated future cash flows. The recoverable amount of brands is determined with
Goodwill. That is, at a Group level under one cash generating unit, supported by the single operating segment. Refer to Note
15 'Intangibles' for further information. In the current period the Group has also had to allocate a portion of goodwill to Assets
held for sale and assess recoverability, as outlined in Note 5 – Discontinued operations.
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 3. Critical accounting judgements, estimates and assumptions (continued)
Income tax
The consolidated entity is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in
determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course
of business for which the ultimate tax determination is uncertain. The consolidated entity recognises liabilities for anticipated
tax audit issues based on the consolidated entity's current understanding of the tax law. Where the final tax outcome of these
matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period
in which such determination is made.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the consolidated entity considers it is probable
that future taxable amounts will be available to utilise those temporary differences and losses. Refer to Note 9 'Income tax' for
further information.
Determining the lease term of contracts with renewal options
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option
to extend the lease or the ability of staying on past lease expiry date (in holdover) if it is reasonably certain to be exercised.
The Group has historically always had several lease contracts in holdover. The Group applies judgement in evaluating whether
it is reasonably certain whether leases will be extended beyond the contracted period. Refer to Note 16 'Right-of-use assets'
for further information.
Holdover leases
The Group has historically always had several lease contracts in holdover. The Group applies judgement in evaluating whether
it is reasonably certain whether leases will be extended beyond the contracted period. A range of 2 to 5 years extension is
estimated based on average lease terms. Refer to Note 16 'Right-of-use assets and lease liabilities' for further information.
Note 4. Operating segments
Identification of reportable operating segments
The Group’s overall strategy remains to operate as an omni-channel retailer, focused on the plus-size market whilst delivering
profitability and to leverage a centralised structure that is not specific to a geography or channel. As such the consolidated
entity is organised into one operating segment, being fashion retail. Despite having numerous brands and geographies, the
Chief Executive Officer who is identified as the Chief Operating Decision Makers (‘CODM’) assesses the performance and
determines the allocation of resources at a single segment, consolidated level with each part of the business exhibiting similar
long-term financial performance and economic characteristics.
The CODM assess the performance of the operating segment based on a measure of EBITDA (Earnings before interest, tax,
depreciation, amortisation and impairment, and other adjustments). 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 at least a monthly basis, including weekly reporting on key metrics.
Major customers
There is no revenue that is significant from any particular customer. Segment revenue from external parties, assets and
liabilities are all reported to the CODM in a manner consistent with the financial statements.
Revenue by geographical area
The Group operates in the following geographical regions:
●
Asia Pacific (APAC) - current operations in Australia and New Zealand. Both regions serviced by stores, website and
marketplace; and
●
Americas - current operations in United States and are comprised of online (website and marketplace) and wholesale.
Refer to Note 6 'Revenue' for by geographical area.
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 63
Annual Report 2024 | Annual Financial Statements
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 4. Operating segments (continued)
Reconciliation of net profit to Underlying EBITDA
Reconciliation of net profit after income tax from continuing operations to Underlying EBITDA (Earnings before interest,
taxation, depreciation, amortisation, impairment, and other adjustments) is provided as follows (Underlying EBITDA is a non
IFRS measure):
Consolidated Consolidated
2024
2023
$'000
$'000
Net (loss) / profit after tax from continuing operations
(38,409)
(34,209)
Interest expense
3,553
3,751
Tax benefit from continuing operations
(848)
(3,704)
Depreciation, amortisation and impairment expense
20,507
15,775
Restructuring
2,235
-
Northern hemisphere warehouse relocation
497
2,143
Loss on lease modification (AASB16)
2,666
308
Capital raise costs
1,242
-
Transaction costs
159
-
Underlying EBITDA from continuing operations
(8,398)
(15,936)
Note 5. Discontinued operations
Material accounting policy
The Group classifies current assets as held for sale if their carrying amounts will be recovered principally through a sale
transaction rather than through continuing use. Current assets classified as held for sale are measured at the lower of their
carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of
an asset, excluding finance costs and income tax expense.
The criteria for held for sale classification is regarded as met only when the sale is highly probable, and the asset is available
for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant
changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the plan to
sell the asset and the sale expected to be completed within one year from the date of the classification.
Intangible assets are not amortised once classified as held for sale.
Assets and liabilities classified as held for sale are presented separately as current items in the statement of financial position.
Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit
or loss after tax from discontinued operations in the statement of profit or loss. The Avenue business was not considered a
discontinued operation or classified as an asset held for sale at 2 July 2023. As such, the comparative consolidated statement
of profit or loss, the statement of other comprehensive income and certain applicable notes have been restated to show
discontinued operations separately from continuing operations.
Assets held for sale and discontinued operations
Discontinued operations in 2024
On 18 June 2024, the Group signed a definitive agreement to divest its US based Avenue business ("Avenue") to Full Beauty
Brands (FBB) for US$12.0 million (c. A$18.0 million, less working capital adjustments of c. $3.0 million). The deal was
completed on 8 July 2024, subsequent to year-end, via an asset purchase agreement. The sale of the Avenue business has
also facilitated the exit of the US warehouse contract with a move to a new provider for the remaining business, with a
significantly lower fixed cost structure.
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 5. Discontinued operations (continued)
Discontinued operations in 2023
The Group divested the Evans business and EMEA inventory via an asset sale and purchase agreement (Agreement). AK
Retail Holdings Limited (AK Retail Holdings), has acquired the Evans brand, intellectual property and customer base under
the Agreement that signed and closed on 3 August 2023. The Agreement also includes the sale of all the inventory in City
Chic’s EMEA business.
Under the Agreement, AK Retail Holdings has paid City Chic a total cash consideration of £8.0 million (c. $15.5 million AUD).
Net of transaction costs, and the closure of City Chic’s UK warehouse, the consideration is c. £6.4 million (c. $12.0 million
AUD). City Chic has agreed with its 3PL provider to close its UK warehouse which also supports its European operations. As
a result, the Navabi business has ceased trading. City Chic retains the right to trade under the City Chic, Avenue and other
non-Evans brands in EMEA in the future. There will be a transition period for AK Retail Holdings to sell all non-Evans branded
product and for City Chic to sell its remaining Evans-branded product in ANZ and North America. The results of the
discontinued operation for the year are presented below:
Results from discontinued operation
Consolidated Consolidated
2024
2023
$'000
$'000
Revenue from discontinued operations
71,964
125,505
Expense
(86,010)
(162,108)
Operating Income / (loss)
(14,046)
(36,603)
Impairment loss recognised on the remeasurement to fair value less costs to sell
(40,505)
(29,402)
Income tax benefit / (expense)
-
436
Loss after income tax from discontinued operations
(54,551)
(65,569)
Other comprehensive income
Foreign currency translation - discontinued operations
86
2,207
Total comprehensive loss attributed to discontinued operations
(54,465)
(63,362)
The 2024 operating loss ($14,046,000) includes results from both the Avenue business ($10,623,000) and the EMEA business
($3,423,000). The EMEA result includes a $746,000 unwind of the FCTR, upon divestment of the business. The gain or loss
on disposal of the EMEA business in 2024 is nil.
Cash flows from/(used in) discontinued operations
The results of cash flows from/(used in) the discontinued operations during the period are set out below, including
comparative information.
Consolidated
2024
2023
$'000
$'000
Net cash from operating activities
(13,340)
41,087
Net cash used in investing activities
12,000
(2)
Net cash from financing activities
-
-
Net increase in cash and cash equivalents from discontinued operations
(1,340)
41,085
Cash received from proceeds of sale is considered as part of the discontinued business. This is presented as investing
activities in the statement of cashflows.
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 65
Annual Report 2024 | Annual Financial Statements
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 5. Discontinued operations (continued)
Assets and liabilities of disposal group classified as held for sale
The following assets and liabilities were reclassified as held for sale in relation to discontinued operations as at 30 June
2024:
Consolidated
2024
2023
$'000
$'000
Assets classified as held for sale:
Cash and cash equivalents
-
144
Inventories
7,268
6,658
Brand
5,363
5,993
Other current assets
-
126
Intangibles
-
282
Total assets
12,631
13,203
Liabilities directly associated with assets classified as held for sale:
Trade and other payables
-
249
Provisions
476
387
Other liabilities
-
10
Total liabilities
476
646
Net assets
12,155
12,557
The assets classified as held for sale have been assessed against the fair value less cost to sell. This has resulted in an
impairment of $40,505,000 (2023: $29,402,000), as disclosed above in the results from discontinued operation. The assets
classified as held for sale have been presented net of this impairment.
Note 6. Revenue
Consolidated
2024
2023
$'000
$'000
From continuing operations
Sale of goods
131,607
183,513
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 6. Revenue (continued)
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Consolidated
2024
2023
$'000
$'000
Timing of revenue recognition
Goods transferred at a point in time
131,607
183,513
Geographical regions
APAC
97,690
141,106
Americas
33,917
42,407
131,607
183,513
Channel
Online website
54,942
98,981
Stores
53,942
59,926
Partners
22,723
24,606
131,607
183,513
Accounting policy for revenue recognition
The consolidated entity recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected to be entitled
in exchange for transferring goods to a customer. For each contract with a customer, the consolidated entity: 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
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.
Store and online sales
Revenue is recognised at the point of sale, which is where the customer has taken delivery of the goods. Amounts disclosed
as revenue are net of sales returns, trade discounts and commission paid. Return policy on sale of goods range from 30 to
90 days and provision is made based on historical return percentage. Please refer to Note 19 'Provisions' for sales return
raised and Note 13 'Other assets' for corresponding right-of-return assets recognised.
