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KATHMANDU HOLDINGS LIMITED
ANNUAL REPORT 2011
423644 Kathmandu AR Cover FINAL.indd 1
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store locations
AUSTRALIA
Hampton East
Melbourne (Bourke St)
Highpoint (Maribyrnong)
Camberwell
Melbourne (Spencer St)
VIC
Smith St
Fitzroy
Blackburn
Knox
Richmond
Chadstone
Doncaster
Frankston
Chapel St
Bendigo
Geelong
Ballarat
South Wharf DFO
Southland (Cheltenham)
NSW
Albury
Sydney (Kent St)
Chatswood
Cronulla
Birkenhead Point
NORTH ISLAND
Albany
Auckland (Queen St)
Auckland (Victoria St)
Botany
Gisborne
Hamilton
Hastings
Lyall Bay
Manukau
Napier
New Plymouth
Newmarket
Onehunga
Otaki
Palmerston North
Petone
Rotorua
Sylvia Park
Takapuna
Taupo
Redyard (Auburn)
Bondi Junction
Hornsby
Warringah
Newcastle
Castle Towers
Macquarie
Rouse Hill
Parramatta
Macarthur
Erina Fair
Orange
Wollongong
Wagga Wagga
Adelaide (Rundle St)
SA
Marion
Tea Tree
Adelaide Harbourtown
ACT
Canberra Civic
Woden
Canberra Centre
Belconnen
Tauranga
Tauranga CBD
Te Rapa
Waitakere
Wanganui
Wellington
Whakatane
Whangarei
Dunedin
Invercargill
Nelson
Queenstown
Riccarton
Timaru
Papanui
Ashburton
SOUTH ISLAND
Blenheim
Christchurch (Cashel St)
Christchurch (Tower Junction)
QLD
Brisbane (Albert St)
Fortitude Valley
Chermside
Pacific Fair (Broadbeach)
Logan
Kawana
Townsville
Cairns
Toowoomba
Southport
TAS
Hobart
Devonport
Launceston
WA
Perth (Hay St)
Cottesloe
Innaloo
Carousel (Cannington)
Fremantle
Whitford
Perth Harbourtown
Brighton
Bristol
London (Berners St)
London (Covent Garden)
London (Spitalfields)
London (White City)
This book is printed on environmentally
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from sustainable well-managed forests and
using an elemental chlorine-free process.
Vegetable based inks and water-based
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Designed and printed by
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NEW ZEALAND
UNITED KINGDOM
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contents
kathmandu annual report 2011 1
Chairman’s Report
Highlights For The Year
Chief Executive’s Report
Board
Management Team
Directors’ Report
Corporate Governance
Auditor’s Independence Declaration
Financial Statements
Statutory Information
Share Registry
2
4
6
12
13
15
25
27
29
74
80
notice of annual General meetinG
11.00am Friday
18 November 2011
Stamford Plaza,
Albert Street,
Auckland
New Zealand
2 kathmandu annual report 2011
chairman’s report
James Strong
Chairman
I am pleased to report on a very successful year for Kathmandu
Holdings Limited. After our listing on the ASX and NZX in
November 2009, in our first full year’s trading as a listed company
we have delivered a substantial increase in both sales and profit.
this result was particularly satisfying in view of the general
economic environment, and the challenging circumstances
now facing the retail sector, as consumers focus on their
personal debt management and become increasingly value
conscious.
capital inveStment proGramme
the Company has committed to an increase in capital
expenditure over the next three years. the investment
programme, including the ongoing new store rollout, is
necessary to support the growth targets in the Kathmandu
business plan, and includes the following key initiatives:
Kathmandu will now move forward as the market leader in
the outdoor travel and adventure category, and make further
investment to enhance future growth opportunities.
financial reSultS
the key financial highlights for the year ended 31 July 2011
were:
Growth in sales by 24.5% to $306.1 million
Gross profit margin of 65.5%
Increase in earnings before interest and tax of 32%
from nZ$48.5 million to nZ$64.0 million
this result reflected strong double digit same store sales
growth in both australia and new Zealand, a further 14%
increase in total store numbers and effective management
of operating costs. overall eBIt margin lifted from 19.7% to
20.9%.
Growth StrateGy
at the time of listing in late 2009, Kathmandu highlighted its
sales growth would be driven through:
Continuing store rollout in australia and new Zealand;
optimisation of existing store footprint;
Introduction of new product; and
Development of online capabilities.
the success of these strategies to date, combined with
the delivery of the new Kathmandu brand strategy over
the next two years, will support the expansion of both the
Kathmandu retail footprint and the range of product that we
offer in the outdoor travel and adventure market.
Delivery of the new brand identity across the business;
In association with the brand refresh, an accelerated
programme of store refurbishments and where
appropriate re-locations to new sites that will generally
be larger;
Improved physical infrastructure including the new
Zealand distribution centre and Melbourne support
office; and
enhanced information systems technology including an
online platform that will enable global sales capability.
dividend
the Directors are recommending a final dividend of 7 cents
per share, with the 3 cents interim dividend making a total
payout for the year of 10 cents per share. the final dividend
will be fully imputed for new Zealand shareholders, and fully
franked for australian shareholders.
this dividend represents a payout ratio of 51% and the
Board expects the payout ratio will remain in the 50 to 60%
range, particularly through the next two to three years in
association with the planned capital investment programme.
people
the Board congratulates Kathmandu’s Chief executive
officer, peter Halkett and his team for the result achieved
by Kathmandu over the past year. they have delivered one
of the best results in australasian retail in an exceptionally
challenging retail environment, and dealt with the impacts
of an extraordinary series of natural disaster events. the
devastating earthquakes in Christchurch placed enormous
strain on our people, who have performed in an outstanding
manner. their commitment in these circumstances has
been exemplary. We record our sympathy for the effects of
this tragedy, and acknowledge the sustained efforts of our
staff.
outlook
the economic environment is likely to continue to adversely
affect overall consumer spending. However we are
confident the new Kathmandu brand strategy, with an
increased and enhanced product range, and the on-going
growth in its retail network will maintain our strategic
competitive advantage.
kathmandu annual report 2011 3
It is likely that the next year will be just as challenging
for retail, but our strategy remains to invest to grow the
business and continue to build the Kathmandu brand in the
australasian market. this will provide the opportunity for
the Board and senior management to then evaluate and
pursue future new growth opportunities as they arise in the
medium and long term.
James Strong
Chairman
Southland (melbourne)
4 kathmandu annual report 2011
highlights for the year
Record sales and earnings result
100th store opened
Brand refresh project completed
Summit Club members now exceed 500,000
Core systems upgrade completed
Record sales and earnings result
100th store opened
Brand refresh project completed
Summit Club members now exceed 500,000
Core systems upgrade completed
kathmandu annual report 2011 5
SALES (NZ$m)
$306.1
$192.8
$215.6
$245.8
$151.4
fy2007
fy2008
fy2009
fy2010
fy2011
EBIT (NZ$m)*
$33.1
$32.9
$64.0
$48.5
$44.1
fy2007
fy2008
fy2009
fy2010
fy2011
NPAT (NZ$m)*
$39.1
$25.2
$14.9
$11.5
$8.0
fy2007
fy2008
fy2009
fy2010
fy2011
* FY2007 - FY2009 as presented in the Prospectus dated 23 October 2009,
and FY2010 excluding the impact of IPO listings costs, and $0.6m of net
exchange losses on foreign currency borrowings.
6 kathmandu annual report 2011
chief executive’s report
peter halkett
Managing Director and Chief executive officer
key hiGhliGhtS
Record sales ($306.1m,+24.5%) and earnings
(EBIT $64.0m,+32%) result
Strong growth in gross margin and improved
EBIT margin
On-going product range growth and increased
overall investment in inventory underpinned same
store sales growth of 15.7%
Opening of our 100th store, total store numbers
now 111
Summit Club membership numbers exceed 500,000
Brand refresh project completed and fi rst new
stores opened with new brand identity
Core systems upgrade completed, new distribution
and inventory management systems now operative
reSult overview
Kathmandu’s fi rst full year as a listed company on the
aSX and nZX was one of the most signifi cant years in
the Company’s 24 year history. the excellent result,
highlighted by an increase in sales of over $60 million (24%)
and eBIt of $15.5 million (32%), was achieved during a
generally diffi cult period for retailers. the Company also
had to deal with the on-going impacts of the Christchurch
earthquakes, where the majority of its support offi ce team
and new Zealand distribution centre are located. In these
circumstances the result refl ects the strong position that
Kathmandu has established in the outdoor market, and it
has to be considered an excellent performance.
Sales levels throughout most of the year from December
2010 onwards were at the upper end of our expectations
in both australia and new Zealand. the growth in both our
store network, and the Kathmandu product range were
signifi cant contributors to the sales result. Store network
growth was a combination of both new store rollout and the
enlargement of the retail footprint for a number of existing
stores.
additionally we made a substantial incremental investment
in base inventory levels. this was primarily to ensure the
stock-outs experienced during the second half of FY2010,
which followed our transition from private to public
company ownership did not re-occur. again this initiative
contributed to this year’s sales uplift, and it resulted in the
year on year increase in total inventories of $16.6m.
the strong a$ and nZ$ exchange rates relative to the
uS$ assisted in partially offsetting supplier cost increases
experienced across most categories. effective management
of supplier cost increases, and the overall product mix,
combined to deliver an above target gross profi t margin
(65.5%) for the year. Despite a slight increase in operating
expenses, overall eBIt margin improved in FY2011 from
19.7% to 20.9%.
BuSineSS overview
the kathmandu Brand
Kathmandu has continued it’s leadership in the outdoor
travel and adventure market. our market positioning and
brand awareness has been further enhanced since our
listing in november 2009, especially in australia, assisted by
our store rollout programme and expansion of the product
range. an increase of 29 stores (35%) in the fi rst two years
as a listed company has been achieved. We now have over
100 stores in australia and new Zealand which, supported
by increased advertising spend year on year, has caused our
measured brand recognition to improve signifi cantly in both
markets.
the continued development and strength of the Kathmandu
brand has been a key focus of the business throughout the
past year. We completed a comprehensive review of the
Kathmandu brand in FY2011, and this has culminated in a
complete refresh of the Kathmandu brand identity, formally
released to the market from September 2011.
the brand refresh project is much more than a simple
logo change. It carries through to our store design, our
advertising collateral, product and packaging and general
communication with our customers. the new brand identity
refl ects our brand strategy and its core purpose of inspiring
and enabling people to live their dreams of travel and
adventure.
up to 75 stores will be rebranded during FY2012, and our
objective is complete all stores by the end of FY2013.
additionally a large portion of our new summer product
range and packaging has been rebranded, and the balance
is planned to be completed within 12 months. the new
design, including advertising and marketing material, and
our website, launched on September 1st. We are very
confi dent that our brand refresh will underpin Kathmandu
growth well into the future.
kathmandu annual report 2011 7
product range
the development and delivery of new and innovative
products for the outdoor and travel categories is critical to
growing our market share. Design is a central part of who
we are as a Company, and we design product that is original
and engineered to perform.
Store network
there were 14 permanent new stores opened during the
year, but as the central Christchurch store has remained
closed since the February 22 earthquake net store numbers
increased by 13 stores year on year. permanent store
numbers as at 31 July 2011 were new Zealand 38,
australia 66 and uK 6. Stores currently open were 110.
In addition to the focus on design our structured approach
to product development addresses:
the new stores opened during the year were:
expansion of our overall product offer through growth
of existing ranges and new complimentary categories;
Continuous enhancement of technical attributes,
both in tandem with fabric and component suppliers,
and through our own proprietary technologies;
on-going growth in the australian market, particularly
for warmer and tropical climate requirements;
evaluation and management of our supplier base,
with a focus on consistent and contracted performance
standards.
the on-going and increasing investment made by
Kathmandu in design resources will ensure we maintain our
technical credibility and further enhance the success of our
brand.
australia: Cairns, logan, toowoomba,
Southport, orange, Wollongong, Wagga Wagga,
Belconnen (Canberra), Southland (Melbourne),
Whitford City (perth), perth Harbour town.
new Zealand: Whakatane, papanui (Christchurch),
ashburton.
the overall results of all the new stores that we opened
this year were in line with expectations, and in australia the
stores opened in regional cities performed particularly well.
the results from new stores continue to reinforce and
support our target of a store network of approximately 150
stores in australia and new Zealand. In new Zealand the
new plymouth and palmerston north stores were
8 kathmandu annual report 2011
re-located and our Sylvia park store in auckland was
extended. the Innaloo store in perth was also extended.
Sales from our online store, launched in october 2009,
recorded significant growth in FY2011. Sales achieved
through the online channel are now the equivalent of a mid-
sized store in each country. Kathmandu is well positioned,
as a brand owner, to capitalise on the rapid growth of online
sales. Major enhancements to our website are scheduled
to be delivered during FY2012, providing more functionality,
capacity and global sales capability.
infrastructure and Systems
enhancement of our information systems is an essential
requirement to support future growth, and a number of
key projects are either planned to commence shortly or
are already underway. our new erp platform has been
operating live since 1 august, and this was implemented in
tandem with a new warehouse management system. this
has been an 18 month project that will deliver improved
operating efficiency, and positively impact on the per unit
cost of stock handling across our internal supply chain.
our erp upgrade also provides the starting point for
further systems enhancements in key areas such as online
trading, business intelligence and reporting, improved CrM
initiatives and specialist software for product and image
database management.
two projects are planned in FY2012 to further improve our
overall supporting infrastructure. the lease expires for our
current new Zealand distribution centre in october 2012,
and after a detailed and extended evaluation, we have
committed to a new purpose built facility, to be constructed
approximately 500 metres from our existing site in
Christchurch. the new facility provides adequate capacity
to support projected long term growth in the new Zealand
market, supported by third party logistics and warehousing
in auckland through peak periods of stock holding and sales
demand. We expect the new facility to be operating by
July 2012. We are also re-locating our Melbourne domiciled
management and support team to new premises in South
Melbourne before the end of 2011.
market overview
overall retail sales statistics highlight the challenge faced by
discretionary retail through the past year.
there was only a small increase (c. 2%) in new Zealand total
sales across the combined recreational goods, clothing and
footwear categories. Spending on recreational goods only in
new Zealand, and on sales of clothing, footwear and personal
accessories in australia declined year on year. Given this flat
to negative macro sales outcome, Kathmandu’s double digit
same store sales result in both countries indicates the specific
market for travel and adventure products was relatively
stronger than clothing and recreational goods sales generally.
although there has been an extended period of consumer
de-leveraging, exacerbated by the economic uncertainty
in europe and the uSa, Kathmandu has been selling to a
customer base that appears willing to keep spending money
on quality product for travel and adventure. the strong a$
and nZ$ exchange rates encouraged spend on experiential
activity and holidaying in overseas locations, and published
statistics highlighted growth of c.10% in the number of
australians travelling overseas in the first half of 2011, and c.
5% in new Zealand travellers over the year to 30 June 2011.
price deflation has also been commented on and observed
in a number of retail categories, but it wasn’t generally
apparent across the technical product ranges that
Kathmandu sells. our overall gross profit margin result
highlights that we have successfully negotiated most of the
challenges of price deflation and competitor discounting
through the year.
Weather influences Kathmandu sales and gross margin
performance, particularly during our key easter and Winter
promotional periods, given our product offer is weighted
overall towards winter, cold and wet weather product. the
third quarter trading period including easter was colder
throughout australia and new Zealand compared to last
year, when March/april temperatures were at record highs.
this did assist sales volumes in this period, primarily in
australia. By comparison, overall weather patterns in the
final quarter didn’t vary significantly from the previous year.
as we have grown store numbers across all the main cities
in australasia, the geographic spread also provides some
mitigation of the impact of regional variation in weather and
other regional economic factors.
financial performance
Group sales increased by 24.5% over the previous year, to
$306.1m. Most pleasing was the increase in same store
sales, by 15.7% overall and 12.9% at a constant exchange
rate.
Country by country change in same store sales was as
follows:
australia 14.4%
new Zealand 12.3%
uK (7.1%)
the increase in total gross profit for FY2011 was $45.3m,
an increase of 29%. the sales increase was matched by an
improvement in gross margin by 230bps, to 65.5% overall.
Gross margins achieved in new Zealand increased slightly
(by c. 30bps), whilst in australia there was an improvement
of over 300bps. the key reasons for the improved outcome
were:
Favourable product mix outcome, as the increase in
sales in FY2011 was derived primarily from higher
gross margin apparel categories;
excellent sales results from the initial period of our
easter and Winter sales promotions, resulting in a
reduced reliance upon both further reductions during
those promotions and subsequent clearance sales
activity.
In FY2011 our now improved capital structure enabled
us to invest effectively in stock and as a result we had
substantially higher inventory levels available to sell
throughout the second half of the year. this meant a
reduction in the level of lost sales due to out of stocks
when compared to FY2010 and the investment supported
both the sales and gross margin result achieved. the year
on year increase in total stock levels was $16.6m, and
whilst stock both in absolute terms and per store increased
substantially compared to the previous year, the more
relevant comparison is between FY2009 and FY2011, when
working capital constraints weren’t a relevant factor. there
has been an increase of less than 1% in value of stock held
per store between FY2009 and FY2011, which we consider
a satisfactory outcome having regard to the increase in
store numbers over the same period.
expenses, excluding depreciation, amortisation and
financing costs (and in FY2010 also excluding Ipo costs),
increased by $28.3m (28.0%). this was an increase as a
% of sales from 41% to 42.2%. approximately one-third
of this rate of % increase arose specifically because of the
cost of incentive based remuneration payable in FY2011
to Senior Management as a result of achieving all profit
targets applying this year. In FY2010 because profit targets
were not met there were very limited amounts of incentive
remuneration paid. the other primary reasons for the
increase in expenses as a % of sales were the on-going
shift in weighting of operating costs incurred in australia,
where cost of doing business is higher, and the incurring of
approximately $1.1m of expenses in FY2011 for the brand
refresh project. In FY2012 there will again be a similar level
of expenditure as the new brand identity is rolled out. the
benefit of a full year with an appropriate capital structure
resulted in a substantial reduction in finance costs.
net profit after tax, after eliminating from the FY2010 result
the costs of the Ipo net of tax, increased by $13.9 million
(55%) to $39.1 million.
kathmandu annual report 2011 9
online activity will occur to fully leverage the new website
capability we intend to launch during FY2012.
SuStainaBility
Kathmandu has been working for some time on
our approach to sustainability and it is important to
communicate our plan and progress to date. We have
developed a common understanding of sustainability across
the business, described in the following statement:
“At Kathmandu we take social and environmental
responsibility to heart. We passionately believe in the
importance of sustainable product development and
running an ethical business. We strive to minimise our
environmental impact and look for ways to contribute to
the broader community, aligning our values with those of
our customers, team members and society. With a holistic
outlook, we live, work and dream to inspire adventure and
enable an outdoor lifestyle for generations to come.”
We have also established our Sustain the Dream plan,
which focuses on four priority areas. these areas and some
examples of actions taken over the last year are:
1. minimise our environmental footprint - reducing
the amount of waste produced, energy used, greenhouse
gases emitted and water used, and increasing our
efficiency.
Steps taken included:
Moving to either use of recycled product packaging,
and/or minimising packaging altogether, dependent on
product requirements.
Commencing the replacement of plastic shopping bags
by asking customers to either take no bag, bring their
own, or purchase a reusable bag or an 80% recycled
paper bag.
Completing an energy audit of the australian
distribution centre. We will apply some of the major
energy saving initiatives to the new new Zealand
distribution centre and australian support office.
2. respect human rights - adhering to and promoting
safe and equitable workplace practices both locally and
internationally.
uk BuSineSS
For the first five months of FY2011, we achieved positive
sales results, but sales declined sharply after the Vat rate
increased to 20% from 1 January, and they did not recover.
the period of economic uncertainty in the uK may be
prolonged, and this reinforces our decision not to make
further investment in the uK retail network at this time.
although no new stores are currently planned, a step up in
all core suppliers have been issued with the
new Kathmandu terms of trade, which stipulate
minimum requirements with regards to our suppliers’
social and environmental labour practices.
We have conducted factory site audits as a part of a
wider on-going programme to ensure that our suppliers
are adhering to our terms of trade.
10 kathmandu annual report 2011
3. Strengthen communities - providing financial and
product support to appropriate community organisations
as a way to give back and to maintain our relevance and
relationship with our community.
We continue with our well established major
sponsorships of the Kathmandu adventure Series and
outward Bound new Zealand. the Kathmandu
adventure Series encourages people to appreciate the
outdoors in an active and enjoyable way. outward
Bound provides opportunities for people to learn
and grow through experiences in the outdoors.
a new partnership with red Cross has been
established. red Cross will be supported in
both australia and new Zealand through the sale of
our paper shopping bags, and we have supported
red Cross with either cash or product donations for
the Christchurch earthquakes and Queensland cyclone
and flood events.
We have commenced a new partnership with the
australian Himalayan Foundation, supporting teacher
training programs in the impoverished Solu Khumbu region
of nepal. this is an appropriate organisation to support
and enable an on-going contribution by Kathmandu to
the region where our brand name originates.
4. develop our team - they are integral to our business,
and we endeavour to provide opportunities for our staff to
develop skills and retain healthy lifestyles.
We have:
established a cross functional sustainability
representative team who we call our Dream team,
to ensure two way communication on sustainability
across the business, and to drive the initiatives of the
Sustain the Dream plan.
Increased our investment in training and development,
including integrating our core values throughout the
organisation.
Finally we have defined and adopted five core values that
serve as the guiding principles and beliefs that capture
the spirit, culture and attitude of Kathmandu. these are
fundamental in guiding how team members interact with
one another and represent Kathmandu.
the values are:
Integrity
openness & Directness
passion & Determination
resourcefulness
love of travel & adventure
Further details relating to our sustainability activities can be
seen on our website.
the kathmandu team
Staff numbers as at 31 July 2011 increased by 11% to 1733
compared to 1562 at the same last year. approximately
50% of this number are full or part time permanent staff
members. our first annual employee engagement survey
delivered pleasing results for our employees support of our
brand and their positive view of Kathmandu as an employer.
