Plain-text annual report
Annual Integrated Report
2023
CONTENTS
2 OUR JOURNEY
2 Reporting approach
3 Our purpose and vision
4 Our brands
6 Highlights and lowlights for FY23
8 Our world
10 LEADERSHIP & GOVERNANCE
10 Report from the Chair
12 Group CEO report
14 Governance at KMD Brands
16 Our board
17 Our management team
18 WHAT MATTERS MOST
18 Materiality approach
20 Our material issues
22 STRATEGY
22 How we create value
24 Our strategic pillars
26 BUILDING GLOBAL BRANDS
39 ELEVATING DIGITAL
48 OPERATIONAL EXCELLENCE
58 LEAD IN ESG
60 Communities
84 Climate
96 Circularity
118 FINANCING OUR IMPACT
119 Group CFO report
122 Financial statements
168 Auditors report
172 ADDITIONAL DISCLOSURES
172 Corporate Governance Statement
184 Statutory information
189 Directory
190 GRI index
198 SASB index
202 Our partners
1
KMD Brands acknowledges Tangata Whenua, the
Indigenous Nations, First Peoples, and Custodians of the
lands and waterways on which our brand head offices
reside in New Zealand, Australia and the United States.
OUR JOURNEY
Reporting approach
Our purpose and vision
ABOUT THIS REPORT
This integrated report is a review of
our financial, economic, social and
environmental performance for the
year ending 31 July 2023. This is our
second year of integrated reporting.
We have prepared this report using
the International Framework,
which aims to communicate the
full range of factors that affect
an organisation’s ability to create
value over time. It requires a
high level of transparency and a
commitment to robust disclosure
around Environmental, Social and
Governance (ESG) commitments.
KPMG has audited the financial
statements in this report. Financial
information has been prepared
in accordance with New Zealand
Equivalents to International Financial
Reporting Standards (NZ IFRS) and
International Financial Reporting
Standards (IFRS). Non-financial
information is reported with reference
to the Global Reporting Initiative
(GRI) Universal Standards.
This year, we have built on our climate
disclosures, referring to the structure
of the Aotearoa New Zealand
Climate Standards (NZ CS) as we
build towards our first disclosure
under the NZ CS for FY24. We will
continue to improve and increase our
reporting of our climate-related risks
and opportunities and how they are
reflected in our business strategy
as we prepare for the reporting
requirements under the NZ CS.
This report also includes our
Group carbon emissions data,
with assurance provided by Toitū
Envirocare, a New Zealand-based
company helping businesses reduce
their carbon footprint. Apart from
our carbon emissions data, external
assurance on non-financial data or
information has not been obtained.
This report constitutes KMD Brands'
2023 Annual Report to shareholders
and covers the requirements of
the NZX Corporate Governance
Code (version 1 April 2023).
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OUR BUSINESS
WHAT DRIVES US
KMD Brands is a global outdoor
lifestyle and sports company and
certified B Corporation. The Group
consists of three iconic brands:
Kathmandu, Oboz and Rip Curl.
Kathmandu was founded in 1987
in New Zealand to equip people
for travel and adventure. Outdoor
footwear brand Oboz joined the
group in 2018 and is based in
Bozeman, Montana USA, the gateway
to Yellowstone National Park. Rip
Curl, acquired in 2019, is a leading
global surf brand born in Bells
Beach, Victoria, Australia, in 1969.
KMD Brands Limited is publicly listed
on the NZX and ASX, initially listing
in 2009 as Kathmandu Holdings
Limited. The name changed to
KMD Brands Limited in 2022 to
reflect the multi-brand nature of the
company and its future strategy,
while still acknowledging our history.
KMD Brands is a family of outdoor
brands that designs products for
purpose, is driven by innovation
and is best for people and planet.
All products in the KMD Brands
family are made specifically for
the outdoors and are tested
by experts in the elements.
As the parent company, KMD
Brands brings vision and strategic
guidance that make Kathmandu,
Oboz and Rip Curl much more than
the sum of their parts. By sharing
expertise in technology, research
and development and by leveraging
operational excellence in sourcing,
supply chain and systems, we are
able to deliver the best customer
experience across our brands.
Our purpose and vision are motivated
by our love of the outdoors and
a commitment to protecting our
natural environment and the
people touched by our brands.
We are proud to be part of an
accelerating global cultural shift
to redefine success, build a more
inclusive and sustainable economy
and use business as a force for good.
By pushing for responsible
practices across all three of our
brands, we protect the experience
and exhilaration offered by the
outdoors that means so much
to us and our customers.
PURPOSE
Inspiring people to
explore and love
the outdoors.
VISION
To be the leading
family of global
outdoor brands –
designed for
purpose, driven by
innovation, best for
people and planet.
GRI 2-1
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KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES Our brands
Kathmandu’s journey began in
Aotearoa New Zealand more than
30 years ago. We’re on a mission
to improve the wellbeing of the
world by getting more people
outdoors – because nature has a
positive transformative effect on
us all. Getting outside makes us
more happy, open, free and fun.
Kathmandu’s vision is to be the
world’s most loved outdoor brand.
Born in the legendary Greater
Yellowstone Ecosystem right outside
our front door, the mountains just
outside Bozeman beckon us. It’s
in this 10-million-acre laboratory
where we test our designs and
find inspiration for our ideas. It’s
where we just soak it all in. It
even inspired our name “Oboz”
(Outside + Bozeman = Oboz).
Rip Curl, the ultimate surfing
company, was founded in 1969 in
Bells Beach, Australia. For more
than 50 years, Rip Curl has been
a market leader in surfing and
synonymous within surf culture.
‘The Search’ is the driving force that
led to the creation of Rip Curl and
it lives in the spirit of everything we
do. Our vision is to be the ultimate
surfing company in all that we do.
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5
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KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS HIGHS
FINANCIAL
$1,103m
Group sales
59.1%
Gross margin
$105.9m
Underlying EBITDA1
$43.3m
Underlying NPAT1
$55.7m
Net debt balance
$42.7m
FY23 dividends declared
to shareholders
w
Highlights and Lowlights for FY22
Highlights and lowlights for FY23
FY23 vs FY22
12.6%
increase
LOWS
Softening consumer
sentiment in Q4
Elevated levels of inventory
HIGHS
BUILDING GLOBAL BRANDS
LOWS
International launches in Europe and Canada
Launch of high-growth fast trail category
Release of the innovative FlashBomb Fusion wetsuit
Rising cost of living impacts on
consumer spending
North American and European
outdoor, footwear, and surf
industries all impacted by
industry over-stocking
20
increase
basis points
(0.2% of sales)
ELEVATING DIGITAL
15.1%
increase
8.6%
increase
1. Statutory results include the impact of IFRS
16 leases. For comparability, the impacts of
IFRS 16, restructuring, and the notional
amortisation of Rip Curl and Oboz customer
relationships are excluded from Underlying
results. Refer to Appendix 1 of the FY23
Results Presentation for a reconciliation of
Statutory to Underlying results.
Launch of French, German and Canadian websites
Oboz direct-to-consumer website sales increased
>350% year-on-year
Launch of Club Rip Curl in Australasia
Online penetration normalised
following pandemic highs to
13.2% of direct-to-consumer sales
Significant resource invested in
mitigating the impact and risk of
scam websites for Kathmandu
and Oboz
OPERATIONAL EXCELLENCE
Working capital
management
19.9%
of sales
Gross margin
59.1%
of sales
Improved from
21.1%
of sales in FY22
Improved from
58.9%
of sales in FY22
Impact on working capital from
elevated levels of inventory
Increase in customer
aggression in store towards
our retail employees
Global transactional banking consolidation
LEAD IN ESG
Group B Corp Certification
Science-based targets approved by SBTi
2nd anniversary of Sustainability Linked Loan – all targets met
KMD Brands wins Deloitte New Zealand Top 200 Sustainable
Business Leadership award
Winner, Best First Time Entry Australasian Reporting Awards
Increase in Scope 1 and 2
emissions year-on-year due to
return of travel and full store
network operation
Complexities of scaling
circularity programs within
a linear business model
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OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS Our world
NORTH AMERICA
Owned stores
Licensed stores
Wholesale doors
TOTAL
31
20
+4,200
Materials sourcing
USA , Mexico
Factories
1
Global Office Locations
EUROPE
Owned stores
Licensed stores
Wholesale doors
TOTAL
24
14
+2,000
Materials sourcing
Italy, France
Factories
6
ASIA
Licensed and JV stores
Wholesale doors
TOTAL
75
+600
Materials sourcing
Vietnam, China,
Thailand, Taiwan, Japan,
Indonesia, South Korea,
Bangladesh, India
Factories
162
CANADA
Vancouver
USA
San Clemente
Bozeman
FRANCE
Hossegor
JAPAN
Fujisawa
SOUTH AMERICA
Owned stores
Licensed stores
Wholesale doors
Factories
Materials sourcing
TOTAL
5
96
+800
13
Brazil
NATIONALITIES OF OUR TEAM *
American, Argentine, Australian, Austrian, Bangladeshi, Brazilian,
British, Canadian, Chilean, Chinese, Colombian, Croatian, Cuban, Dutch,
Ecuadorian, English, Filipino, Fijian, French, German, Greek, Honduran,
Indian, Indonesian, Iranian, Iraqi, Irish, Italian, Japanese, Korean,
Lebanese, Malaysian, Maltese, Mexican, Nepalese, New Zealander,
Pakistani, Peruvian, Polish, Portuguese, Russian, Salvadorian, Scottish,
South African, Spanish, Sri Lankan, Swedish, Thai, Tongan, Turkish,
Vietnamese, Welsh, and Zimbabwean.
BRAZIL
Sao Paulo
* Sourced from Gallup Q12 Engagement survey conducted during FY23 and is based on responses received from respondents
8
Chiang Mai
THAILAND
Bangkok
INDONESIA
AFRICA &
MIDDLE EAST
Licensed stores
Factories
TOTAL
Bali
35
1
AUSTRALASIA
Owned stores
Licensed stores
Wholesale doors
TOTAL
267
23
+1,000
Materials sourcing
Australia, New Zealand
Factories
6
AUSTRALIA
Torquay
Melbourne
NEW ZEALAND
Christchurch
GRI 2-1
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KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES LEADERSHIP & GOVERNANCE
Report from the Chair
In this report, you will find a holistic
overview of our business, including
how we create value for all our
stakeholders, the material issues
that we have encountered this
year, and how we are addressing
these. We have again organised
this report around our strategic
pillars which are unchanged.
We manage reporting and track our
metrics at a Group, rather than at an
individual brand level. This year we
have built on the foundation created
in our FY22 report by providing
more depth in our reporting on
important topics. We will continue
to develop our reporting content
under the framework in
subsequent reporting periods.
In FY23 we have continued our
progress from a single ANZ
retailer to a global group of iconic
brands. This evolution brings with
David Kirk
Chairman
I am pleased to present the
Financial Year ‘23 Annual
Integrated Report for KMD
Brands. FY23 was a year of
consolidation and setting of solid
foundations that will position the
Group and brands for growth in
the next fiscal year and beyond.
it increased complexity in our
operational footprints. The Board
and I are pleased by the progress
the company has made in FY23.
STRATEGY, PURPOSE
AND VISION
In FY22 we focused on bringing the
brands together as a Group with
a new vision and purpose. In FY23
we continued that momentum and
further consolidated Group-wide
operating initiatives in support of
our strategic pillars. We remain
relentlessly focused on our four
strategic pillars: Building Global
Brands, Elevating Digital, Operational
Excellence and Lead in ESG.
We are guided by our vision – to
be the leading family of global
outdoor brands – designed for
purpose, driven by innovation,
best for people and planet. This
vision requires us to balance profit
with purpose and accordingly our
strategic pillar to Lead In ESG.
This year, as reported by the media
in ANZ and abroad, KMD Brands
proudly certified as a B Corporation
(B Corp). B Corp Certification is a
significant achievement for the Group.