Partner revenue - wholesale
Revenue is recognised at time of delivery less an allowance for estimated customer returns, rebates, and other similar
allowances.
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 67
Annual Report 2024 | Annual Financial Statements
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 7. Interest and other revenue
Consolidated
2024
2023
$'000
$'000
Interest revenue
283
86
Other revenue
423
353
Interest and other revenue
706
439
Note 8. Expenses
Consolidated
2024
2023
$'000
$'000
Loss before income tax from continuing operations includes the following specific expenses:
Cost of sales
74,818
132,260
Depreciation, amortisation and impairment
20,507
15,775
Employee benefits expense
Employee benefits expense excluding superannuation and share-based payments
33,222
38,875
Defined contribution superannuation expenses
2,703
3,126
Share-based payments expense
923
(1,126)
Total employee benefits expense
36,848
40,875
Finance costs
Interest and finance charges paid/payable on borrowings
1,284
1,922
Interest and finance charges paid/payable on lease liabilities
2,269
1,829
Total finance costs
3,553
3,751
Leases
Short-term and low-value lease payments
4,349
2,919
Other expenses
Utility and maintenance expenses
5,672
4,941
Transactional fees and charges
2,145
3,281
Marketing expenses
4,204
3,656
Advertising expenses
5,404
4,601
Professional, consulting and insurance
7,375
9,689
FX (gain) / loss
58
(3,803)
Loss on lease modification
2,666
-
Sundry
3,971
3,920
Total other expenses
31,495
26,285
Accounting policy for purchase and inbound–related costs of inventory and fulfillment costs
Purchase and inbound related costs include underlying product cost and “landed costs” which include inbound freight, duties
and other charges. Fulfilment costs represent warehousing and freight costs to deliver online sales.
Accounting policy for lease related expenses
Refer to Note 16 'Right-of-use assets'.
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 8. Expenses (continued)
Accounting policy for Advertising and Marketing expenses
Advertising Expenses include costs associated with driving customer acquisition and re-engagement, such as digital
advertising and direct mail campaigns. All other marketing costs, such as photoshoots and content development, are reflected
in Marketing Expenses.
Note 9. Income tax
Consolidated
2024
2023
$'000
$'000
a) Income tax expense
Current tax
188
123
Deferred tax – origination and reversal of temporary differences
(1,684)
(335)
Prior year tax over/ (under) provisions
187
(3,798)
Foreign exchange
37
306
Other
424
-
Aggregate income tax (benefit)/expense
(848)
(3,704)
Income tax (benefit)/expense is attributable to:
(Loss) / Profit from continuing operations
(848)
(3,704)
Aggregate income tax (benefit)/expense
(848)
(3,704)
b) Numerical reconciliation of income tax expense and tax at the statutory rate
(Loss)/Profit before income tax from continuing operations
(39,257)
(37,913)
Tax at the statutory tax rate of 30%
(11,777)
(11,374)
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Non-taxable income
-
(172)
LTIP and LFSP
276
(464)
Other non-deductible expenses
24
1,395
(11,478)
(13,864)
Difference in overseas tax rates
(1,865)
4,120
Prior year deferred tax (under)/over provisions
450
(1,434)
Prior year current tax over/(under) provisions
(93)
(2,363)
Foreign exchange
-
253
US state tax payable
20
43
Tax loss not recognised/utilised
10,179
-
DTA derecognised on prior year tax losses
1,790
9,541
Other
149
-
Income tax (benefit)/expense from continuing operations
(848)
(3,704)
Income tax (benefit)/expense related to discontinued operations
-
(436)
c) Capital losses
Unused tax losses related to capital losses of $147,200,000 (2023: $147,200,000) carried forward for which no deferred tax
asset has been recognised. These tax losses can only be utilised in the future if the continuity of ownership test is passed, or
failing that, the same business test is passed. The capital losses are in Australia and do not expire.
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 69
Annual Report 2024 | Annual Financial Statements
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 9. Income tax (continued)
d) Income tax losses
As at 30 June 2024, the consolidated entity (including EMEA) had carried forward income tax losses of $167,200,000 (2023:
$91,400,000). The income tax losses carried forward at 30 June 2024 were from its Australian, US, UK and EU businesses.
These tax losses can be utilised in the future subject to local tax law requirements such as continuity of ownership or the same
business. A deferred tax asset can be recognised on losses to the extent that it is probable that sufficient taxable profit will be
available to utilise the tax losses in future financial periods. At 30 June 2024, the Group has recognised a deferred tax asset
related to tax losses for $4,167,000 (2023: $1,790,000), based on management’s recoverability assessment, using forecasts
as included in Board approved business plans, showing that the Company will be in a future taxable profit position.
e) Tax consolidation legislation
City Chic Collective Limited and its wholly owned Australian controlled entities implemented the tax consolidation legislation
as of 1 July 2003. The accounting policy in relation to this legislation is set out below.
f) Deferred tax assets
Consolidated
2024
2023
$'000
$'000
Deferred tax asset comprises temporary differences attributable to:
Tax losses
4,167
1,790
Property, plant and equipment
(748)
(3,120)
Employee benefits
1,045
1,219
Leases
3,335
2,322
Other provisions and accruals
2,829
5,949
Inventories
(115)
676
Other
(59)
(66)
10,454
8,770
Amounts recognised in equity:
Amounts initially recognised in equity
443
245
Deferred tax asset
10,897
9,015
Movements:
Opening balance
9,015
7,330
Foreign exchange on opening balance
(42)
351
(Charged)/credited to profit or loss - continuing
1,684
458
(Charged) to profit or loss – discontinued (Note 5)
-
(436)
Credited/(charged) to equity
443
(122)
Prior year under/over
(220)
1,434
Other
17
-
Closing balance
10,897
9,015
Consolidated
2024
2023
$'000
$'000
Income tax refund due
Income tax refund due
332
2,632
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 9. Income tax (continued)
Consolidated
2024
2023
$'000
$'000
Provision for income tax
162
-
Accounting policy for 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.
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 and does not give rise to equal taxable and deductable temporary differences; or
●
when the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the
timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable
future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax
assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the
carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable
that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against
current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on
either the same taxable entity or different taxable entities which intend to settle simultaneously.
City Chic Collective Limited (the 'head entity') and its wholly-owned Australian subsidiaries have formed an income tax
consolidated group under the tax consolidation regime. The head entity and each subsidiary in the tax consolidated group
continue to account for their own current and deferred tax amounts. The tax consolidated group has applied the 'separate
taxpayer within group' approach in determining the appropriate amount of taxes to allocate to members of the tax consolidated
group.
In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or assets)
and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the tax
consolidated group.
The amount receivable/payable under the tax funding agreement is due upon receipt of the funding advice from the head
entity, which is issued as soon as practicable after the end of each financial year. The head entity may also require payment
of interim funding amounts to assist with its obligations to pay tax instalments.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that the
intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in neither a
contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity.
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 71
Annual Report 2024 | Annual Financial Statements
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 10. Cash and cash equivalents
Consolidated
2024
2023
$'000
$'000
Current assets
Cash at bank
21,434
12,414
Accounting policy for 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.
Note 11. Trade and other receivables
Consolidated
2024
2023
$'000
$'000
Current assets
Trade receivables
4,118
5,312
Less: Allowance for expected credit losses
(121)
(241)
3,997
5,071
Other receivables
2,644
2,512
6,641
7,583
Non-current assets
Other receivables
83
90
Total trade and other receivables
6,724
7,673
Past due but not impaired
As at 30 June 2024, trade receivables of $nil (2023: $341,000) were past due but not impaired.
The ageing analysis of these trade receivables is as follows:
Consolidated
2024
2023
$'000
$'000
30 to 60 days
-
186
60 to 90 days
-
23
90 days and over
-
132
Trade receivables - past due but not impaired
-
341
Current
4,118
4,971
Total trade receivables
4,118
5,312
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 11. Trade and other receivables (continued)
Allowance for expected credit losses
The Group has recognised a net gain of $121,000 (2023: $65,000) in the statement of profit or loss in respect of the expected
credit losses for the year ended 30 June 2024. The recoverability of trade and other receivables at 30 June 2024 has been
assessed to consider the impact of the current economic environment and no material recoverability issues were noted. The
Group determines the expected credit losses on these items by using a provision matrix, estimated based on historical credit
loss experience based on the past due status of the debtors, adjusted as appropriate to reflect current conditions and estimates
of future economic conditions.
The consolidated entity 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.
Consolidated
2024
2023
$'000
$'000
Current
121
90
30 to 60 days
-
3
60 to 90 days
-
16
90 days and over
-
132
Allowance for expected credit loss
121
241
Movement of allowance for expected credit loss
Consolidated
2024
2023
$'000
$'000
Opening balance
241
306
Additional allowance recognised
230
286
Allowance derecognised
(265)
(289)
Amount used
(85)
(62)
Closing balance
121
241
Accounting policy for 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 60
days. Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
Note 12. Inventories
Consolidated
2024
2023
$'000
$'000
Current assets
Finished goods - at cost
32,557
70,606
Less: Provision for obsolescence
(1,809)
(16,808)
Inventories on hand at lower of cost and net realisable value
30,748
53,798
Finished goods reduction includes $7,274,000 (2023: $19,300,000) (before impairment) of Avenue (2023: EMEA) inventory
moved to assets held for sale.
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 73
Annual Report 2024 | Annual Financial Statements
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 12. Inventories (continued)
Accounting policy for inventories
Finished goods are stated at the lower of cost and net realisable value. Cost is determined on a weighted average cost method
and includes 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 fulfilment and
the estimated costs necessary to make the sale. The allowances against inventory are recognised to account for
obsolescence, the expected sales below cost and inventory expected to be lost through shrinkage. In recognising the
allowance for inventory, judgement has been applied by considering a range of factors including historical loss-making sales,
historical inventory shrinkage trends, inventory ageing, seasonality, and product lifecycle.