Staff retention within our retail management teams in
particular improved this year, and the depth and expertise
of our wider leadership team continues to effectively
support our growth strategy. this latter group of over 30
people, as well as the executive Management team, are
now incentivised to achieve annual earnings targets by way
of equity participation. the executive Management team
remained unchanged during the year.
the Christchurch earthquakes had a severe and on-
going impact on tens of thousands of people in the city,
and we consider ourselves very fortunate to have had
tremendous on-going support and commitment from our
sales, distribution and office staff located in our home
city. understandably the decision was made by some to
leave Christchurch, but it is pleasing that the number was
relatively few, and that we have continued to be able to
recruit new staff members into our Christchurch operations.
We don’t underestimate the on-going challenge we will
have in recruiting and retaining the people we need across
the business to support our growth strategy, and our future
strategy will involve on-going flexibility where practical in
locating people in either Christchurch or Melbourne.
outlook
the FY2011 performance gives us confidence in the
on-going potential of the Kathmandu brand in the outdoor
and travel markets. In the short term, the primary growth
opportunity remains to uplift (relative to new Zealand)
the sales peneration in australia, to a level that equates
at the very least to that achieved by other retailers selling
discretionary spend product through a fully developed
network in each country. at present sales per capita in
australia is less than 40% of that in new Zealand, and
our target ratio when we have a full retail network in each
country is no less than 60%. the ongoing development of
our product range with a greater focus on the requirements
of the australian market is also critical to achieving this
target, as is a further increase in Summit Club membership.
a further 15 stores are targeted for opening in FY2012, and
perhaps more significantly we will substantially increase our
investment in re-located and renovated stores, in tandem
with rolling out the new brand identity. We have already
committed to re-development or re-location in existing key
sites including Chatswood, Camberwell, Queen Street,
newmarket and Wellington in the first half of FY2012, and
our overall budget for FY2012 anticipates up to 12 major
projects of this type.
our cost of product for FY2012 will again generally be
subject to supplier price increases, but we anticipate that
overall the extent of these increases will be no worse than
for FY2011, and we have the benefit of a substantially
improved rate of uS$ hedging applying through the
forthcoming year compared to FY2011. as with FY2011, we
again consider it unlikely that our cost of doing business will
reduce as a % of sales. this is because of our investment
in business infrastructure and the on-going weighting of
operating costs being derived from australia domiciled
stores, where net margins are lower than new Zealand.
the investment in our product, our new and refurbished
stores, and our new brand further enhance the strategies
that have already doubled Kathmandu sales revenue
between FY2007 and FY2011. We continue to have a clear
opportunity to build the australian business to realise the
potential the Kathmandu brand has in that country. In new
Zealand, we are confident that the new brand identity
and the on-going investment in new product will continue
to deliver revenue growth. Whilst we recognise and are
cautious in relation to the generally uncertain economic
outlook, our performance through the past year gives us
confidence that our focused growth strategies should
continue.
kathmandu annual report 2011 11
In the medium to long term, the online channel provides
options for the expansion of the Kathmandu brand that
realistically were not available prior to our listing in 2009.
We recognise this is much more than simply initiating a
website, but with our new brand identity and a successful
australasian business we have confidence there is the
potential to take the Kathmandu brand to other markets in
a profitable manner. through FY2012 we will undertake
comprehensive planning and build the technology platform
required to take this opportunity forward.
Finally my thanks to all of the Kathmandu staff for their
commitment and contribution to achieving this result.
FY2011 provides us with a clear benchmark for the results
that Kathmandu can achieve in the years ahead, and the
Kathmandu team are committed to delivering further
growth in FY2012 and beyond.
Peter Halkett
Managing Director and
Chief executive officer
12 kathmandu annual report 2011
board
left to right: John Harvey, Peter Halkett, James Strong, Mark Todd, Sandra McPhee and John Holland.
James Strong
ao Chairman
Mr Strong is currently Chairman of
Woolworths limited, the australia
Council for the arts and the organising
Committee for the ICC Cricket World
Cup 2015. He is a Director of Qantas
airways, a member of the australian
Grand prix Corporation and a member
of the nomura australia advisory
Board.
previously, Mr Strong was the
Chairman of Insurance australia Group,
rip Curl Group and Corrs Chambers
Westgarth. Mr Strong was also the
Chief executive officer of australian
airlines from 1986 to 1989 and the
Managing Director and Chief executive
officer of Qantas airways from 1993
to 2001.
peter halkett
Managing Director and
Chief executive officer
Mr Halkett joined Kathmandu in 2006
and has directed the growth strategy
for the business throughout the period
of current ownership.
Mr Halkett has had a management
career with extensive retail experience
including Chief executive officer
roles in new Zealand and the united
Kingdom. the companies he has led
include two that were publicly listed, in
particular pacific retail Group.
mark todd
Finance Director and
Chief Financial officer
Mr todd joined Kathmandu in
1998, following previous financial
management experience in both the
apparel and retail sectors.
Mr todd has been Kathmandu’s senior
financial executive throughout his 13
years with the Group, a Director of
various Group companies and manager
of the new Zealand business from
2004 to 2006.
Mr todd is the Company Secretary.
John harvey
non-executive Director
Mr Harvey is a professional Director
with a background in accounting and
professional services. Mr Harvey has
over 35 years professional experience,
including 23 years as a partner of
pricewaterhouseCoopers where he
also held a number of leadership and
governance roles.
Mr Harvey has extensive experience
in financial reporting, governance,
information systems and processes,
business evaluation, acquisition,
merger and takeover reviews.
Mr Harvey is currently a non-executive
Director of DnZ property Fund,
Heartland Building Society, port otago
and nZ opera.
John holland
non-executive Director
Mr Holland is a partner in the national
new Zealand law firm Chapman tripp
and specialises in general corporate
and commercial law. Mr Holland was
a Board member of Chapman tripp for
six years until 31 March 2009.
Mr Holland’s securities law experience
includes acting on initial public
offerings, advising on employee share
schemes and in the private equity
area. Mr Holland was a member of
the Securities Commission of new
Zealand from January 2007 to 30 april
2011 and is an accredited director of
the new Zealand Institute of Directors.
Sandra mcphee
non-executive Director
Ms Mcphee is a professional Director
with an executive career background in
sales and marketing including 10 years
with Qantas airways. Ms Mcphee also
served as Chief executive officer of
the ansett/traveland Group.
Ms Mcphee is currently a non-
executive Director of Fairfax Media,
aGl energy, Westfield retail trust
and Vice president of the art Gallery
of new South Wales. She is also a
member of the advisory Council of Jp
Morgan and advisory Board of MMC
and St Vincent’s and Mater Health
Community advisory Board.
previous non-executive roles include
Coles Group, australia post, perpetual,
primelife and South australia Water.
kathmandu annual report 2011 13
left to right: Grant Taylor, Peter Halkett, Caleb Nicholson, Mark Todd, Tamalin Morton, Matt Spencer, Michelle Adams and Paul Stern.
management
paul Stern
General Manager,
Business Development
and Sustainability
Joined Kathmandu in January
2010 with over 18 years
experience in senior retail
and Marketing roles, including
at Kmart, a.S. Watson (Hong
Kong), and Cadbury
Schweppes.
peter halkett
Managing Director and
Chief executive officer
refer to page 12
mark todd
Finance Director and
Chief Financial officer
refer to page 12
matt Spencer
General Manager, retail
Joined Kathmandu in 2007
after over 10 years in senior
operational and planning
roles with domestic and
international retailers,
including Shell and the
Coles Group.
michelle adams
General Manager,
product
Joined Kathmandu in 2009
following extensive product
and brand management
experience with pacific
Brands and Canterbury.
tamalin morton
General Manager,
Marketing
Joined Kathmandu in 2007,
with extensive experience
in marketing management
and brand strategy gained
through senior marketing
roles with Coles Group and
Bass plc (uK).
Grant taylor
Chief Information officer
Joined Kathmandu in august
2010 with 15 years experience in
senior It roles, including CIo at
otago and Southland District
Health Boards and Group It
Manager for pGG Wrightson.
caleb nicolson
General Manager,
Supply Chain
Joined Kathmandu in 2007,
after eight years with
the Warehouse, where he
had responsibility for delivering
change across the supply chain
and the merchandise function.
kathmandu annual report 2011 15
directors’ report
your directors present their report and the financial Statements for the year ended 31 July 2011.
directorS
the following persons were Directors of Kathmandu
Holdings limited during the financial year.
James Strong
Was re-appointed Chairman, non-executive Director,
Member of the audit and risk Committee, Member of the
remuneration and nominee Committee on 24 november
2010 and continues in these offices at the date of this
report.
Peter Halkett
Was appointed as Managing Director and Chief executive
officer on 9 october 2009 and continues in these offices
at the date of this report.
Mark Todd
Was appointed as Finance Director, Chief Financial officer
and Company Secretary on 9 october 2009 and continues
in these offices at the date of this report.
John Harvey
Was appointed as a non-executive Director, Chair of the
audit and risk Committee, Member of the remuneration
and nominee Committee on 16 october 2009 and
continues in these offices at the date of this report.
John Holland
Was re-appointed as a non-executive Director, Member
of the audit and risk Committee, Member of the
remuneration and nominee Committee on 24 november
2010 and continues in these offices at the date of this
report.
Sandra McPhee
Was appointed as a non-executive Director, Member of the
audit and risk Committee, Chair of the remuneration and
nominee Committee on 16 october 2009 and continues in
these offices at the date of this report.
Details of the experience and expertise of the Directors and
the Company Secretary are outlined on pages 12 and 13 of
this annual report.
retirement of directorS
In accordance with the Company’s constitution, Mark todd
and Sandra Mcphee will retire as Directors at the annual
general meeting and being eligible, offer themselves for
re-election.
Director
Meetings
Audit
and Risk
Committee
Meetings
Remuneration
and Nominee
Committee
Meetings
Director
James Strong
Peter Halkett
Mark Todd
John Harvey
John Holland
Sandra McPhee
A
8
8
8
8
7
8
B
8
8
8
8
7
8
A
8
XX
XX
8
7
8
B
8
XX
XX
8
7
8
A
8
XX
XX
8
7
8
B
8
XX
XX
8
7
8
A - Number of meetings attended
B - Number of meetings held during the time the Director held office during the year
XX - Not a member of relevant Committee
review of operationS
the profit of the consolidated entity for the financial year
after providing for income tax amounted to $39,066,000
(2010: $9,387,000).
a detailed review of operations is provided on pages 2 to 11
of this annual report.
SiGnificant chanGeS of affairS
there has been no material change in the state of affairs of
the Company or the Group.
principal activitieS
the Group’s principal activity in the course of the financial
year was the design, marketing and retailing of clothing and
equipment for travel and adventure. It operates in new
Zealand, australia and the united Kingdom.
matterS SuBSeQuent to the
end of the financial year
no matters or circumstances have arisen since the end
of the financial year which significantly affect or may
significantly affect the operations of the consolidated entity,
the results of those operations, or the state of affairs of the
consolidated entity in future financial years.
likely developmentS and
eXpected reSultS of operationS
meetinG of directorS
the number of meetings of the Board of Directors and
likely developments in the operations of the consolidated
entity and the expected results of those operations in future
Committees held during the year ended 31 July 2011 and
financial years are contained on pages 2 to 11 of this annual
the numbers of meetings attended by each Director were:
report.
16 kathmandu annual report 2011
environmental reGulation
the consolidated entity’s operations are not regulated by
any significant environmental regulation under a law of the
Commonwealth or of a State or territory of australia, or of
new Zealand.
dividendS
Since the end of the financial year the Directors have
declared the payment of a final ordinary dividend of nZ
7.0 cents per share. Dividends will carry full new Zealand
imputation credits and full australian franking credits. the
dividend will be paid on 24 november 2011.
the Company does not currently have a dividend re-
investment plan.
inSurance of officerS
the Company has entered into deeds of indemnity,
insurance and access with each Director which confirms
each person’s right of access to certain books and records
of the Company for a period of seven years after the
Director ceases to hold office. this seven year period can
be extended where certain proceedings or investigations
commence before the seven years expires. the deed also
requires the Company to provide an indemnity for liability
incurred as an officer of the Company, to the maximum
extent permitted by law.
Indemnification: pursuant to the Constitution, the Company
is required to indemnify all Directors and employees, past
and present against all liabilities allowed under law. the
Company has entered into an agreement with each Director
to indemnify those parties against all liabilities to another
person that may arise from their position as Director or other
officer of the Company or its controlled entities to the extent
permitted by law. the deed stipulates that the Company
will meet the full amount of any such liabilities, including
reasonable legal costs and expenses.
Insurance: pursuant to the Constitution, the Company may
arrange and maintain Directors’ and officers’ insurance
during each Director’s period of office and for a period
of seven years after a Director ceases to hold office.
this seven year period can be extended where certain
proceedings or investigations commence before the seven
years expires.
remuneration report
the remuneration report is set out in the following sections:
the information provided in this remuneration report has not
been audited as Kathmandu Holdings limited is a foreign
company in terms of the Corporations act 2001 (australia).
However the report is provided in the same form as is
generally applied by australian companies listed on the
aSX, and the audited remuneration disclosures contained
in note 10 of the financial statements generally comply with
those required under the Corporations act 2001 (australia).
a principleS uSed to determine the
nature and amount of remuneration
the objective of the Company’s remuneration and
nominee Committee (“the Committee”) is to create
a framework whereby Directors and executives are
remunerated fairly and within generally accepted market
and comparable entity norms, on a basis that appropriately
rewards for the creation of shareholder value. the
composition, role and responsibility of the Committee is
outlined in the Corporate Governance Statement on page 27
of this annual report. the general principles adopted by the
Committee in the setting of remuneration are:
remuneration whether measured at base or total level,
should be market competitive, and generally account
for key relevant internal and external factors such as
employee level of responsibility and place of domicile,
Company commercial circumstances, and market
practice;
those employees with the clear ability to influence
the achievement of the Company’s strategic objectives
and business plans (“key management and senior
management personnel”) should be rewarded by
way of performance based rewards structured to
reflect success or otherwise against those objectives
and plans;
the alignment and mix of remuneration should not
be based primarily upon cash incentives earned
from Company short term profit performance
(which was the case under the framework for
executives which applied under the Company’s
previous private equity ownership structure).
the remuneration framework recognises the
varying executive roles, remunerates these accordingly
and has an incentive structure that has a lesser and
appropriate proportion of total remuneration that is
cash based;
a principleS uSed to determine the nature
and amount of remuneration
B detailS of remuneration
c Service aGreementS
d detailS of Share-BaSed compenSation
e additional information
the opportunity to participate in equity based rewards
should be a component of the reward structure for key
management personnel, both to align their reward
with the creation of shareholder value, and to
encourage their ongoing participation in and retention
by the Company;
Key management personnel who are executives (those
personnel who report directly to the Chief executive
officer and who are not Board members) should have
a substantial portion (as a target no less than one-third)
of their total remuneration aligned with reward for
creating shareholder value. this should generally
be achieved through the application of appropriate and
measurable performance hurdles to be met as criteria
for receiving incentive based remuneration by way of
cash or equity;
the executive Directors (Chief executive officer and
Chief Financial officer) should, relative to other
executives have;
a greater proportion of total remuneration
that is “at risk”, i.e. contingent upon the
achievement of performance hurdles, and
a greater proportion of “at risk”
remuneration weighted towards equity
based rewards rather than cash,
because of their role in establishing and
delivering achievement of medium and long term
Company strategic objectives and business plans, and
increasing shareholder value over that period.
the opportunity to participate in equity based
rewards should be a component of remuneration
for all senior management personnel.
the audited consolidated financial results for the Group
are the basis for measuring achievement against a
financial performance target.
non-executive Directors’ remuneration should enable
the Company to attract and retain high quality
Directors with the relevant experience. In order to
maintain independence and impartiality, non-
executive Directors should not receive performance
based remuneration.
executive rewards
the executive remuneration framework (currently applying
to 8 executives including the 2 executive Directors) has
four components:
1 Base salary and benefits;
2 Short term cash incentives;
3 Short term equity incentives with performance
conditions relating to continuing employment
with the company, and
4 long term incentives via participation in the
company’s options and long term incentive plans
kathmandu annual report 2011 17
the combination of these comprises the executives’ total
remuneration. other senior management personnel have a
remuneration framework incorporating components 1 to 3
above.
the remuneration framework provides a market competitive
reward for executives that aligns appropriately with
achievement of personal and strategic objectives, the
results delivered, and the creation of value for shareholders.
the framework also creates emphasis on cross-functional
collaboration by requiring the payment of all short term
incentive based rewards to be contingent firstly upon
the achievement of the applicable overall Group financial
performance targets.
there has been a re-alignment of the make-up of executive
total remuneration, which from 1 august 2011 results in:
a greater proportion of total cash remuneration
earned by executives by way of base salary and
a lesser proportion by way of short term cash
incentive;
the now reduced proportion of remuneration available
through short term incentives earned as a mix of cash
and equity incentives (was previously all cash);
long term incentive plan performance rights granted,
subject to shareholder approval, only to executive
Directors.
the Company’s previous framework, established under
private equity ownership, had a weighting of rewards
applying to the entire executive which was based primarily
upon cash incentives earned from Group short term profit
performance. the new framework recognises the varying
executive roles, remunerates these accordingly and has an
incentive structure that contains a much greater weighting
to equity based rewards.
Group earnings before interest, tax, depreciation and
amortisation (eBItDa) has been determined as the appropriate
financial performance target to trigger payment of short
term cash incentives. In the previous (FY2010) year the
performance target adopted was Group eBIt (earnings before
interest and tax). Both criteria were determined based on
comparative research against the market and advice from
external independent remuneration consultants.
the change in criterion reflects the substantial increase in
the capital investment programme expected to be approved
and overseen by the Board over the medium term. the large
increase in programme $ spend and number of projects,
means considerable variability in the depreciation and
amortisation expense arising year by year is possible and this
could be both within and beyond executive control given the
nature and mix of the Group’s capital assets and leases.
18 kathmandu annual report 2011
the Company’s objective is to provide a remuneration
framework whereby every incentive payment over and
above an executive’s fixed pay, whether in the form of
cash or equity, is appropriate for the results delivered by
the Company and the employee and based on reward
for performance. the Board, through the Committee
undertakes its governance role in establishing executive
remuneration including, where required, use of external
independent remuneration consultants and/or available
market information, with reference to both total
remuneration and its various components.
1 Base Salary and Benefits
executive base salaries are structured as part of a total
employment remuneration package which is delivered as
a mix of cash and non-monetary benefits determined by
negotiation with the executive.
executives are offered a competitive base salary that
comprises the fixed component of pay and rewards.
external independent remuneration consultants provide
analysis and advice to assess whether base salary as well
as total remuneration reflects the market positioning for
a comparable role. Base salary for senior executives is
reviewed annually to provide competitiveness with the
market but there are no guaranteed base salary increases
in any executive’s contracts, except as specifically stated in
this report. an executive’s remuneration is also reviewed
on promotion.
executive benefits made available are superannuation
contributions made in accordance with the legislation
specific to each country in which the employee is resident,
medical insurance and for some executives leasing and/or
reimbursement of vehicle running costs. Key management
and senior management personnel who relocate their place
of working between countries may be assisted in the cost
of such relocation.
2 Short term cash incentives
executives are eligible to participate in an annual short
term cash incentive which delivers rewards by way of cash
bonuses, subject to the achievement of Group financial
performance targets and individual KpI’s.
were paid to the extent of 50% of base salary for all eligible
executives (60% for the Chief executive officer). this
comprised of payment for achievement of Group financial
performance targets to a level that triggered maximum
permissible cash bonuses (40% of base salary, 50% for
Chief executive officer), and consequent entitlement to
individual KpI based cash bonuses (10% of base salary).
For the year ended 31 July 2010 no short term cash
incentives were paid under the terms above, as Group
financial performance targets were not met.
Details of these short term cash incentives along with other
remuneration of the key management personnel of the
Company, for the current and prior financial years are set
out in note 10 of the financial statements.
Further incentives may also be paid at the discretion of the
Board to individual executives as recognition of exceptional
achievement in any given year.
3 Short term equity incentives with
performance conditions
the shareholder approved long term incentive plan enables
the Board to offer equity incentives as part of short and long
term remuneration. In FY2011 short term equity incentives
were offered to senior management personnel and from
1 august 2011 both senior management personnel and
executives will participate in short term equity incentives.
For FY2012 executives including the executive Directors
will have no less than 30% of the total value of their annual
short term incentive equity based, with rewards delivered
by way of nil cost performance rights. the entitlement
to the short term equity incentive will be subject to the
achievement of the same Group financial performance and
individual KpI’s as for the short term cash incentive.
If the Group financial performance targets and individual
KpI’s are achieved, vesting of the performance rights
granted under this incentive will generally require the
executive staff member to remain employed by the Group
for a period of two years after the end of the financial year
in which Group financial performance that determines
entitlement to the rights is measured.
the amount of any short term cash incentive paid in a year
is dependent upon:
the level of over performance achieved against the
Group’s financial performance target (eBItDa or eBIt)
for the year; and
if financial performance targets have been met or
exceeded, the achievement or otherwise of individual
KpI’s.
For the year ended 31 July 2011 short term cash incentives
For senior management personnel short term equity
incentives, delivered by way of nil cost performance rights,
were granted in november 2010. the vesting of the rights
was dependent firstly upon achievement of Company
epS targets for FY2011. these targets were achieved and
the rights granted will vest on 31 July 2012 providing the
personnel concerned remain employed by the Group.
For FY2012 the equity incentives applying for senior
management personnel will again be measured based on
the level of financial over performance of the Group against
the Group’s financial target for the year (eBItDa), and if
these targets are achieved the rights granted will vest on
31 July 2013 providing the personnel concerned remain
employed by the Group. the value of the short term equity
incentive for senior management personnel is generally up to
10% of base salary.