The Group has been independently
verified to meet globally recognised
high standards of social and
environmental performance, public
transparency and accountability.
The entire Group and its many
functions, both globally and
locally, came together to achieve
this goal. The Kathmandu brand
recertified and Rip Curl and Oboz
certified for the first time after
several years of preparation. KMD
Brands is one of only 45 publicly
traded companies globally that are
certified B Corps – a significant
also won the award for ‘Best First
Time Entry’ and was an overall
runner-up in the Integrated Reporting
category, a significant achievement
for our first AIR. The Australian
Investor Relations Association also
acknowledged KMD Brands with
a nomination for Best Investor
Relations by a New Zealand company.
THANK YOU
I would like to record the Board’s
sincere thanks to Group CEO and
Managing Director, Michael Daly, for
his commitment this year. Michael
led the Kathmandu brand very
capably at the same time as leading
the Group. I would also like to thank
Chris Kinraid, Group CFO, for his
nine years of tenure at both KMD
Brands and Kathmandu. Chris leaves
to take up a chief executive officer
role at the end of this calendar year.
I also thank my fellow Board members
for all their hard and insightful work in
a challenging year, the management
teams at Group and in the brands
and each of the almost 5,000 KMD
Brands employees. We are well
positioned for continued growth
in profitability and value thanks to
your hard work and dedication.
Finally I would also like to thank our
shareholders for their continued
support in these more challenging
times for consumer spending.
achievement for a listed company
of our size, complexity, and scale.
PEOPLE
FY23 was Michael Daly’s second
year as Group CEO. For much of the
year, Michael was also Acting CEO
for Kathmandu, as we embarked on
a global search for a new leader. We
were delighted to appoint Megan
Welch as CEO of Kathmandu from
FY24. Her brand-building expertise
and experience in retail, wholesale
and digital sales channels in multiple
international markets including the
US, Europe and Asia, is perfectly
suited for Kathmandu at this time.
Last December, we farewelled John
Harvey after more than 12 years of
excellent service to KMD Brands
and Zion Armstrong was appointed
as a new non-executive director.
Zion has had a very successful 30
year career in the global branded
sportswear industry. Zion spent 24
years with adidas, stepping down as
President – North America in early
2022 to return to New Zealand.
FINANCIAL
The first full financial year of
uninterrupted trade since the
pandemic was focused on managing
our cost base in a period of higher
interest rates and inflation and
dampened consumer sentiment. We
have adjusted cost bases, focused
distribution channels, continued to
invest in our brands and worked
hard on distinctive, fit-for-purpose
products. We achieved record sales
of $1.1 billion for the first time, with
an underlying EBITDA of $105.9m.
All our iconic brands grew sales year-
on-year. Rip Curl achieved record
sales, growing sales year-on-year in
all major geographies. Kathmandu
achieved strong sales and profit
growth year-on-year, benefiting
from 12 months of uninterrupted
trade. Oboz sales improved sharply,
recovering from significant supply
constraints in the prior year.
In the second half of FY23 we
performed solidly despite a
significant deterioration in global
market conditions for consumer-
facing businesses. Our balance
sheet is strong, our strategy is
clear and our businesses are leaner
as we move into FY24. We have
good reason to feel confident in
our capacity to deliver improved
performance in the year ahead.
DIVIDEND
We have maintained the previous
year’s record dividend payout,
declaring $42.7 million dividends in
FY23. The directors have declared a
final dividend of 3 cents per share.
Combined with the 3 cents per share
interim dividend, this delivers a total
payout for the 2023 financial year of
6 cents per share. The final dividend
will not be franked for Australian
shareholders, and not imputed
for New Zealand shareholders.
INVESTOR RELATIONS
KMD Brands has been recognised
for its excellent engagement with
investors in FY23. The Group was
recognised at the Australasian
Reporting Awards (ARA) for our 2022
Annual Integrated Report (AIR). The
Group won a Gold Award for overall
excellence in annual reporting and
a Silver Award for achievement in
sustainability reporting. The Group
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KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES Group CEO report
Despite our strong overall
performance, there is work to
be done to continue to build
momentum in our brands.
regionally focused Kathmandu
websites and elevate the Oboz
e-commerce experience,
delivering triple-digit growth.
Kathmandu continued to cycle
through its second phase of
recovery, with increased incoming
and outgoing travel presenting
an opportunity for growth back
to pre-pandemic levels.
Rip Curl and Oboz continue to
drive growth in sales and need to
balance that with increased EBITDA
margins. Reduced working capital
for these brands is also a focus, as
we transition away from strategic
inventory builds in wetsuits and
footwear through the pandemic.
The Group remains committed
to improving our EBITDA margin
across all brands towards
our target of 15% of sales.
Ultimately, FY23 was a year of great
achievements for KMD Brands
and we’re encouraged by the
gains made across the Group.
STRATEGY
Our strategy and plan remained
unchanged and kept us on a steady
path in FY23. Our commitment to
Building Global Brands allowed us
to achieve key strategic priorities,
including the soft launch of
Kathmandu in Europe and Canada,
the global release of Rip Curl’s
breakthrough wetsuit innovation
the FlashBomb Fusion, and the
extension of Oboz both into
new markets and categories.
Elevating Digital saw the Group
collaborate with brands to launch
Rip Curl’s unique new customer
loyalty platform Club Rip Curl,
develop and deploy several new
We continue to leverage Operational
Excellence across the Group by
bringing the power of our brands
together. This year we saw strong
benefits derived from leveraging
our purchasing power across
brands with service providers. We
will continue to leverage the power
of the Group across systems, and
supply chain in particular, in the
coming years to deliver further
benefits and enable us to achieve
our desired financial targets.
Lead in ESG was an area that
united our Group – certifying as
a B Corp; Kathmandu piloting
industry leading circularity business
models that drove commercial
outcomes; launching Rip Curl’s first
Reconciliation Action Plan; and
Oboz reaching a milestone of five
million trees planted on behalf of
customers. ESG remains at the heart
of the business, and I feel personally
honoured to have been a part of
these achievements for this year.
Each section of our FY23 Annual
Integrated Report will dive into
how we activated these strategic
pillars, including case studies
that give greater detail, so please
continue to read more on this.
CUSTOMER
Our products are made by
passionate people, who live
and breathe the lifestyle of
their customers. We foster and
encourage this, ensuring that our
team can surf when the surf’s up,
or head home early to spend the
weekend camping or hitting the
Michael Daly
Managing Director and Chief Executive Officer
As Managing Director and Chief
Executive Officer of KMD Brands,
it is with great pride that I
present to you our second annual
integrated report, and our first
as a group with B Corporation
(B Corp) Certification.
FY23 was a year of significant
achievement for the Group.
We delivered a record NZD $1.1
billion in sales for the first time.
All of our iconic brands grew
sales, with Rip Curl and Oboz
delivering record results.
In our first year of uninterrupted
trade post-pandemic, we
also achieved:
• Gross margin improvement
of 20 basis points for the
Group and all brands
• Underlying EBITDA $105.9m
representing a margin
improvement for the Group
• Net working capital as a
percentage of sales improved
to under 20% (19.9%), with
significant reduction in
inventory at Kathmandu.
12
“
Our team can surf when the surf’s up, or head home early to spend the
weekend camping or hitting the trail. We are our customers, and like
our customers, we’ve grown up loving our brands.”
trail. We are our customers, and
like our customers, we’ve grown
up loving our brands. This gives
us a unique understanding of our
core target, both the adventures
they seek and the gear and
apparel they need to enable that.
Our customers rely on us for their
journeys, so it’s important we live in
their shoes. This shared enthusiasm
for the outdoors, whether that be
surfing, hiking or simply getting
out there, drives us to continuously
innovate for our customers.
To strengthen these bonds and
expand our influence, we’re actively
growing our loyalty programs.
Club Rip Curl unites customers,
encouraging them to share their
experiences of ‘The Search’ and fully
engage with our brand. Additionally,
the reimagined Kathmandu ‘Out
there rewards', set to launch in early
FY24, aims to deepen bonds with
our customers by incentivising
them to experience what they’re
passionate about – outdoor
adventures. As Oboz makes gains on
building community, we’re already
seeing the benefits of connecting
with their core hiker base through
the Oboz Trail Experience.
PEOPLE
This year in my role as Acting CEO
of Kathmandu, I worked closely
with the leadership team to refine
the strategic direction of the brand,
aligning with Group focuses. It was
important for me to get to know the
business in greater detail, to make
sure it was well positioned for its
next stage of leadership and growth.
With greater understanding
of what was required our CEO
search focused on appointing
a leader with hands-on brand
and product experience, from an
internationally successful business.
In Megan Welch, we identified
these important skills, which
ensure we are well positioned to
fulfil our international expansion
aspirations for Kathmandu.
In addition to this, we continued to
broaden the depth of our executive
bench and prioritised our Elevating
Digital and Operational Excellence
strategic pillars. This included a
revised and expanded Group Chief
Information Officer role, and the
newly created Chief Digital Officer
role, which will focus on digital
innovation and transformation
across the Group and brands. Both
roles are in the process of being
filled, as is the search for a new
Chief Financial Officer to replace
Chris Kinraid. We aim to ensure
all candidates start in H1 FY24.
OUTLOOK
This year has been one of many
milestones. Our focus was to
consolidate and position the Group
and our brands for the next stage
of growth, and we have achieved
this. Though we ended the year in
a challenging trading environment,
it’s important to note our record
performance, and the strong
position we find ourselves in for
FY24. With a strategic focus and
commitment, we finish FY23 with a
strong balance sheet, record sales,
and improved margin. FY24 will
see us continue the momentum
and deliver sustainable long-term
growth to our shareholders.
THANK YOU
I’m proud of the collective efforts
of the entire team that sit under
KMD Brands and each of our
iconic brands. I want to take this
opportunity to thank you all. Firstly,
thank you to our retail teams who
continue to go into stores each
day and passionately serve our
customers. To longer tenured team
members, thank you for trusting us
with your careers and combining
your lifelong passion with your
work. We benefit enormously
from your commitment.
A special thanks goes to everyone
across the entire business – both
locally and globally – who was
involved in the B Corp Certification
of the Group and brands; and the
recertification of Kathmandu. This
was a huge task, and we are the
better for it. I appreciate all the
hard work and passion that went
into this fantastic achievement.
A final thanks to Chris Kinraid,
Chief Financial Officer, for his
partnership and dedication over
the years. I wish him well in his next
role as a chief executive officer.
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ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESKMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS Governance at KMD Brands
At KMD Brands, our purpose
is to inspire people to explore
and love the outdoors. It is this
purpose that drives our vision to
be the leading family of global
outdoor brands – designed for
purpose, driven by innovation,
best for people and planet.
KMD Brands is led by a talented
group of non-executive directors
supporting an experienced
management team. The Group,
through the leadership of the
Board, has a clear purpose, vision
and defined corporate strategy. We
have well-established strategies,
policies and goals supporting
sustainable development,
underpinned by our commitment
to the B Corp movement.
Kathmandu first became a certified
B Corporation in 2019 and recertified
in 2023. Both Rip Curl and Oboz
achieved B Corp Certification
for the first time in 2023.
A B Corp is a different way of doing
business. It is a governance structure
underpinned by a “benefit mindset”
that considers all stakeholders to
balance purpose and profit. This
means that, as a business, we
consider the impact of our decisions
on our employees, our customers, the
wider community, the environment,
our shareholders, and the workers in
our global supply chain. We empower
and direct our employees to make
decisions with the same principles
of wider stakeholder consideration.
B Corps are a rapidly growing
community driving a global
movement of people working towards
a more inclusive, equitable and
regenerative economic system.
B Corp Certification - and
recertification every three years –
guides KMD Brands’ Environmental,
Social and Governance (ESG) impact
strategy and provides a framework
for continuous improvement.
The process to become B Corp
certified is different to other ESG
reporting frameworks, as it provides a
vehicle for transparent reporting and
disclosure, and also evaluates and
validates a company’s performance.