Note 13. Other assets
Consolidated
2024
2023
$'000
$'000
Current assets
Prepayments
2,109
2,356
Right of return assets
696
1,757
Total other assets
2,805
4,113
Accounting policy for right of return assets
Right of return assets represents the right to recover inventory sold to customers and is based on an estimate of customers
who may exercise their right to return the goods and claim a refund. Such rights are measured at the value at which the
inventory was previously carried prior to sale, less expected recovery costs and any impairment.
Note 14. Plant and equipment
Consolidated
2024
2023
$'000
$'000
Non-current assets
Plant and equipment - at cost
30,854
31,798
Less: Accumulated depreciation
(20,931)
(18,457)
Total plant and equipment
9,923
13,341
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 14. Plant and equipment (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial period are set out
below:
Property,
plant and
equipment
Consolidated
$'000
Balance at 3 July 2022
15,355
Additions
2,280
Disposals
(1,049)
Depreciation expense
(4,228)
Accumulated depreciation on disposals
1,017
Accelerated depreciation*
(70)
Exchange differences
36
Balance at 2 July 2023
13,341
Additions
1,485
Disposal
(2,095)
Accumulated depreciation on disposal
2,001
Depreciation expense
(4,088)
Impairment
(721)
Balance at 30 June 2024
9,923
*Accelerated depreciation
During the previous period, the Group closed a number of stores. The carrying value of these stores was extinguished to nil
through accelerated depreciation.
Accounting policy for property, plant and equipment
Plant and equipment are 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 plant and equipment (excluding land) over their expected useful lives, which range from 2 to
10 years.
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
An item of plant and equipment is derecognised upon disposal or when there is no future economic benefit to the consolidated
entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
Impairment of assets
Plant and equipment is reviewed for indicators of impairment or changes in circumstances that 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. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value
in use.
Management has performed an impairment assessment on all stores and the corporate head office assets at year-end and
impaired $721,000. This is related to three under-performing stores and leasehold improvements that are now under-utilised
post the company restructures and decline in head count (2023: nil).
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 75
Annual Report 2024 | Annual Financial Statements
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 15. Intangibles
Consolidated
2024
2023
$'000
$'000
Non-current assets
Goodwill - at cost
15,946
48,178
Brand assets - at cost
-
12,907
Customer relationships - at cost
3,644
3,644
Less: Customer relationships - accumulated amortisation
(3,491)
(2,606)
153
1,038
Other intangible assets - at cost
11,151
10,323
Less: Other intangible assets - accumulated amortisation
(9,377)
(7,958)
1,774
2,365
Total intangibles
17,873
64,488
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial period are set out
below:
Goodwill
Brand assets
Customer
relationships
Other
intangibles
Total
Consolidated
$'000
$'000
$'000
$'000
$'000
Balance at 3 July 2022
52,153
28,116
1,726
2,671
84,666
Transfer to asset held for sale
(6,046)
(16,423)
(314)
(356)
(23,139)
Additions
-
-
-
1,595
1,595
Amortisation expense
-
-
-
(1,503)
(1,503)
Amortisation expense – discontinued
-
-
(461)
(55)
(516)
Exchange differences
2,071
1,214
87
13
3,385
Balance at 2 July 2023
48,178
12,907
1,038
2,365
64,488
Amortisation and impairment - discontinued
-
-
(563)
(346)
(909)
Classified as held for sale
(32,525)
(13,197)
-
-
(45,722)
Additions
-
-
-
960
960
Amortisation expense
-
-
(322)
(1,073)
(1,395)
Exchange differences
293
290
-
(132)
451
Balance at 30 June 2024
15,946
-
153
1,774
17,873
Accounting policy for 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.
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 15. Intangibles (continued)
Brand assets
Brand assets is recognised on acquisition of brand assets and is not amortised. Management consider brand assets to have
an indefinite useful life because the potential to generate cash flows is unlimited. Brand assets 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 brand assets are taken to profit or loss and are not subsequently
reversed.
Customer relationships
Acquired customer relationships are carried at original cost based on independent valuation obtained at the date of acquisition
less accumulated amortisation. They are amortised on a straight-line basis over a useful life of 3 years. The estimated useful
life and amortisation period is reviewed at the end of each annual reporting period.
Other intangible assets
Significant costs associated with the development of the revenue generating aspects of websites development and
enhancements, including the capacity of placing orders, are deferred and amortised on a straight-line basis over the period of
their expected benefit, being their finite life of 4 years.
Significant costs associated with software are deferred and amortised on a diminishing value basis over the period of their
expected benefit, being their finite life of 2-4 years.
Configuration and customisation costs incurred in implementing Software as a Service (“SaaS”) arrangements are recognised
in profit or loss as the customisation and configuration services are performed, or, in certain circumstances, over the SaaS
contract term when access to the cloud application software is provided.
Transfer to assets held for sale
As set out in Note 5 'Discontinued operations', the Group has classified specific assets as held for sale at 30 June 2024 related
to the divestment of the Avenue business and at 2 July 2023 related to the divestment of the EMEA business. From intangibles
this relates to the Avenue, Evans and Navabi brands, customer lists and other intangibles. Because the CGU for goodwill is
assessed at a consolidated Group level, only a portion of goodwill can be allocated to the assets held for sale from the Group
goodwill balance. The allocation is based on the relative value of the divested business as a proportion of the group. For
Avenue in FY24 this has been assessed at $32.5 million and in FY23 for Evans and Navabi this was assessed at $6.0 million.
Impairment
Intangible assets with a finite life are reviewed for impairment when events or changes in circumstances indicate that the
carrying amount may not be recoverable. Intangible assets that have an indefinite useful life, including goodwill, are not subject
to amortisation and are tested annually for impairment irrespective of whether there are any indicators of impairment. An
impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash generating units.
Goodwill and Brand assets impairment assessment
Determining whether goodwill or brand assets are impaired requires an estimation of the value-in-use of the cash-generating
units (CGUs) to which the intangible has been allocated. These calculations reflect an estimated cash flow projection based
on a five-year forecast and requires the use of assumptions, including estimated discount rates; growth rates of estimated
future cash flows; and terminal growth rates. The CGU for goodwill and brand assets is assessed at a consolidated Group
level, in line with the one operating segment used in its reporting.
The discounted cash flow valuations were calculated using projected five-year future cash flows based on Board approved
business plans. Business plans are modelled assuming like for like sales growth based on historical performance considering
changing market conditions.
The key assumptions used by management in setting the financial budgets for the initial five-year period were as follows:
(i) Forecast sales growth rates
Forecast sales growth rates are based on past experience adjusted for economic conditions and the strategic decisions made
in respect of the CGU.
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 77
Annual Report 2024 | Annual Financial Statements
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 15. Intangibles (continued)
(ii) Gross margin rates
Gross margin rates against sales are estimated based on sales channel and region mix and adjusted for economic conditions
and the strategic decisions made in respect of the CGU.
(iii) Fulfilment costs
Fulfilment costs assumptions are based on long-term 3PL agreements in each region and market freight rates.
(iv) Operating profits
Operating profits are forecasted based on historical experience of operating margins, adjusted for the above impact of changes
to product and fulfilment costs and cost saving initiatives.
(v) Cash conversion
Cash conversion is the ratio of operating cash flow to operating profit. Forecasted cash conversion rates are based on historical
experience.
The discount rates used in the value-in-use calculations are pre-tax and reflect management’s estimate of the time value of
money, as well as the risks specific to the CGU. The discount rates have been determined using the average weighted cost
of capital and the current market risk-free rate, adjusted for relevant business risks. The discount rate is applied in the current
year value-in-use model: 16.3% (2023: 15.8%). The slightly higher discount rate year-on-year is a result of higher cost of debt
and higher market risk assumptions, partly offset by a lower risk premium due to the divestment in Avenue. A terminal growth
rate of 2.5% (2023: 2.5%) has been assumed in the value-in-use calculation and reflects the long-term growth expectations
beyond the five-year forecast horizon.
The calculations confirmed that there was no impairment of goodwill and brand assets intangibles from continuing operations
(2023: nil), with excess headroom remaining when performing sensitivity analysis. In performing the sensitivity analysis,
management considered a stressed scenario due to diminishing macro-economic conditions, and no impairment was
identified. Any deterioration in any of these assumptions could cause the carrying value to exceed the recoverable amount
resulting in an impairment.
Refer to Note 5 'Discontinued operations' for separate assessment of impairment for assets held for sale.
Note 16. Right-of-use assets and lease liability
(a) Right-of-use assets
Consolidated
2024
2023
$'000
$'000
Non-current assets
Right-of-use assets
49,753
76,543
Less: Accumulated depreciation
(22,185)
(19,545)
Total right-of-use assets
27,568
56,998
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 16. Right-of-use assets (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial period are set out
below:
Right-of-use
asset
Consolidated
$'000
Balance at 3 July 2022
26,255
Additions
41,008
Disposals
(4,028)
Exchange differences
34
Accumulated depreciation on disposals
3,660
Depreciation expense
(9,931)
Balance at 2 July 2023
56,998
Additions
6,089
Disposals
(11,634)
Lease Modification
(14,184)
Accumulated depreciation on disposals
6,504
Depreciation expense
(9,803)
Depreciation from discontinued operations
(1,826)
Impairment of Head Office Lease
(4,576)
Balance at 30 June 2024
27,568
Refer to Note 8 'Expenses' for lease related expenses and to the consolidated statement of cash flows for repayment of lease
liabilities.