4 long term incentive plans
w options plan 2009
the Company implemented the employee option plan on
16 october 2009, and it was developed in the lead in to the
Company’s Ipo in order to provide an incentive scheme for
selected senior employees in conjunction with the public
listing of the Company. an initial grant of options was made
in conjunction with the Ipo to seven executives of the
Company. Vesting of the options is subject to the Company
achieving a compound annual growth in total Shareholder
return (tSr) of 15% for the period applying to each tested
period of performance measurement. tSr was determined
as the criterion for performance measurement based on
research against the market, and advice from external
independent remuneration consultants with reference
to the approach considered appropriate for a Company
undertaking an Ipo of shares.
Subject to achievement of this condition and executives
remaining in employment with the Company at the
vesting date, the options granted to each executive as
detailed below vest progressively in 3 equal tranches on
the test dates of 1 october 2010, 2011 and 2012. If the
tSr performance condition has not been achieved on the
applicable test date there will be re-testing of this condition
on 1 october 2011, 2012 and 2013. all options have an
expiry date five years from their date of grant.
the Board do not intend to grant any further options under
the existing plan. the Board are of the view that the
existing plan no longer represents an appropriate on-going
long term incentive structure for the Company post the Ipo.
long -term incentive plan november 2010
Shareholders approved a new long term incentive plan at
the Company’s 2010 annual General Meeting based on
the granting of nil cost performance rights. rights were
offered in 2010 to all executives. For executives vesting of
the rights will be dependent upon the Company achieving
earnings per Share (epS) and /or relative tSr targets over
a 2, 3 and 4 year performance period, with 50% of the value
of rights allocated under each target .
epS is measured on a compound annual growth basis and
tSr is measured on a relative basis against similar sized
australian and new Zealand listed retail organisations.
performance measurement under either criterion is at the
end of each applicable performance period with no ability
to re-test. Fifty percent of the relevant portion of the award
kathmandu annual report 2011 19
vests for achievement of targets and a further fifty percent
vests for the achievement of aspirational targets. a sliding
scale operates between target and aspirational performance
levels.
this long-term incentive is intended to focus performance
on achievement of key long-term performance metrics. the
selected performance measures provide an appropriate
balance between relative and absolute Company
performance. the Committee considers this plan will best
support and facilitate the growth in shareholder value over
the long term.
With effect from 1 august 2011, the Committee intends to
grant only executive Directors with nil cost performance
rights that will require achievement of epS and relative
tSr targets over the 2, 3 and 4 year periods. these grants
are subject to shareholder approval. other executives and
senior management personnel have been granted nil cost
performance rights under this plan that are measured and
will vest under the short term equity incentive framework.
non-executive directors’ fees
the current aggregate limit for non-executive Directors’
fees is $a600,000 per annum with a base fee payable
(including superannuation if applicable) to the Chairman of
$a206,000 and to a non-executive Director currently of
$a103,000 per annum. additionally a$10,000 per annum
is paid for sub-committee attendances. all non-executive
Directors’ fees are inclusive of Committee fees. the
Managing Director and Finance Director do not receive
Directors’ fees. the amounts approved for Directors’ fees
are expressed in $a given the specific requirements for
remuneration reporting applying to aSX listed companies,
however all amounts reported in the tables within this
report are specified in $nZ, being the reporting currency of
the Company.
non-executive Directors’ fees are those as set at the time
of the Initial public offering (Ipo) of shares in the Company.
the Board will be recommending to shareholders
an increase in the aggregate limit for non-executive
Directors’ fees to a$800,000 per annum at this year’s
Company annual General Meeting. this increase is being
recommended to enable the Board to appoint a further
non-executive Director. It remains the Board’s intention
that Directors’ fees will be reviewed annually, with external
independent remuneration consultants providing advice to
ensure fees reflect market rates. there are no guaranteed
annual increases in any Director’s fees.
non-executive Directors do not participate in the Company
short or long term incentive schemes.
20 kathmandu annual report 2011
the following fees apply per annum, including sub-
committee attendance fees:
Total fees
Chairman
Other Non-Executive Directors
Actual fees paid in year ended 31 July
2011 (converted to reporting currency)
Chairman
Other Non-Executive Directors
AUD $
216,000
113,000
NZD $
283,235
148,174
all of the named persons were employed by the Group
and were key management personnel for the entire year
ended 31 July 2011 and the year ended 31 July 2010, unless
otherwise stated. peter Halkett, Mark todd, Michelle
adams, Caleb nicolson and Grant taylor are employees of
Kathmandu limited (new Zealand domiciled), and Matt
Spencer, tamalin Morton and paul Stern are employees of
Kathmandu pty limited (australian domiciled).
Details of the remuneration of the Directors and other key
management personnel of the Group, for the current and
prior financial years are set out in note 10 of the financial
statements.
B detailS of remuneration
c Service aGreementS
the following executives along with the Directors were
the key management personnel with the authority and
responsibility for planning, directing and controlling the
activities of the Group, directly or indirectly, during the
financial year. the key management personnel also include
the five highest paid officers:
peter halkett - Chief executive officer
mark todd - Chief Financial officer
matt Spencer - General Manager, retail
tamalin morton - General Manager, Marketing
(returned from maternity leave on 23 August 2010)
michelle adams - General Manager, product
caleb nicolson - General Manager, Supply Chain
paul Stern - General Manager, Business Development and
Sustainability (from 1 August 2010)
Grant taylor - Chief Information officer (from 30 August
2010)
all executives are on employment terms consistent with
the remuneration framework outlined in this report. each
of the agreements has an open term, and the period of
notice to be given by the employee is three months. the
agreements provide for three months base salary inclusive
of any applicable superannuation to be paid in the event of a
redundancy.
d detailS of Share-BaSed compenSation
options plan 2009
the Company employee option plan entitles the holder
to acquire one share for each option granted by paying
the prescribed exercise price to the Company once the
option has vested in the holder and the relevant exercise
conditions have been met. the number of options granted
by the Company and thus provided as remuneration to
executive Directors and other key management personnel
during the current financial year is set out below.
2011
Options
grant date
Executive Directors
Peter Halkett
Mark Todd
-
-
Other Key Management Personnel
Matt Spencer
Michelle Adams
Tamalin Morton
Paul Stern
Caleb Nicolson
Grant Taylor
Total
-
-
-
-
-
Options
granted
during the
year
First vesting
date
Last vesting
date
Total fair
value of options
at grant date $
Options vested
during the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
kathmandu annual report 2011 21
Options
grant date
Options
granted
during the
year
2010
Executive Directors
First vesting
date
Last vesting
date
Total fair value
of options at
grant date $
Options vested
during the year
18 Nov 2009
186,218
1 Oct 2010
1 Oct 2013
18 Nov 2009
186,218
1 Oct 2011
1 Oct 2013
18 Nov 2009
186,218
1 Oct 2012
1 Oct 2013
Peter Halkett
Peter Halkett
Peter Halkett
Mark Todd
Mark Todd
Mark Todd
18 Nov 2009
18 Nov 2009
18 Nov 2009
Other Key Management Personnel
Matt Spencer
18 Nov 2009
Matt Spencer
18 Nov 2009
Matt Spencer
18 Nov 2009
Michelle Adams
18 Nov 2009
Michelle Adams
18 Nov 2009
Michelle Adams
18 Nov 2009
Tamalin Morton
18 Nov 2009
Tamalin Morton
18 Nov 2009
Tamalin Morton
18 Nov 2009
Caleb Nicolson
18 Nov 2009
Caleb Nicolson
18 Nov 2009
Caleb Nicolson
18 Nov 2009
Bryan Moore*
18 Nov 2009
Bryan Moore
18 Nov 2009
Bryan Moore
18 Nov 2009
53,377
53,377
53,377
39,541
39,541
39,542
26,755
26,755
26,756
36,932
36,932
36,933
15,518
15,518
15,518
14,983
14,983
14,983
1 Oct 2010
1 Oct 2013
1 Oct 2011
1 Oct 2013
1 Oct 2012
1 Oct 2013
1 Oct 2010
1 Oct 2013
1 Oct 2011
1 Oct 2013
1 Oct 2012
1 Oct 2013
1 Oct 2010
1 Oct 2013
1 Oct 2011
1 Oct 2013
1 Oct 2012
1 Oct 2013
1 Oct 2010
1 Oct 2013
1 Oct 2011
1 Oct 2013
1 Oct 2012
1 Oct 2013
1 Oct 2010
1 Oct 2013
1 Oct 2011
1 Oct 2013
1 Oct 2012
1 Oct 2013
1 Oct 2010
1 Oct 2013
1 Oct 2011
1 Oct 2013
1 Oct 2012
1 Oct 2013
78,925
88,912
90,841
22,623
25,485
26,038
16,759
18,879
19,289
11,340
12,774
13,052
15,653
17,634
18,017
6,577
7,409
7,570
6,350
7,154
7,309
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
1,119,976
518,590
* Bryan Moore was General Manager, Information Services until his resignation on 10 September 2010.
the fair value of the options granted on 18 november 2009
is $0.46 per option.
all options granted during the current year will vest on the
exercise dates above provided the required performance
hurdles are achieved and the employee remains employed
with the Company at the vesting date. In the event an
employee leaves the Company prior to the vesting date the
options will lapse. any options that vest under this plan
must be exercised no later than 18 november 2014. the
total payable per employee on the exercise of one or more
options on a particular day is the price per share in the
Company paid for by the purchasers of shares in the Ipo,
being $a1.70 and $nZ2.1333, regardless of the number
exercised on that day.
no options in the Company were granted or vested in the
previous year. no grants have been made subsequent to
year end.
22 kathmandu annual report 2011
long-term incentive plan november 2010
the Company long term incentive plan entitles the Board to grant performance rights for no cash consideration, at intervals
determined by the Board. rights were offered in 2010 to all executives and senior management personnel domiciled in
australia and new Zealand.
For executives vesting of the rights will be dependent upon the Company achieving earnings per Share (epS) and /or relative
tSr targets over a 2, 3 and 4 year performance period, with 50% of the value of rights allocated under each target.
For senior management vesting of the rights was dependent firstly upon achievement of Company epS targets for FY2011,
and given those targets were achieved, the rights granted will vest on 31 July 2012 providing the personnel concerned
remain employed by the Company.
For each executive the number of rights granted and the applicable performance period over which epS and relative tSr is
measured is set out below, along with the fair value of the rights at the grant date of 29 november 2010.
2011
Grant date
Executive Directors
Peter Halkett
Peter Halkett
Peter Halkett
Mark Todd
Mark Todd
Mark Todd
29 Nov 2010
29 Nov 2010
29 Nov 2010
29 Nov 2010
29 Nov 2010
29 Nov 2010
Other Key Management Personnel
Matt Spencer
Matt Spencer
Matt Spencer
Michelle Adams
Michelle Adams
Michelle Adams
Tamalin Morton
Tamalin Morton
Tamalin Morton
Paul Stern
Paul Stern
Paul Stern
Caleb Nicolson
Caleb Nicolson
Caleb Nicolson
Grant Taylor
Grant Taylor
Grant Taylor
Total
29 Nov 2010
29 Nov 2010
29 Nov 2010
29 Nov 2010
29 Nov 2010
29 Nov 2010
29 Nov 2010
29 Nov 2010
29 Nov 2010
29 Nov 2010
29 Nov 2010
29 Nov 2010
29 Nov 2010
29 Nov 2010
29 Nov 2010
29 Nov 2010
29 Nov 2010
29 Nov 2010
Rights
granted
during the
year
Date
exercisable
Expiry date
Total fair value
of performance
rights at grant
date $
Performance
rights granted in
prior periods vested
during the year
59,048
59,048
59,048
20,833
20,833
20,833
9,925
9,925
9,925
6,131
6,131
6,131
8,759
8,759
8,759
8,759
8,759
8,759
5,952
5,952
5,952
5,357
5.357
5,357
1 Dec 2012
1 Dec 2013
1 Dec 2014
1 Dec 2012
1 Dec 2013
1 Dec 2014
1 Dec 2012
1 Dec 2013
1 Dec 2014
1 Dec 2012
1 Dec 2013
1 Dec 2014
1 Dec 2012
1 Dec 2013
1 Dec 2014
1 Dec 2012
1 Dec 2013
1 Dec 2014
1 Dec 2012
1 Dec 2013
1 Dec 2014
1 Dec 2012
1 Dec 2013
1 Dec 2014
1 Oct 2013
1 Oct 2013
1 Oct 2013
1 Oct 2013
1 Oct 2013
1 Oct 2013
1 Oct 2013
1 Oct 2013
1 Oct 2013
1 Oct 2013
1 Oct 2013
1 Oct 2013
1 Oct 2013
1 Oct 2013
1 Oct 2013
1 Oct 2013
1 Oct 2013
1 Oct 2013
1 Oct 2013
1 Oct 2013
1 Oct 2013
1 Oct 2013
1 Oct 2013
1 Oct 2013
139,353
132,858
126,363
49,166
46,874
44,583
23,423
22,331
21,240
14,469
13,795
13,120
20,671
19,708
18,744
20,671
19,708
18,744
14,047
13,392
12,737
12,643
12,053
11,464
374,292
842,157
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
performance rights granted to each executive will, subject to satisfaction of performance conditions, vest on the basis of
one ordinary share for each performance right which vests, at the end of each performance period.
kathmandu annual report 2011 23
e additional information
retesting against the 15% compound tSr growth target on
cash Bonuses and performance
as noted above, for the current year all cash bonuses that
were available to be paid to key management personnel
1 october each year through to 2013 for this tranche and
the subsequent tranches that will be performance tested for
the first time in 2011 and 2012.
based on achievement of financial performance targets and
company performance
individual KpI’s were paid as a result of the Company and
all key management personnel’s short term cash incentive
individuals meeting those performance targets. no part of
the cash bonuses are payable in future years.
options and performance
the first test date for the vesting of options granted under
the Company employee option plan was 1 october 2010
(for one-third of the options granted). In the event that the
initial tranche of options do not vest on that date because
is dependent upon the Company’s overall financial
performance for each financial year and their long term
incentive is dependent upon both earnings per share
growth and relative total shareholder returns over a range of
performance periods.
With reference to the measurement of long term incentive
performance the table below outlines the Company’s
the tSr performance target for the tested period has
earnings and share performance since its listing on 13
not been met, the options do not lapse. there is annual
november 2009:
Year
NPAT Growth
EPS cents
per share
EPS
growth
Share price
at start of
year
Share price
at end of year
Share price
growth
Ordinary dividends paid
or declared per share
FY2010
$9.4m
NA
FY2011
$39.1m
316%
0.3
19.5
NA
65x
$2.13
$2.05
$2.05
$2.20
(3.8%)
7.3%
$0.07
$0.10
Share price quoted is the nZX listing price. the Company is listed on both the aSX and nZX and options will vest on both
exchanges, dependent on where the employee is based.
Historical performance prior to the Company’s listing is not considered meaningful with respect to the Company’s
performance and its impact on shareholder wealth.
Shares under options or performance rights
there are no unissued ordinary shares of the Company under any vested options or performance rights at the date of this report.
remuneration of auditorS
Details of remuneration of auditors is set out in note 24 of the Financial Statements.
non-audit Services
pricewaterhouseCoopers were appointed auditors of Kathmandu Holdings limited in 2009 and whilst their main role is
to provide audit services to the Company, the Company does employ their specialist advice where appropriate. In each
instance, the Board has considered the nature of the advice sought in the context of the audit relationship and in accordance
with the advice received from the audit and risk Committee, does not consider these services compromised the auditor
independence for the following reasons:
all non-audit services have been reviewed by audit and risk Committee to ensure they do not impact the
impartiality and objectivity of the auditor.
none of the services undermined the general principles relating to auditor independence, including not reviewing or
auditing the auditor’s own work, not acting in a management or a decision making capacity for the Company, not acting
as advocate for the Company or not jointly sharing economic risk or rewards.
a copy of the auditor’s independence declaration is contained on page 27 of this annual report.
this report is made in accordance with a resolution of the Directors.
James Strong
Chairman
Peter Halkett
Managing Director
kathmandu annual report 2011 25
corporate governance
the Board and management of the Company are committed
to ensuring that the Company adheres to best practice
governance principles and maintains the highest ethical
standards. the Board is responsible for the overall corporate
governance of the Company, including adopting the
appropriate policies and procedures and seeking to ensure
Directors, management and employees fulfil their functions
effectively and responsibly.
the Company is listed on both the new Zealand and
australian stock exchanges. Corporate governance
principles and guidelines have been introduced in both
countries. these include the australian Securities exchange
(aSX) Corporate Governance Council Corporate Governance
principles and recommendations, the new Zealand Stock
exchange listing rules relating to corporate governance,
the nZX Corporate Governance Best practice Code, and
the new Zealand Financial Markets authority’s Corporate
Governance principles and Guidelines (collectively, the
principles).
the Board considers that the Company’s corporate
governance practices and procedures substantially reflect
the principles. the full content of the Company’s Corporate
Governance policies, practices and procedures can be found
on the Company’s website
(www.kathmanduholdings.com).
the main policies and practices adopted by the Company
are summarised below.
Board charterS of directorS and itS
committeeS
the Board has adopted a written charter to provide a
framework for the effective operation of the Board. the
charter addresses the following matters and responsibilities
of the Board:
enhancing Shareholder value;
oversight of the Company, including its control and
accountability systems;
appointing and removing the Managing Director (or
equivalent) and the Finance Director;
ratifying the appointment, and where appropriate, the
removal of the senior executives;
input into and approval of corporate strategy and
performance objectives;
reviewing and ratifying systems of risk management
and internal compliance and control, codes of conduct
and legal compliance;
monitoring senior management’s performance
and implementation strategy, and seeking to ensure
appropriate resources are available;
approving and monitoring the progress of major capital
expenditure, capital management and acquisitions
and divestitures;
approving budgets; and
approving and monitoring financial and other reporting.
Board compoSition
at present, there are six Directors on the Board. Four out of
the six Directors are non-executive Directors. peter Halkett,
(Managing Director and Chief executive officer), and Mark
todd (Finance Director and Chief Financial officer) are the
only executive Directors on the Board. the Chairman of
the Board is James Strong. the biography of each Board
member, including each Director’s skills, experience,
expertise and the term of office held by each Director at
the date of this annual report is set out in the “Board of
Directors” section of this annual report.
independence of directorS
the factors that the Company will take into account when
assessing the independence of its Directors are set out in
its Charter, a copy of which is available on the Company’s
website (www.kathmanduholdings.com).
the Managing Director (peter Halkett) and Finance
Director (Mark todd) are employed by the Company or
another Group member in an executive capacity and are
not considered to be independent Directors based on
the criteria set out in the Board Charter. all remaining
Directors satisfy the criteria and are considered independent
Directors, namely James Strong, John Harvey, John Holland
and Sandra Mcphee.
Board committeeS
the Board may from time to time establish appropriate
committees to assist in the discharge of its responsibilities.
the Board has established the audit and risk Committee
and the remuneration and nomination Committee.
other committees may be established by the Board as and
when required. Membership of Board committees will be
based on the needs of the Company, relevant legislative
and other requirements and the skills and experience of
individual Directors.
audit and riSk committee
under its charter, this committee must have at least three
members, a majority of whom must be independent
Directors and all of whom must be non-executive Directors.
Currently, all the non-executive Directors are members of
this committee. John Harvey is Chair of the committee. the
primary role of this committee includes:
overseeing the process of financial reporting, internal
control, continuous disclosure, financial and non-
financial risk management and compliance and external
26 kathmandu annual report 2011
audit;
monitoring Kathmandu’s compliance with laws and
continuouS diScloSure policy
the Company is committed to observing its disclosure
regulations and Kathmandu’s own codes of conduct
obligations under the listing rules. the Company has a
and ethics;
policy which establishes procedures which are aimed at
encouraging effective relationships with, and
ensuring that Directors and Management are aware of and
communication between, the Board, Management and
fulfil their obligations in relation to the timely disclosure of
Kathmandu’s external auditor; and
material price-sensitive information.
evaluating the adequacy of processes and controls
established to identify and manage areas of potential
risk and to seek to safeguard the Company’s assets.
under the charter it is the policy of the Company that its
external auditing firm must be independent of the Company.
the committee will review and assess the independence of
the external auditor on an annual basis.
remuneration and nomination committee
under its charter, this committee must have at least three
members, a majority of whom must be independent
Directors and all of whom must be non-executive Directors.
Currently, all the non-executive Directors are members of
this committee. Sandra Mcphee is Chair of the committee.
the main functions of the committee, are to assist the
Board with a view to establishing a Board of effective
composition, size, expertise and commitment to adequately
discharge its responsibilities and duties, and assist the
Board with a view to discharging its responsibilities to
Shareholders and other stakeholders to seek to ensure that
the Company:
has coherent remuneration policies and practices
which enable the Company to attract and retain
executives and Directors who will create value for
Shareholders;
fairly and responsibly remunerates Directors and
executives, having regard to the performance of the
Company, the performance of the executives and
the general remuneration environment; and
has effective policies and procedures to attract,
motivate and retain appropriately skilled persons
to meet the Company’s needs.
riSk manaGement policy
the identification and proper management of the
Company’s risk are an important priority of the Board. the
Company has a risk management policy appropriate for
its business. this policy highlights the risks relevant to the
SecuritieS tradinG policy
the Company has guidelines for dealing in securities which
are intended to explain the prohibited type of conduct in
relation to dealings in securities under the Corporations
act 2001 (australia) and the Securities Markets act 1988
(nZ) and to establish a best practice procedure in relation
to Directors’, management’s and employees’ dealings in
Shares in the Company.