This enhances accountability
and transparency and gives us a
pathway to continually shape our
business practices to reduce our
negative impacts and create new
value for people and planet.
Our Group Code of Ethics embeds
the benefit mindset into our
expectations of all employees. We
have taken this further by adding
ESG responsibilities to the job
descriptions of all employees and
included ESG-related objectives as
part of our employee goal-setting
and performance review processes.
We are also looking for ways to
incorporate these expectations when
assessing our broader relationships
with manufacturers, licensee
partners, third-party branded
suppliers, and other vendors. The
benefit mindset is also reflected in
the Group’s policy commitment to
responsible business conduct.
At KMD Brands, we are committed to
leading the way by considering our
impact on people and planet in how
we do business and our governance
practices. This is because, by
doing so, we are protecting the
business for the long term, making
it more valuable, supporting the
future financial success of the
Group and preparing for future
regulatory requirements to come.
And these principles align with
our fundamental purpose and
vision. Getting people outside and
enjoying the outdoors is what all
our brands are about. We are in
business for profit, but we want
to be a good and robust business
for the long term, and B Corp
Certification positions us for this.
At our Annual Shareholders
Meeting in November 2023,
the Board will propose a
special resolution to amend the
constitution of KMD Brands to
embed our purpose provision,
and to add a requirement for
the Board to consider relevant
stakeholder interests when
making decisions, including
the interests of shareholders,
consequences for the
business in the long term,
the interests of employees,
customers, suppliers, impacts
on the community and the
environment. These clauses
reflect the approach we
already take to governance and
decision making across our
organisation. Incorporating this
provision is a requirement to
maintain B Corp Certification
for our Group beyond 2023.
KMD Brands is committed to
seeking an overall positive
impact on society and the
environment, while delivering
returns to our shareholders,
and proposing this change has
the full support of our Board.
GRI 2-12, 2-22, 2-23, 2-24
14
15
KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS Our board
Our management team
The Board provides overall strategic oversight of KMD
Brands, including adherence to best-practice governance
principles, maintenance of the highest ethical standards
and protection of core values so that the Group is managed
effectively and responsibly. A brief biography of each Board
member can be found in the “Board and Management”
section of the company’s investor website. Our full Corporate
Governance statement, including Director skills matrix, is
included in the “Additional Disclosures” section of this report.
David Kirk
Chairman
Appointed 21 November 2013
The management team takes care of the day-to-day
management and operation of KMD Brands, regularly reporting
to the Board on all aspects of group performance.
A brief biography of each member of the management team
can be found in the “Board and Management” section of the
company’s investor website.
Michael Daly
Managing Director and Chief Executive Officer
Joined Rip Curl in 2002
Brent Scrimshaw
Non-Executive Director
Appointed 2 October 2017
Philip Bowman
Non-Executive Director
Appointed 2 October 2017
Andrea Martens
Non-Executive Director
Appointed 1 August 2019
Chris Kinraid
Group Chief Financial Officer
Joined Kathmandu in 2014
Brooke Farris
Amy Beck
Rip Curl Chief Executive Officer
Joined Rip Curl in 2010
President Oboz / KMD Brands North America
Joined Oboz in 2019
Michael Daly
Abby Foote
Managing Director and Chief Executive Officer
Appointed 19 May 2021
Non-Executive Director
Appointed 15 October 2021
Zion Armstrong
Non-Executive Director
Appointed 1 December 2022
Jolann Van Dyk
Chief Information Officer
Joined Kathmandu in 2014
Frances Blundell
Chief Legal & ESG Officer
Joined Kathmandu in 2017
Linda Barlow
Chief People Officer
Re-joined Rip Curl in 2019
John Harvey
Retired 1 December 2022
16
Lachlan Farran
Chief Commercial Officer
Re-joined Rip Curl in 2016
Mathieu Lefin
Megan Welch
President KMD Brands – Europe
Joined Rip Curl in 2009
Kathmandu Chief Executive Officer
Joined August 2023
17
KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES WHAT MATTERS MOST
Materiality approach
During FY23, we conducted a
materiality assessment refresh.
This looked at the relevance
and importance of the material
issues identified in 2021, and
identified emerging issues.
This process involved extensive
stakeholder surveys and confidential
interviews. Selected stakeholders
completed a comprehensive online
survey; this was complemented with
simplified surveys of employees,
ambassadors and athletes, and
polls both in-store and across
social media platforms. We
integrated specific ESG questions
into surveys conducted in eight
supplier locations in Vietnam. We
also investigated scientific, industry,
economic and political sources to
understand emerging trends.
THE MATERIALITY
ASSESSMENT PROCESS
We received input from a large
number of stakeholders during this
materiality refresh process, including
over 30 interviews with individuals.
Respondents were asked to examine
the ESG and non-ESG material
issues we identified in our FY22
Annual Integrated Report and to
provide their perspectives and
importance of each issue to:
• KMD Brands’ ongoing business
success and reputation
• The stakeholders' ongoing
relationship with KMD Brands,
either as an individual or as a
representative of an institution,
such as an investment manager.
We asked respondents to rate
the relative importance that they
think KMD Brands should give to
each material issue and whether
they think KMD Brands is meeting
their expectations on each issue.
We also asked key stakeholders
to share their perspectives on:
18
• Specific ESG sub-issues that
KMD Brands is currently focusing
on in our ESG Strategy
• Issues that in the opinion of the
stakeholder are missing from the
current material issues list and that
we should give more attention to
• Issues “on the horizon” that in
the opinion of the stakeholder
have the potential to become
more material to KMD Brands
over the next 5-10 years.
The materiality assessment refresh
demonstrated that, according to
our stakeholders, we are on the
right track, and the material issues
identified in the 2021 materiality
assessment are still the right ones
for KMD to focus on in 2023. All
our stakeholders are unanimous
in this regard. Both our investors
and our employees observed that
we are gaining traction on our
key ESG issues. In addition, the
majority of stakeholders indicated
that KMD Brands’ ESG leadership
remains important both for ongoing
business success and to them as
stakeholders. Our stakeholders
made some observations around
nuanced changes in the market
and emerging issues that we
need to be aware of and monitor,
for future incorporation into our
strategy. We have included the
topic of biodiversity impact into our
material issues for our FY23 report,
and separated out the topics of
geopolitics and digital transformation.
OUR KEY STAKEHOLDERS
In reviewing our material topics
for FY23, we consulted with the
stakeholders that make a substantial
impact on our Group, or on whom
we have a substantial impact
through our business activities:
• Our shareholders
• Our board of directors, executive
and functional leaders
• Our employees
• Our consumers and
wholesale customers
• Suppliers and workers
• Financiers
• Regulators
• Community groups including our
athletes and brand ambassadors.
GRI 2-12, 2-29, 3-1
19
ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESOUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS Our material issues
Our material issues are defined
as having the most impact
on our ability to create value
for our stakeholders.
Under this definition we acknowledge
that there are some trade-offs
between material issues.
A material issue may require
substantial investment, and therefore
negatively influence KMD Brands'
value creation, but create value for
employees or improve customer
experience. A number of the
material issues facing our business
are wholly or partially outside of
our control. There are actions we
can take to mitigate the risks to
our business that these issues
create. Our business success can
be adversely or positively affected
by these issues depending upon
the degree to which we anticipate,
prepare for, and respond. We discuss
the impacts of these material issues
throughout our report on the capitals
(resources) we rely on to create
value, and how our strategic focus
areas are informed and prioritised
to respond. Our Board has reviewed
and approved these material topics
for the FY23 reporting period.
GLOBAL ECONOMY
Managing the impacts of the global
rising cost of inflation is a critically
important issue for our business as
we experience inflationary pressures
on multiple fronts. Inflationary
pressures and the rising cost of
living are also impacting consumer
discretionary spending habits.
Consumer lifestyles have shifted and
spending patterns are changing.
GEOPOLITICAL LANDSCAPE
The turbulent geopolitical landscape,
global conflicts and regional
20
political instability carry the risk
of heightened trade tensions,
regulatory uncertainties, supply chain
disruptions, potential security threats,
and potential sanctions for countries.
All of these issues could impact our
ability to source input materials,
lead to market volatility, create
increased operational complexities,
and reduce access to key markets.
SUPPLY CHAIN RESILIENCE
Our ability to effectively and
efficiently transport products globally
and reach our end-customers
can be significantly affected by
shipping delays, port congestion,
and access to regional freight
forwarding. These factors can have
a substantial impact on the smooth
flow of goods, making it challenging
for us to navigate the supply chain
and deliver products in a timely
manner. Addressing issues related
to shipping delays, managing port
congestion effectively, and ensuring
reliable access to regional freight
forwarding are crucial to overcoming
these obstacles and maintaining
seamless global operations.
CLIMATE CHANGE
The pressing need for urgent
transformative change to tackle the
impacts of climate change and global
warming represents a significant
material issue that all businesses
are facing, encompassing physical,
regulatory, market and social risks,
while also presenting opportunities
for innovation and growth through
mitigation, adaptation, transparency
and collaboration. Our commitment
and plan to reduce the greenhouse
gas emissions connected with
our business and our products
continues to be a key material
issue for all our stakeholders.
PEOPLE AND WELLBEING
Attracting talent and retaining
that talent within our businesses
in a competitive labour market is
an ongoing challenge. We need
skilled resources to drive our
business strategies and support the
growth potential of our brands.
The wellbeing of people connected
with our businesses is a key
focus. Our stakeholders want us
to focus beyond just health
and safety. Wellbeing is about
resilience, inclusion and recognising
our responsibility to provide a
workplace where everyone can
show up as their true self.
DIGITAL TRANSFORMATION
The shift towards the digital
world requires us to keep pace
with future-fit platforms and tools
and to operate with agility. Digital
transformation refers to the ability
of KMD Brands to harness data
to drive decision making and
accelerate growth across our direct-
to-consumer business to elevate
the customer experience, enhance
efficiency and support innovation.
BRAND POWER
The strength of each of our
brands is a core material asset
and it is fundamental that we
protect and grow brand awareness
at a manageable pace.
To remain relevant and desirable
to our customers, and ahead
of our competition, we must
deliver products, and provide
MATERIALITY MATRIX
Brand power
People and
wellbeing
Supply chain
resilience
Digital
transformation
Cyber and
data security
Global
economy
Climate
change
Geopolitical
landscape
Biodiversity
loss
Change
management
High
Very High
Importance to me as a stakeholder
i
h
g
H
y
r
e
V
h
g
H
i
s
s
e
c
c
u
s
s
s
e
n
i
s
u
b
'
s
d
n
a
r
B
D
M
K
o
t
e
c
n
a
t
r
o
p
m
I
i
d
M
Mid
a brand experience which is
relevant and appealing.
BIODIVERSITY LOSS
Biodiversity loss encompasses
depletion of natural resources,
including ecosystem disruption,
habitat loss, pollution and impacts
on water quality and availability,
with systemic consequences
for human health and planetary
stability. We are reliant on natural
resources to create our products
and need to find ways to minimise
our impacts on the natural world.
CHANGE MANAGEMENT
Bringing together our family of
brands to maximise synergies and
optimise operational and financial
performance can be complex
and costly and requires careful
change management processes.
To achieve success, we need to focus
on effective communication and
employee engagement, robust project
planning and leadership support.
CYBER AND DATA
SECURITY
The risk and sophistication of cyber
threats is ever increasing, requiring
investment in infrastructure which
is resilient and well protected.
We need to respect and protect the
privacy of our customers and the
data assets we hold and use that
data responsibly and effectively.