Consolidated
2024
2023
$'000
$'000
Amounts recognised in profit and loss
Depreciation expense on right-of-use assets
9,803
9,914
Interest expense on lease liabilities
2,269
1,829
Expenses relating to leases not recognised under AASB 16
877
1,765
The consolidated entity leases land and buildings for its office and retail outlets under agreements of between 1 to 10 years
with, in some cases, options to extend. The leases have various escalation clauses. On renewal, the terms of the leases are
renegotiated.
The lease liability recognised by the Group represents the present value of future lease payments owing to the lessor.
The Group leases office equipment under agreements of less than 5 years. These leases are either short-term or low value,
so have been expensed as incurred and not capitalised as ROU assets.
Some of the property leases in which the Group is the lessee contain variable lease payment terms that are linked to sales
generated from the leased stores. Variable payment terms are used to link rental payments to store cash flows and reduce
fixed cost.
Accounting policy for 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.
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 79
Annual Report 2024 | Annual Financial Statements
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 16. Right-of-use assets (continued)
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life
of the asset, whichever is the shorter. Where the consolidated entity 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 consolidated entity 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.
Impairment of right-of-use assets and loss on modification of lease
During the current financial period, the Company identified an impairment indicator for its head office lease, classified as a
right-of-use (ROU) asset under AASB 16 Leases. The impairment was driven by a reduction in the workforce largely due to
the divestment activities. An impairment loss of $4,576,000 has been recognised in the statement of profit or loss. As part of
the assessment, management have used consistent assumptions as disclosed in Note 15 – Intangibles and have made the
assumption that the office space will not be sublet.
Prior to year-end the US warehouse agreement was terminated and the Company exited its US warehouse facility in July
2024. The warehouse agreement contained an embedded lease under AASB-16 and this has been treated as a lease
modification at 30 June 2024. As part of the termination of the warehouse agreement, a break fee was also incurred and has
been included in the lease modification. The loss on modification of lease was $2,666,000 in the continued operations and
$3,677,000 in the discontinued business, in the profit or loss statement at 30 June 2024.
(b) Lease liabilities
Consolidated
2024
2023
$'000
$'000
Current liabilities
Lease liabilities
12,108
12,429
Non-current liabilities
Lease liabilities
29,023
47,535
Total lease liabilities
41,131
59,964
Refer to Note 28 'Financial instruments' for further information on contractual maturity.
Accounting policy for lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present
value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or,
if that rate cannot be readily determined, the consolidated entity's incremental borrowing rate. Lease payments comprise of
fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts
expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is
reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on
an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if
there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee;
lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is
made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written
down.
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 17. Trade and other payables
Consolidated
2024
2023
$'000
$'000
Current liabilities
Trade creditors
12,432
7,799
Sundry creditors
10,390
20,834
Other payables
14,203
22,363
37,025
50,996
Refer to Note 28 'Financial instruments' for further information.
Accounting policy for trade and other payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial
period 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 60 days of recognition.
Note 18. Borrowings
Consolidated
2024
2023
$'000
$'000
Current liabilities
Bank loans
17,500
1,500
The company has made several amendments to the debt facility during the period:
On 9 August 2023, the facility limit reduced from $31.5 million to $20.0 million and on 8 September 2023, the Group amended
its debt facility to reduce the minimum liquidity ratio covenant and reduce the facility limit from $20.0 million to $15.0 million,
effective from 1 July 2024. This timing of the reduction was subsequently extended to 1 September 2024.
Subsequent to year-end and in connection with the divestment of Avenue, The Group agreed to reduce and extend its current
debt facility to December 2026. The extended facility will mature in December 2026 and will step down to a limit of $10.0
million effective from 19 July 2024. Under the terms of the agreed facility, current covenants will be replaced with a requirement
to complete clean downs (which requires City Chic to repay all drawn down amounts under the facility to nil for at least seven
consecutive days) twice per annum, no less than three months apart.
The Group was in compliance with all covenants during the financial year ended 30 June 2024.
Refer to Note 28 'Financial instruments' for further information.
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 81
Annual Report 2024 | Annual Financial Statements
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 18. Borrowings (continued)
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Consolidated
2024
2023
$'000
$'000
Total facilities
Corporate credit card
500
1,008
Bank loans
19,114
45,992
Bank guarantee/Letter of credit
886
508
20,500
47,508
Used at the reporting date
Corporate credit card
241
288
Bank loans
17,500
1,500
Bank guarantee/Letter of credit
886
508
18,627
2,296
Unused at the reporting date
Corporate credit card
259
720
Bank loans
1,614
44,492
Bank guarantee/Letter of credit
-
-
1,873
45,212
Accounting policy for 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.
Note 19. Provisions
Consolidated
2024
2023
$'000
$'000
Current liabilities
Employee benefits
3,192
3,699
Lease make good
246
279
Onerous contracts
724
-
Sales return provision
1,569
2,883
Total provisions – current
5,731
6,861
Non-current liabilities
Employee benefits
345
449
Lease make good
558
482
Total provisions - non-current
903
931
Total provisions
6,634
7,792
Movements in provisions
Movements in provisions during the current financial period are set out below:
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 19. Provisions (continued)
Employee
Sales return
Lease
Onerous
Total
benefits
provision
make good
Contract
Consolidated - 2024
$'000
$'000
$'000
$'000
$'000
Current provisions
Carrying amount at the start of the period
3,699
2,883
279
-
6,861
Additional provisions recognised
391
9,962
-
724
11,077
Amounts used
(898)
(11,276)
(33)
-
(12,207)
Carrying amount at the end of the period
3,192
1,569
246
724
5,731
Non-current provisions
Carrying amount at the start of the period
449
-
482
-
931
Additional provisions recognised
28
-
76
-
104
Amounts used
(132)
-
-
-
(132)
Carrying amount at the end of the period
345
-
558
-
903
Accounting policy for provisions
Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result of a past
event, it is probable the consolidated entity 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.
Lease make good
The provision represents the present value of the estimated costs to make good the premises leased by the consolidated
entity at the end of the respective lease terms.
Sales return provision
The sales return provision represents managements' best estimate of the future outflow of economic benefits in respect of
products sold. The provision is estimated based on historical sales claim information, sales levels and any recent trends that
may suggest future claims could differ from historical amounts.
Accounting policy for 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.
Long term employee benefits
The liability for 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.
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.
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 83
Annual Report 2024 | Annual Financial Statements
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 20. Other liabilities
Consolidated
2024
2023
$'000
$'000
Current liabilities
Deferred income
2,195
2,177
Gift card liability
660
1,741
2,855
3,917
Non-current liabilities
Deferred income
32
137
Total other liabilities
2,887
4,054
Accounting policy for deferred income
Deferred income relates mainly to unredeemed gift cards, income received in advance from customers and deferred lease
incentives.
Gift cards are considered a prepayment for goods and services to be delivered in the future. The Group has an obligation to
transfer the goods or services in the future, creating a performance obligation. The Group recognises deferred revenue for
the amount of the prepayment and recognises revenue when the customer redeems the gift card and the Group fulfils the
performance obligation related to the transaction or when the likelihood of the gift card being redeemed by the customer is
deemed remote. These are all deemed current liabilities.
Income received in advance from customers are recognised as revenue at the point of delivery of the goods to the customer.
Customer orders are typically completed within a few days and income received in advance is therefore considered short term
in nature and is not discounted. These are all deemed current liabilities.
Deferred lease incentives relate to landlord fitout contributions related to stores that are not treated as Leases under AASB
16.
Note 21. Cash flow information
Reconciliation of loss after income tax to net cash from/(used in) continuing and discontinued operating activities
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 21. Cash flow information (continued)
Consolidated
2024
2023
$'000
$'000
Loss after income tax expense from continuing and discontinued operations
(92,960)
(99,778)
Adjustments for:
Depreciation, amortisation, and impairment
61,012
46,364
Share-based payments
923
(1,126)
Foreign exchange and other differences
57
(3,382)
Changes in operating assets and liabilities
Decrease in trade and other receivables
950
3,338
Decrease in inventories
23,050
142,138
Decrease in other assets
1,308
732
Decrease in tax receivable
2,300
(2,633)
Decrease/ (increase) in deferred tax assets
(1,882)
(1,686)
Increase/(decrease) in trade and other payables
(12,119)
(29,330)
(Decrease)/increase in provision for income tax
162
(3,284)
Increase/(decrease) in other provisions
(1,130)
(1,418)
(Decrease)/increase in other liabilities
(1,062)
(635)
(Decrease) in assets held for sale
2,557
(19,535)
Net cash from continuing and discontinued operating activities
(16,834)
29,765
Non-cash
changes
Non-cash
changes
Opening
balance
Cash flows
Acquisitions
Leases
Closing
balance
2024
$'000
$'000
$'000
$'000
$'000
Long-term borrowings
1,500
16,000
-
-
17,500
Lease liabilities
59,964
(13,382)
-
(5,451)
41,131
61,464
3,395
-
(5,451)
58,631
Non-cash
changes
Non-cash
changes
Opening
balance
Cash flows
Acquisitions
New leases
Closing
balance
2023
$'000
$'000
$'000
$'000
$'000
Long-term borrowings
14,000
(12,500)
-
-
1,500
Lease liabilities
33,266
(11,247)
-
37,945
59,964
47,266
(23,747)
-
37,945
61,464
Note 22. Share-based payments
The Group’s long-term incentives rewards executives for high performance and ongoing commitment over a three to five-year
horizon and recognises the important role executives play in delivering the long-term growth of the Group.