Subject to the overriding restriction that persons may not
deal in Shares while they are in possession of material
price sensitive information, Directors and management will
only be permitted to deal in Shares during certain ‘window
periods’, following the release of the Company’s full and
half year financial results or the release of a disclosure
document offering shares in the Company. outside of these
periods, Directors and management must receive clearance
for any proposed dealing in Shares.
code of conduct
the Board recognises the need to observe the highest
standards of corporate practice and business conduct.
accordingly, the Board has a formal code of conduct, to be
followed by all employees and officers. the key aspects of
this code are to:
act with honesty, integrity and fairness and in the best
interest of the Company;
act in accordance with all applicable laws, regulations,
policies and procedures; and
use Company resources and property properly.
communicationS with ShareholderS
the Company is committed to keeping Shareholders
informed of all major developments affecting the
Company’s state of affairs relevant to Shareholders
in accordance with all applicable laws. Information is
communicated to Shareholders through the lodgement
of all relevant financial and other information with aSX
and nZX and publishing information on the Company’s
website (www.kathmanduholdings.com). In particular,
Company’s operations, and the Company’s commitment
the Company’s website will contain information about the
to designing and implementing systems and methods
Company, including media releases, key policies and the
appropriate to minimise and control its risk. the audit
terms of reference of the Company’s Board Committees.
and risk Committee is responsible for monitoring risk
all relevant announcements made to the market and any
management and establishing procedures which seek to
other relevant information will be posted on the Company’s
provide assurance that major business risks are identified,
website as soon as they have been released to aSX
consistently assessed and appropriately addressed.
and nZX.
kathmandu annual report 2011 27
PricewaterhouseCoopers, 5 Sir Gil Simpson Drive, Burnside, PO Box 13 244, Christchurch 8053, New Zealand
T: +64 (3) 374 3000, F: +64 (3) 374 3001, www.pwc.com/nz
kAThMANdu annual report 2011 29
financial statements
For the year ended 31 July 2011
Directory
Directors’ Approval of Financial Statements
Income Statements
Statements of Comprehensive Income
Statements of Changes in Equity
Balance Sheets
Statements of Cash Flows
Notes to the Financial Statements
Auditors’ Report
Summary of significant accounting policies
Standards, interpretations and amendments to published standards
Income and expenses
Costs associated with the Initial Public Offering (IPO)
Income tax expense
Reconciliation of net profit after taxation with cash inflow from operating activities47
Cash and cash equivalents
Trade and other receivables
Inventories
Intangible assets
Investment in subsidiaries
CONTENTS OF NOTES TO FINANCIAL STATEMENTS
1 General information
2
3
4
5
6
7
8
9
10 Related party disclosures
11 Derivative financial instruments
12
13 Property, plant and equipment
14
15
16 Deferred taxation
17 Trade and other payables
Interest bearing liabilities
18
19 Contributed equity - ordinary shares
20 Employee share based remuneration
21 Reverse acquisition
22 Reserves and retained earnings
23 Dividends
24 Remuneration of auditors
25 Contingent liabilities
26 Contingent assets
27 Commitments
28 Financial risk management
29 Segmental information
30 Earnings per share
31 Earthquake disclosures
32 Events occurring after the balance date
29
30
31
32
33
34
35
36
73
36
36
43
44
45
46
47
48
48
49
52
52
53
54
55
56
57
58
59
59
62
62
63
63
64
64
64
65
70
72
72
72
30 kAThMANdu annual report 2011
directors’ approval of fi nancial
statements
For the year ended 31 July 2011
authorisation for Issue
the Board of directors authorised the issue of these Financial Statements on 21 September 2011.
approval by Directors
the directors are pleased to present the Financial Statements of Kathmandu holdings limited for the year ending 31 July 2011 on
pages 31 to 72.
director
director
director
For and on behalf of the Board of directors
21 September 2011
date
21 September 2011
date
date
income statements
For the year ended 31 July 2011
kAThMANdu annual report 2011 31
Group
parent
note
2011
2010
2011
2010
nZ$’000
nZ$’000
nZ$’000
nZ$’000
Sales
Cost of sales
Gross profit
Other income
Selling expenses
Administration and general expenses
Finance income
Finance expenses
Finance costs - net
profit before income tax and costs associated with Ipo
Costs associated with IPO
profit / (loss) before income tax
Income tax (expense) / benefit
-
-
-
-
-
(1,235)
(1,235)
2
-
2
306,143
(105,560)
200,583
245,812
(90,523)
155,289
-
-
-
-
(94,812)
(41,751)
64,020
236
(7,039)
(6,803)
57,217
-
57,217
(18,151)
4
4
5
6
-
20,341
-
(1,868)
18,473
49
-
49
(77,556)
(29,278)
48,455
2,277
(11,934)
(9,657)
38,798
(16,834)
21,964
(12,577)
18,522
-
(1,233)
(11,572)
18,522
(12,805)
(106)
446
profit / (loss) after income tax
39,066
9,387
18,416
(12,359)
Basic earnings per share
Diluted earnings per share
Weighted average basic ordinary shares outstanding (‘000)
Weighted average diluted ordinary shares outstanding (‘000)
30
30
19.5cps
19.2cps
200,000
203,437
0.3cps
0.3cps
2,754,829
2,755,608
32 kAThMANdu annual report 2011
statements of comprehensive income
For the year ended 31 July 2011
Group
parent
note
2011
2010
2011
2010
nZ$’000
nZ$’000
nZ$’000
nZ$’000
profit / (loss) after tax
39,066
9,387
18,416
(12,359)
Movement in cash flow hedge reserve
Movement in foreign currency translation reserve
other comprehensive income for the year, net of tax
22
22
(5,055)
1,409
(3,646)
(2,580)
(1,515)
(4,095)
-
-
-
-
-
-
total comprehensive income for the year attributable to
shareholders
35,420
5,292
18,416
(12,359)
kAThMANdu annual report 2011 33
statements of changes in equity
For the year ended 31 July 2011
Group
Share
Capital
Cash Flow
Hedge
reserve
Foreign
Currency
translation
reserve
employee
Share
option
reserve
retained
earnings total equity
nZ$’000
nZ$’000
nZ$’000
nZ$’000
nZ$’000
nZ$’000
Balance as at 31 July 2009
Total comprehensive income and expense
Issue of share capital
Movement in employee share option reserve
96,146
-
100,903
-
(1,420)
(2,580)
-
-
3,995
(1,515)
-
Balance as at 31 July 2010
197,049
(4,000)
2,480
Total comprehensive income and expense
Dividends paid
Movement in employee share option reserve
-
-
-
(5,055)
1,409
-
-
-
Balance as at 31 July 2011
197,049
(9,055)
3,889
-
-
-
246
246
-
-
379
625
33,965
9,387
-
-
132,686
5,292
100,903
246
43,352
239,127
39,066
35,420
(20,000)
(20,000)
-
379
62,418
254,926
parent
Balance as at 31 July 2009
Total comprehensive income and expense
Issue of share capital
Movement in employee share option reserve
Balance as at 31 July 2010
Total comprehensive income and expense
Dividends paid
Movement in employee share option reserve
Balance as at 31 July 2011
422,137
Share
Capital
Cash Flow
Hedge
reserve
Foreign
Currency
translation
reserve
employee
Share
option
reserve
retained
earnings total equity
nZ$’000
nZ$’000
nZ$’000
nZ$’000
nZ$’000
nZ$’000
-
-
422,137
-
422,137
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
246
246
-
-
379
625
-
-
(12,359)
(12,359)
-
-
422,137
246
(12,359)
410,024
18,416
18,416
(20,000)
(20,000)
-
379
(13,943)
408,819
34 kAThMANdu annual report 2011
balance sheets
aS at 31 July 2011
aSSetS
Current assets
Cash and cash equivalents
Trade and other receivables
Related party receivable
Derivative financial instruments
Inventories
Current tax assets
Total current assets
non-current assets
Property, plant and equipment
Intangible assets
Derivative financial instruments
Investment in subsidiaries
Deferred tax
Total non-current assets
total assets
LIaBILItIeS
Current liabilities
Trade and other payables
Derivative financial instruments
Current tax liabilities
Total current liabilities
non-current liabilities
Derivative financial instruments
Interest bearing liabilities
Total non-current liabilities
total liabilities
net assets
eQuItY
Contributed equity - ordinary shares
Reserves
Retained earnings
total equity
note
Group
2011
nZ$’000
2010
nZ$’000
parent
2011
nZ$’000
2010
nZ$’000
8
9
10
11
12
13
14
11
15
16
17
11
11
18
19
22
22
3,574
2,339
-
2
54,001
-
59,916
32,822
243,685
-
-
3,467
279,974
339,890
21,012
10,505
6,666
38,183
301
46,480
46,781
84,964
4,736
3,903
-
-
37,416
-
46,055
28,018
241,825
44
-
3,472
273,359
319,414
16,891
4,819
4,297
26,007
315
53,965
54,280
80,287
5
192
84,216
-
-
3,214
87,627
-
-
-
321,234
-
321,234
408,861
42
-
-
42
-
-
-
42
6
181
88,225
-
-
1
88,413
-
-
-
321,234
445
321,679
410,092
68
-
-
68
-
-
-
68
254,926
239,127
408,819
410,024
197,049
(4,541)
62,418
254,926
197,049
(1,274)
43,352
239,127
422,137
625
(13,943)
408,819
422,137
246
(12,359)
410,024
kAThMANdu annual report 2011 35
statements of cash flows
For the year ended 31 July 2011
Cash flows from operating activities
Cash was provided from:
Receipts from customers
Dividends received
Interest received
Cash was applied to:
Payments to suppliers and employees
Income tax paid
Interest paid
Group
parent
note
2011
nZ$’000
2010
nZ$’000
2011
nZ$’000
2010
nZ$’000
306,618
-
179
306,797
246,063
14,175
6,785
267,023
244,422
-
258
244,680
189,699
11,904
10,474
212,077
-
20,000
-
20,000
1,477
2,875
-
4,352
-
-
2
2
257
-
-
257
net cash inflow from operating activities
7
39,774
32,603
15,648
(255)
Cash flows from investing activities
Cash was provided from:
Proceeds from sale of property, plant and equipment
Cash was applied to:
Purchase of property, plant and equipment
Purchase of intangibles
net cash (outflow) from investing activities
Cash flows from financing activities
Cash was provided from:
Proceeds from share issue
Proceeds of loan advances
Cash was applied to:
Costs associated with IPO
Dividends paid
Repayment of loan advances
13
14
21
-
-
11,188
676
11,864
9
9
12,823
746
13,569
(11,864)
(13,560)
-
-
-
-
-
-
-
240,223
240,223
-
20,000
248,177
268,177
105,426
126,884
232,310
21,357
-
258,511
279,868
-
4,351
4,351
-
20,000
-
20,000
-
-
-
-
-
-
-
261
261
-
-
-
net cash inflow / (outflow) from financing activities
(27,954)
(47,558)
(15,649)
261
net increase / (decrease) in cash held
Opening cash and cash equivalents
Effect of foreign exchange rates
Closing cash
(44)
(28,515)
4,736
(1,118)
3,574
32,209
1,042
4,736
(1)
6
-
5
8
6
-
-
6
36 kAThMANdu annual report 2011
notes to the financial statements
1 GENERAL INFORMATION
Kathmandu holdings limited (the Company) and its
subsidiaries (together the Group) is a designer, marketer and
retailer of clothing and equipment for travel and adventure.
It operates in new Zealand, australia and the united Kingdom.
the Company is a limited liability company incorporated and
domiciled in new Zealand. the address of its registered office
is 11 Mary Muller drive, heathcote, Christchurch.
these audited consolidated financial statements have been
approved for issue by the Board of directors on 21 September
2011.
2 SuMMARY OF SIGNIFICANT
ACCOuNTING POLICIES
these financial statements have been prepared in accordance
with Generally accepted accounting practice in new
Zealand. they comply with the new Zealand equivalents to
International Financial reporting Standards (nZ IFrS)
and other applicable Financial reporting Standards, as
appropriate for profit-oriented entities. the financial
statements also comply with International Financial
reporting Standards (IFrS).
the reporting currency used in the preparation of these
consolidated financial statements is new Zealand dollars,
rounded where necessary to the nearest thousand dollars.
(A) BASIS OF PREPARATION
the principal accounting policies adopted in the preparation
of the financial statements are set out below. these policies
have been consistently applied to all periods presented, unless
otherwise stated.
Reverse Acquisition
the acquisition of Milford Group holdings limited by
Kathmandu holdings limited in november 2009 was
recognised as a reverse acquisition and the 2010 consolidated
financial statements were therefore prepared as a continuation
of the financial statements of the accounting acquirer, Milford
Group holdings limited.
as a result:
the 2010 retained earnings of the Group represent
the retained earnings of Milford Group holdings
limited from the date of its incorporation, plus the
results of other combining entities from
the date of acquisition.
the 2010 consolidated balance sheet comprises the
existing consolidated net assets of Milford Group
holdings limited and its controlled entities measured
at their historical cost, except for derivatives which are
measured at fair value, plus the fair value of the net
assets of the other combining entities.
Entities reporting
the financial statements for the “parent” are for Kathmandu
holdings limited as a separate legal entity.
the consolidated financial statements for the “Group” are for
the economic entity comprising Kathmandu holdings limited
and its subsidiaries. the Group consists of:
kathmandu holdings Limited
parent Company
Milford Group holdings Limited
100% owned by Kathmandu holdings limited
kathmandu Limited
100% owned by Milford Group holdings limited
kathmandu Pty Limited
100% owned by Milford Group holdings limited
kathmandu (u.k.) Limited
100% owned by Milford Group holdings limited
the Company and Group are designated as profit oriented
entities for financial reporting purposes.
Statutory base
Kathmandu holdings limited is a company registered under
the Companies act 1993. the financial statements have been
prepared in accordance with the requirements of the Financial
reporting act 1993 and the Companies act 1993.
historical cost convention
these financial statements have been prepared under the
historical cost convention, as modified by the revaluation of
certain assets as identified in specific accounting policies
below.
Comparatives
Certain comparatives have been reclassified in order to
conform to the current period presentation and disclosure.
Critical accounting estimates
the Group makes estimates and assumptions concerning the
future. the resulting accounting estimates will, by definition,
seldom equal the related actual results. the estimates and
assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities
within the next financial year are discussed below
(i) Estimated impairment of goodwill and brands
the group tests annually whether goodwill and brands have
suffered any impairment; in accordance with the accounting
policy stated in note 2 (q) (i) & (ii). the recoverable amounts of
cash-generating units have been determined based on the fair
value less cost to sell calculation. these calculations require
the use of estimates (note 14).
(ii) Stock obsolescence
the Group assesses the likely residual value of inventory. a
stock provision is recognised for stock which is selling for
less than cost. any increase in these provisions is taken as a
reduction to inventory on the balance sheet and expensed into
gross profit on the income statement.
(B) PRINCIPLES OF CONSOLIdATION
(i) Subsidiaries
Subsidiaries are all entities (including special purpose entities)
over which the Group has the power to govern the financial
and operating policies generally accompanying a shareholding
of more than one half of the voting rights. the existence and
effect of potential voting rights that are currently exercisable or
convertible are considered when assessing whether the Group
controls another entity. Subsidiaries are fully consolidated
from the date on which control is transferred to the Group.
they are de-consolidated from the date that control ceases.
the acquisition method of accounting is used to account
for business combinations by the Group. the consideration
transferred for the acquisition of a subsidiary is the fair values
of the assets transferred, the liabilities incurred and the equity
interests issued by the Group. the consideration transferred
includes the fair value of any asset or liability resulting from
a contingent consideration arrangement. acquisition-related
costs are expensed as incurred. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. on an acquisition-by-acquisition basis,
the Group recognises any non-controlling interest in the
acquiree either at fair value or at the non-controlling interest’s
proportionate share of the acquiree’s net assets.
the excess of the consideration transferred over the amount of
any non-controlling interest in the acquiree and the acquisition
date fair value of any previous equity interest in the acquiree
kAThMANdu annual report 2011 37
over the fair value of the Group’s share of the identifiable net
assets acquired is recorded as goodwill. If this is less than
the fair value of the net assets of the subsidiary acquired in
the case of a bargain purchase, the difference is recognised
directly in the income statement.
Inter-company transactions, balances and unrealised gains
on transactions between Group companies are eliminated.
unrealised losses are also eliminated. accounting policies of
subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
(ii) Transactions and non-controlling interests
the Group treats transactions with non-controlling interests as
transactions with equity owners of the Group. For purchases
from non-controlling interests, the difference between any
consideration paid and the relevant share acquired of the
carrying value of net assets of the subsidiary is recorded
in equity. Gains or losses on disposals to non-controlling
interests are also recorded in equity.
(C) SEGMENT REPORTING
an operating segment is a component of an entity that
engages in business activities which earns revenue and
incurs expenses and where the chief decision maker reviews
the operating results on a regular basis and makes decisions
on resource allocation. the Group is organised into three
operating segments, depicting the three geographical regions
the Group operates in.
(d) FOREIGN CuRRENCY TRANSLATION
(i) Functional and presentation currency
Items included in the financial statements of each of the
subsidiaries’ operations are measured using the currency
of the primary economic environment in which it operates
(‘functional currency’). the financial statements are presented
in new Zealand dollars, which is the Company’s functional
currency and Group’s presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of
the transaction. Foreign exchange gains and losses resulting
from the settlement of such transactions and from the
translation at year end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised
in the income statement, except when deferred in equity
as qualifying cash flow hedges. translation differences on
monetary financial assets and liabilities are reported as part of
the fair value gain or loss.
38 kAThMANdu annual report 2011
(iii) Group companies
(iv) dividend income
the results and financial position of all the Group entities (none
of which has the currency of a hyper-inflationary economy)
that have a functional currency different from the presentation
currency are translated into the presentation currency as
follows:
dividend income is recognised when the right to receive
payment is established.
(F) CuRRENT ANd dEFERREd INCOME TAX
assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance sheet;
Income and expenses for each income statement are
translated at average exchange rates (unless this average is
not a reasonable approximation of the cumulative effect of
the rates prevailing on the transaction dates, in which case
income and expenses are translated at the rate on the dates
of the transactions); and all resulting exchange differences are
recognised as a separate component of equity.
on consolidation, exchange differences arising from the
translation of the net investment in foreign operations, and
of borrowings and other currency instruments designated
as hedges of such investments, are taken to shareholders’
equity. When a foreign operation is partially disposed of or
sold, exchange differences that were recorded in equity are
recognised in the income statement as part of the gain or loss
on sale.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate.
(E) REVENuE RECOGNITION
revenue comprises the fair value of the consideration received
or receivable for the sale of goods and services, excluding
Goods and Services tax, rebates and discounts and after
eliminating sales within the Group. revenue is recognised as
follows:
(i) Sales of goods
Sales of goods are recognised when a Group entity has
delivered a product to the customer. retail sales are usually
in cash or by credit card. the recorded revenue is the gross
amount of sale (excluding GSt), including credit card fees
payable for the transaction. Such fees are included in selling
expenses.
(ii) Sales of services
Management fees are recognised in the accounting period in
which the services are rendered.
(iii) Interest income
Interest income is recognised on a time-portion basis using the
effective interest method.
the tax expense for the year comprises current and deferred
tax. tax is recognised in the income statement, except to the
extent that it relates to items recognised directly in equity. In
this case, the tax is also recognised in equity.
the current income tax charge is calculated on the basis of
the tax laws enacted or substantively enacted at the balance
sheet date in the countries where the Company’s subsidiaries
operate and generate taxable income. Management
periodically evaluates positions taken in tax returns with
respect to situations in which applicable tax regulations is
subject to interpretation and establishes provisions where
appropriate on the basis of amounts expected to be paid to
the tax authorities.
deferred income tax is provided in full, using the liability
method, on temporary differences arising between tax
bases of assets and liabilities and their carrying amounts
in the consolidated financial statements. however, the
deferred income tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than
a business combination that at the time of the transaction
affects neither accounting nor taxable profit or loss. deferred
income tax is determined using tax rates (and laws) that have
been enacted or substantially enacted by the balance sheet
date and are expected to apply when the related deferred
income tax asset is realised or the deferred income tax liability
is settled.
deferred income tax assets are recognised to the extent that
it is probable that future taxable profit will be available against
which the temporary differences can be utilised.
deferred income tax is provided on temporary differences
arising on investments in subsidiaries and associates, except
where the timing of the reversal of the temporary difference is
controlled by the Group and it is probable that the temporary
difference will not reverse in the foreseeable future.
(G) GOOdS ANd SERVICES TAX (GST)
the income statement and the cash flow statement have
been prepared so that all components are stated exclusive of
GSt. all items in the balance sheet are stated net of GSt, with
the exception of receivables and payables, which include GSt
invoiced.
(h) LEASES
The Group is the lessee
leases in which a significant portion of the risks and rewards
of ownership are retained by the lessor are classified as
operating leases. payments made under operating leases (net
of any incentives received from the lessor) are charged to the
income statement on a straight-line basis over the period of
the lease.
(I) IMPAIRMENT OF NON-FINANCIAL ASSETS
assets are reviewed for impairment whenever 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 any circumstances identifying a
possible impairment have been identified. 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 to sell
and value in use.
For the purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable
cash flows (cash generating units).
(J) 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, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities on the balance sheet.
(k) TRAdE RECEIVABLES
kAThMANdu annual report 2011 39
the amount of the provision is the difference between the
asset’s carrying amount and the present value of estimated
future cash flows, discounted at the effective interest rate.
the amount of the provision is recognised in the income
statement.
(L) INVENTORIES
Inventories are stated at the lower of cost and net realisable
value. Cost is determined on a weighted average cost method
and includes expenditure incurred in acquiring the inventories
and bringing them to their existing location and condition. net
realisable value is the estimated selling price in the ordinary
course of business, less applicable variable selling expenses.
(M) INVESTMENTS ANd OThER FINANCIAL
ASSETS
the Group classifies its investments in the following
categories: loans and receivables, and financial assets at
fair value through profit or loss. the classification depends
on the purpose for which the investments were acquired.
Management determines the classification of its investments
at the initial recognition and re-evaluates this designation at
every reporting date.
(i) Loans and receivables
loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. they arise when the Group provides money, goods
or services directly to a debtor with no intention of selling the
receivable. they are included in current assets, except for those
with maturities greater than 12 months after the balance sheet
date which are classified as non-current assets.