GRI 2-14, 3-2
21
KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES
STRATEGY
How we create value
THE RESOURCES WE RELY ON
OUR VALUE CHAIN
FY23 OUTPUTS
OUTCOMES FOR OUR STAKEHOLDERS
OUR FUNDING
Over 10k shareholders
$310m syndicated debt facility
OUR PRODUCTS
AND CHANNELS
Over 9,000 total doorways
(owned, licensed, wholesale)
OUR CREATIVE POWER
Product development, design
and innovation
OUR PEOPLE
4,843 employees
x
OUR PARTNERSHIPS
189 Tier 1 factories making
our products
OUR ENVIRONMENT
16 countries we source
materials from
Our material issues
(see pages 20-21)
TIER 4
Raw material
production
TIER 2 and 3
Raw material processing
and fabric mills
TIER 1
Final stage manufacturing
Freight, distribution centres
and third party logistics
Retail and wholesale network
INSPIRING PEOPLE TO
EXPLORE AND LOVE
THE OUTDOORS
Take-back, repair, resale,
recycling programs
22
419
Tonnage of waste diverted
from landfill
29%
Scope 1 & 2 location-based
emissions
reduction since FY19
FOR THE PLANET
Striving for a positive impact on
the environment across the
whole life cycle of our products
NZD $1,103m
Total revenue
FOR CUSTOMERS
Designing innovative, technical outdoor
lifestyle and sports products
4.3 YEARS
Average tenure of
permanent employees
FOR EMPLOYEES
Providing a place for all people to realise
their full potential
NZD $42.7m
Dividends declared
FOR INVESTORS
Paying total shareholder returns. Providing a
sustainable investment option
NZD $1.14m
Total community
investment
FOR THE COMMUNITY
Creating positive change in the communities
we impact
40
Supplier partnerships
> 10 years
FOR SUPPLIERS
Providing long-term partnerships,
supporting strong worker wellbeing
OUR VISION
To be the leading family
of global outdoor brands
– designed for purpose,
driven by innovation, best
for people and planet.
BUILDING GLOBAL BRANDS
ELEVATING DIGITAL
OPERATIONAL EXCELLENCE
LEAD IN ESG
GRI 2-6
23
KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES
Our strategic pillars
This year, we have continued to
build on our Group corporate
strategy to support our future
as a global, outdoor family
of brands that creates high-
quality products designed for
purpose, driven by innovation,
and best for people and planet.
Our strategy consists of four key
pillars: Building Global Brands,
Elevating Digital, Leveraging
Operational Excellence, and
Leadership in ESG. These pillars are
designed to support KMD Brands'
growth as a global, multi-channel
business and address the material
issues that we face. As we manage
our way through challenging and
disruptive global conditions, we
are focused on having a flexible
balance sheet that allows for capital
returns and future acquisitions.
Each pillar is addressed in more
detail in the following sections, where
we discuss our observations and
response to the relevant material
issues experienced during the
year and how our strategic pillars
address the strategic risks to KMD
Brands, together with the challenges
and opportunities ahead. Through
the consideration of our material
issues across each of our strategic
pillars, we review and disclose the
most material impacts we have on
value creation, preservation and
erosion across each of the resources
we rely on to create value for our
stakeholders that are essential for our
success. The resources described
on the previous page are our
interpretation of the capitals under
the Integrated Reporting Framework.
SUSTAINABLE
DEVELOPMENT GOALS
We acknowledge the impact of our
businesses on people and planet
and accept our responsibility
to advance the United Nations
Sustainable Development Goals
(SDGs). We consider the SDGs in
our strategy and our reporting,
which underpins all our business
activities. The goals where we have
the most impact are shown below:
Promote sustained, inclusive and
sustainable economic growth, full
and productive employment and
decent work for all
Reduce inequality within and among
countries
Ensure sustainable consumption and
production patterns
Take urgent action to combat
climate change and its impacts
BUILDING GLOBAL BRANDS
We are actively building our brands to have global appeal, presence and
reach through investing in world class brand and customer experiences.
We are focused on extending awareness of the Rip Curl brand in North
America, growing brand recognition in Europe to a top three position, and
being the top surf brand in Australasia. We have launched Kathmandu into
Canada and Europe, highlighting its New Zealand origins and will continue
to build on the brand’s presence in these markets while maintaining its
market dominance throughout Australasia. We are leveraging Oboz’
position as a leader of hike footwear to grow in the key North American
market, to re-launch the brand in ANZ and expand distribution in Europe.
ELEVATING DIGITAL
Elevating and enhancing our digital execution is a key feature of the
KMD Brands’ strategy. We are investing in Group digital platforms
to deliver a truly world-class experience to consumers, wholesale
customers, suppliers, and our employees. Through these platforms
we support a unified customer experience, accelerating brand
growth, and provide commerce operations for the whole Group.
OPERATIONAL EXCELLENCE
To support the growth of our global brands, we are focusing on collaboration
across our businesses. We are investing in programmes that accelerate
cross-brand opportunities through supply chain efficiencies and core-
system capabilities. We are collaborating on product innovation to enable the
products of each brand to continue to lead in their respective categories.
LEAD IN ESG
By integrating our ESG pillars of Communities, Climate and Circularity into our
business practices, we are aligning the KMD Brands Group with sustainable
development goals and demonstrating our leadership in ESG within our
sector. Through collaboration, transparency and adherence to B Corp
Certification standards, we make a positive social and environmental impact
while also achieving long-term business success.
24
25
KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS BUILDING GLOBAL BRANDS
Metrics that matter
FY23 SALES GROWTH YEAR ON YEAR %
Oboz
+61.8%
BY
BRAND
+8.3%
Rip Curl
+17.5%
Retail
+9.6%
Australia
+10.6%
Kathmandu
Wholesale
+11.0%
Licensing / Royalties
+9.8%
BY
CHANNEL
-8.2%
Online
Europe
+5.6%
Rest of World
+11.2%
North
America
+24.4%
BY
REGION
+12.5%
New Zealand
26
27
ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESKMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS How we are building global brands
MATERIAL ISSUES: GLOBAL ECONOMY • GEOPOLITICAL LANDSCAPE • DIGITAL TRANSFORMATION
SUPPLY CHAIN RESILIENCE • BRAND POWER
OUR OBSERVATIONS
Our Group consists of three iconic
brands: Kathmandu, Rip Curl and
Oboz. Our brands are iconic not only
because they represent innovative,
high-performance products for the
outdoor consumer, but because of
the values that underpin them. Strong
brand equity is our material asset
and it is fundamental that we grow
our brands strategically and steadily.
Building global brands requires
a purpose-driven approach, a
motivated, engaged and talented
team, and a deep understanding of
our customers’ needs. Our brands
have strong foundations built around
activities in the outdoors and our
purposefully designed, innovative
products allow our customers
to thrive in their adventures. By
enhancing customer experiences in
store and online through our multi-
channel strategy, we can continue to
build our brands on a global scale.
To maintain our relevance and
appeal to our customers, while
staying ahead of our competitors,
we must consistently deliver
desirable products that are
innovative, responsibly sourced
and made, and enhance the
outdoor experience. Our brands
must make the outdoor experience
more enjoyable, comfortable and
inspiring for our customers.
We remain true to our mission and
pricing strategies, despite inflationary
pressures, driven by global economic
conditions and geopolitical
uncertainties, that have continued
to increase production costs. The
current economic environment
remains challenging for many
businesses, with many apparel goods
retailers carrying excess inventory.
We have observed examples
28
of aggressive and deep price
discounting from some competitors,
adding to the challenge of driving
sales growth and maintaining margin
without losing our market share.
In the last few months of FY23,
we started to see a softening in
wholesale and consumer demand in
some markets. However, each of our
brands’ positioning remains strong,
all showing growth during the year
despite the economic headwinds.
OUR ACTIONS
We are investing in the long-term
success of each of our brands
through new initiatives, leadership
in product innovation, multi-channel
offerings and by expanding into new
geographies. We continue to bring
our brands to life through relevant,
targeted, consumer-driven content.
During FY23, we continued to
invest in the Rip Curl brand in the
US and global surf market through
ongoing sponsorship of the Rip
Curl World Surf League Finals and
by expanding the Hawaii retail
footprint. Product development at
Rip Curl is relentlessly committed
to quality, sustainability, innovation
and creativity, focusing on our core
product categories of wetsuits,
boardshorts and swimwear. The
FlashBomb Fusion with seams that
don’t leak is already making waves,
having launched in Australia and
New Zealand in March 2023. Rip
Curl is enhancing our engagement
with female customers by creating
more inclusive content and
expanding the wholesale presence
of our women’s range. During FY23,
Rip Curl launched the Club Rip
Curl loyalty program in Australia.
Strong growth in membership was
achieved in the program’s first
year, the program placing runner
up at the World Loyalty Awards
in the category of Best Customer
Experience. Online, Rip Curl pushed
into European marketplaces
with strong initial success.
Kathmandu commenced building
new customer relationships in
Europe, the UK and Canada during
FY23, highlighting the New Zealand
origins of the brand, while leveraging
existing Rip Curl relationships,
team members and infrastructure.
New direct-to-consumer websites
were launched in Canada, France
and Germany in September 2022.
Kathmandu continued to bring to
life our new brand purpose and
vision through ‘We’re Out There’
campaigns, which were nominated
for several global marketing awards.
During FY23, Kathmandu focused
on refining and understanding our
core target customer, and built
brand equity through community
engagement, strong partnerships
and brand ambassadors. Product
innovation has always been central
to the Kathmandu business and
that continued in FY23 with
the launch of the Heli R – a
reinvention of the flagship Heli
jacket – and its digital product ID.
During FY23, Oboz focused on
elevating the retail experience of
our customers to increase brand
awareness. Our integrated marketing
campaigns used storytelling, events
and experiences to emphasise Oboz’
key points of differentiation including
the out-of-the-box fit and our B Corp
Certification. Oboz is committed
to promoting inclusiveness in the
outdoors, with several initiatives
spanning community outreach and
education, and through support
for partners including Black Folks
Camp Too. Oboz expanded its
product offering during the year,
launching the much-anticipated
Katabatic range, which is already
demonstrating success in the
important Fast and Light category.
Our certification as a B Corp during
FY23 further demonstrates our
commitment to build the global
reputation of our brands as we sit
amongst an esteemed group of
only 45 publicly traded companies
worldwide to have achieved this.
B Corp Certification is not just a
brand differentiator. It also reinforces
each brand’s purpose and values,
enhances brand reputation, attracts
socially conscious customers
and investors, and separates
us from our competitors.
CHALLENGES AND
OPPORTUNITIES AHEAD
In the short term, our brands
face challenges with geopolitical
uncertainty, economic volatility,
market competition, supply chain
disruptions, and cost-of-living
impacts on consumer spending.
Our competitors are pricing
aggressively to shift high levels
of inventory and challenging our
market share. However, there are
opportunities for each brand to
grow. Some competitors will pivot
towards strategies that reduce
investment in brand development,
which presents clear opportunities
to establish our brands in key
locations and new markets and to
expand our points of differentiation.
The shift towards wellness is one
we are watching closely. More
customers are seeking healthier
and more active lifestyles, and are
looking for products that align with
this trend. By responding to this shift,
we can tap into a larger customer
base and cater to their needs for
balance, active living and wellbeing.
To capitalise, our brands will focus
on product development, brand
licensing opportunities, marketing
and messaging, education and
content creation, partnerships and
collaborations, as well as customer
engagement. By incorporating these
strategies, we can position our
brands as leaders in the wellness
space, offering products that support
healthy and active lifestyles.
There is immediate opportunity
for growth of the Rip Curl brand
through the expansion of Club Rip
Curl, including launching in additional
regions, with a longer-term target
of one million members. Growth
will also be supported by digital
transformation, including launches
on key marketplaces, improvements
to the website experience, and
expansion of valuable wholesale
partnerships. In the medium term,
Rip Curl will continue to explore
opportunities to open women’s-
specific stores. We will continue
to grow the brand by opening 10
new stores each year while also
expanding key flagship stores and
identifying key wave pool locations
and opportunities to connect the
brand with all levels of surfer.
The relaunch of the Kathmandu
Summit Club as ‘Out there rewards’
in early FY24 provides an immediate
and exciting growth opportunity
that engages customers and creates
new value. By resetting core lines
to reduce range volume and align
product offerings with the current
target customer, focusing on “best
at” products including insulation,
bottoms and packs Kathmandu can
strengthen our brand presence in
priority markets. This will provide a
solid platform for international growth.