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 85
Annual Report 2024 | Annual Financial Statements
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 22. Share-based payments (continued)
The Group’s long-term incentives are comprised of the Long-Term Incentive Plan (LTIP) and the Loan Funded Share Plan
(LFSP). The following share-based payment arrangements were in existence during the current year:
Tranche
Grant date
Performance
period end
date
Fair Value
Share
price at
grant
date
Expected
volatility
%
Dividend
yield
%
Risk-free
interest rate
%
Opening
balance 2
July 2023
Granted Vested
Expired/
forfeited/
other
Closing
balance 30
June 2024
2C
13/11/2018
30/06/2023
$0.995
$1.17
40.00%
3.50%
2.33%
2,300,000
-
-
(2,300,000)
-
5A
22/11/2023
30/06/2027
$0.340
$0.34
60.00%
0%
4.02%
-
2,860,235
-
(520,416)
2,339,819
5B
19/02/2024
30/06/2026
$0.550
$0.55
60.00%
0%
3.69%
-
4,860,181
-
(346,640)
4,513,541
Total Performance Rights
2,300,000 7,720,416
-
(3,167,056)
6,853,360
3
21/11/2019
30/06/2024
$0.739
$2.68
35.00%
N/A
0.81%
6,298,457
-
-
(2,593,482)
3,704,975
3
03/03/2020
30/06/2024
$0.731
$2.79
35.00%
N/A
0.81%
667,464
-
-
-
667,464
3
16/09/2020
30/06/2024
$0.970
$3.33
40.00%
N/A
0.29%
474,576
-
-
-
474,576
Total Loan Funded Shares
7,440,497
-
-
(2,593,482)
4,847,015
LTIP Tranches
Vesting conditions of the LTIP are set out below:
Tranche 2C
Vesting Condition 1
Continued service to August 2023, with no holding lock on resulting shares;
Vesting Condition 2
Group underlying EPS (before income tax and share-based payments) performance in
accordance with the following schedule:
Group EPS for the year to 30 June 2023
Proportion of Tranche 2C Performance Rights held that will satisfy
Vesting Condition 2
Below $0.1125 (1.5 x FY18 EPS)
Nil
$0.1250 ≤ EPS ≤ $0.1200 (1.6 x FY18 EPS)
50%
$0.1200 ≤ EPS ≤ $0.1275 (1.7 x FY18 EPS)
75%
EPS ≥ $0.1275
100%
As the Group EPS for the year ended 2 July 2023 finished below the minimum performance threshold, all Tranche 2C
performance rights have been valued at nil at 2 July 2023. The rights themselves only lapsed in August 2023.
Tranche 5A and 5B
Vesting Condition 1
The sole Performance Condition requires the Company to achieve at least the threshold
Earnings before Interest Tax Depreciation and Amortisation (EBITDA) Margin on the
expiration of the three-year performance period commencing 3 July 2023 and ending on 28
June 2026
Vesting Condition 2
5A: Continued service up to and including 30 June 2027
5B: Continued service up to and including 30 June 2026
Weighting
EBITDA Margin
Percentage of FY24 Performance Rights that will satisfy the
Performance Condition
100%
10% (threshold)
30%
Between threshold and
stretch
Straight line pro rata basis between threshold and stretch.
15% (stretch)
100%
The Group recognised an expense of $997,000 in FY24 related to Tranche 5.
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 22. Share-based payments (continued)
LFSP Tranches
As at 30 June 2024, the Loan Funded (LF) shares issued under the LFSP have been treated as 'in-substance' options which
have been valued using a Modified Binomial Lattice option pricing model which allows for varying exercise price. The resulting
value is amortised over the vesting period on a probability adjusted basis.
The key terms of the LFSP are listed as follows:
●
LF Shares are issued at the Company's share price on the ASX at the time of issue.
●
The Company advances money to pay for the subscription price of the LF Shares (Loan).
●
The Loan has an interest payable of 1.9% and is repayable on the earlier of cessation of employment (6 or 12 month
grace periods may be applied) or 7 years from the agreement by the Board to issue LF Shares under the Plan (Vesting
Period is 5 years to 30 June 2024).
●
The Company's recourse in the event it seeks to recover the Loan is limited to the LF Shares. Where a Participant does
not repay the Loan by the repayment date, the Participant is deemed to have agreed to sell to the Company pursuant to
an employee share scheme buy-back, that number of LF Shares required to repay the Loan to the Company.
●
The Company will apply the after-tax amount of any dividends payable in respect of a participant's LF Shares towards
repayment of the outstanding balance of the Loan.
●
The LF Shares offered are subject to Vesting Conditions, which if not met, the unvested LF Shares will be forfeited and
bought back by the Company at the issue price and the Loan will be deemed repaid.
Vesting conditions of the LF Shares are set out below:
Tranche 3
Vesting Condition 1
Continued service to 30 June 2024.
Vesting Condition 2
Compound annual growth rate (CAGR) in the Group's earnings per share after tax (ADEPS)
prescribed by the Board over the 3 year period commencing on 1 July 2019, in which case
(subject to satisfaction of Vesting Period Condition) the LF Shares held will vest in
accordance with the following vesting scale:
ADEPS 3-year CAGR from 1 July 2019
Proportion of Tranche 3 LF shares that will satisfy Vesting Condition
2
12.5%
25%
20%
100%
12.5% ≤ ADEPS CAGR ≤ 20.0%
Straight-line pro rata vesting between 25% and 100% (inclusive)
Vesting Condition 2 was eligible for testing on 3 July 2022. The ADEPS 3-year CAGR from 1 July 2019 to 3 July 2022 was
16.8% meeting the performance threshold for Vesting Condition 2. The proportion of Tranche 3 LF shares that will satisfy
Vesting Condition 2 is 66.3%. Vesting Condition 1 was tested at the end of FY24. The Group has recognised a gain in the
statement of profit or loss of $43,000 in FY24.
Accounting policy for share-based payments
Equity-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.
The cost of equity-settled transactions is measured at fair value on grant date. Fair value is independently determined using
either the Binomial 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 consolidated entity
receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions.
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 87
Annual Report 2024 | Annual Financial Statements
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 22. Share-based payments (continued)
The cost of equity-settled transactions is 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 probability is assessed with
consideration of management's expectation of future earnings and the financial hurdles for vesting. 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.
Any market-based performance 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 consolidated entity or employee, the failure to satisfy the condition is
treated as a cancellation. If the condition is not within the control of the consolidated entity 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 23. Issued capital
Consolidated
2024
2023
2024
2023
Shares
Shares
$'000
$'000
Ordinary shares - fully paid
336,351,678
239,360,583
195,531
182,167
Movements in ordinary share capital
Details
Date
Shares
Issue price
$'000
Balance
3 July 2022
239,360,583
182,167
Balance
2 July 2023
239,360,583
182,167
Institutional Placement
28 June 2024
96,991,095
$0.15
14,549
Share issue expenses (net of tax)
-
(1,185)
Balance
30 June 2024
336,351,678
195,531
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. The fully paid ordinary shares have no par value and the Company
does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share
shall have one vote.
Share buy-back
There is no current on-market share buy-back.
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 23. Issued capital (continued)
Capital risk management
The consolidated entity's objectives when managing capital is to safeguard its ability to continue as a going concern, so that
it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to
reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated
as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The consolidated entity would look to raise capital when an opportunity to invest in a business or company was seen as value
adding relative to the current company's share price at the time of the investment.
The consolidated entity is subject to certain financing arrangements covenants and meeting these is given priority in all capital
risk management decisions. There have been no events of default on the financing arrangements during the financial period.
The capital risk management policy remains unchanged from the 30 June 2023 Annual Report.
Accounting policy for issued capital
Ordinary shares are classified as equity.
Note 24. Reserves
Consolidated
2024
2023
$'000
$'000
Foreign currency reserve
2,782
1,906
Share-based payments reserve
3,473
2,356
Loan funded shares held in trust
(20,322)
(20,322)
Loss reserve
(10,991)
(10,991)
Total reserves
(25,058)
(27,051)
Foreign currency reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign
operations to Australian dollars. It is also used to recognise gains and losses on hedges of the net investments in foreign
operations.
Share-based payments reserve
The reserve is used to recognise the cost of share-based payments on the Group's employee incentive schemes.
Loan funded shares
Under the LFSP, the participants are granted a loan by the Company to purchase the beneficial interest in shares. These are
limited recourse loans to the participants and any dividends received in respect of the loan funded shares are used to reduce
the loan balance net of tax payable. Participants are required to meet service requirements and performance conditions before
being entitled to acquire full title to these shares and are required to repay the loan in order to do so. The shares held by the
Company have been deducted from equity as shares are held in trading lock until vesting in line with accounting standards.
Loss Reserve
The reserve is used to recognise the historical losses of the Group’s operations.