(ii) Financial assets at fair value through
profit or loss
Financial assets at fair value through profit or loss are financial
assets held for trading. a financial asset is classified in this
trade receivables are recognised initially at fair value and
category if acquired principally for the purpose of selling in the
subsequently measured at amortised cost, less provision for
short-term. derivatives are also categorised as held for trading
doubtful debts.
unless they are designated as hedges. assets in this category
are classified as current assets.
the collectability of trade receivables is reviewed on an
ongoing basis. debts, which are known to be uncollectible, are
Financial assets carried at fair value through profit or loss
written off. a provision for doubtful receivables is established
are initially recognised at fair value, and transaction costs
when there is objective evidence that the Group will not be
are expensed in the income statement. Financial assets are
able to collect all amounts due according to the original terms
derecognised when the rights to receive cash flows from the
of receivables. Significant financial difficulties of the debtor,
investments have expired or have been transferred and the
probability that the debtor will enter bankruptcy or financial
Group has transferred substantially all risks and rewards of
reorganisation, and default or delinquency in payments are
ownership. loans and receivables are carried at amortised
considered indicators that the trade receivable is impaired.
cost using the effective interest method.
40 kAThMANdu annual report 2011
Gains or losses arising from changes in the fair value of
‘financial assets at fair value through profit or loss’ are
presented in the income statement, except for foreign
exchange movements on monetary assets, which are
recognised in the income statement within ‘finance costs
– net’. dividend income from financial assets at fair value
through profit or loss is recognised in the income statement
as part of other income when the Group’s right to receive
payments is established.
the Group assesses at each balance sheet date whether
there is objective evidence that a financial asset of a group of
financial assets is impaired. In the case of equity securities
classified as available for sale, a significant or prolonged
decline in the fair value of the security below its cost is
considered in determining whether the securities are impaired.
If any such evidence exists for available for sale financial
assets, the cumulative loss – measured as the difference
between the acquisition cost and the current fair value,
less any impairment loss on that financial asset previously
recognised in profit or loss – is removed from equity and
recognised in the income statement. Impairment losses
recognised in the income statement on equity instruments are
not reversed through the income statement.
(N) dERIVATIVES
derivatives are initially recognised at fair value on the date
a derivative contract is entered into and are subsequently
re-measured to their fair value. the method of recognising
the resulting gain or loss depends on whether the derivative
is designated as a hedging instrument, and if so, the nature
of the item being hedged. the Group designates certain
derivatives as either; (1) hedges of the fair value of recognised
assets or liabilities or a firm commitment (fair value hedge); or
(2) hedges of highly probable forecast transactions (cash flow
hedges).
the Group documents at the inception of the transaction
the relationship between hedging instruments and hedged
items, as well as its risk management objective and strategy
for undertaking various hedge transactions. the Group also
documents its assessment, both at hedge inception and on
an ongoing basis, of whether the derivatives that are used in
hedging transactions have been and will continue to be highly
effective in offsetting changes in fair values or cash flows of
hedged items.
which the effective interest method is used is amortised to
profit and loss over the period to maturity.
(ii) Cash flow hedge
the effective portion of changes in the fair value of derivatives
that are designated and qualify as cash flow hedges is
recognised in equity in the hedging reserve. the gain or loss
relating to the ineffective portion is recognised immediately
in the income statement. amounts accumulated in equity are
recycled in the income statement in the periods when the
hedged item will affect profit or loss (for instance when the
forecast sale that is hedged takes place). however, when the
forecast transaction that is hedged results in the recognition of
a non-financial asset (for example, inventory) or a non-financial
liability, the gains and losses previously deferred in equity are
transferred from equity and included in the measurement of
the initial cost or carrying amount of the asset or liability.
When a hedging instrument expires or is sold or terminated,
or when a hedge no longer meets the criteria for hedge
accounting, any cumulative gain or loss existing in equity
at that time remains in equity and is recognised when the
forecast transaction is ultimately recognised in the income
statement. When a forecast transaction is no longer expected
to occur, the cumulative gain or loss that was reported in
equity is immediately transferred to the income statement.
(iii) derivatives that do not qualify for
hedge accounting
Certain derivative instruments do not qualify for hedge
accounting or hedge accounting has not been adopted.
Changes in the fair value of these derivative instruments
are recognised immediately in the income statement within
‘finance costs – net’.
(O) FAIR VALuE ESTIMATION
the fair value of financial assets and financial liabilities must be
estimated for recognition and measurement or for disclosure
purposes.
the fair value of financial instruments that are not traded in
an active market (for example, over-the-counter derivatives)
is determined using valuation techniques. the fair value of
forward exchange contracts is determined using forward
exchange market rates at the balance sheet date.
(i) Fair value hedge
Changes in the fair value of derivatives that are designated
and qualify as fair value hedges are recorded in the income
statement, together with any changes in the fair value of the
hedged asset or liability that are attributable to the hedged risk.
If the hedge no longer meets the criteria for hedge accounting,
the adjustment to the carrying amount of a hedged item for
Quoted market prices or dealer quotes for similar instruments
are used for long-term debt. other techniques, such as
estimated discounted cash flows, are used to determine fair
value for the remaining financial instruments. the fair value
of interest rate swaps is calculated as the present value of the
estimated future cash flows. the fair value of forward foreign
exchange contracts is determined using quoted forward
exchange rates at the balance sheet date.
kAThMANdu annual report 2011 41
the carrying value less impairment provision of trade
(Q) INTANGIBLE ASSETS
receivables and payables are assumed to approximate their fair
values.
(i) Goodwill
the only financial instruments held by the Group that are
measured at fair value are over the counter derivatives. these
derivatives have all been determined to be within level 2 (for
the purposes of nZ IFrS 7) of the fair value hierarchy as all
significant inputs required to ascertain the fair value of these
derivatives are observable.
(P) PROPERTY, PLANT ANd EQuIPMENT
all property, plant and equipment are stated at historical cost
less depreciation and impairment. historical cost includes
expenditure that is directly attributable to the acquisition of
the items. Cost may also include transfers from equity of
any gains/losses on qualifying cash flow hedges of foreign
currency purchases of property, plant and equipment.
Subsequent costs are included in the asset’s carrying amount
or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with
the item will flow to the Group and the cost of the item can
be measured reliably. all other repairs and maintenance are
Goodwill arises on the acquisition of subsidiaries. Goodwill
represents the excess of the cost of the acquisition over the
Group’s interest in the net fair value of the assets and liabilities
of the acquiree. Separately recognised goodwill is tested
annually for impairment and carried at cost less accumulated
impairment losses. Impairment losses on goodwill are not
reversed.
Goodwill is allocated to cash-generating units for the purpose
of impairment testing. the allocation is made to those cash-
generating units or groups of cash-generating units that are
expected to benefit from the business combination in which
the goodwill arose.
(ii) Brand
acquired brands are carried at original cost based on
independent valuation obtained at the date of acquisition.
the brand represents the price paid to acquire the rights to use
the Kathmandu brand. the brand is not amortised. Instead the
brand is tested for impairment annually or more frequently if
events or changes in circumstances indicate that it might be
impaired, and is carried at cost less accumulated impairment
losses.
charged to the income statement during the financial period in
(iii) Software costs
which they are incurred.
depreciation of property, plant and equipment is calculated
using diminishing value method so as to expense the cost of
the assets over their useful lives. the rates are as follows:
Leasehold Improvements
10 – 25 %
Office, Plant and Equipment
10 – 48 %
Furniture and Fittings
Computer Equipment
Motor Vehicles
10 – 48 %
20 – 60%
15 – 30%
Software costs have a finite useful life. Software costs are
capitalised and written off over the useful economic life of four
years.
Costs associated with developing or maintaining computer
software programs are recognised as an expense as incurred.
Costs that are directly associated with the production of
identifiable and unique software products controlled by the
Group, and that will probably generate economic benefits
exceeding costs beyond one year, are recognised as
intangible assets. direct costs include the costs of software
development employees.
the assets’ residual value and useful lives are reviewed and
adjusted if appropriate at each balance sheet date.
(R) TRAdE ANd OThER PAYABLES
Capital work in progress is not depreciated until available for use.
an asset’s carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount.
these amounts represent liabilities for goods and services
provided to the Group prior to the end of financial year which
are unpaid. the amounts are unsecured and are usually
paid by the 30th of the month following recognition. trade
payables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest
method.
Gains and losses on disposals are determined by comparing
(S) PROVISIONS
proceeds with carrying amount. these are included in the
income statement.
a provision is recognised if, as a result of a past event, the
42 kAThMANdu annual report 2011
Group has a present legal or constructive obligation that can
(ii) Long service leave
be estimated reliably, and it is probable that an outflow of
economic benefits will be required to settle the obligation.
provisions are determined by discounting the expected future
cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific
to the liability. the Group has no provisions at year end.
(T) BORROWINGS
Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently
measured at amortised cost. any difference between the
proceeds (net of transaction costs) and the redemption
amount is recognised in the income statement over the period
of the borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the Group
has an unconditional right to defer settlement of the liability for
at least 12 months after the balance sheet date.
(u) ShARE CAPITAL
ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new
shares are shown in equity as a deduction, net of tax, from the
proceeds.
Where any group company purchases the company’s equity
share capital (treasury shares), the consideration paid,
including any directly attributable incremental costs (net of
income taxes) is deducted from equity attributable to the
company’s equity holders until the shares are cancelled or
reissued. Where such shares are subsequently reissued,
any consideration received net of any directly attributable
incremental transaction costs and the related income tax
effects, is included in equity attributable to the Company’s
equity holders.
(V) EMPLOYEE BENEFITS
(i) Wages and salaries, annual leave and sick leave
liabilities for wages and salaries, including non-monetary
benefits, annual leave, and accumulating sick leave expected
to be settled within 12 months of the reporting date are
recognised in other payables in respect of employees’ services
the liability for long service leave is recognised in the
provision for employee benefits and measured as the present
value of expected future payments to be made in respect
of services provided by employees up to the reporting date
using the projected unit credit method. Consideration is given
to expected future wage and salary levels, experience of
employee departures and periods of service. expected future
payments are discounted using market yields at the reporting
date on national government bonds with terms to maturity
and currency that match, as closely as possible, the estimated
future cash flows.
(iii) Equity settled share option plan
the employee Share option plan allows Group employees
to acquire shares of the Company. the fair value of options
granted is recognised as an employee expense in the Income
Statement with a corresponding increase in the employee
share option reserve. the fair value is measured at grant date
and spread over the vesting periods. the fair value of the
options granted is measured using the Monte Carlo simulation
approach, taking into account the terms and conditions upon
which the options are granted. When options are exercised
the amount in the share option reserve relating to those
options, together with the exercise price paid by the employee,
is transferred to share capital. When any vested options lapse,
upon employee termination or unexercised options reaching
maturity, the amount in the share option reserve relating to
those options is also transferred to share capital.
(iv) Equity settled long term incentive plan
the executive and Senior Management long term Incentive
plan grants Group employees performance rights subject
to performance hurdles being met. the fair value of rights
granted is recognised as an employee expense in the Income
Statement with a corresponding increase in the employee
share option reserve. the fair value is measured at grant date
and amortised over the vesting periods. the fair value of the
rights granted is measured using the Kathmandu holdings
limited share price as at the grant date less the present value
of the dividends forecast to be paid prior to the each vesting
date. When performance rights vest, the amount in the share
option reserve relating to those rights are transferred to share
capital. When any vested performance rights lapse, upon
employee termination the amount in the share option reserve
relating to those rights is also transferred to share capital.
up to the reporting date and are measured at the amounts
(W) dIVIdENdS
expected to be paid when the liabilities are settled. liabilities
for non-accumulating sick leave are recognised when the leave
is taken and measured at the rates paid or payable. the liability
for employee entitlements is carried at the present value of the
estimated future cash flows.
dividend distribution to the Company shareholders is
recognised as a liability in the Company’s and Group’s financial
statements in the period in which the dividends are approved
by the Company’s shareholders.
kAThMANdu annual report 2011 43
NZ IFRS 9: Financial Instruments (mandatory for
periods beginning on or after 1 January 2013)
the standard replaces part of nZ IaS 39 and establishes
two primary measurement categories for financial assets:
amortised cost and fair value, with classification
depending on an entity’s business model and
the contractual cash flow characteristics of the
financial asset. the Company is currently in the
process of evaluating the potential effect
of this standard.
NZ IAS 24: Related Parties Revised (mandatory
for periods beginning on or after 1 January 2011)
the revised Standard further clarifies the definition
of a related party which may result in other related parties
being identified. the Company is currently in the process
of evaluating the potential effect of this standard.
(X) CASh FLOW STATEMENT
the following are definitions of the terms used in the Cash
Flow Statement:
Cash comprises: cash at bank, cash on hand and
overdraft balances;
operating activities include all transactions and
other events that are not investing or
financing activities.
Investing activities are those activities relating to the
acquisition, holding and disposal of property, plant and
equipment and of investments. Investments can include
securities not falling within the definition of cash;
Financing activities are those activities which result in
changes in the size and composition of the
capital structure of the Company;
(Y) ChANGES IN ACCOuNTING POLICIES
there were no changes in the accounting policies during the
period.
3 STANdARdS, INTERPRETATIONS ANd
AMENdMENTS TO PuBLIShEd STANdARdS
there are no new standards or amendments to standards
which were mandatory and were applied during the period.
the following are standards, amendments and interpretations
to existing standards applicable to the Group but are not yet
effective and have not been early adopted by the Group:
44 kAThMANdu annual report 2011
4
INCOME ANd EXPENSES
profit / (loss) before income tax includes the following
specific (income) and expenses:
Income
Dividends received
Management Fees
expenses
Depreciation
- Leasehold improvements
- Office, plant and equipment
- Furniture and fittings
- Computer equipment
- Motor vehicles
Total depreciation
Amortisation
- Software
Total amortisation
(Gain) / Loss on sale of property, plant and equipment
Rental and operating lease expenses
Directors’ fees
Donations
Employee entitlements:
- Wages, salaries and other short term benefits
- Employee share based remuneration
Finance Costs
Interest income
Interest expense
Other finance costs
Net exchange (gain) / loss on foreign currency borrowings
Group
parent
2011
nZ$’000
2010
nZ$’000
2011
nZ$’000
2010
nZ$’000
-
-
-
-
(20,000)
(341)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
728
563
-
-
-
-
379
246
-
-
-
(49)
(49)
(2)
-
-
-
(2)
3,902
484
1,555
584
28
6,553
862
862
527
31,918
728
335
52,286
379
(179)
4,443
2,256
283
6,803
3,045
394
1,239
669
32
5,379
594
594
290
25,610
611
109
41,139
246
(258)
7,674
1,674
567
9,657
Remuneration of auditors is detailed in Note 24. Amortisation expenditure is included in administration expense in the income statement.
5 COSTS ASSOCIATEd WITh ThE INITIAL PuBLIC OFFERING (IPO)
kAThMANdu annual report 2011 45
Costs associated with Initial public offering:
Charged to income statement
Equity reduction (refer note 19)
The total costs associated with the IPO
can be analysed as follows:
(a) Direct IPO costs
(b) Costs associated with IPO
Total costs associated with IPO
Group
parent
2011
nZ$’000
2010
nZ$’000
2011
nZ$’000
2010
nZ$’000
-
-
-
-
-
-
16,834
4,523
21,357
18,306
3,051
21,357
-
-
-
-
-
-
11,572
4,523
16,095
15,714
381
16,095
(a) The direct costs of the IPO include legal, accounting and tax due diligence and advice, Joint Lead Manager’s fees (including the discretionary incentive fee),
prospectus design and printing, advertising, marketing, share registry and other expenses.
The direct costs have been allocated based on the proportion of new equity raised to the total IPO proceeds and accounted for as either an expense or a
reduction in equity as follows:
Reduction in equity
Charged to income statement
-
-
-
4,523
13,783
18,306
-
-
-
4,523
13,783
18,306
(b) The costs associated with the IPO have been expensed and comprise primarily the costs of exiting the previous banking facilities together with the related
interest rate swaps.
46 kAThMANdu annual report 2011
6
INCOME TAX EXPENSE
Income statement
Current income tax charge
Deferred income tax charge (refer note 16)
Income tax charge / (credit) reported in income statement
reconciliation of effective tax charge
Profit before income tax
Income tax calculated at 30%
Adjustments to taxation:
Adjustments due to different rate in different jurisdictions
Non-taxable income
Expenses not deductible for tax purposes
Effect of change in corporate tax rate
Utilisation of tax losses by group companies
Tax expense transferred to foreign currency translation reserve
Adjustments in respect of prior years
Income tax charge / (credit) reported in income statement
Group
parent
2011
nZ$’000
2010
nZ$’000
2011
nZ$’000
2010
nZ$’000
17,237
914
18,151
10,791
1,786
12,577
(339)
445
106
(1)
(445)
(446)
57,217
17,165
21,964
6,589
18,522
5,557
(12,805)
(3,841)
51
-
967
13
-
202
(247)
18,151
76
(559)
5,143
12
-
(529)
1,845
12,577
-
(6,000)
189
(5)
365
-
-
-
(71)
3,461
5
-
-
-
106
(446)
On 20 May 2010 the New Zealand Government announced that the company tax rate will reduce from 30% to 28% and tax depreciation on any buildings with an
estimated useful life of 50 years or more will reduce to 0%. The changes were substantively enacted on 21 May 2010 and are effective for years beginning on or
after 1 August 2011. The effect of these changes on the re-measurement of deferred tax balances has been brought to account in the financial statements for the
years ended 31 July 2010 and 2011
unrecognised tax losses
the group has estimated tax losses to carry forward from Kathmandu (u.K.) limited of £5,743,723 (nZ$12,016,157) (2010:
£4,705,832 (nZ$10,120,069)) which can be carried forward to be offset against future profits generated within the uK.
ImputatIon CreDItS reConCILIatIon
Group
parent
opening balance at 1 august
Income tax – paid
Resident withholding tax on interest received
Draw through to consolidated Group ICA
Income tax refund received
Dividends paid
Imputations lost on shareholding change
Closing balance at 31 July
2011
nZ$’000
2010
nZ$’000
2011
nZ$’000
2010
nZ$’000
4,207
6,356
8
-
(396)
(5,696)
6,765
9,372
15
-
-
-
-
(11,945)
4,479
4,207
1
-
-
(1)
-
-
-
-
-
-
1
-
-
-
-
1
The balance of Australian franking credits able to be used by the Group as at 31 July 2011 is A$836,783 (2010: A$1,399,463).
kAThMANdu annual report 2011 47
7 RECONCILIATION OF NET PROFIT AFTER TAXATION WITh CASh INFLOW FROM OPERATING ACTIVITIES
Group
parent
2011
nZ$’000
2010
nZ$’000
2011
nZ$’000
2010
nZ$’000
Profit after taxation
39,066
9,387
18,416
(12,359)
Movement in working capital:
(Increase) / decrease in trade and other receivables
(Increase) / decrease in inventories
Increase / (decrease) in trade and other payables
Increase / (decrease) in tax liability
Add non cash items:
Depreciation
Amortisation of intangibles
Revaluation of derivative financial instruments
(Increase) / decrease in deferred taxation
Employee share based remuneration
Loss on sale of property, plant and equipment
Items classified as financing activities:
Costs associated with the IPO
Intercompany financing
1,564
(16,585)
4,121
2,369
(8,531)
(1,274)
2,198
(988)
(1,710)
(1,774)
(11)
-
(26)
(3,213)
(3,250)
6,553
5,379
862
913
5
379
527
594
4
1,643
246
290
9,239
8,156
-
-
-
445
379
-
824
(181)
-
68
-
(113)
-
-
-
(445)
246
-
(199)
-
-
16,834
-
-
-
(342)
12,416
Cash inflow from operating activities
39,774
32,603
15,648
(255)
48 kAThMANdu annual report 2011
8 CASh ANd CASh EQuIVALENTS
Group
parent
2011
nZ$’000
2010
nZ$’000
2011
nZ$’000
2010
nZ$’000
Cash on hand
Cash at bank
Short term deposits
155
3,419
-
3,574
The carrying amount of the Group’s cash and cash equivalents are denominated in the following currencies:
NZD
AUD
GBP
USD
EUR
389
2,499
550
135
1
143
4,593
-
4,736
225
3,747
432
321
11
9 TRAdE ANd OThER RECEIVABLES
3,574
4,736
-
5
-
5
5
-
-
-
-
5
-
6
-
6
6
-
-
-
-
6
Group
parent
2011
nZ$’000
2010
nZ$’000
2011
nZ$’000
2010
nZ$’000
Trade receivables
Sundry debtors and prepayments
92
2,247
2,339
-
3,903
3,903
Bad and doubtful trade receivables
The Group has recognised a loss of $0 (2010: $0) in respect of bad and doubtful trade receivables during the year ended 31 July 2011.
The carrying amount of the Group’s trade and other receivables are denominated in the following currencies:
NZD
AUD
GBP
USD
1,129
683
527
-
2,339
1,181
2,032
690
-
3,903
-
192
192
192
-
-
-
-
181
181
137
44
-
-
192
181
kAThMANdu annual report 2011 49
all subsidiaries within the Group (note 15) are related parties.
no amounts owed to related parties have been written off or
forgiven during the year.
during the year the Company advanced and repaid loans
to its subsidiaries by way of an internal current account. In
presenting the financial statements of the Group, the effect
of transactions and balances between fellow subsidiaries and
those with the parent have been eliminated. all transactions
with related parties were in the normal course of business and
provided on commercial terms.
Material amounts outstanding between the parent and
subsidiaries at year end were:
loans from the parent to subsidiaries (Kathmandu
limited) $84,215,544 (2010: $88,225,280).
loans to the parent from subsidiaries $0 (2010: $0).