We will also focus on extending
Kathmandu’s presence in Europe
and Canada, with the initial low-risk
“Our certification as a
B Corp during FY23
further demonstrates
our commitment to
build the global
reputation of
our brands.”
Michael Daly
Managing Director and
Chief Executive Officer
soft launch in FY23 expanding to
a full scale, multi-channel strategy
in the medium term. Kathmandu
is refreshing the look and feel of
our store fitouts to enhance the
presentation of our brand image
and ethos across the store network,
and to create unique and engaging
customer experiences. Additions
to the store network in key growth
corridors appeal to new customer
demographics while retaining our
existing, loyal customer base.
For Oboz, there is significant
opportunity in the global marketplace
to grow the brand to the size of key
competitors. Oboz has the capacity
to take market share by continuing to
expand our product categories and
by demonstrating product innovation
and a clear sustainability roadmap.
For FY24, Oboz will focus on new key
wholesale accounts and accelerate
our marketplace presence and
e-commerce experience. Dedicated
resources to drive the Oboz brand
momentum in Australia and Europe
has been established. The longer-
term opportunity of an Oboz concept
store will be explored to further build
brand awareness. A relaunch of the
brand in Australia and New Zealand
is planned for FY24, with expansion in
Europe a longer-term target into FY25.
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KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES CASE
STUDY
A new era of growth
and exploration
Kathmandu is embarking on
an exciting journey of global
growth. That’s why we cast
our net far and wide to find
the next leader for our brand.
After a year-long search, we
were excited to announce the
appointment of Megan Welch
as Kathmandu’s next CEO.
Megan takes the reins from Group
CEO and Managing Director of
KMD Brands, Michael Daly, who had
stepped into a caretaker role while
the executive search was underway.
recently as Senior Vice President
and General Manager of Crocs
Asia Pacific. Joining Crocs when
it was a three-year-old company,
Megan played a pivotal role in
the brand’s remarkable growth
trajectory, holding roles in product
development, merchandising,
marketing and commercial strategies.
Megan takes on her new role,
based in Christchurch, from August
2023. Reporting directly to Michael
Daly, Megan will work alongside
brand CEOs Brooke Farris from Rip
Curl and Amy Beck from Oboz.
Megan brings a wealth of experience
and leadership to our team. With
an impressive track record in global
brand and product management,
Megan spent 18 years at Crocs, most
As Megan told the Australian
Financial Review in May 2023:
“With the brand leading in the ANZ
market, but new to Europe and North
America, I’m looking forward to
Megan Welch
Kathmandu CEO
partnering with Michael and my new
team to accelerate the momentum”.
With expertise spanning retail,
wholesale and digital channels, and
international experience across
the US, Europe and Asia, Megan is
the right leader to take Kathmandu
to new heights and inspire new
adventurers around the world.
Metrics that matter
Improve the wellbeing of the
world through the outdoors.
FINANCIAL
CHANNELS
NZD
$422.2m
Total sales
158
Retail stores
Almost 100
Wholesale doors
NZD
$58.8m
Online sales
Representing 14.0% of
direct-to-consumer sales
BRAND
1.9 million
Active Summit Club members
74
Net Promoter Score
SALES MIX
Online
14%
Wholesale
1%
BY
BY
CHANNEL
CHANNEL
New Zealand
27%
International
1%
BY
REGION
85%
Retail stores
72%
Australia
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ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESKMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS Scaling for success
CASE
STUDY
Metrics that matter
Empower the people of the
world to blaze their own trail.
FINANCIAL
CHANNELS
NZD
$99.3m
Total sales
NZD
$5.6m
Online sales
>350% online sales growth
year on year
SALES MIX
Online
6%
BY
CHANNEL
94%
Wholesale
Over 2,000
Wholesale doors
1
Direct-to-consumer website
International
7%
Canada
7%
BY
REGION
86%
USA
33
Paris Fashion Week made
the perfect launch pad for
Kathmandu’s entry into the
European, Canadian and
United Kingdom markets. On
30 September 2022, more
than 75 media influencers and
fashion tastemakers joined us
at specialty boutique Leclaireur
in Paris to debut our Autumn
and Winter ‘22 range.
President, KMD Brands Europe,
Mathieu Lefin told the packed
crowd that the new venture was in
response to growing demand from
global consumers. “Kathmandu
is Australia and New Zealand’s
32
favourite outdoor brand, and
we look forward to seeing local
outdoor enthusiasts discover our
innovative and sustainable gear.”
Among the eco-conscious
showstoppers in the Autumn and
Winter ’22 range, the NXT-Level
jacket earned plenty of praise.
Condé Nast Traveller applauded the
“ultimate winter-weekend jacket for
anyone who loves to travel light”.
KMD Brands leveraged Rip Curl’s
long established global operations,
including our distribution centres,
and expert regional teams, to
scale Kathmandu for success.
Almost 100 doorways now stock
Kathmandu in Europe, Canada
and the United Kingdom. Four
websites cater to customers in the
UK and Ireland, French and German
speakers in Europe, and English and
French speakers in Canada. Our
presence on Instagram, Facebook
and TikTok continues to grow and
bring us closer to customers.
Our dedicated teams in each market
are now busy hosting seasonal
previews and engaging in proactive
marketing and media relations
to boost the Kathmandu brand.
Following the initial soft launch, we
are now considering our pathways
to accelerating the channel growth
in these markets for execution
through 2024 and beyond.
ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESKMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS A better kind of fast
CASE
STUDY
Blazing a B Corp trail
CASE
STUDY
In 2022, we launched our first
foray into the global ‘fast
trail’ category with the Oboz
Katabatic, a collection of
shoes that hits the sweet spot
between running and hiking.
Named after a Katabatic wind that
gathers speed as it blows down the
slope of a mountain, our footwear
helps customers move faster and
travel further on their trails.
The Katabatic line signifies a new
direction for Oboz – one that
taps into a global trend that is
a fast-growing and high-growth
category in outdoor footwear.
The fast trail line is built on
thousands of kilometres of underfoot
insight engineered into transformative
footwear. The Katabatic adapts
to the terrain and the natural
biomechanics of the foot, and does
so without sacrificing traction,
cushioning, support or quality.
The Katabatic collection has
attracted rave reviews. Outside
magazine, the global authority for
the outdoors industry, voted the
Oboz Katabatic Low men’s shoe the
“best day hiking boot”. “I’m a very
heavy-heeled hiker, and these were
like walking with springs in my heels,”
reported Alabama-based tester, Seth
Kromis, after hiking 16-kilometres
in them with a day pack.
The fast trail category is a natural
brand extension for Oboz and the
Katabatic range of products has
attracted new customers, grown
our market share and delivered
better foot health, better adventures
and a better kind of fast.
Since our very first pair of
Oboz were sold in 2007, we
have planted a tree for every
pair sold – that’s five million
trees and counting. It’s because
of this passion for the planet
and the people on it that we
are always looking for better
ways to do business.
In early 2023, Oboz was certified as a
B Corporation. Oboz is now counted
among a global community of
businesses – including Rip Curl and
Kathmandu – that are championing
an inclusive, equitable and
regenerative economy.
Because the outdoors is important to
us, Oboz balances profit with our
impact on the planet and the people
that our brand touches. We have
bold environmental, social and
governance targets, and our new B
Corp Certification means that we
meet stringent standards for positive
social and environmental impact.
But this is just the beginning. To help
us continue to serve the wellbeing of
all, we utilise the B Corp movement
to strengthen our commitment to our
three areas of focus: Communities,
Climate and Circularity.
B Corp certification is something few
footwear companies obtain, which is
significant in the competitive
outdoors market. For adventurers
and trailblazers out there, this
stringent certification confirms we
are constantly improving our
standards for positive social and
environmental impact. B Corp
Certification isn’t an end goal for
Oboz. The steps we have taken to
reach this point are the first on a
long trail. With B Corp recertification
every three years, we will continue to
meet high standards of social and
environmental performance,
transparency and accountability.
Now we do so with an international
movement behind us.
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ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESKMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS Metrics that matter
The swell of success
CASE
STUDY
Many surfers pick the Californian
surf break of Lower Trestles as
the wave they'd most like to surf,
and the pristine four-to -six-foot
peaks didn’t disappoint fans of
the 2022 Rip Curl World Surf
League Finals.
Rip Curl is a company built
by surfers for surfers. Our
determination to be front and
centre during the ultimate day
in surfing led us to establish a
three-year partnership with the
World Surf League in 2021.
In 2022, our second year of the
partnership, the Rip Curl WSL Finals
attracted a global audience. Fans
flocked to social channels to watch
and celebrate Stephanie Gilmore
secure a record-setting eighth
world title and assert her position as
the greatest women’s competitive
surfer. Filipe Toledo took home his
first and long-sought world title
in front of his hometown crowd
and millions more fans online.
For the second year in a row, Rip
Curl was the most visible brand
on WSL channels. We reached the
most fans pre-event in WSL history,
with 16.7 million pre-event video-
on-demand views. The live and
video-on-demand coverage of the
Rip Curl WSL finals attracted more
than 10.5 million views, and the
410 million impressions on social
handles was up 5% year-on-year.
The winner-takes-all final attracted
the largest single day live audience
in the competition’s history – a 22%
increase on 2021. We amassed 93
million social impressions in just
one day – not to mention more
than six thousand press articles
before and after the event.
Rip Curl first sponsored a
professional surfing event in 1973,
the Rip Curl Pro at Bells Beach. With
our commitment to the Rip Curl WSL
Finals, we continue the tradition of
supporting and showcasing the best
surfing to fans across the globe.
To be regarded as the
ultimate surfing company
in all that we do.
FINANCIAL
CHANNELS
Total sales
NZD
$581.5m
NZD
$34.9m
Online sales
Representing 10.6% of
direct-to-consumer sales
SALES MIX FY23
Online
6%
BY
BY
CHANNEL
CHANNEL
Wholesale
41%
2%
Other
Rest of world
12%
BY
REGION
Europe
18%
169
Owned stores
232
Licensed stores
31
JV stores
Over 6,000
Wholesale doors
BRAND
Retail
stores
51%
Over 220k
Active Club Rip Curl members
Net Promoter Score
77
Across Australasian stores
25%
North America
45%
AU & NZ
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ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESKMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS CASE
STUDY
50 years of innovation
in one wetsuit
ELEVATING DIGITAL
Metrics that matter
NZD
$99.3m
Total online sales
13.2%
Online penetration as a % of
direct-to-consumer sales
In 1969, Rip Curl began to
revolutionise the surfing wetsuit
to help surfers stay out for
longer in the cold southern
waters off Australia’s Bells
Beach. Our team has invested
more than 50 years of research,
development and innovation into
a product that has redefined
the possibilities of wetsuits.
In March 2023 we launched the
FlashBomb Fusion – a wetsuit that
is warm, flexible, durable and 96%
stitch-free. Our Global Product
Manager of Wetsuits, Adam
Brissenden, hails this as a “new mark
in the sand” for surfing equipment.
Most wetsuits are made from
neoprene, a synthetic rubber material
known for its flexibility, durability,
insulation and resistance to water. “As
neoprene has become stretchier and
stretchier, and because that’s where
a lot of the movement is, the seams
have become the weak point of many
suits,” Adam explains. “This leads
to cold water leaking into the suit,
and the surfer becoming cold.” Rip
Curl’s Fusion Dry Seam Technology
solves the age-old issue of wetsuits
leaking at the seams, without
resorting to using stiff liquid tape
or stitching that can compromise a
suit’s performance and integrity.
This breakthrough innovation – our
most technically advanced seam
construction yet – uses a unique
bonding technique that doesn’t
require stitching (the source of
the pinholes that let cold water
leak in). Combined with 100%
E7 Flash Lining, E7 Flash Lining
Tape, a zip-free entry and sealed
cuffs, the FlashBomb Fusion is
the ultimate in surfing comfort.