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 89
Annual Report 2024 | Annual Financial Statements
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 24. Reserves (continued)
Movements in reserves
Movements in each class of reserve during the current and previous financial period are set out below:
Loan funded
shares held
in trust
Loss reserve
Share-based
payments
reserve
Foreign
currency
translation
reserve
Total
Consolidated
$'000
$'000
$'000
$'000
$'000
Balance at 3 July 2022
(20,322)
(10,991)
3,482
(1,144)
(28,975)
Foreign currency translation - continued
operations
-
-
-
843
843
Foreign currency translation - discontinued
operations
-
-
-
2,207
2,207
Share-based payments expense
-
-
(1,126)
-
(1,126)
Reserves
(20,322)
(10,991)
2,356
(301)
(29,258)
Reserves directly associated with assets
held for sale
-
-
-
2,207
2,207
Balance at 2 July 2023
(20,322)
(10,991)
2,356
1,906
(27,051)
Foreign currency translation - continued
operations
-
-
-
133
133
Recycling of FCTR on discontinued operations
743
743
Share-based payments expense
-
-
923
-
923
FX Gain / (loss)
-
-
194
-
194
Balance at 30 June 2024
(20,322)
(10,991)
3,473
2,782
(25,058)
Note 25. Accumulated losses
Consolidated
2024
2023
$'000
$'000
Retained profits/(accumulated losses) at the beginning of the financial period
(42,393)
57,385
Loss after income tax benefit for the period
(92,960)
(99,778)
Accumulated losses at the end of the financial period
(135,353)
(42,393)
Note 26. Earnings per share
Consolidated
2024
2023
$'000
$'000
Earnings per share for loss from continuing operations
Loss after income tax from continuing operations
(38,409)
(34,209)
Consolidated
2024
2023
$'000
$'000
Earnings per share for loss from discontinued operations
Loss after income tax from discontinued operations
(54,551)
(65,569)
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 26. Earnings per share (continued)
Consolidated
2024
2023
$'000
$'000
Earnings per share for loss
Loss after income tax from continuing and discontinued operations attributable to the owners
of City Chic Collective Limited
(92,960)
(99,778)
Number
Number
Weighted average number of ordinary shares
Ordinary shares – fully paid
240,162,162
239,360,583
Less: Loan funded shares
(7,440,497)
(7,440,497)
Weighted average number of ordinary shares used in calculating basic earnings per
share
232,721,665
231,920,086
Weighted average number of ordinary shares used in calculating diluted earnings per share
232,721,665
231,920,086
Due to the Group's loss position, performance rights have been excluded from the above calculations as their inclusion would
be anti-dilutive.
Cents
Cents
Earnings per share for (loss) / profit from continuing operations attributable to the owners of
City Chic Collective Limited
Basic earnings per share
(16.5)
(14.8)
Diluted earnings per share
(16.5)
(14.8)
Cents
Cents
Earnings per share for (loss) / profit from discontinued operations attributable to the owners of
City Chic Collective Limited
Basic earnings per share
(23.4)
(28.3)
Diluted earnings per share
(23.4)
(28.3)
Cents
Cents
Earnings per share for (loss) / profit attributable to the owners of City Chic Collective Limited
Basic earnings per share
(39.9)
(43.0)
Diluted earnings per share
(39.9)
(43.0)
Accounting policy for earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of City Chic Collective Limited, excluding
any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding
during the financial period, adjusted for bonus elements in ordinary shares issued during the financial period.
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.
Options under the loan funded share plan could potentially dilute basic earnings per share in the future, however, were not
included in the calculation of diluted earnings per share because they are antidilutive for the periods presented.
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 91
Annual Report 2024 | Annual Financial Statements
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 27. Dividends
Dividends
There were no dividends paid, recommended or declared during the current or previous financial period.
Franking credits
Consolidated
2024
2023
$'000
$'000
Franking credits available at the reporting date based on a tax rate of 30%
67,566
69,750
Franking credits available for subsequent financial years based on a tax rate of 30%
67,566
69,750
The above amounts represent the balance of the franking account as at the end of the financial period, adjusted for:
●
franking credits that will arise from the payment of the amount of the provision for income tax at the reporting date
●
franking debits that will arise from the payment of dividends recognised as a liability at the reporting date
●
franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date
Accounting policy for dividends
Dividends are recognised when declared during the financial period and no longer at the discretion of the company.
Note 28. Financial instruments
Financial Assets and Liabilities:
Amounts are accounted for at amortised cost and shown at approximate fair values below:
Consolidated
2024
2023
$'000
$'000
Financial assets
Cash and cash equivalents
21,434
12,414
Trade and other receivables - current
6,641
7,583
Trade and other receivables - non-current
83
90
28,158
20,087
Financial liabilities
Trade and other payables
37,025
50,996
Borrowings
17,500
1,500
Lease liabilities - current
12,108
12,429
Lease liabilities - non-current
29,023
47,535
95,656
112,460
Financial risk management objectives
The consolidated entity's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price
risk and interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk management program focuses on
the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the
consolidated entity. The consolidated entity uses different methods to measure different types of risk to which it is exposed.
These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks and ageing
analysis for credit risk.
Risk management is carried out by senior finance executives ('Finance') under policies approved by the Board. These policies
include identification and analysis of the risk exposure of the consolidated entity and appropriate procedures, controls and risk
limits. Finance identifies, evaluates and hedges financial risks within the consolidated entity's operating units where necessary.
Finance reports to the Board on a monthly basis.
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 28. Financial instruments (continued)
Capital risk management
The consolidated entity’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that
it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to
reduce the cost of capital. The capital risk management policy remains unchanged from the 2023 Annual Report.
In order to maintain or adjust the capital structure, the consolidated entity manages the level of cash and debt that is prudent
in light of the operational plan and the growth opportunities for the business.
The consolidated entity is subject to certain financing arrangement covenants and meeting these is given priority in all capital
risk management decisions. There have been no events of default on the financing arrangements during the financial year.
Formal notification of this compliance is confirmed on a monthly basis.
The capital structure of the consolidated entity consists of net cash (cash and cash equivalents as detailed in Note 10. Cash
and cash equivalents, less borrowings as detailed in Note 18. Borrowings) and equity of the consolidated entity (comprising
issued capital, reserves and accumulated losses) as detailed in Note 23. Issued capital, Note 24. Reserves and Note 25.
Accumulated losses.
Market risk
Foreign currency risk
The consolidated entity undertakes certain transactions denominated in foreign currency and is exposed to foreign currency
risk through foreign exchange rate fluctuations.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities
denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity analysis and cash
flow forecasting.
In FY24 approximately 26% of Group’s continued operating revenue was in USD from its US operations and the consolidated
entity was able to source a similar corresponding amount of its inventory in USD. This natural hedge meant the Group was
not required to hedge its foreign exchange exposure. Management monitors this natural hedge on an ongoing basis to ensure
that the exposure to foreign exchange is acceptable.
Management continue to assess the future cash flows of the international business, particularly post the sale of the Avenue
brand and will look to address such changes in its purchasing activity, where possible. If the natural hedge for USD the Group
has enjoyed to-date is no longer in place, exposure will be hedged appropriately.
For the current financial period, if AUD to USD rates had changed by +/- 10% from the FY24 average rates, with all other
variables held constant, the impact on pre-tax loss for the year would have been $0.5m lower/ $0.6m higher (2023: $3.8m
lower/$4.6m higher).
Price risk
The consolidated entity is not exposed to any significant price risk.
Interest rate risk
The Group has exposure to interest rate risk on the long-term borrowings. Borrowings issued at variable rates expose the
Group to interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk.
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 93
Annual Report 2024 | Annual Financial Statements
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 28. Financial instruments (continued)
As at the reporting date, the consolidated entity had the following variable rate borrowings:
2024
2023
Weighted
average
interest rate
Balance
Weighted
average
interest rate
Balance
Consolidated
%
$'000
%
$'000
Cash and cash equivalents
1.82%
21,434
0.51%
12,414
Borrowings
6.78%
(17,500)
5.69%
(1,500)
Net exposure to cash flow interest rate risk
3,934
10,914
For the current financial period, if interest rates had changed by +/- 100 basis points from the year-end rates with all other
variables constant, the impact on post-tax profit for the year would have been $0.03m higher/lower (2023: $0.1m higher/lower),
relating to the interest income on the cash at bank and interest expense on the borrowings.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
consolidated entity. The consolidated entity has a strict code of credit, including obtaining agency credit information, confirming
references and setting appropriate credit limits. The consolidated entity obtains guarantees where appropriate to mitigate
credit risk. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount,
net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the
financial statements. The consolidated entity does not hold any collateral.
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the
lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected credit
loss rate for each group. These assumptions include recent sales experience and historical collection rates.
The consolidated entity has a credit risk exposure with trade debtors, which as at 30 June 2024 owed the consolidated entity
$4,118,000 (2023: $5,312,000). There are no guarantees against this receivable but management closely monitors the
receivable balance on a monthly basis and is in regular contact with its customers to mitigate risk. The Group has recognised
a net gain of $121,000 (2023: $65,000) in profit or loss in respect of the expected credit losses for the year ended 30 June
2024.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include the
failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual payments
for a period greater than 1 year.
Liquidity risk
Prudent liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash and cash
equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable. The
consolidated entity manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by
continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and
liabilities. Inventory management methods and established supplier relationships assist management to prepare rolling
forecasts of the consolidated entity's cash flow requirements to monitor the liquidity position and optimise its cash return on
investments. Typically the consolidated entity ensures that it has sufficient cash on demand to meet expected operational
expenses for the period of 12 months, including the servicing of financial obligations; this excludes the potential impact of
extreme circumstances that cannot reasonably be predicted, such as natural disasters.
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 28. Financial instruments (continued)
At balance date, the bank loan facility totalling $20.0 million, was available to the Group (2 July 2023: $46,500,000 comprising
of both working capital and acquisition tranches). The facility limit reduces from 3 July 2023 to $31.5 million, then to $20m
from 9 August 2023 then again to $10.0 million from 19 July 2024 (see note 37 - Events after the reporting period for further
subsequent changes to the facility after year-end). Management monitors rolling forecasts of the consolidated entity’s liquidity
reserve (comprising the undrawn borrowing facilities below) and cash and cash equivalents based on expected cash flows.
This is generally carried out at a local level in the operating companies of the consolidated entity in accordance with practice
and limits set by the consolidated entity. These limits vary by location to consider the liquidity of the market in which the entity
operates. In addition, the consolidated entity’s liquidity management policy involves projecting cash flows in major currencies
and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal
and external regulatory requirements and maintaining debt financing plans.