Material transactions between the parent and its subsidiaries
were:
Management fees charged to subsidiaries $341,000
(2010: $0)
Group
parent
2011
nZ$’000
2,515
1,355
-
246
177
4,293
2010
nZ$’000
2,013
217
-
-
246
2,476
2011
nZ$’000
2010
nZ$’000
-
-
-
246
177
423
-
-
-
-
246
246
Group
parent
2011
nZ$’000
728
-
-
728
2010
nZ$’000
611
-
-
611
2011
nZ$’000
728
-
-
2010
nZ$’000
563
-
-
728
563
10 RELATEd PARTY dISCLOSuRES
Kathmandu holdings limited is the immediate parent, ultimate
parent and controlling party.
during the year, legal fees of $75,730 (2010: $112,274 (legal
Fees) and $413,386 (Ipo costs)) were paid to Chapman tripp
for services provided (primarily related to property leases).
John holland is both a director of Kathmandu holdings limited
and a partner of Chapman tripp.
during the year, operating lease costs of $199,000 (2010:
$98,000) were paid to Chalmers properties limited, a
subsidiary of port otago limited. John harvey is a director of
both of these companies.
the previous shareholders granted to James Strong, with
effect from listing, an option to purchase (“Call option”)
1,764,705 shares. the exercise price of the Call option is
a$1.70 per option Share. the call option is only exercisable
fourteen days after the audited financial results for the
year ended 31 July 2010 is reported, and otherwise during
a permitted trading window for dealing in the Company’s
securities under applicable laws or the Company’s securities
trading policy. the Call option will expire on 23 november
2011.
(a) key Management Personnel
Salaries
Other short-term employee benefits
Termination benefits
Employee performance rights
Employee share option plans
(b) Non-Executive directors
Total directors fees
Share purchase plans
Share option plans
directors fees for the parent company were paid to the following:
James Strong
Sandra Mcphee
John harvey
John holland
50 kAThMANdu annual report 2011
(c) Remuneration detail (as referred to in the Remuneration Report)
2011
SHort-term BeneFItS
poSt-empLoY-
ment BeneFItS
SHare BaSeD paYmentS
name
Cash Salary
and fees
Cash bonus
non-
monetary
benefits
Super-
annuation
retirement
Benefits
Share
options
performance
rights
proportion of
remuneration
as equity
related
$
$
$
$
$
$
$
%
non-executive Directors
James Strong
John Harvey
John Holland
Sandra McPhee
283,235
148,174
148,174
148,174
total non-executive Directors
727,757
executive Directors
-
-
-
-
-
-
-
-
-
-
Peter Halkett
Mark Todd
627,627
372,000
350,149
175,000
6,091
2,963
total executive Directors
-
-
-
-
-
-
7,000
-
-
-
-
-
-
-
proportion of
remuneration
as performance
related
%
-
-
-
-
-
total
$
283,235
148,174
148,174
148,174
727,757
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
91,884
26,337
48,815
62,499
12.3% 1,146,417
14.2%
623,948
32.4%
28.0%
977,776
547,000
9,054
7,000
- 118,221
111,314
13.0% 1,770,365
30.9%
other Key management personnel
Matt Spencer
346,083
175,393
10,590
19,166
Michelle Adams
206,000
105,000
1,182
4,120
Tamalin Morton
277,995
155,105
Paul Stern
304,150
155,105
-
-
19,160
19,839
Caleb Nicolson
201,339
102,000
2,963
4,027
Grant Taylor
173,077
92,000
-
138
total other Key management personnel
1,508,644
784,603
14,735
66,450
-
-
-
-
-
-
-
19,511
13,202
18,223
-
7,657
-
58,593
total
3,214,177
1,331,603
23,789
73,450
- 176,814
29,775
18,393
26,277
26,277
17,856
16,071
8.2%
9.1%
9.0%
5.2%
7.6%
5.7%
600,518
347,897
496,760
505,371
335,842
281,286
134,649
245,963
7.5% 2,567,674
8.3% 5,065,796
29.2%
30.2%
31.2%
30.7%
30.4%
32.7%
30.6%
26.3%
kAThMANdu annual report 2011 51
2010
SHort-term BeneFItS
poSt-empLoY-
ment BeneFItS
SHare BaSeD paYmentS
name
Cash Salary
and fees
Cash bonus
non-
monetary
benefits
Super-
annuation
retirement
Benefits
Share
options
performance
rights
proportion of
remuneration
as equity
related
$
$
$
$
$
$
$
%
non-executive Directors
James Strong
John Harvey
John Holland
Sandra McPhee
225,213
112,607
112,607
112,607
total non-executive Directors
536,034
executive Directors
-
-
-
-
-
-
-
-
-
-
-
7,076
2,938
-
-
-
-
-
-
7,193
Peter Halkett
Mark Todd
586,447
282,552
50,000
total executive Directors
868,999
50,000
10,014
7,193
other Key management personnel
Matt Spencer
339,942
-
9,862
29,466
Michelle Adams
Tamalin Morton
Caleb Nicolson
Bryan Moore
200,582
141,699
1,033
6,846
216,625
161,347
159,789
-
-
-
-
18,806
2,443
2,372
3,227
-
total other Key management personnel
1,078,285
141,699
15,710
58,345
total
2,510,318
191,699
25,724
65,538
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
122,726
35,178
157,904
26,059
17,633
24,340
10,227
9,874
88,133
246,037
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
proportion of
remuneration
as performance
related
%
-
-
-
-
-
total
$
225,213
112,607
112,607
112,607
536,034
-
-
-
-
-
17.1%
716,249
9.3%
377,861
0.0%
13.2%
14.4% 1,094,110
4.6%
6.4%
4.8%
9.4%
5.8%
5.7%
405,329
367,793
259,771
177,244
172,035
6.4% 1,382,172
8.1% 3,039,316
0.0%
38.5%
0.0%
0.0%
0.0%
10.3%
6.3%
52 kAThMANdu annual report 2011
11 dERIVATIVE FINANCIAL INSTRuMENTS
asset
Interest rate swaps - cash flow hedge
Foreign exchange contracts - cash flow hedge
Less non-current portion:
Interest rate swaps - cash flow hedge
Foreign exchange contracts - cash flow hedge
Current portion
Liabilities
Interest rate swaps - cash flow hedge
Foreign exchange contracts - cash flow hedge
Less non-current portion:
Interest rate swaps - cash flow hedge
Foreign exchange contracts - cash flow hedge
Current portion
Group
parent
2011
nZ$’000
2010
nZ$’000
2011
nZ$’000
2010
nZ$’000
2
-
2
-
-
2
340
10,466
10,806
301
-
10,505
44
-
44
44
-
-
315
4,819
5,134
315
-
4,819
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The above table shows the Group’s financial derivative holdings at year end. Refer to note 2(o) for information on the calculation of fair values.
(a) Interest rate swaps - cash flow hedge
Interest rate swaps are to exchange a floating rate of interest
for a fixed rate of interest. the objective of the transaction
is to hedge the core borrowings of the business to minimise
interest cost within acceptable levels of risk thereby limiting
the volatility on the Group’s financial results. the total amount
of interest rate swaps at balance date was $40,284,450 (2010:
$39,844,720). the fixed interest rates range between 4.73%
and 5.25% (2010: 4.73% and 5.25%).
the effectiveness of the contracts is measured by comparing
the changes in the present value of the cash flow arising
from the hedged forecast interest rate at fixed rate, with the
changes in fair value of the forward contract.
(b) Foreign exchange contracts - cash flow hedge
the objective of these contracts is to hedge highly probable
anticipated foreign currency purchases against currency
fluctuations. these contracts are timed to mature when
import purchases are scheduled for payment. the total of
foreign exchange contracts amount to uS$63,050,000,
nZ$84,184,649 (2010: uS$53,700,000, nZ$80,033,820).
the effectiveness of the contracts is measured by comparing
the changes in the present value of the cash flow arising from
the hedged forecast purchase at the forward rate, with the
changes in fair value of the forward contract.
12
INVENTORIES
Trading stock
Goods in transit
Group
parent
2011
nZ$’000
47,146
6,855
54,001
2010
nZ$’000
28,984
8,432
37,416
2011
nZ$’000
2010
nZ$’000
-
-
-
-
-
-
Inventory has been reviewed for stock selling below cost and no provision (2010: $nil) has been made.
kAThMANdu annual report 2011 53
13 PROPERTY, PLANT ANd EQuIPMENT
Group
as at 31 July 2009
Cost or valuation
Accumulated depreciation
Closing net book value
Year ended 31 July 2010
Opening net book value
Additions
Disposals
Depreciation charge
Exchange differences
Closing net book value
as at 31 July 2010
Cost or valuation
Accumulated depreciation
Closing net book value
Year ended 31 July 2011
Opening net book value
Additions
Disposals
Depreciation charge
Exchange differences
Closing net book value
as at 31 July 2011
Cost or valuation
Accumulated depreciation
Closing net book value
Leasehold
improvement
$’000
office, plant
& equipment
$’000
Furniture &
fittings
$’000
Computer
equipment
$’000
motor
vehicles
$’000
22,604
(8,212)
14,392
14,392
7,022
(221)
(3,045)
(382)
17,766
28,373
(10,607)
17,766
17,766
9,134
(137)
(3,902)
205
23,066
37,178
(14,112)
23,066
2,990
(1,649)
1,341
1,341
625
(1)
(394)
(13)
1,558
3,565
(2,007)
1,558
1,558
304
-
(484)
27
1,405
3,907
(2,502)
1,405
6,701
(2,741)
3,960
3,960
3,801
(63)
(1,239)
(35)
6,424
10,301
(3,877)
6,424
6,424
1,025
(28)
(1,555)
96
5,962
11,379
(5,417)
5,962
5,877
(4,379)
1,498
1,498
1,351
(5)
(669)
(22)
2,153
6,990
(4,837)
2,153
2,153
725
(7)
(584)
12
2,299
7,621
(5,322)
2,299
335
(200)
135
135
24
(8)
(32)
(2)
117
314
(197)
117
117
-
-
(28)
1
90
317
(227)
90
total
$’000
38,507
(17,181)
21,326
21,326
12,823
(298)
(5,379)
(454)
28,018
49,543
(21,525)
28,018
28,018
11,188
(172)
(6,553)
341
32,822
60,402
(27,580)
32,822
54 kAThMANdu annual report 2011
14
INTANGIBLE ASSETS
Group
as at 31 July 2009
Cost or valuation
Accumulated amortisation and impairment
Closing net book value
Year ended 31 July 2010
Opening net book value
Additions
Disposals
Amortisation
Exchange differences
Closing net book value
as at 31 July 2010
Cost or valuation
Accumulated amortisation and impairment
Closing net book value
Year ended 31 July 2011
Opening net book value
Additions
Disposals
Amortisation
Exchange differences
Closing net book value
as at 31 July 2011
Cost or valuation
Accumulated amortisation and impairment
Closing net book value
Goodwill
nZ$’000
Brand
nZ$’000
Software
nZ$’000
total
nZ$’000
76,677
(1,271)
75,406
167,455
-
2,331
(1,337)
246,463
(2,608)
167,455
994
243,855
994
746
-
(594)
(12)
243,855
746
-
(594)
(2,182)
1,134
241,825
3,065
(1,931)
1,134
245,027
(3,202)
241,825
1,134
676
-
(862)
23
971
241,825
676
-
(862)
2,046
243,685
75,406
167,455
-
-
-
-
75,406
76,677
(1,271)
75,406
-
-
-
(2,170)
165,285
165,285
-
165,285
75,406
165,285
-
-
-
2,023
167,308
-
-
-
-
75,406
76,677
(1,271)
75,406
167,308
-
3,764
(2,793)
247,749
(4,064)
167,308
971
243,685
Impairment tests for goodwill and brand
the aggregate carrying amounts of goodwill and brand allocated to each unit are as follows:
Group
GooDWILL
BranD
New Zealand
Australia
2011
nZ$’000
28,654
46,752
75,406
2010
nZ$’000
28,654
46,752
75,406
2011
nZ$’000
51,000
116,308
167,308
2010
nZ$’000
51,000
114,285
165,285
kAThMANdu annual report 2011 55
For the purposes of goodwill and brand impairment testing,
the Group operates as two cash generating units, new
Zealand and australia. the recoverable amount of the cash
generating units has been determined based on the fair value
less cost to sell.
In the prior year three valuation methodologies were used,
however due to the significant headroom between all valuation
methodologies and the carrying value of goodwill and brand,
only the discounted cash flow method will be used going
forward.
the discounted cash flow valuations were calculated using
projected five year future cash flows, based on Board
approved business plans. Growth is expected to continue as
the store rollout programme (approximately fifteen stores per
year) continues and like for like sales increase. Cash flows
beyond five years have been extrapolated using the following
key assumptions:
2011
2010
Terminal growth rate
2.5%
2.5%
New Zealand CGU pre-tax discount rate
Australia CGU pre-tax discount rate
15.7%
15.4%
15.4%
14.7%
Consolidated pre-tax discount rate
15.6%
15.1%
the calculations confirmed that there was no impairment of
goodwill and brand during the year (2010: nil). the Board
believes that any reasonably possible change in the key
assumptions used in the calculations would not cause the
carrying amount to exceed its recoverable amount.
the expected continued promotion and marketing of the
Kathmandu brand supports the assumption that the brand
has an indefinite life.
INVESTMENT IN SuBSIdIARIES
15
the consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with
the accounting policy described in note 2:
name of entity
Milford Group Holdings Limited
Kathmandu Limited
Kathmandu Pty Limited
Kathmandu (U.K.) Limited
equity holding
2011
100%
100%
100%
100%
2010
100%
100%
100%
100%
all subsidiary entities have a balance date of 31 July. Kathmandu pty limited and Kathmandu (u.K.) limited are incorporated in
australia and united Kingdom, respectively. all other subsidiary entities are incorporated in new Zealand.
the principal activities of the subsidiaries are:
Country of registration
principal activity
Milford Group Holdings Limited
Kathmandu Limited
Kathmandu Pty Limited
Kathmandu (U.K.) Limited
Investment in subsidiaries
Milford Group Holdings Limited
Kathmandu Limited
Kathmandu Pty Limited
Kathmandu (U.K.) Limited
New Zealand
New Zealand
Australia
United Kingdom
2011
nZ$
Holding company
Outdoor retailer
Outdoor retailer
Outdoor retailer
2010
nZ$
321,233,808
321,233,808
-
-
-
-
-
-
321,233,808
321,233,808
56 kAThMANdu annual report 2011
16 dEFERREd TAXATION
the following are the major deferred taxation liabilities and assets recognised by the Group and movements thereon during the
current and prior year.
Group
tax
depreciation
nZ$’000
employee
obligations
nZ$’000
Losses
nZ$’000
other timing
differences
nZ$’000
reserves
total
nZ$’000
nZ$’000
As at 31 July 2009
Credit to the income statement
Charge to other comprehensive income
As at 31 July 2010
Credit to the income statement
Charge to other comprehensive income
As at 31 July 2011
11
(2)
-
9
59
-
68
1,207
(512)
-
695
235
1
931
570
-
175
745
-
869
1,614
5,115
(1,818)
175
3,472
(914)
909
3,467
409
(43)
-
366
(365)
-
1
2,918
(1,261)
-
1,657
(843)
39
853
parent
As at 31 July 2009
Charge to the income statement
As at 31 July 2010
Credit to the income statement
As at 31 July 2011
tax
depreciation
nZ$’000
employee
obligations
nZ$’000
Losses
nZ$’000
other timing
differences
nZ$’000
reserves
total
nZ$’000
nZ$’000
-
-
-
-
-
-
69
69
(69)
-
-
365
365
(365)
-
-
11
11
(11)
-
-
-
-
-
-
-
445
445
(445)
-
Certain deferred taxation assets and liabilities have been offset. the following is the analysis of the deferred taxation balances
(after offset) for financial reporting purposes:
Deferred taxation assets:
- Deferred tax asset to be recovered after more than 12 months
- Deferred tax asset to be recovered within 12 months
Deferred taxation liabilities:
- Deferred tax liability to be recovered after more than 12 months
- Deferred tax liability to be recovered within 12 months
Group
parent
2011
nZ$’000
2010
nZ$’000
2011
nZ$’000
2010
nZ$’000
1,445
3,057
-
(1,035)
3,467
1,289
2,411
-
(228)
3,472
-
-
-
-
-
69
376
-
-
445
Movements
the gross movement on the deferred income tax account is as follows:
Opening balance
Income statement charge
Tax charged directly to equity
Closing balance
Effective tax rate reconciliation:
Re-measurement of deferred tax - company tax rate change from 30% to 28%
Re-measurement of deferred tax - removal of depreciation on buildings
17 TRAdE ANd OThER PAYABLES
kAThMANdu annual report 2011 57
Group
parent
2011
nZ$’000
2010
nZ$’000
2011
nZ$’000
2010
nZ$’000
3,472
(914)
909
3,467
5,115
(1,818)
175
3,472
445
(445)
-
-
-
445
-
445
Group
parent
2011
nZ$’000
2010
nZ$’000
2011
nZ$’000
2010
nZ$’000
(13)
-
(13)
(12)
-
(12)
5
-
5
(5)
-
(5)
Group
parent
2011
nZ$’000
2010
nZ$’000
2011
nZ$’000
2010
nZ$’000
Trade payables
Employee entitlements
Sundry creditors and accruals
6,685
4,979
9,348
4,463
2,818
9,610
21,012
16,891
the carrying amount of the Group’s trade and other payables are denominated in the following currencies:
NZD
AUD
GBP
USD
5,624
8,722
810
5,856
21,012
2,916
6,488
954
6,533
16,891
-
-
42
42
24
18
-
-
42
-
-
68
68
58
10
-
-
68
58 kAThMANdu annual report 2011
18
INTEREST BEARING LIABILITIES
Current portion
Non-current portion
Total term loans
Group
parent
2011
nZ$’000
-
46,480
46,480
2010
nZ$’000
2011
nZ$’000
2010
nZ$’000
-
53,965
53,965
-
-
-
-
-
-
the bank loan is part of a facility agreement with anZ national
Bank, Bank of new Zealand and Commonwealth Bank of
australia dated 19 november 2009. the loan is repayable in
full on final maturity date of the facility being 13 november
2012. Interest is payable based on the BKBM rate ($nZ
borrowings) or the BBSy rate ($a borrowings) plus a margin
of up to 1.25%. the bank loan is secured against the assets of
the company and its subsidiaries.
and amortisation (eBItda) plus lease rental costs to exceed
total fixed charges (net interest expense and lease rental
costs) at the end of each quarter during the financial year.
Similarly eBItda must be no less than a specified proportion
of total net debt at the end of each quarter. the calculations
of these covenants are specified in the bank syndicated facility
agreement of 19 november 2009 and have been complied
with at the end of each quarter of the year ended 31 July 2011.
the covenants entered into by the Group require specified
calculations of Group earnings before interest, tax, depreciation
the current interest rates, prior to hedging, on the term loans
ranged between 3.65% - 5.99% (2010: 4.24% - 5.81%).
The maturity analysis of interest bearing liabilities is:
Payable within 1 year
Payable 1 to 2 years
Payable 2 to 3 years
Payable 3 to 4 years
Group
parent
2011
nZ$’000
2010
nZ$’000
2011
nZ$’000
2010
nZ$’000
-
46,480
-
-
-
-
53,965
-
46,480
53,965
-
-
-
-
-
-
-
-
-
-
kAThMANdu annual report 2011 59
19 CONTRIBuTEd EQuITY - ORdINARY ShARES
Ordinary shares fully paid ($)
Balance at beginning of year
Shares issued during the year
Less capital raising costs (refer note 5)
Balance at end of year
numBer oF autHorISeD SHareS
Group
parent
2011
nZ$’000
197,049
197,049
-
-
197,049
2010
nZ$’000
197,049
96,146
105,426
(4,523)
197,049
2011
nZ$’000
422,137
422,137
-
-
422,137
Group
2011
’000
2010
’000
parent
2011
’000
Ordinary shares on hand at beginning of the year
200,000
9,081,072
200,000
Shares issued during the year
Shares repurchased
-
-
200,000
(9,081,072)
-
-
2010
nZ$’000
422,137
-
426,660
(4,523)
422,137
2010
’000
-
200,000
-
Ordinary shares on hand at end of the year
200,000
200,000
200,000
200,000
Ordinary shares
as at 31 July 2009 there were 9,081,072,589 issued shares in Milford Group holdings limited. as a result of the Initial public
offer (november 2009) and subsequent reverse acquisition transaction as at 31 July 2010 there were 200,000,000 ordinary
issued shares in Kathmandu holdings limited and these are classified as equity. no shares were issued during the year ending 31
July 2011. all ordinary shares carry equal rights in respect of voting and the receipt of dividends. ordinary shares do not have
a par value.
20 EMPLOYEE ShARE BASEd REMuNERATION
Executive Share Option Plan 16 October 2009:
on 16 october 2009 the Board approved an executive Share
option plan to issue options to selected senior executives
and subject to shareholder approval to executive directors.
options will vest annually in part or in full with the holder, in
three tranches commencing 1 october 2010. all options not
vested expire on 1 october 2013, and all options vested must
be exercised within five years from date of grant. entitlement
to exercise is conditional on the Company achieving in relation
to each tranche a compound total shareholder return of 15%
per annum over the period of trading that is measured in
relation to that tranche. each option entitles the holder to one
ordinary share in the capital of the Company. the exercise
price is determined by the Board but is generally $2.1333 for
new Zealand based employees and a$1.70 for australian
based employees.
during the financial year the Company issued nil options
(2010: 1,119,976) to executive directors and senior executives.
the fair value of options issued during the financial year is $nil
(2010: $518,590).
the options issued during 2010 were valued under a Monte
Carlo simulation approach factoring in the total shareholder
return condition using the following assumptions:
Current price at issue date
Risk free interest rate
Expected life (years)
Expected share volatility
$2.14
5.40%
5
30%
a 50% net profit after tax dividend payout ratio was factored
into the valuation of the options based on management
budgets. the expected volatility has been estimated based on
the historical volatility of comparable listed retail businesses.
the estimated fair value for each tranche of options issued
is amortised over the vesting period from the grant date.
the Company has recognised a compensatory expense in
the income statement of $168,587 (2010: $246,037) which
represents this amortisation.