The FlashBomb Fusion has been
well received by Rip Curl’s core
surfer target audience, with robust
sales across retail, e-commerce
and wholesale channels. And
there’s plenty of growth ahead
for this wetsuit that blows all
others out of the icy water.
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ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESKMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS How we are elevating digital
MATERIAL ISSUES: GLOBAL ECONOMY • DIGITAL TRANSFORMATION • CYBER AND DATA SECURITY
CHANGE MANAGEMENT • BRAND POWER • CLIMATE CHANGE
OUR OBSERVATIONS
Consumer spending patterns have
undergone a significant shift in
response to economic conditions
and the transformative impact of
COVID-19. Today’s customers are
more discerning than ever before,
seeking personalised and inspiring
shopping experiences. They now
expect seamless, omni-channel
access to a unified offering. In the
last 12 months, consumers have
returned to shopping in stores,
and our omni-channel offering
supports this consumer choice.
To safeguard our brands’ reputations
and recognition, we continue to invest
in a strong digital presence. Our
customers want to engage with our
brands through a range of channels,
and this is driving an evolution
in how we communicate with
customers and conduct transactions.
To grow our direct-to-consumer
business, we are using data-driven
insights to inform decision-making
and provide a rich, personalised
customer shopping experience.
To remain agile and fit for the future,
we must continuously review, adapt
and evolve our platforms and tools.
To carefully manage change, we
engage all relevant stakeholders and
then verify the impact of change on
interconnected business procedures.
OUR ACTIONS
For FY23, our priority has been to
embed and amplify the systems,
tools and processes implemented
in prior years. In FY22, we made
significant investment in customer-
facing, best-in-class digital
platforms to support our unified
commerce objectives. Our point-
of-sale, e-commerce, and insights
40
and personalisation platforms,
enable us to present a fully unified
commerce capability in our direct-
to-consumer offerings. During FY23
we consolidated that functionality
to leverage these investments.
By integrating our personalisation
engine with our loyalty platforms
we can gather data insights, better
understand customer preferences
and unlock further sales growth
potential. During FY23, we
implemented several personalisation
use cases which drove great results
and delivered a return on investment
that has exceeded our expectations.
Expanding on user experience
and customer centricity during the
year, Kathmandu has implemented
shoppable user generated content
to further increase acquisition.
We optimised the speed of the
Kathmandu website to enhance its
reliability and experience. We also
introduced personalised product
pages and recommendations
for every customer to drive
engagement and revenue.
Rip Curl launched a new loyalty
program, Club Rip Curl, in early FY23
connecting customers to the Group’s
loyalty ecosystem for the first time
and giving us a single view of each
customer to create personalised
communications. The program
leverages the same technology
platform currently used to manage
Kathmandu’s loyalty club members.
Club Rip Curl launched in Australia
and New Zealand in September
2022 and has already amassed
more than 220,000 members.
Oboz continued to build a direct-to-
consumer online trading site during
FY23 that delivered consistent
growth and exceeded performance
expectations. Oboz maintains
channels on Amazon, Backcountry
and Zappos marketplaces
expanding brand recognition
and offering greater choice and
convenience to customers.
The Group has an established set
of security standards that detail the
steps taken to secure our systems
and information from people, process
and technology perspectives.
This framework aligns with the
CIS (Center of Internet Security)
framework for Information Security
Management Systems (ISMS)
and Risk Management. During the
first half of FY23, Rip Curl made a
voluntary notification to a limited
number of European customers
following an incident of unauthorised
access to its European website in
2022. This involved basic customer
information and Rip Curl notified
the relevant European regulatory
authorities and impacted customers.
No further action was taken by the
regulatory bodies. No other Rip
Curl systems, networks or entities
were affected by the incident.
In early FY23 Kathmandu launched
two new European direct-to-
consumer websites in Germany and
France, and both Kathmandu and Rip
Curl launched new sites in Canada,
supporting the future growth of the
brands in these emerging markets.
CHALLENGES AND
OPPORTUNITIES AHEAD
A key and immediate growth
opportunity lies in expansion of the
Group’s loyalty programs. Rip Curl
will launch Club Rip Curl online in
the US in early FY24, Kathmandu will
relaunch the Summit Club program
as ‘Out there rewards’ in early FY24,
engaging with customers in new
ways and transforming a discount
club into a mechanism that unlocks
brand loyalty and awareness.
During FY24, we will continue to
improve our digital execution by
extending the enterprise resource
planning platforms from ANZ
into the USA to support a unified
customer experience and commerce
operations. By accelerating
integration of these platforms for
the North American market we can
support omnichannel delivery and
expand our loyalty programs.
The Elastic suite of tools was a
key foundational workstream for
FY23 rolling out in Australasia in
early FY24. This will enhance our
business-to-business purchasing
capability for our wholesale
channel and digitise our wholesale
merchandising process. These tools
will help our brands to reduce the
use of physical samples in favour of
digital samples over time, and reduce
paper consumption through digital
catalogues for wholesale customers.
Expanding on our D365 and
e-commerce platforms will enable Rip
Curl to introduce click-and-collect
in Australia early FY24, followed by
more advanced options later in the
year. This strategic move will harness
the strength of our store network
for fulfilling online orders, improving
the customer experience, increasing
store inventory sell-through and
contributing to our sustainability goals
by reducing waste and emissions.
Rip Curl is making strides in digital
revenue growth by online customer
experience and expanding into online
marketplaces. By prioritising these
enhancements, Rip Curl moves closer
“
With the changing
needs of our
customers and
technology
advancements,
we continue to
re-imagine the
future of Unified
Commerce.”
Jolann Van Dyk
Chief Information Officer
to the long term goal of online sales
accounting for 25% of direct-to-
consumer revenue – a goal that each
of our brands is working towards.
The ever-evolving landscape of cyber
threats and sophisticated threat
actors remains a critical risk. We
remain vigilant and invest in top-of-
the-line security tools. We continue to
embed risk-based processes across
our operations in relation to data
protection is aligned with global
best practices.
With the changing needs of
our customers and technology
advancements, we continue to
reimagine the future of Unified
Commerce. This will mean keeping
pace with evolving consumer
expectations for technology,
products and brand experiences.
Rip Curl continues to innovate with
the evolution of the Search GPS
ecosystem. Search GPS connects Rip
Curl with our core surfer community
in the most authentic way, something
we continue to strive for across our
group of brands.
GRI 418
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KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES Climate action in a click
CASE
STUDY
CASE
STUDY
Kathmandu’s digital
IDs debut
Kathmandu customers in
Australia and New Zealand
can now offset part of their
carbon impact at checkout.
With the help of CarbonClick,
Kathmandu customers can add $2
to their transaction to contribute
directly to carbon offsetting projects
in Australia and New Zealand
– with each $2 offset capturing
carbon from the atmosphere
and protecting ecosystems.
Launched in May 2023, the offsetting
option is the result of Kathmandu’s
new technology partnership with
CarbonClick, an Auckland-based
envirotech company with a mission
to make carbon offsets simple,
trustworthy and cost effective.
Like KMD Brands, Kathmandu,
Rip Curl and Oboz, CarbonClick
is B Corp certified, which means
it meets high standards of social
and environmental performance,
accountability and transparency.
By harnessing digital technology,
this partnership will promote
reforestation projects in
Australia and New Zealand.
Australian customers can contribute
to the Everdale Native Regeneration
project in New South Wales, a
project registered under the
Australian Emissions Reduction
Fund that is regenerating more
than 5,000 hectares of acacia
woodland and eucalypt forest.
In New Zealand’s Kaikōura, the
Flax Hills Forever Forest project
is regenerating 69 hectares
of retired grazing land and is
recognised by the New Zealand
Emissions Trading Scheme.
CarbonClick Chief Executive Officer
Dave Rouse says the partnership
“sets an example for the sector,
and in doing so makes a tangible,
positive impact on the planet”.
In May 2023, Kathmandu proudly
launched an innovative new
product with a groundbreaking
addition – a unique Digital ID.
Kathmandu’s Heli R jacket – which
uses 100% recycled materials
everywhere possible, including face,
liner and zipper fabrics, trims and
labels – was the perfect product
to start our Digital ID journey.
A Digital ID is sewn into every
Kathmandu Heli R product.
Customers can use their smartphone
to scan their jacket’s stitched-in
QR code to discover its unique
sustainability story. They can
learn more about the product’s
design and manufacturing process,
the factory it was made in, the
materials used to make it, repair
information and, eventually, resale
and recycle recommendations.
Kathmandu’s launch of Digital IDs
is the first in Australia and New
Zealand, and follows a region-
leading partnership with global
technology platform EON.
EON’s technology, which is leveraged
by some of the apparel industry’s
largest brands, is helping Kathmandu
to bridge the gap between the
digital and physical worlds.
Speaking to Ragtrader, Kathmandu’s
General Manager of Product, Robert
Fry, said partnering with EON “is
an innovative step towards our
circularity ambitions, helping shift
customer mindset to think circular”.
Our launch of Digital IDs strengthens
Kathmandu’s digital capabilities
as we connect and communicate
with our customers in new ways.
Our elevated digital offerings will
help us to harness data-driven
insights that enhance customer
expectations, build traceability into
every product, drive efficiencies and
support even more innovation.
43
Flax Hills Forever Forest
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ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESKMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS Club Rip Curl launch
CASE
STUDY
Riding the digital wave
CASE
STUDY
Club Rip Curl is building
the world's largest surfing
community with a membership
program that rewards customers
for doing what they love best
– being one with the waves.
Launched in 2022, Club Rip Curl
connects and rewards people with a
passion for all things surf. Members
of the club can earn rewards from
purchases and catching a wave.
are able to be spent on products,
and as the program evolves, can be
donated to initiatives that protect
the environment through Rip
Curl’s partnership with SurfAid.
Our world-first pilot program at
five stores last year was expanded
to 77 stores, including online, in
Australia and New Zealand in
FY23. The rollout will continue
in USA and Canada next year.
Customers with a Rip Curl SearchGPS
Surf Watch can upload their data to
the app on waves caught, top speed
and distance to earn points. Points
Club Rip Curl has attracted
more than 220,000 members
so far and is responsible for a
growing proportion of sales.
Connecting all customer data in
one ecosystem elevates our digital
offering and creates an end-to-
end surfing experience. Club Rip
Curl will help us uncover fresh
data-driven insights, create new
synergies and economies of scale,
and, best of all, deliver even better
experiences for Rip Curl customers.
In March 2023 we hosted
the world’s first digital surf
competition. We teamed up with
Tourism Fiji to present the Rip
Curl Virtual Pro competition
from 4 to 14 March. Everyone
with a Rip Curl SearchGPS watch
that tracked their surfing over
the 10-day period was eligible
to enter the competition to win
the ultimate surfing holiday on
Fiji’s beautiful Namotu Island.
Every time competitors surfed, we
analysed the data from their Rip
Curl SearchGPS and scored it in
real time. Our unique algorithm
assessed the distance paddled,
surf time, total waves surfed, top
speed, longest waves and number
of surfs, and allocated bonus points
for surfing in a new location.
The winner? A Copacabana Beach
local in New South Wales, Australia,
who caught 126 waves in 10 surfs,
spent nearly 12 hours in the water and
paddled an impressive 37 kilometres.
The Rip Curl SearchGPS watch,
which we launched in 2014, has
recorded more than 50,000 surfers
across 76 countries, recording 25
million waves at 2,400 beaches.
The data sets created by each
contestant formed the foundation
for a unique video visualisation
that they could download and
share – and every surfer found a
story behind their data. Take pro
Australian surfer Owen Wright, who
was at Bells Beach training for the
last competitive surfing event of
his career. With a wavelength of
166 metres, and a wave speed of
35 kilometres an hour across two
locations, Owen gained an impressive
5,183 points and a special story to
share with his social followers.