Financing arrangements
Unused borrowing facilities at the reporting date:
Consolidated
2024
2023
$'000
$'000
Corporate credit card
259
720
Bank loans
1,614
44,492
1,873
45,212
Refer to Note 37 (Events after the reporting period) for further information on subsequent changes in facility limits
Remaining contractual maturities
The following tables detail the consolidated entity's remaining contractual maturity for its financial instrument liabilities. The
tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which
the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining
contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.
Weighted
average
interest rate 1 year or less
Between 1
and 2 years
Between 2
and 5 years
Over 5 years
Remaining
contractual
maturities
Consolidated - 2024
%
$'000
$'000
$'000
$'000
$'000
Non-derivatives
Non-interest bearing
Trade payables
-
38,877
32
-
-
38,909
Interest-bearing - variable
Bank loans
6.78%
18,686
-
-
-
18,686
Undiscounted lease liabilities
4.38%
12,638
7,106
15,798
7,390
42,933
Total non-derivatives
70,201
7,138
15,798
7,390
100,528
Weighted
average
interest rate 1 year or less
Between 1
and 2 years
Between 2
and 5 years
Over 5 years
Remaining
contractual
maturities
Consolidated - 2023
%
$'000
$'000
$'000
$'000
$'000
Non-derivatives
Non-interest bearing
Trade payables
-
50,996
-
-
-
50,996
Interest-bearing - variable
Bank loans
5.69%
1,500
-
-
-
1,500
Undiscounted lease liabilities
4.37%
14,044
12,942
28,771
13,460
69,217
Total non-derivatives
66,540
12,942
28,771
13,460
121,713
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 95
Annual Report 2024 | Annual Financial Statements
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 28. Financial instruments (continued)
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above.
The lease liabilities include holdover assumptions in addition to contractually obligated periods, as disclosed in Note 16 'Right-
of-use assets and lease liabilities'.
Fair value of financial instruments
This section provides information about how the consolidated entity determines fair values of various financial assets and
financial liabilities.
Fair values of financial instruments are categorised by the following levels:
- Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities
- Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as
prices) or indirectly (derived from prices)
- Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs)
The consolidated entity does not have any financial assets and liabilities which are measured at fair value at the end of each
reporting period.
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value. The carrying amounts of
receivables, trade and other payables are assumed to approximate their fair values due to their short term nature. The fair
value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market interest rate
that is available for similar financial instruments. Refer to Note 5 'Discontinued operations' for the fair value of assets held for
sale.
Note 29. Key management personnel disclosures
Directors
The following persons were directors of City Chic Collective Limited during the financial period:
Michael Kay
Chairman and non-executive director
Megan Quinn
Non-executive director
Neil Thompson
Non-executive director
Natalie McLean
Non-executive director
Phil Ryan
Chief Executive Officer and Managing Director
Other key management personnel
The following person also had the authority and responsibility for planning, directing and controlling the major activities of the
consolidated entity, directly or indirectly, during the financial period:
Peter McClelland
Chief Financial Officer
Compensation
The aggregate compensation made to directors and other members of key management personnel of the consolidated entity
is set out below:
Consolidated
2024
2023
$
$
Short-term employee benefits
1,760,942
2,030,818
Post-employment benefits
106,955
117,017
Short-term benefits
139,336
116,414
Long-term benefits
-
21,042
Share-based payments
590,324
(667,890)
2,597,557
1,617,401
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 30. Remuneration of auditors
During the financial period the following fees were paid or payable for services provided by Ernst & Young, the auditor of the
company:
Consolidated
2024
2023
$
$
Auditing the statutory financial report of the parent covering the Group
535,200
483,360
Auditing the statutory financial reports of any controlled entities
104,800
124,800
640,000
608,160
It is the consolidated entity's policy to engage Ernst & Young on assignments additional to their statutory audit duties where
Ernst & Young's expertise and experience with the consolidated entity are important. These assignments are principally
assurance related and other advisory services, or where Ernst & Young is awarded assignments on a competitive basis. It is
the consolidated entity's policy to seek competitive tenders for all major consulting projects.
Note 31. Contingent liabilities
The consolidated entity had a contingent liability of $0.9m (FY23: $0.5m) in the form of a bank guarantee / letter of credit (see
Note 18).
No material losses are anticipated in respect of any of the above contingent liabilities.
Note 32. Commitments
Consolidated
2024
2023
$'000
$'000
Capital commitments
Committed at the reporting date but not recognised as liabilities, payable:
Property, plant and equipment
18
1,245
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
403
172
One to five years
90
1,110
More than five years
-
-
493
1,282
Lease commitments includes contracted amounts for a small number of retail outlets considered short term (expiring within
less than one year) and contracted amounts for leases not yet commenced as of 30 June 2024 to which the Group is
committed.
Lease commitments for the leases not yet commenced includes contracted amounts for a small number of retail outlets under
non-cancellable operating leases expiring within 1 to 5 years. The leases have various escalation clauses. On renewal, the
terms of the leases are renegotiated. The lease commitments do not include rental payments which may arise in the event
that sales revenue exceeds a pre-determined amount.
Capital commitments includes contracted amounts for fit-out costs (net of landlord fit-out contributions) relating to retail outlets
for which the leases have not yet commenced as of 30 June 2024 but to which the Group is committed.
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 97
Annual Report 2024 | Annual Financial Statements
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 33. Related party transactions
Parent entity
City Chic Collective Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in Note 35.
Key management personnel
Disclosures relating to key management personnel are set out in Note 29 and the remuneration report included in the directors'
report.
Transactions with related parties
There were no transactions with related parties during the current or previous financial period.
Note 34. Parent entity information
Set out below is the supplementary information about the parent entity
Statement of profit or loss and other comprehensive income
Consolidated
2024
2023
$'000
$'000
Revenue
88,954
127,355
Expenses
(107,602)
(131,147)
Profit before income tax
(18,648)
(3,792)
Impairment on asset
(75,000)
(90,332)
Income tax expense
3,988
1,730
(71,012)
(88,602)
Profit after income tax from discontinued operations
-
-
Total profit after income tax for the year from parent entity
(89,660)
(92,394)
Other comprehensive income / (loss)
-
-
Total comprehensive income from parent entity
(89,660)
(92,394)
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 34. Parent entity information (continued)
Statement of financial position
2024
2023
$'000
$'000
Cash and cash equivalents
19,140
1,808
Trade and other receivables
1,830
858
Inventories
17,402
16,783
Other
1,953
2,012
Income tax
7
2,390
Intercompany
-
-
Total current assets
40,332
23,851
Plant and equipment
9,580
12,330
Investments in subsidiaries
52,620
127,620
Right-of-use assets
26,114
32,784
Intangibles
2,909
2,970
Deferred tax
8,427
3,493
Total non-current assets
99,650
179,197
Total assets
139,982
203,048
Trade and other payables
27,681
25,857
Intercompany
19,183
21,883
Lease liabilities
8,918
12,068
Income tax
-
-
Borrowings
17,500
1,500
Provisions
4,156
4,659
Other
1,048
1,344
Total current liabilities
78,486
67,311
Lease liabilities
27,450
26,872
Provisions
344
449
Other
-
137
Total non-current liabilities
27,794
27,458
Total liabilities
106,280
94,769
Net Assets
33,702
108,279
Issued capital
195,531
182,167
Loss reserve
(10,991)
(10,991)
Share-based payments reserve
(16,849)
(18,389)
Retained (losses) / profits
(133,989)
(44,508)
Total equity
33,702
108,279
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The same guarantee disclosure applies to both parent and consolidated accounts, refer to Note 36. Deed of cross guarantee.
Contingent liabilities
The above disclosure does not include contingent rental payments which may arise in the event that sales revenue exceeds
a predetermined amount.
Cross guarantees by and between City Chic Collective Limited and Specialty Fashion Group No.5 Pty Limited. These are
described in Note 36. Deed of cross guarantees. No deficiencies of assets exist in any of these companies.
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 99
Annual Report 2024 | Annual Financial Statements
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 34. Parent entity information (continued)
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2024 (2023: $1,200,000).
Material accounting policy information
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in Note 2, except
for the following:
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
●
Investments in associates 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 35. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance
with the accounting policy described in Note 1:
Ownership interest
Principal place of business /
2024
2023
Name
Country of incorporation
%
%
Specialty Fashion Group No. 5 Pty Limited
Australia
100.0%
100.0%
City Chic Collective No. 1 Pty Limited
Australia
80.0%
80.0%
City Chic Collective No. 2 Pty Limited
Australia
100.0%
100.0%
Specialty Fashion Group No. 6 Pty Limited
Australia
100.0%
100.0%
City Chic International Pty Limited
Australia
100.0%
100.0%
City Chic Collective New Zealand Limited
New Zealand
100.0%
100.0%
City Chic Collective UK Limited
England and Wales
100.0%
100.0%
JPC United GmbH
Germany
100.0%
100.0%
City Chic Collective USA Incorporated
United States
100.0%
100.0%
Note 36. Deed of cross guarantee
The following entities are party to a deed of cross guarantee under which each company guarantees the debts of the others:
City Chic Collective Limited
Specialty Fashion Group No.5 Pty Limited
The above companies (where incorporated in Australia) 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 City Chic Collective Limited,
they also represent the 'Extended Closed Group'.
All companies in the Closed Group are dormant, except for City Chic Collective Limited. The financial results of the Closed
Group are the same as the financial results of the parent entity which are disclosed in Note 34 'Parent entity information'.