60 kAThMANdu annual report 2011
Movements in the number of share options outstanding and their related weighted average exercise price are as follows:
Balance at beginning of year
Issued
Forfeited
Balance at end of year
2011
2010
average
exercise price
$ per share
2.1333
-
2.1333
2.1333
options
‘000
1,120
-
(46)
1,074
average
exercise price
$ per share
-
2.1333
2.1333
Share options outstanding at the end of the year have the following expiry date, exercise dates and exercise prices.
First Vesting month
October 2010
October 2011
October 2012
Last Vesting
month
October 2013
October 2013
October 2013
exercise
price
$2.1333
$2.1333
$2.1333
2011
‘000
358
358
358
1,074
options
‘000
-
1,120
1,120
2010
‘000
373
373
374
1,120
Executive and Senior Management Long Term Incentive Plan 24 November 2010
on 24 november 2010, shareholders approved at the annual General Meeting the establishment of an employee long
term Incentive plan (ltI) to grant performance rights to executive directors, Key Management personnel and other Senior
Management. performance rights will vest subject to the satisfaction of performance conditions which will be different for Senior
Management as compared with the executive directors and Key Management personnel.
Executive directors and key Management Personnel
on 29 november 2010 the Company granted 374,292 performance rights to two executive directors and six Key Management
personnel. the performance rights will vest in three equal tranches:
tranche
Tranche 1
Tranche 2
Tranche 3
Vesting Date
1 December 2012
1 December 2013
1 December 2014
number
124,764
124,764
124,764
374,292
In each tranche 50% of the rights are subject to a relative total Shareholder return (tSr) hurdle and the remaining 50% are
subject to an epS growth hurdle.
the proportion of rights subject to the relative tSr hurdle is dependent on Kathmandu holdings limited’s tSr performance
relative to a defined comparable group of companies, which is currently comprised of 18 retail companies in new Zealand and
australia listed on either the aSX or nZX. the percentage of tSr related rights vest according to the following performance
criteria:
Kathmandu Holdings Limited relative tSr ranking
Below the 50th percentile
50th percentile
51st – 74th percentile
75th percentile or above
% Vesting
0%
50%
50% + 2% for each percentile above the 50th
100%
kAThMANdu annual report 2011 61
prior to the each vesting date. the estimated fair value for
each tranche of options issued is amortised over the vesting
period from the grant date. the Company has recognised a
compensatory expense in the income statement of $61,194
(2010: $0) which represents this amortisation.
Senior Management
on 29 november 2010 the Company granted 177,977
performance rights to selected senior management
employees. 50% of the rights granted to each employee vest
if an earnings per share (epS) of 15.275 cps is achieved for
the year ended 31 July 2011. the remaining 50% vest if epS
exceeds 15.975 cps. In both instances, if vesting occurs, it
takes place on 31 July 2012, provided the employee remains
in employment with the company to that date. earnings
per share exceeded 15.975 cps for the year ended 31 July
2011. the fair value of the rights have been assessed as the
Kathmandu holdings limited share price as at the grant date
less the present value of the dividends forecast to be paid prior
to the 31 July 2012 vesting date. the fair value of each right
has been calculated to be nZ$1.50 per right. the value of each
right is amortised over the period from the grant date to the
vesting date.
the Company has recognised a compensatory expense in the
income statement of $107,318 (2010: $0) which represents
this amortisation.
the tSr performance is calculated for the following
performance periods:
tranche
Tranche 1
Tranche 2
Tranche 3
performance period
24 months to 1 December 2012
24 months to 1 December 2013
24 months to 1 December 2014
the fair value of the tSr rights have been valued at $173,422
under a Monte Carlo simulation approach predicting
Kathmandu holdings limited’s tSr relative to the comparable
group of companies at the respective vesting dates for each
tranche. the future share prices were simulated using a
random-walk process using the following assumptions:
Current price at issue date
Risk free interest rate
Expected life (years)
Expected share volatility
$1.62
4.79%
2-4
38%
the estimated fair value for each tranche of options issued is
amortised over the vesting period from the grant date. the
Company has recognised a compensatory expense in the
income statement of $41,948 (2010: $0) which represents this
amortisation.
the proportion of rights subject to the epS growth hurdle
is dependent on the compound average annual growth in
Kathmandu holdings limited’s epS relative to the year ending
31 July 2010. the applicable performance periods are:
tranche
Tranche 1
Tranche 2
Tranche 3
performance period
FY12 EPS relative to FY10 EPS
FY13 EPS relative to FY10 EPS
FY14 EPS relative to FY10 EPS
the percentage of the epS growth related rights scales
according to the compound average annual epS growth
achieved as follows:
epS Growth
< 10%
>=10%, < 11%
>=11%, < 12%
>=12%, < 13%
>=13%, < 14%
>=14%, < 15%
>=15%
% Vesting
0%
50%
60%
70%
80%
90%
100%
the fair value of the rights have been assessed as the
Kathmandu holdings limited share price as at the grant date
less the present value of the dividends forecast to be paid
62 kAThMANdu annual report 2011
21 REVERSE ACQuISITION
under the terms of nZ IFrS 3 Business Combinations, Milford
Group holdings limited was deemed to be the accounting
acquirer in the business combination. this transaction has
therefore been accounted for as a reverse acquisition under
nZ IFrS 3. accordingly the consolidated financial statements
of Kathmandu holdings limited have been prepared as a
continuation of the consolidated financial statements of Milford
Group holdings limited as the deemed acquirer.
although legally the transaction involved Kathmandu holdings
limited raising $426.6m by the issue of new shares and
the expending of $321.3m in cash for the acquisition of
Milford Group holdings limited, the substance from a group
perspective is that $105.4m of new capital was raised.
of this $19.7m was used to settle the costs associated with
the Ipo and $85.7m was used to repay debt. the substance
is reflected in the reverse acquisition accounting adopted in
these consolidated financial statements.
Kathmandu holdings limited was incorporated on 1 october
2009 and did not commence trading until 13 november 2009.
In the period between 13 november 2009 and 31 July 2010
Kathmandu holdings limited did not generate any income,
and incurred expenses which primarily related to directors and
annual listing costs, and the cost associated with the Ipo as
set out in note 5. at the date of acquisition the net assets of
Kathmandu holdings limited comprised cash of $105,426.
there was no goodwill.
22 RESERVES ANd RETAINEd EARNINGS
(a) reSerVeS
(i) Cash flow hedging reserve
Opening balance
Revaluation - gross
Deferred tax
Transfer to net profit - gross
Closing balance
(ii) Foreign Currency Translation Reserve
Opening balance
Currency translation differences
Closing balance
(iii) Share Option Reserve
Opening balance
Current year amortisation
Closing balance
Total Reserves
Group
parent
2011
nZ$’000
2010
nZ$’000
2011
nZ$’000
2010
nZ$’000
(4,000)
(6,161)
869
237
(1,420)
(2,908)
175
153
(9,055)
(4,000)
2,480
1,409
3,889
246
379
625
3,995
(1,515)
2,480
-
246
246
(4,541)
(1,274)
-
-
-
-
-
-
-
-
246
379
625
625
-
-
-
-
-
-
-
-
-
246
246
246
Nature and purpose of reserves
(i) Cash flow hedging reserve
the hedging reserve is used to record gains or losses on a
hedging instrument in a cash flow hedge that are recognised
directly in equity, as described in note 2 n (ii). the amounts
are recognised in profit and loss when the associated hedged
transaction affects profit and loss.
(ii) Foreign currency translation reserve
the foreign currency translation reserve is used to record gains
or losses on investments in foreign operations. the amounts
are accumulated in equity and recognised in profit and loss
when the foreign operation is partially disposed of or sold.
(iii) Share option reserve
the employee share option reserve is used to recognise
the fair value of options granted but not exercised or lapsed.
amounts are transferred to share capital when the vested
options are exercised by the employee or lapse upon expiry.
kAThMANdu annual report 2011 63
(B) retaIneD earnInGS
Group
parent
Opening retained earnings
Profit / (loss) for the year
Less dividends paid
Balance at 31 July
23 dIVIdENdS
Prior year final dividend paid
Current year interim dividend paid
Dividends paid ($0.10 per share (2010; $0.00))
2011
nZ$’000
2010
nZ$’000
2011
nZ$’000
2010
nZ$’000
43,352
39,066
(20,000)
62,418
33,965
9,387
-
43,352
(12,359)
18,416
(20,000)
(13,943)
-
(12,359)
-
(12,359)
Group
parent
2011
nZ$’000
2010
nZ$’000
2011
nZ$’000
2010
nZ$’000
14,000
6,000
20,000
-
-
-
14,000
6,000
20,000
-
-
-
24 REMuNERATION OF AudITORS
during the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related
practices and other network audit firms:
(a) audit services
PricewaterhouseCoopers
Statutory audit
Half year review
Other assurance services
Total remuneration for audit services
(b) other services
Accounting standards advice
IPO due diligence
Total remuneration for other services
Total auditor remuneration
Group
parent
2011
nZ$’000
2010
nZ$’000
2011
nZ$’000
2010
nZ$’000
106
25
7
138
-
-
-
138
102
38
5
145
59
533
592
737
57
25
-
82
-
-
-
82
55
38
-
93
-
495
495
588
64 kAThMANdu annual report 2011
25 CONTINGENT LIABILITIES
Liabilities outstanding under letters of credit
Rent guarantees
Financial guarantees
Group
parent
2011
nZ$’000
2,497
2010
nZ$’000
1,767
8,530
1,188
7,643
1,430
2011
nZ$’000
2010
nZ$’000
-
-
-
-
-
-
Financial guarantees cover internal overdrafts and credit card limits between banks across the Group.
26 CONTINGENT ASSETS
there are no contingent assets in 2011 (2010: nil).
27 COMMITMENTS
(a) Capital commitments
Capital commitments contracted for at balance date are:
Property, plant and equipment
Intangible assets
Group
parent
2011
nZ$’000
2010
nZ$’000
2011
nZ$’000
2010
nZ$’000
131
159
290
440
339
779
-
-
-
-
-
-
(b) Operating lease commitments
Group company as lessee:
rent expenses reported in these financial statements relate to non-cancellable operating leases.
the future commitments on these leases are as follows:
Due within 1 year
Due within 1-2 years
Due within 2-5 years
Due after 5 years
Group
parent
2011
nZ$’000
2010
nZ$’000
2011
nZ$’000
2010
nZ$’000
31,708
28,885
62,889
23,785
23,834
21,459
46,580
17,760
147,267
109,633
-
-
-
-
-
-
-
-
-
-
Some of the existing lease agreements have right of renewal options for varying terms.
the Group leases various properties under non-cancellable lease agreements.
these leases are generally between 1 - 10 years.
kAThMANdu annual report 2011 65
28 FINANCIAL RISk MANAGEMENT
the Group’s activities expose it to a variety of financial risks,
market risk (including currency risk and interest rate risk), credit
risk and liquidity risk. the Group’s overall risk management
programme focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on the
financial performance of the Group. the Group uses derivative
financial instruments such as foreign exchange contracts
and options and interest rate swaps to manage certain risk
exposures. derivatives are exclusively used for economic
hedging purposes, i.e. not as trading or other speculative
instruments, however not all derivative financial instruments
qualify for hedge accounting.
risk management is carried out based on policies approved
by the Board of directors. the Group treasury policy provides
written principles for overall risk management, as well as
policies covering specific areas, such as foreign exchange risk.
the parent is not directly exposed to any significant financial
risk.
(a) Market risk
Foreign exchange risk
the Group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures,
primarily with respect to the aud, uSd and the GBp. the
Group is exposed to currency risk on conversion of the trading
results from its subsidiaries operating in australia and the
united Kingdom, and any cash remitted between australia
and the united Kingdom and new Zealand. the Group does
not hedge for such remittances. the Group is exposed to
purchases that are denominated in a currency other than
the functional currency of Group entities, and over 90% of
purchases are denominated in united States dollars. hedging
of this exposure is detailed in note 11. Interest on borrowings is
denominated in either new Zealand dollars or australian dollars
currency, and is paid for out of surplus operating cashflows
generated in new Zealand or australia.
refer to note 11 which shows the forward foreign exchange
contracts and options held by the Group as derivative financial
instruments at balance date. a sensitivity analysis of foreign
exchange rate risk on the Group’s financial assets and liabilities
is provided in the table below.
Cash flow and fair value interest rate risk
the Group’s main interest rate risk arises from floating rate
borrowings drawn down under bank debt facilities. the Group
uses interest rate swaps to hedge floating rate borrowings
in accordance with the Group treasury policy. Interest rate
swaps have the economic effect of converting borrowings
from floating to fixed rates.
refer to note 11 for notional principal amounts and valuations
of interest rate swaps outstanding at balance date. a
sensitivity analysis of interest rate risk on the Group’s financial
assets and liabilities is provided in the table below. refer to
note 18 for further details of the Group’s borrowings.
at the reporting date the interest rate profile of the Group’s banking facilities was:
CarrYInG amount
Total secured loans
less principal covered by interest rate swaps
Principal on floating interest
Group
parent
2011
nZ$’000
2010
nZ$’000
2011
nZ$’000
2010
nZ$’000
46,480
(40,284)
6,196
53,965
(39,845)
14,120
-
-
-
-
-
-
Interest rates on loans currently range from 3.65% – 5.99% (2010: 4.24% - 5.81%). the Company has entered into interest rate
swap agreements to reduce the impact of changes in interest rates on its long-term debt. the cashflow hedge (gain)/loss on
interest rate swaps at balance date was $338,244 (2010: $271,285).
66 kAThMANdu annual report 2011
Summarised sensitivity analysis
the following table summarises the sensitivity of the Group’s
financial assets and financial liabilities to interest rate risk and
foreign exchange risk.
a sensitivity of -15% / +5% for foreign exchange risk has been
selected. While it is unlikely that an equal movement of the
new Zealand dollar would be observed against all currencies
an overall sensitivity of -15% / +5% is reasonable given the
exchange rate volatility observed on an historic basis for the
preceding five year period and market expectation for potential
future movements.
a sensitivity of 1% has been selected for interest rate risk.
the 1% is based on reasonably possible changes over a
financial year, using the observed range of historical data for
the preceding five year period.
amounts are shown net of income tax. all variables other than
applicable interest rates and exchange rates are held constant.
Group
IntereSt rate rISK
ForeIGn exCHanGe rISK
31 July 2011
Derivative financial instruments
(asset) / liability
Financial assets
Cash
Financial liabilities
Trade payables
Borrowings
Carrying
amount
$’000
-1%
+1%
-15%
+5%
profit
equity
profit
equity
profit
equity
profit
equity
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
10,804
(403)
323
403
(331)
-
(12,930)
-
3,489
3,574
(26)
21,012
46,480
-
465
465
-
-
-
-
26
-
(465)
(465)
-
-
-
-
405
(1,955)
-
(1,955)
-
-
(2,539)
(2,539)
(109)
528
-
528
-
-
685
685
total increase / decrease
36
323
36
(331)
(1,550)
(15,469)
419
4,174
Group
IntereSt rate rISK
ForeIGn exCHanGe rISK
31 July 2010
Derivative financial instruments
(asset) / liability
Financial assets
Cash
Financial liabilities
Trade payables
Borrowings
Carrying
amount
$’000
-1%
+1%
-10%
+10%
profit
equity
profit
equity
profit
equity
profit
equity
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
5,090
(398)
603
398
(668)
-
(8,322)
-
6,785
4,736
(34)
16,891
53,965
-
539
539
-
-
-
-
34
-
(539)
(539)
-
-
-
-
361
(865)
-
(865)
-
-
(2,117)
(2,117)
(295)
707
-
707
-
-
1,732
1,732
total increase / decrease
107
603
(107)
(668)
(504)
(10,439)
412
8,517
the parent is not sensitive to either interest rate or foreign exchange risk.
kAThMANdu annual report 2011 67
(b) Credit risk
Credit risk is the risk of financial loss to the Group if a customer
or counterparty to a financial instrument fails to meet its
contractual obligations. this would arise principally from
the Group’s receivables from customers. the nature of the
customer base is such that there is no individual customer
concentration of credit risk. other financial instruments which
potentially subject the Company to credit risks principally
consist of bank balances, loans, advances and refund of taxes.
Trade and other receivables
the nature of the customer base is such that there is no
individual customer concentration of credit risk.
the Company does not carry out credit evaluations for all new
customers requiring credit. Credit is generally only given to
government or local council backed institutions.
Exposure to credit risk
the balances below are recorded at their carrying amount
after any provision for loss on these financial instruments.
the maximum exposure to credit risk at reporting date was:
CarrYInG amount
Group
parent
Cash and cash equivalents
Trade receivables
Sundry debtors
2011
nZ$’000
2010
nZ$’000
2011
nZ$’000
2010
nZ$’000
3,574
92
407
4,073
4,736
-
865
5,601
5
-
-
5
6
-
-
6
As at balance date the carrying amount is also considered the fair value for each of the financial instruments.
(c) Liquidity risk
liquidity risk is the risk that an unforeseen event or
miscalculation in the required liquidity level will result in the
Group foregoing investment opportunities or not being able
to meet its obligations in a timely manner, and therefore gives
rise to lower investment income or to higher borrowing costs
than normal. prudent liquidity risk management includes
maintaining sufficient cash, and ensuring the availability of
funding from adequate amounts of credit facilities.
the Group’s liquidity exposure is managed by ensuring
sufficient levels of liquid assets and committed facilities are
maintained based on regular monitoring of cash flow forecasts.
the Group has lending facilities of $126,311,631 (2010 :
$125,201,863) and operates well within this facility.
this includes short term bank overdraft requirements, and at
balance date no bank accounts were in overdraft.
the table below analyses the Group’s financial liabilities and
net-settled derivative financial liabilities into relevant maturity
groupings based on the remaining period at the balance sheet
to the contractual maturity date. the amounts disclosed in the
table are the contractual undiscounted cash flows.
Group 2011
Trade and other payables
Guarantees
Borrowings
Group 2010
Trade and other payables
Guarantees
Borrowings
Less than
1 year
nZ$’000
Between
1 and 2 years
nZ$’000
Between
2 and 5 years
nZ$’000
over
5 years
nZ$’000
21,012
12,215
2,163
35,390
16,891
10,840
2,599
30,330
-
-
47,274
47,274
-
-
2,599
2,599
-
-
-
-
-
-
54,915
54,915
-
-
-
-
-
-
-
-
68 kAThMANdu annual report 2011
the Group enters into forward exchange contracts to manage
the risks associated with the purchase of foreign currency
denominated products.
the table below analyses the Group’s derivative financial
instruments that will be settled on a gross basis into relevant
at 31 July 2011
Forward foreign exchange contracts
-
-
Inflow
Outflow
Net Inflow / (Outflow)
Net settled derivatives – interest rate swaps
Net (Outflow)
at 31 July 2010
Forward foreign exchange contracts
-
-
Inflow
Outflow
Net Inflow / (Outflow)
Net settled derivatives – interest rate swaps
Net (Outflow)
maturity groupings based on the remaining period of the
balance sheet to the contractual maturity date. the amounts
disclosed in the table are the contractual undiscounted cash
flows. they are expected to occur and affect the profit or loss
at various dates between balance date and the following five
years.
Less than
1 year
nZ$’000
Between
1 and 2 years
nZ$’000
Between
2 and 5 years
nZ$’000
73,719
(84,185)
(10,466)
-
-
-
(254)
(84)
75,214
(80,033)
(4,819)
-
-
-
(181)
(90)
-
-
-
-
-
-
-
-
Fair values
the following methods and assumptions were used to
estimate the fair values for each class of financial instrument.
Foreign exchange contracts and interest rate swaps
the fair value of these instruments is estimated based on the
quoted market price of these instruments.
Trade debtors, trade creditors and bank balances
the carrying value of these items is equivalent to their fair
value.
Term liabilities
the fair value of the Group’s term liabilities is estimated based
on current market rates available to the Group for debt of
similar maturity.
Guarantees and overdraft facilities
the fair value of these instruments is estimated on the basis
that management do not expect settlement at face value to
arise. the carrying value and fair value of these instruments
is nil. details of guarantees are included in note 25. all
guarantees are repayable on demand.
kAThMANdu annual report 2011 69
Financial instruments by category
Loans and
receivables
nZ$’000
Derivatives used
for hedging
nZ$’000
measured at
amortised cost
nZ$’000
total
nZ$’000
Group
at 31 July 2011
Cash and cash equivalents
Trade and other receivables
Derivative financial instrument assets
Total financial assets
Trade and other payables
Interest bearing liabilities
Derivative financial instrument liabilities
Total financial liabilities
at 31 July 2010
Cash and cash equivalents
Trade and other receivables
Derivative financial instrument assets
Total financial assets
Trade and other payables
Interest bearing liabilities
Derivative financial instrument liabilities
Total financial liabilities
parent
at 31 July 2011
Cash and cash equivalents
Trade and other receivables
Related party receivable
Total financial assets
Trade and other payables
Related party payable
Total financial liabilities
at 31 July 2010
Cash and cash equivalents
Trade and other receivables
Related party receivable
Total financial assets
Trade and other payables
Related party payable
Total financial liabilities
3,574
499
-
4,073
-
-
-
-
4,736
865
-
5,601
-
-
-
-
5
-
84,216
84,221
-
-
-
6
-
88,225
88,231
-
-
-
-
-
2
2
-
-
10,806
10,806
-
-
44
44
-
-
5,134
5,134
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
21,012
46,480
-
67,492
-
-
-
-
16,891
53,965
-
70,856
-
-
-
-
42
-
42
-
-
-
-
68
-
68
3,574
499
2
4,075
21,012
46,480
10,806
78,298
4,736
865
44
5,645
16,891
53,965
5,134
75,990
5
-
84,216
84,221
42
-
42
6
-
88,225
88,231
68
-
68
70 kAThMANdu annual report 2011
Capital risk management
the Group’s capital includes contributed equity, reserves and
retained earnings.
the Group’s objectives when managing capital are to
safeguard the Group’s ability to continue as a going concern in
order to provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to
reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group
may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell assets
to reduce debt or draw down more debt.