The Rip Curl Virtual Pro competition
is “another display of leadership
in a rapidly changing surfing
landscape,” says Rip Curl’s Head
of Brand and Marketing, James
Taylor, and demonstrates our
commitment to create digital
experiences that are just as exciting
as catching the next wave.
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ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESKMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS CASE
STUDY
E-commerce exceeds
expectations
Since Oboz officially launched
a direct-to-consumer online
offering in 2022 it has
outperformed our expectations.
We are on track to meet
our goal of 10% direct-to-
consumer sales by 2026.
Our e-commerce site has been
designed to drive conversion and
complements the Oboz brand
experience on site, where customers
can learn more about the products
they love.
Our agile e-commerce team has
embraced a ‘test and learn’
approach which allows us to make
small adjustments to our online
marketing to convert browsers into
buyers, and to showcase the range
of Oboz products to new customers.
This year we launched the Oboz
Shoe Finder to help online shoppers
pick the perfect pair of boots, shoes
or sandals for their next outdoor
adventure. After answering seven
questions, customers receive a
personalised list of recommended
hiking boots and shoes, winter boots
and sandals.
The Oboz Shoe Finder helps us
maintain our reputation for great
‘out of the box fit’. Oboz customers
agree – with a return rate of less
than 20% positive proof that our
digital platform is helping them
choose the perfect fit.
CASE
STUDY
Growing forests and
online communities
Oboz customers don’t need
encouragement to enjoy the
outdoors. But we gave them
an extra incentive in May
2023 when we launched the
inaugural Fast Trail Challenge.
For 10 days in May, Oboz challenged
hikers, runners and people using
mobility devices to take to the trail.
Competitors tracked their hikes with
the help of GPS technology, and for
every hike that was more than a mile
long, we planted a tree. For further
bragging rights, we planted bonus
trees when competitors completed
their 11th and 12th hike within the
allotted time.
“We have planted more than five
million trees and we are on a mission
to plant five million more,” says Oboz
President Amy Beck. “We hope that
the Fast Trail Challenge will inspire
more people to get out and get
moving and help us achieve our goal.”
The first Fast Trail Challenge certainly
hit the target. The 1,072 hikers who
took part hailed from 17 countries
around the world, from Mexico to
Mongolia, Switzerland to the Solomon
Islands. Participants hiked a
combined 16,119 miles, or nearly
26,000 kilometres, across 5,019 hikes.
Their efforts were rewarded with
5,403 trees planted on their behalf.
The gamified experience created a
healthy sense of competition and
helped us to engage our community
of hikers across new digital platforms.
Challenge participants connected
through our social media channels,
sharing their hiking stories and
cheering on their fellow competitors.
Oboz is growing its online community
as quickly as its Tanzanian forest
gardens. We followed up the Fast Trail
Challenge with the Oboz Trail
Experience. This year, 10-plus
regional events across the United
States saw participants take on new
or lesser-known local trails to push
their limits, log their achievements
online and celebrate their successes
with a community of people that are
True to the Trail.
46
47
ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESKMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS OPERATIONAL EXCELLENCE
Metrics that matter
Short-term working capital
19.9% of sales
How we leverage operational excellence
MATERIAL ISSUES: GLOBAL ECONOMY • GEOPOLITICAL LANDSCAPE • SUPPLY CHAIN RESILIENCE • CHANGE MANAGEMENT
• PEOPLE AND WELLBEING • CLIMATE CHANGE • DIGITAL TRANSFORMATION
OUR OBSERVATIONS
To support the growth of our global
brands, we are leveraging the
synergies within our Group through
shared knowledge and collaboration.
We achieve this through programs
that accelerate cross-brand
opportunities that optimise our
supply chain, invest in core system
upgrades and collaborate on product
innovation. This year, continued
inflationary pressures and supply
chain challenges have made these
efforts even more important.
An emerging industry-wide issue
for FY23 is excess finished goods
inventory, both within our businesses
and those of our competitors. For us,
this ties up working capital, leads to
escalated storage costs and creates
the risk that inventory will become
outdated and therefore harder to sell.
High levels of excess inventory held
by our competitors have encouraged
aggressive discount pricing
strategies in some key markets.
We have observed an increase
in health and safety incident
reporting in FY23, reflecting greater
awareness and compliance among
employees. This positive trend
demonstrates employees’ increased
recognition of potential hazards
and incidents, contributing to
safer work environments overall.
However, the rise in injuries
can also be partly attributed to
increased inventory and therefore
an increase in manual handling
risks and consequent injuries. In
response, we are strengthening
training and ergonomic measures to
mitigate risks. Additionally, we have
observed an increase in customer
aggression in store towards our
retail employees. This emphasises
the need for comprehensive training
programs that foster respect
and understanding among both
employees and customers. We
remain committed to maintaining
safe and harmonious workplaces
while delivering exceptional
service to our valued customers.
The impacts of COVID-19 continue
to affect our business, even though
the key risks of the pandemic have
passed. Post FY22 and COVID-
induced factory closures, we
have observed our manufacturer
suppliers rapidly scaling to return
to full operating capacity. This
created a new issue, with some
new suppliers falling short of our
quality assurance standards. This
was largely due to process failures
around training and upskilling of
workers as factories came back
Gross margin
59.1%
Increase of 20 basis points
(0.2% of sales)
Underlying EBTIDA margin 1
9.6% of sales
1. The impacts of IFRS 16 leases and restructuring are excluded
from Underlying EBITDA. Refer to Appendix 1 of the FY23 Results
Presentation for a reconciliation of Statutory to Underlying results.
48
49
ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESOUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS online. This required product re-work
and additional inspection times on
receiving goods, which impacted
the on-time delivery of key stock.
OUR ACTIONS
In response to the prevailing global
economic conditions, our focus in
FY23 has been on opportunities
that enhance and optimise the
underlying operational and financial
performance of the Group. With a
keen eye on efficiently managing
costs and maximising productivity,
we embarked on strategic initiatives
to drive our EBITDA margin.
One of our key steps was to explore
opportunities to consolidate our
suppliers and streamline the network
to improve efficiency and cost-
effectiveness. Additionally, we made
a concerted effort to reduce the
number of styles and Stock Keeping
Units (SKUs) to streamline inventory
management and improve margins.
In line with global markets, container
freight costs fell substantially.
We continue to work towards ISO
45001 for the wider group.
To preserve and enhance profitability,
we strategically considered the depth
of discounting, ensuring that we
balance the needs of our customers
while maintaining healthy margins.
In line with this approach, we also
moderated our marketing spend,
carefully optimising our expenditures
to effectively maintain our brand
presence and customer outreach.
During FY23, our owned and
operated wetsuit manufacturing
facility, OnSmooth Thai, became
B Corp certified. The facility also
achieved International Safety
Standard (ISO) 14001:2015 and
ISO 45001:2018 certification for
Environmental and Occupational
Health and Safety Management
Systems, which demonstrates
high standards of environmental
sustainability and workplace safety.
We achieved a step-change
in inventory management for
Kathmandu during the reporting
period with new, enduring processes
to streamline inventory levels for
the future. Inventory levels for both
Rip Curl and Oboz are moderating,
following investment in greater
holdings in the wetsuit categories
and key Oboz product lines. Record
demand for these products last
year has since softened, leaving
us with higher inventory levels
than expected. We have a steady
path planned for our holdings in
these inventory categories, which
can be held and sold efficiently.
With the softening of consumer
demand, particularly for wetsuits,
we have reviewed our workforce
structures across some business
units, particularly the requirements
for wetsuit production in line with
forward orders, to ensure we drive
operational and labour efficiency.
Reducing our workforce is not a
decision we make lightly but is a
necessary step to rightsize our
business in line with future demand
planning requirements. In making
decisions like these, as a B Corp, we
consider the impacts of our decision
on all stakeholders, including the
long-term profitability and needs
of the business and the impacts on
employees, both those whose roles
are no longer needed and the wider
impacts on the people remaining.
We support any employees whose
positions are no longer required with
Employee Assistance Program (EAP)
support beyond their final day of
employment, additional payments
over and above those required by
law, such as pay in lieu of notice and
13th month salary and full payout
of provident fund (where relevant)
to all employees regardless of
eligibility. Making these decisions
is never easy for any business but
it is important we revisit workforce
requirements to provide a stable
foundation for future growth.
We continue to actively manage
our property portfolio growing
our portfolio by 11 stores to 327
owned stores. We closely scrutinise
underperforming stores, including
in some locations rebranding within
the portfolio to optimise financial
performance. We continue to
monitor that any new stores do not
cannibalise sales from the existing
store network or other channels
and drive earnings growth overall.
Leveraging the scale of our store
portfolio and infrastructure enables
us to efficiently manage fixed costs,
including for new market expansion
in the medium term. Additionally,
by pooling our brand spend we
50
can unlock substantial production
savings. Managing leases at a Group
level allows us to negotiate more
favourable terms, leading to cost
savings and improving flexibility.
Leveraging our purchasing power,
both in terms of inventory and non-
inventory items, enables us to achieve
better deals and economies of scale.
Our Group legal team has been
reshaped during the reporting period
to form a solid support function to
assist all our brands globally. During
the reporting period there were
no instances of significant non-
compliance with laws or regulations
across the Group. There was one
fine (compared with none in 2022)
with a total monetary value of USD
$2,270 (NZD $3,720) for instances of
non-compliance with laws relating
to an instance of mislabelled pricing
under the Weights and Measures
requirements of the City of Santa
Monica, California. KMD Brands
defines a significant instance of
non-compliance to be a fine or
sanction of $1 million or more.
Throughout FY23, these strategic
actions were driven by our
commitment to strengthen the
Group's financial performance and
ensure sustainable growth amid
challenging economic conditions. We
remained agile and forward-thinking,
positioning ourselves for success
in an ever-evolving landscape.
GRI 2-27, 401, 403, 404
51
ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESKMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS CHALLENGES AND
OPPORTUNITIES AHEAD
Looking ahead, a multitude of short,
medium and long-term opportunities
can support growth and efficiency
across our organisation and
improve our working capital. In the
short term, our focus is on supply
chain efficiency in distribution and
sourcing. We will also continue to
optimise supply chain logistics by
aligning our factories across brands
to achieve significant gross margin
benefits. We will look at a greater
mix of origin third party logistics
suppliers in our supply chain.
We will continue geographic
diversification of our supplier
factories to reduce concentration
risk and supply chain disruptions.
This approach spreads reliance
across different regions, reducing
the impact of localised challenges
such as natural disasters or
geopolitical conflicts.
Recognising the significant risk
and challenge of climate change,
we are committed to working
with partners that proactively
adopt technologies to reduce the
emissions in our supply chain.
When considering new suppliers
of services for the Group, we will
seek information from potential
partners about their use of emerging
technologies to reduce operational
costs, reduce emissions and
enhance the resilience of systems.
In FY24 we will revise our buying
timelines and enhance our demand
planning processes. Our refined
buying policies will concentrate
on the depth of core styles while
offering a tighter breadth of products,
ultimately reducing inventory and
bolstering trade payments.
OUR GROUP FUNCTIONS
Our shared Group support functions provide centres of excellence, implement common platforms
and leverage scale across our brands.
COMMERCIAL
SYSTEMS
FINANCE
PEOPLE
LEGAL
ESG
52
CASE
STUDY
Localising impact,
maximising change
An equitable, inclusive workplace
that represents the diversity of
our communities and amplifies
their professional development…
This is KMD Brands’
commitment to our people.
We continue to invest in training
and experiences that reinforce our
commitments. With teams across
multiple time zones and speaking a
multitude of languages, we are always
looking for creative ways to localise
our efforts to maximise our impact.
This year, the KMD Brands People
team worked on consolidating best
practice training and development
that already existed at a brand
level. This included consolidating
Kathmandu, Rip Curl and Oboz onto
the same Learning Management
System, RedSeed, globally in May.
Giving all our employees access to
a single learning and development
platform will ensure ongoing
consistency of the employee
development experience at KMD
Brands. On top of this, Kathmandu
and Oboz employees were given
access to a full course content
library that was previously only
accessible to Rip Curl employees.