City Chic Collective Limited
Notes to the consolidated financial statements
30 June 2024
Note 37. Events after the reporting period
On 18 June 2024, the Group signed a definitive agreement to divest its US based Avenue business ("Avenue") to Full Beauty
Brands (FBB) for US$12 million (c. A$18 million, less working capital adjustments of c. $3 million). The deal was completed
on 8 July 2024, subsequent to year-end, via an asset purchase agreement. Connected with the sale of Avenue, effective from
19 July 2024, the Group also reduced its debt facility to $10.0 million and extended the facility to December 2026.
The Group also undertook a capital raise prior to year-end. The Placement and institutional component of the Entitlement
Offer were successfully completed on 21 June 2024, raising approximately $14.5 million (before costs). The Retail Entitlement
Offer closed on 10 July 2024 with valid applications for entitlements received raising approximately $0.1 million. The shortfall
of approximately $3.1 million (before costs) was allocated to the underwriter of the Retail Entitlement Offer.
No other matter or circumstance has arisen since 30 June 2024 that has significantly affected, or may significantly affect the
consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial
years.
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 101
Annual Report 2024 | Annual Financial Statements
City Chic Collective Limited
Consolidated entity disclosure statement
As at 30 June 2024
Consolidated entity disclosure statement
Place formed /
Ownership
interest
Entity name
Entity type
Country of incorporation
%
Tax residency
Specialty Fashion Group
No. 5 Pty Limited
Body corporate
Australia
100.00%
Australia
City Chic Collective No. 1
Pty Limited
Body corporate
Australia
80.00%
Australia
City Chic Collective No. 2
Pty Limited
Body corporate
Australia
100.00%
Australia
Specialty Fashion Group
No. 6 Pty Limited
Body corporate
Australia
100.00%
Australia
City Chic International Pty
Limited
Body corporate
Australia
100.00%
Australia
City Chic Collective New
Zealand Limited
Body corporate
New Zealand
100.00%
New Zealand
City Chic Collective UK
Limited
Body corporate
England and Wales
100.00%
England and Wales
JPC United GmbH
Body corporate
Germany
100.00%
Germany
City Chic Collective USA
Incorporated
Body corporate
United States
100.00%
United States
City Chic Collective Limited
Directors' declaration
30 June 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 2 to the financial statements;
●
the attached financial statements and notes give a true and fair view of the consolidated entity's financial position as at
30 June 2024 and of its performance for the financial period 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 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.
●
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
___________________________
___________________________
Michael Kay
Phil Ryan
Chairman
Chief Executive Officer and Managing Director
28 August 2024
Sydney
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 103
Corporate Governance Statement
The directors are committed to the principles underpinning best practice in
corporate governance, applied in a manner which is best suited to the Group
and its controlled entities and to best addressing the directors' accountability to
shareholders and other stakeholders.
In formulating the governance principles that guide the operations of the Group,
the directors have taken into account the ASX Corporate Governance Council’s
Principles of Good Corporate Governance and Best Practice Recommendations
(4th edition). This is supported by an overriding organisation wide commitment to
the highest standards of legislative compliance and financial and ethical behaviour.
Details of the Group’s Corporate Governance Statement as well as key policies and
practices and the charters for the Board and each of its committees are available on
the Group’s website (https://www.citychiccollective.com.au/corporate-governance),
including performance against measurable objectives. The Corporate Governance
Statement will be lodged with ASX at the same time that this Annual Report is
lodged with ASX.
The Corporate Governance Statement outlines the Group's main corporate
governance practices and policies in place during the yearended 30 June 2024
(unless otherwise stated) and are current as at 20 September 2024 and have been
approved by the Board. The Board is comfortable that the practices are appropriate
for a Company of City Chic Collective Limited’s size.
Annual Report 2024 | Corporate Governance Statement
Shareholder Information
The shareholder information set out below was applicable as at 20 September 2024.
Annual Report 2024 | Shareholder information
Distribution of equitable securities
Analysis of the number of ordinary shareholders by size of holding:
Analysis of the number of shareholders, holding restricted and unquoted fully Loan Funded (LF) paid ordinary
shares issued pursuant to an employee incentive scheme, by size of holding:
Analysis of the number of shareholders, holding restricted and unquoted fully Loan Funded (LF) paid ordinary
shares issued pursuant to an employee incentive scheme, by size of holding:
Number of holders of
ordinary shares
% of equity securities
in this class
Number of
securities
1 to 1,000
1,795
0.21
824,348
1,001 to 5,000
1,923
1.27
4,893,418
5,001 to 10,000
619
1.24
4,767,251
10,001 to 100,000
972
8.41
32,377,871
100,001 and over
284
88.87
342,294,905
5,593
100
385,157,793
Holding less than a marketable parcel
3,370
-
4,147,843
Number of holders
of unquoted ordinary
shares
% of equity
securities in this
class
Number of securities
1 to 1,000
-
-
-
1,001 to 5,000
-
-
-
5,001 to 10,000
-
-
-
10,001 to 100,000
-
-
-
100,001 and over
5
100.0
4,847,015
6
100.0
4,847,015
Number of holders
of performance rights
% of equity
securities in this
class
Number of securities
1 to 1,000
-
-
-
1,001 to 5,000
-
-
-
5,001 to 10,000
-
-
-
10,001 to 100,000
6
6.36
436,189
100,001 and over
11
93.64
6,417,171
17
100.00
6,853,360
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 105
Equity security holders
Substantial holders
The names of the twenty largest security holders of quoted equity securities as at 20 September 2024 are
listed below:
Substantial holders in the company based on substantial shareholder notices lodged by the holders with the
ASX are set out below:
Unquoted equity securities
The Company has unquoted fully paid ordinary shares issued pursuant to an employee incentive scheme, and
unquoted performance rights on issue, as detailed more fully above.
Name
A/C designation
20 Sep 2024
%IC
CITICORP NOMINEES PTY LIMITED
75,586,905
19.62
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
73,368,234
19.05
UBS NOMINEES PTY LTD
22,365,474
5.81
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
21,735,295
5.64
T BATSAKIS PTY LTD
7,230,000
1.88
PALM BEACH NOMINEES PTY LIMITED
5,717,883
1.48
ROSSBOW PTY LTD
4,600,000
1.19
BBFIT INVESTMENTS PTE LTD
4,203,716
1.09
HENOCH INVESTMENTS PTY LTD
4,000,000
1.04
R I FINANCES PTY LTD
4,000,000
1.04
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
3,793,251
0.98
BNP PARIBAS NOMINEES PTY LTD
3,495,692
0.91
NETWEALTH INVESTMENTS LIMITED
3,340,967
0.87
T BATSAKIS PTY LTD
3,333,334
0.87
LANDPEAK PTY LIMITED
3,050,000
0.79
ARCHERFIELD AIRPORT CORPORATION PTY LTD
2,500,000
0.65
GARRETT SMYTHE LTD
2,407,800
0.63
BNP PARIBAS NOMINEES PTY LTD
2,194,413
0.57
AVENUE 8 PTY LIMITED
2,000,000
0.52
BIBI NOMINEES PTY LTD
1,841,798
0.48
SANDHURST TRUSTEES LTD
1,750,000
0.45
TOTAL
252,514,762
65.56
TWENTY LARGEST QUOTED EQUITY SECURITY HOLDERS
Ordinary shares
% of total Number
held shares issued
Number of securities
SPHERIA ASSET MANAGEMENT PTY LIMITED
66,596,011
18.60
PINNACLE INVESTMENT MANAGEMENT GROUP LIMITED
37,474,188
9.55
REGAL FUNDS MANAGEMENT PTY LIMITED
30,245,291
7.70
BRETT BLUNDY & ASSOCIATED ENTITIES
23,763,44
9.93
Annual Report 2024 | Shareholder information
Voting rights
The voting rights attached to ordinary shares are set out below:
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll
each share shall have one vote.
Performance rights carry no voting rights.
There are no other classes of equity securities.
ORDINARY SHARES
PERFORMANCE RIGHTS
FY24 CITY CHIC COLLECTIVE ANNUAL REPORT 107
Corporate directory
Annual Report 2024 | Company Directory
DIRECTORS
Michael Kay - Chairman and non-executive director
Megan Quinn - Non-executive director
Phil Ryan - Chief Executive Officer and Managing Director
Natalie McLean - Non-executive director
Neil Thompson - Non-executive director
COMPANY SECRETARY
Jacquie Shanahan (appointed 21 July 2023)
Peter McClelland (additional Company Secretary appointed 21 July 2023)
Marta Kielich (resigned 21 July 2023)
REGISTERED OFFICE
151-163 Wyndham Street
Alexandria, NSW 2015
Telephone: (02) 9059 4300
PRINCIPAL PLACE OF BUSINESS
151-163 Wyndham Street
Alexandria, NSW 2015
Telephone: (02) 9059 4300
SHARE REGISTER
Link Market Services Limited
Level 12, 680 George Street
Sydney, NSW 2000
Telephone: (02) 8280 7111
Facsimile: (02) 9287 0303
AUDITOR
Ernst & Young
200 George Street
Sydney, NSW 2000
SOLICITORS
Thomson Greer
Level 25, 1 O’Connell Street
Sydney, NSW 2000
BANKERS
National Australia Bank
255 George Street
Sydney, NSW 2000
STOCK EXCHANGE LISTING
City Chic Collective Limited shares are listed on the Australian Securities
Exchange (ASX code: CCX)
WEBSITE
http://www.citychiccollective.com.au
CORPORATE GOVERNANCE STATEMENT
https://www.citychiccollective.com.au/corporate-governance
ABN
43 057 569 169
CITY CHIC COLLECTIVE
151–163 Wyndham Street,
Alexandria NSW 2015
Australia
ABN 43 057 569 169
P +61 2 9059 4300