Externally imposed capital requirements
the Group is subject to various covenants with its banking
syndicate in relation to the ratios of earnings to total debt and
interest on that debt, which were complied with during and at
the end of the year.
29 SEGMENTAL INFORMATION
the Group operates in three geographical areas: new Zealand, australia and the united Kingdom.
31 July 2011
new
Zealand
nZ$’000
australia
nZ$’000
united
Kingdom
nZ$’000
elimination
total
nZ$’000
nZ$’000
Segment profit / (loss) before income tax and IPO costs
27,311
33,149
(2,568)
(675)
57,217
Costs associated with IPO
Income tax expense
Profit / (loss) after tax
Segment profit / (loss) before income tax and IPO costs includes
the following specific income and (expenses):
Sales to external customers
Cost of sales
Net interest income/(expense)
Net other finance income/(expense)
Intercompany net finance income/(expense)
Intercompany recharges income/(expense)
Depreciation and software amortisation
Other income from reversal of UK Loan provision
Total current assets
Total non-current assets (excl deferred tax)
Total assets
Total current liabilities
Total non-current liabilities
Total liabilities
-
(18,151)
39,066
306,143
(105,560)
(4,263)
(2,540)
-
-
(7,415)
-
59,916
276,507
336,423
(38,183)
(46,781)
(84,964)
110,335
(43,469)
187,565
(58,578)
(1,875)
(1,043)
3,556
6,872
(2,371)
-
388,794
333,655
722,449
(11,270)
(26,724)
(37,994)
(2,388)
(417)
(3,556)
(6,872)
(4,628)
-
32,381
136,985
169,366
(88,755)
(20,057)
(108,812)
8,243
(3,513)
-
(340)
-
-
(416)
-
3,103
695
3,798
-
-
-
(740)
-
-
-
-
(364,362)
(194,828)
(559,190)
(3,721)
65,563
-
-
(3,721)
65,563
kAThMANdu annual report 2011 71
31 July 2010
new
Zealand
$’000
australia
$’000
united
Kingdom
$’000
elimination
$’000
total
$’000
Segment profit / (loss) before income tax and IPO
36,244
12,966
(3,818)
(6,594)
38,798
Costs associated with IPO
Income tax expense
Profit / (loss) after tax
Segment profit / (loss) before income tax and IPO includes the
following specific income and (expenses):
Sales to external customers
Cost of sales
Net interest income/(expense)
Net other finance income/(expense)
Intercompany net finance income/(expense)
Intercompany recharges income/(expense)
Depreciation and software amortisation
Other income from reversal of UK Loan provision
Total current assets
Total non-current assets (excl deferred tax)
Total assets
Total current liabilities
Total non-current liabilities
Total liabilities
(16,834)
(12,577)
9,387
245,812
(90,523)
(7,416)
(2,241)
-
-
(5,974)
-
46,055
269,887
315,942
(26,007)
(54,280)
(80,287)
94,294
(37,411)
(1,372)
(964)
2,990
7,495
(1,788)
8,346
372,966
331,785
704,751
(9,074)
(27,762)
(36,836)
141,876
(48,986)
(6,044)
(898)
(2,990)
(7,495)
(3,606)
-
21,363
131,786
153,149
(67,995)
(26,518)
(94,513)
9,642
(4,126)
-
-
-
-
(2,132)
1,753
-
-
(580)
-
3,127
1,144
4,271
-
-
-
(8,346)
(351,401)
(194,828)
(546,229)
(1,327)
52,389
-
-
(1,327)
52,389
Revenue is allocated based on the country in which the customer is located. New Zealand includes holding company costs and head office charges.
Assets / liabilities are allocated based on where the assets / liabilities are located.
The Group operates in one industry being outdoor clothing and equipment.
72 kAThMANdu annual report 2011
30 EARNINGS PER ShARE
due to the reverse acquisition referred to in note 2 and note 21 above, the capital structure of the Group changed in november
2009. 9,081,072,000 Milford Group holdings limited shares were on issue prior to the Ipo. 200,000,000 shares were issued in
the Ipo by Kathmandu holdings limited. as a consequence there remains a significant variation in the weighted average number
of shares between 2010 and 2011.
31 EARThQuAkE dISCLOSuRES
the Christchurch earthquake that occurred on 22 February 2011 is not expected to have a significant impact on future trading.
Kathmandu has business interruption insurance that provides cover for this event.
as at the date of this report one store (Cashel St) remains closed and will be for the foreseeable future. a new store in
Christchurch (papanui) was opened on 23 March 2011 to mitigate the expected on-going closure of Cashel Street. a business
interruption claim following the 22 February 2011 event has been lodged and is in process. a further material damage claim has
been lodged to cover any loss of inventory and damage to fixtures and fittings in our Cashel Street store. no expected insurance
proceeds from these claims have been recognised in the financial statements.
the company is not aware of any reason why its insurance would not cover all material costs or loss of profits in the current
financial year that were incurred as a result of the earthquake.
32 EVENTS OCCuRRING AFTER ThE BALANCE dATE
there are no events occurring after balance date that materially affect the information within the financial statements.
kAThMANdu annual report 2011 73
74 kAThMANdu annual report 2011
statutory information
EMPLOYEE REMuNERATION
the Group operates in new Zealand, australia and the uK where remuneration market levels differ. the offshore remuneration
amounts are converted into new Zealand dollars. of the employees noted in the table below, 55% are employed by the Group
outside new Zealand. during the year a number of employees or former employees, not being non-executive directors of the
Group, received remuneration and other benefits that exceeded nZ$100,000 in value as follows:
remuneratIon
numBer oF empLoYeeS
$
100,000
110,001
120,001
130,001
140,001
150,001
160,001
180,001
190,001
200,001
220,001
250,001
280,001
320,001
330,001
340,001
490,001
500,001
600,001
620,001
1,140,001
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
110,000
120,000
130,000
140,000
150,000
160,000
170,000
190,000
200,000
210,000
230,000
260,000
290,000
330,000
340,000
350,000
500,000
510,000
610,000
630,000
1,150,000
5
4
5
3
1
1
2
1
2
1
1
1
1
1
1
1
1
1
1
1
1
dISTRIBuTION OF ShAREhOLdERS ANd hOLdINGS
number of Holders
1 to 999
1,000 to 4,999
5,000 to 9,999
10,000 to 99,999
100,000 and over
Total
377
1,039
441
456
51
%
16%
44%
19%
19%
2%
2,364
100%
number of ordinary Shares
218,292
2,651,152
3,185,415
10,958,005
182,987,136
200,000,000
%
0%
1%
2%
5%
91%
100%
the details set out above were as at 9 September 2011.
the Company has only one class of shares on issue, ordinary
shares, and these shares are listed on the nZX and aSX. there
are no other classes or equity security currently on issue. the
Company’s ordinary shares each carry a right to vote on any
resolution on a poll at a meeting of shareholders. holders of
ordinary shares may vote at a meeting in person, or by proxy,
representative or attorney. Voting may be conducted by voice,
by show of hands, or poll. there are no voting rights attached
to options.
there were 72 shareholders holding less than a marketable
parcel, as defined by aSX listing rules, of the Company’s
ordinary shares, based on the market price as at 9 September
2011.
there are no restricted securities or securities subject to
voluntary escrow on issue.
LIMITATIONS ON ThE ACQuISITION OF
SECuRITIES
the Company is not subject to Chapters 6, 6a, 6B and 6C
of the Corporations act 2001 (australia) dealing with the
acquisition of shares (i.e. substantial holdings and takeovers).
limitations on the acquisition of the securities imposed by
the jurisdiction in which the Company is incorporated (new
Zealand) are:
a. In general, securities in the Company are freely
transferable and the only significant restrictions or
limitations in relation to the acquisition of securities are
those imposed by new Zealand laws relating to
takeovers, overseas investment and competition.
b. the new Zealand takeovers Code creates a general rule
under which the acquisition of 20% or more of the voting
rights in the Company or the increase of an existing holding
of 20% or more of the voting rights of the Company
AMP (3 August 2011)
Commonwealth Bank of Australia (8 August 2011)
Eley Griffiths (17 May 2011)
AusBil Dexia (25 November 2009)
National Australia Bank (26 August 2011)
kAThMANdu annual report 2011 75
can only occur in certain permitted ways. these include
a full takeover offer in accordance with the takeovers
Code, a partial takeover offer in accordance with the
takeovers Code, an acquisition approved by an ordinary
resolution, an allotment approved by an ordinary resolution,
a creeping acquisition (in certain circumstances) or
compulsory acquisition of a shareholder holds 90% or
more of the shares of the Company.
c. the new Zealand overseas Investment act 2005 and
overseas Investment regulations 2005 (new Zealand)
regulate certain investments in new Zealand by overseas
persons. In general terms, the consent of the new
Zealand overseas Investment office is likely to be required
where an “overseas person” acquires shares in the
Company that amount to 25% or more of the shares
issued by the Company, or if the overseas person already
holds 25% or more, the acquisition increases that holding.
d. the new Zealand Commerce act 1986 is likely to
prevent a person from acquiring shares in the Company
if the acquisition would have, or would be likely to have,
the effect of substantially lessening competition in the
market.
SuBSTANTIAL SECuRITY hOLdERS
according to notices given under the Securities Markets
act 1988 (new Zealand), the substantial security holders in
ordinary shares (being the only class of listed voting securities)
of the Company and their relevant interests according to the
substantial security holder file as at 9 September 2011, were
as follows:
ordinary shares
20,764,707
17,962,113
12,332,516
10,512,000
10,100,031
%
10.4%
9.0%
6.2%
5.3%
5.1%
as at 9 September 2011, the Company had 200,000,000 ordinary shares on issue.
76 kAThMANdu annual report 2011
PRINCIPAL ShAREhOLdERS
the names and holdings of the twenty largest registered shareholders as at 9 September 2011 were:
name
ordinary Shares
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
20
J P MORGAN NOMINEES AUSTRALIA LIMITED
NEW ZEALAND CENTRAL SECURITIES DEPOSITORY LIMITED
NATIONAL NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
COGENT NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
COGENT NOMINEES PTY LIMITED
AMP LIFE LIMITED
CITICORP NOMINEES PTY LIMITED
BOND STREET CUSTODIANS LIMITED
PETER HALKETT
NEW ZEALAND DEPOSITORY NOMINEE LIMITED
QUEENSLAND INVESTMENT CORPORATION
RBC DEXIA INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
CITICORP NOMINEES PTY LIMITED
FRANED PTY LIMITED
BUTTONWOOD NOMINEES PTY LTD
UBS WEALTH MANAGEMENT AUSTRALIA NOMINEES PTY LTD
FNZ CUSTODIANS LIMITED
QUADRANT PRIVATE EQUITY MANAGEMENT PTY LIMITED
QUADRANT PRIVATE EQUITY SERVICES PTY LIMITED
dIRECTORS’ ShAREhOLdINGS
directors held interests in the following shares of the Company at 31 July 2011:
James Strong
Peter Halkett
Mark Todd
John Harvey
John Holland
Sandra McPhee
beneficially owned
beneficially owned
beneficially owned
not beneficially owned
beneficially owned
beneficially owned
beneficially owned
43,132,497
38,579,680
38,171,239
16,374,706
12,629,580
9,580,307
3,936,023
3,861,388
1,822,363
1,733,120
1,409,832
1,264,090
643,387
642,220
596,793
544,600
542,557
527,352
502,153
441,176
441,176
176,470
1,429,832
361,418
43,437
51,563
82,033
58,823
%
21.57%
19.29%
19.09%
8.19%
6.31%
4.79%
1.97%
1.93%
0.91%
0.87%
0.70%
0.63%
0.32%
0.32%
0.30%
0.27%
0.27%
0.26%
0.25%
0.22%
0.22%
kAThMANdu annual report 2011 77
ShARE dEALINGS BY dIRECTORS
In accordance with Section 148(2) of the Companies act 1993, the Board has received disclosures from the directors named
below of acquisitions or disposals of relevant interests in the Company between 1 august 2010 and 31 July 2011, the details of
those dealings were entered in the Company’s interests register. the particulars of such disclosures are:
Director
Peter Halkett
Mark Todd
nature of Interest
Beneficial
Non-Beneficial
Shares acquired
20,000
20,000
Consideration
NZD 2.38
NZD 1.92
Date
03/04/2011
04/10/2010
SuBSIdIARY COMPANY dIRECTORS
Section 211(2) of the Companies act 1993 requires the Company to disclose, in relation to its subsidiaries, the total remuneration
and value of other benefits received by directors and former directors, and particulars of entries in the interests registers made
during the year ended 31 July 2011. no subsidiary has directors who are not full-time employees of the Group.
the remuneration and other benefits of such employees (received as employees) totalling $100,000 or more during the
year ended 31 July 2011, are included in the relevant bandings for remuneration disclosed at the beginning of the “Statutory
Information” section of this annual report. no employee of the Group appointed as a director of Kathmandu holdings limited
or its subsidiaries receives or retains any remuneration or other benefits in their capacity as a director.
the persons who held office as directors of subsidiary companies at 31 July 2010, and those who ceased to hold office during the
year ended 31 July 2011, are as follows:
Milford Group holdings Limited
peter halkett, Mark todd
kathmandu Limited
peter halkett, Mark todd
kathmandu Pty Limited
peter halkett, Mark todd, Matthew Spencer
kathmandu (u.k.) Limited
peter halkett, Mark todd
78 kAThMANdu annual report 2011
dISCLOSuRE OF INTERESTS BY dIRECTORS
In accordance with Section 140(2) of the Companies act 1993, the directors named below have made a general disclosure
of interest, by a general notice disclosed to the Board and entered in the Company’s interests register. General notices given
by directors which remain current as at 31 July 2011 are as follows:
James Strong
Chairman of:
Woolworths limited
australian Council for the arts
local organising Committee for the ICC Cricket World Cup
2015 (appointed 17 august 2011)
Insurance australia Group limited (resigned 26 august 2010)
John harvey
A director of:
dnZ property Fund limited
port otago limited
new Zealand opera limited
heartland Building Society
apn news & Media limited (appointed 1 January 2011)
A director of:
Qantas airways limited
IaG Finance new Zealand limited (resigned 26 august 2010)
An advisor to the board of:
resource Coordination partnership limited
John holland
A partner of:
Chapman tripp
A member of:
Securities Commission of new Zealand
(disestablished 1 May 2011)
A member of:
nomura australia limited advisory Board
australian Grand prix Corporation
Sandra Mcphee
A director of:
aGl energy limited
tourism australia
Fairfax Media limited
Westfield retail trust (appointed 21 december 2010)
A vice president of:
the art Gallery of nSW trust
A member of:
Jp Morgan advisory Council
advisory Board of MMC
St Vincents and Mater health Sydney
Community advisory Council
kAThMANdu annual report 2011 79
dIRECTORS’ ANd OFFICERS’ INSuRANCE ANd INdEMNITY
the Group has arranged, as provided for under the Company’s Constitution, policies of directors’ and officers’ liability Insurance
which, with a deed of Indemnity entered into with all directors, ensures that generally directors will incur no monetary loss as a
result of actions undertaken by them as directors. Certain actions are specifically excluded, for example, the incurring of penalties
and fines which may be imposed in respect of breaches of the law.
uSE OF COMPANY INFORMATION
there were no notices from directors of the Company requesting to use Company information received in their capacity as
directors which would not otherwise have been available to them.
GROuP STRuCTuRE
Kathmandu holdings limited owns 100% of the following companies:
Milford Group holdings limited
Kathmandu limited
Kathmandu pty limited
Kathmandu (uK) limited
dIRECTORS’ dETAILS
James Strong
peter halkett
Mark todd
John harvey
John holland
Sandra Mcphee
Chairman, non-executive
Managing director and Chief executive officer
Finance director and Chief Financial officer and Company Secretary
non-executive director
non-executive director
non-executive director
EXECuTIVES’ dETAILS
peter halkett
Mark todd
Chief executive officer
Chief Financial officer
dIRECTORY
the details of the Company’s principal administrative and registered office in new Zealand is:
11 Mary Muller drive
heathcote
po Box 1234
Christchurch 8140
80 kAThMANdu annual report 2011
ShARE REGISTRY
In new Zealand:
physical address:
link Market Services (lInK)
level 16, Brookfields house,
19 Victoria Street
West, auckland 1010
new Zealand
postal address:
po Box 91976,
auckland, 1142
new Zealand
telephone:
Investor enquiries:
+64 9 375 5999
+64 9 375 5998
Facsimile:
Internet address:
+64 9 375 5990
www.linkmarketservices.com
In australia:
link Market Services (lInK)
physical address:
postal address:
level 1, 333 Collins Street
Melbourne, VIC 3000
australia
locked Bag a14
Sydney, South nSW 1235
australia
telephone:
Investor enquiries:
Facsimile:
Internet address:
+61 2 8280 7111
+61 2 8280 7111
+61 2 9287 0303
www.linkmarketservices.com.au
STOCk EXChANGES
the Company’s shares are listed on the nZX and the aSX.
INCORPORATION
the Company is incorporated in new Zealand.
store locations
store locations
AUSTRALIA
AUSTRALIA
VIC
VIC
Smith St
Smith St
Fitzroy
Fitzroy
Blackburn
Blackburn
Hampton East
Hampton East
Melbourne (Bourke St)
Melbourne (Bourke St)
Knox
Knox
Richmond
Richmond
Highpoint (Maribyrnong)
Highpoint (Maribyrnong)
Camberwell
Camberwell
Melbourne (Spencer St)
Melbourne (Spencer St)
Chadstone
Chadstone
Doncaster
Doncaster
Frankston
Frankston
Chapel St
Chapel St
South Wharf DFO
South Wharf DFO
Bendigo
Bendigo
Geelong
Geelong
Ballarat
Ballarat
Southland (Cheltenham)
Southland (Cheltenham)
NSW
NSW
Albury
Albury
Sydney (Kent St)
Sydney (Kent St)
Chatswood
Chatswood
Cronulla
Cronulla
Birkenhead Point
Birkenhead Point
Redyard (Auburn)
Redyard (Auburn)
Bondi Junction
Bondi Junction
Hornsby
Hornsby
Warringah
Warringah
Newcastle
Newcastle
Castle Towers
Castle Towers
Macquarie
Macquarie
Rouse Hill
Rouse Hill
Parramatta
Parramatta
Macarthur
Macarthur
Erina Fair
Erina Fair
Orange
Orange
Wollongong
Wollongong
Wagga Wagga
Wagga Wagga
SA
SA
Adelaide (Rundle St)
Marion
Tea Tree
Adelaide Harbourtown
Adelaide (Rundle St)
Marion
Tea Tree
Adelaide Harbourtown
ACT
ACT
Canberra Civic
Canberra Civic
Woden
Woden
Canberra Centre
Canberra Centre
Belconnen
Belconnen
QLD
QLD
Brisbane (Albert St)
Brisbane (Albert St)
Fortitude Valley
Fortitude Valley
Chermside
Chermside
Logan
Logan
Kawana
Kawana
Pacific Fair (Broadbeach)
Pacific Fair (Broadbeach)
Townsville
Townsville
Cairns
Cairns
Toowoomba
Toowoomba
Southport
Southport
TAS
TAS
Hobart
Hobart
Devonport
Devonport
Launceston
Launceston
WA
WA
Perth (Hay St)
Perth (Hay St)
Cottesloe
Cottesloe
Innaloo
Innaloo
Carousel (Cannington)
Carousel (Cannington)
Fremantle
Fremantle
Whitford
Whitford
Perth Harbourtown
Perth Harbourtown
NEW ZEALAND
NEW ZEALAND
UNITED KINGDOM
UNITED KINGDOM
NORTH ISLAND
NORTH ISLAND
Albany
Albany
Auckland (Queen St)
Auckland (Queen St)
Auckland (Victoria St)
Auckland (Victoria St)
Botany
Botany
Gisborne
Gisborne
Hamilton
Hamilton
Hastings
Hastings
Lyall Bay
Lyall Bay
Manukau
Manukau
Napier
Napier
New Plymouth
New Plymouth
Newmarket
Newmarket
Onehunga
Onehunga
Otaki
Otaki
Palmerston North
Palmerston North
Petone
Petone
Rotorua
Rotorua
Sylvia Park
Sylvia Park
Takapuna
Takapuna
Taupo
Taupo
Tauranga
Tauranga
Tauranga CBD
Tauranga CBD
Te Rapa
Te Rapa
Waitakere
Waitakere
Wanganui
Wanganui
Wellington
Wellington
Whakatane
Whakatane
Whangarei
Whangarei
SOUTH ISLAND
SOUTH ISLAND
Blenheim
Blenheim
Christchurch (Cashel St)
Christchurch (Cashel St)
Christchurch (Tower Junction)
Christchurch (Tower Junction)
Dunedin
Dunedin
Invercargill
Invercargill
Nelson
Nelson
Queenstown
Queenstown
Riccarton
Riccarton
Timaru
Timaru
Papanui
Papanui
Ashburton
Ashburton
Brighton
Brighton
Bristol
Bristol
London (Berners St)
London (Berners St)
London (Covent Garden)
London (Covent Garden)
London (Spitalfields)
London (Spitalfields)
London (White City)
London (White City)
This book is printed on environmentally
This book is printed on environmentally
responsible paper manufactured using
responsible paper manufactured using
FSC-certified, mixed-source pulp harvested
FSC-certified, mixed-source pulp harvested
from sustainable well-managed forests and
from sustainable well-managed forests and
using an elemental chlorine-free process.
using an elemental chlorine-free process.
Vegetable based inks and water-based
Vegetable based inks and water-based
aqueous coating were used.
aqueous coating were used.
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KATHMANDU HOLDINGS LIMITED
ANNUAL REPORT 2011
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