To complement the courses offered
through RedSeed, employees
embraced a wide range of training
opportunities conducted by external
experts with the aim to educate
and upskill, from leadership to
corporate governance, media
and presentation skills to digital
marketing, cyber security to
environmental and social governance,
financial literacy, copyright, safe
driving, and much more.
The wellbeing of our people,
diversity and inclusion, and
ESG are key focus areas of
our strategy, so we conducted
targeted training in these areas.
We used internal experts to
train our people on climate and
the Science-Based Targets
initiative, greenwashing, employee
entitlements, discrimination,
bullying, diversity and inclusion,
and safety awareness and mental
health in the workplace.
In Australia, we complemented
internal training on our Reconciliation
Action Plan and our journey to
reconciliation, with celebrations
for NAIDOC Week to honour the
history, culture and achievements
of Aboriginal and Torres Strait
Islander peoples. We were joined by
proud Adnyamathanha woman and
Aboriginal entrepreneur, Marsha
Uppill, who shared stories and
reflected on the NAIDOC theme
‘For Our Elders’. All ANZ employees
were invited, with many of our New
Zealand based team joining to gain
an understanding of their Australian
colleagues’ cultural history.
In the United States, Oboz partnered
with the Continental Divide Trail
Coalition, one of the country’s largest
conservation efforts, to host half-day
training with equity, diversity and
inclusion strategist Parker McMullen
Bushman. Our people and partners
gained powerful insights from Parker
as she used her personal experiences
to unpack the unequal representation
of people of colour in outdoor spaces.
KMD Brands partnered with
LGBTQI+ youth charity Minus18
to mark International Day
Against Homophobia, Biphobia
and Transphobia (IDAHOBIT).
Employees across Australia,
New Zealand and North America
gathered virtually to learn how they
Continued overleaf...
53
ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESKMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS CASE
STUDY
Localising impact,
maximising change continued
CASE
STUDY
A proactive, people-centred
health and safety culture
could be active allies. Oboz also
extended this invite to third-party
sales representatives of the brand,
who were keen to gain a better
understanding of gender inclusivity.
Kathmandu recognised Mental
Health Awareness Month in October,
working with not-for-profit partner
Beyond Blue to deliver a presentation
to help people recognise if they
are experiencing mental health
challenges. Rip Curl ran a series of
educational sessions with a mental
health advocate in September and
also recognised R U Okay Day. Mental
health advocate Matt Runnalls was
our guest speaker at two education
sessions, during which he shared his
lived experience and encouraged
others to manage their wellbeing.
Kathmandu was also recognised by
Mental Health First Aid Australia as a
‘Skilled’ workplace, with accreditation
that acknowledges the brand’s
efforts to train 60-plus employees
to act as mental health first-aiders in
Australia. As part of this accreditation,
Kathmandu implemented eight
wellbeing initiatives including a
mental health first aid policy.
As the KMD Brands People
team continues to consolidate
and streamline efforts, we hope
to extend our efforts to reach
more employees each year.
PERFORMANCE REVIEWS COMPLETED FOR FY23
Category
Group executive
Brand executive
Senior management
Management
Non-management
TOTAL
TRAINING HOURS IN FY23
Male
100%
100%
65%
92%
82%
83%
Female
Another gender
100%
100%
70%
98%
80%
82%
N/A
N/A
N/A
100%
69%
69%
Total
100%
100%
67%
95%
81%
80%
Average hours of online training
per employee*
Male
Female
4 hours
4.4 hours
Another gender
3.3 hours
* Based on training modules completed
through RedSeed learning platform
2110
additional training hours
delivered in person*
* Participant attendance is determined by
accepted calendar invitations or attendance
record. Total training hours calculated based
on average training session length of 1 hour
GRI 404
54
The health and safety of
our team is a top priority,
which is why our People
team spent the year auditing
and updating our processes,
procedures and policies to
enhance our safety culture.
We introduced new systems to
ensure our people and customers
stay safe and healthy. When incidents
do occur, we have processes in place
to learn, reflect and prevent these
incidents from happening again.
All new employees complete an
induction module and on-site safety
walk-through upon commencement.
Rip Curl uses the SafetyCulture
app to report hazards, This enables
us to capture consistent data and
identify areas where we can improve.
Kathmandu uses the Noggin platform.
The earlier an employee can return
to work, the faster their recovery.
Most people who have been injured
in our workplaces have returned
in a timely manner, thanks to the
structured processes that support
their return to work. These processes
include immediate response, medical
attention and incident management;
we equip the employee with
information about their injury to
share with their doctor, and work with
them to determine potential work
modifications when they return.
Expanding on Kathmandu’s well-
established process, we have
introduced a quarterly group safety
governance meeting, during which
time a group of employees unpack
each incident or injury and look
for ways to improve. The Health
and Safety team complete monthly
meetings with regional managers
to ensure timeliness of hazard
identification and risk assessments.
We regularly audit our sites for safety,
but as we strengthen our processes,
we have introduced a formal tracking
system. In FY23 we completed 23
audits across Australia, New Zealand,
North America and Brazil for health
and safety regulatory compliance.
We had 168 cases of recordable
work-related injuries during the year,
up from 157 cases in the prior fiscal
year. The main types of work related
injuries are contusions, burns, cuts,
sprains, slips, strains, and soft tissue
injury. Out of these, four cases (2022:
two cases) were high-consequence
requiring the employee to take
more than six months to recover.
We had two cases (2022: 0 cases)
of work-related ill-health, where
the employee took more than six
months to recover. These cases were
related to arthritis and anxiety and
identified through incident reports.
The increase in work-related
injury reporting is a result of our
encouragement of employees to
report incidents when they do occur.
We had no incidents of non-
compliance with regulations
or voluntary codes resulting in
a fine, penalty or warning. We
had no instances of fatalities
from work-related ill-health or
injury. We recorded 43 customer
injuries, two near misses, and
seven medical episodes.
55
ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESKMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS Best in class banking
CASE
STUDY
Sustainable and streamlined –
these are the principles that have
uncovered millions in savings for
KMD Brands this financial year.
Our commitment to operational
excellence means we are always
looking to streamline the way we
work. Across the Group globally we
had 30 different banking relationships
to manage our transactional banking
and merchant acquiring. With a
view to streamline relationships,
drive consistency and obtain better
pricing, a treasury project team was
formed to assess, review and tender
our relationships globally. A global
banking tender and change has many
complexities, but we quickly realised
the size of the prize was significant.
“A global business needs a global
bank”, says Group CFO, Chris Kinraid.
After gauging the market for interest,
we reduced the number of banks we
partner with from 30 to two: ANZ in
Australasia and HSBC globally. This
will deliver a cost saving of around
NZD$1 million each year, strengthen
and simplify our reporting and
data analysis, and give us access
to best-in-class technology.
Our analysis also found significant
cost savings by consolidating our
fragmented merchant acquiring
relationships across Australia
and New Zealand. With one bank
appointed in each region now our
preference, we are looking to save
NZ$1.5 million over three years and
offer leading point of sale technology
for our customers. This consolidation
will also save our team time that we
can spend on projects to strengthen
our business and deliver better
experiences to our customers.
This year, we also successfully closed
a NZ$310 million debt refinancing
deal tied to sustainability. This builds
on KMD Brands’ first sustainability
linked loan, which we secured in 2021.
With the new transactional banking
relationships in place the Group can
more aggressively pool cash globally
and reduce working capital debt.
Tying this loan to our unique
environmental, social and governance
(ESG) targets acts as an additional
financial incentive. If we hit our ESG
targets – which include reducing
our emissions, maintaining our B
Corp Certification and improving
supply chain transparency – the
interest rate on the loan decreases.
The dollar value of meeting the
targets tied to the loan is just one
benefit. By making ESG a key pillar
of our Group strategy, we reduce our
financial and regulatory risks, drive
value for our business today and
protect people and planet tomorrow.
Other health and safety training
we provide our workers include:
health first aid officers, and we plan
to expand the training globally.
• Loss prevention training (includes
deescalation with customers)
• Manual handling training
• First aid training
• Emergency warden training
• Mental health first aid training
• Manager and supervisor
awareness training.
We know mental health is just as
important as physical health. This
year 32 employees in Australia and
New Zealand were trained as mental
Our brands also delivered targeted
training and wellbeing sessions to
their people. Oboz hosted stress
management classes and hired a
wellness coach. Rip Curl Europe
used World Mental Health Day as
a chance to share information and
insights about good mental health.
Kathmandu and Rip Curl ANZ took
part in a webinar with sport scientists
who explored evidence-based tools
to help people thrive through life.
We also rolled out a global employee
assistance program across our
brands. Converge International
helps us provide access to legal
advice, counselling, personal and
work-related issues, nutrition and
more. All full-time and part-time
employees, and their immediate
families, have access to Converge,
and can use the app to monitor
their health goals and progress.
With a commitment to continuous
improvement, proactive systems
and a culture of care, we strive for
operational excellence that delivers
safe and healthy workplaces.
GRI 403, 416
56
57
ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESKMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS LEAD IN ESG
In this section, we report on our overall impact on society and the environment, within the context of our strategic
objective to Lead in ESG. This section is structured to align with the KMD Brands ESG Strategy and is organised
around our focus areas of Communities, Climate and Circularity. We have described our goals in each focus area,
reported on the baseline data where possible, and integrated our reporting to Global Reporting Initiative (GRI) and
Sustainability Accounting Standards Board (SASB) requirements where applicable.
KMD Brands ESG Strategy
OUR VISION is to be the leading family of global outdoor brands – designed for purpose, driven by
innovation, best for people and planet.
OUR PILLARS
OUR FOCUS AREAS
Provide a people-centred culture and workplace that
fosters health, safety, wellbeing and inclusiveness.
Protect human rights and dignity by addressing
modern slavery in our value chain through
collaboration and transparency.
Positively impact the wellbeing
of people and places touched
by our brands
Engage, inspire and protect the communities
where we operate and impact.
Reduce emissions in line with the
Paris Agreement goals.
Transition to a low carbon future
Transition to a low carbon future
Foster and invest in circular business models across
our businesses.
Increase responsible material content in our products.
Reduce the waste footprint created across
our businesses.
Eliminate the linear take-make-
waste approach to business
58
OUR TARGETS
PROGRESS FOR FY23
An equitable, inclusive workplace representative of the diversity within
our communities including:
- 40:40:20 gender representation in leadership positions
(Board, Executive and Management).
SOME PROGRESS
- Increased representation in employment of local Indigenous
PLANNING STAGE
Peoples and people from ethnic or racial minorities.
Genuine transparency of, and effective worker voice
communications with, strategic suppliers for each brand.
Supported local community projects, through donations, fundraising
and paid employee time, to create a positive impact for the wellbeing
of people and planet.
ON TRACK
ON TRACK
Reduced absolute Scope 1 and 2 emissions by a minimum of 47% by
2030, from a FY19 base year (4.2% per annum emissions reduction).
SOME PROGRESS
Reduced absolute Scope 3 emissions by a minimum of 28% by
2030, from a FY19 base year (2.5% reduction per annum).
PLANNING STAGE
Commercialised brand-led circular business models for product
take-back, renewal, repair, re-commerce or recycling.
Dedicated to our own-brand products being responsibly sourced.
ON TRACK
ON TRACK
Reduced operational and packaging waste including:
- Diversion of 90% of waste to landfill from our direct operations
SOME PROGRESS
by 2030.
- All primary and secondary packaging and promotional material
SOME PROGRESS
is recyclable or made using recycled materials by 2030.
PLANNING STAGE
SOME PROGRESS
ON TRACK
HIT A ROADBLOCK
NEARLY THERE
DELIVERED
59
KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES COMMUNITIES
GOALS
An equitable, inclusive workplace
representative of the diversity within
our communities including:
• 40:40:20 gender representation
in leadership positions (Board,
Executive and management).
• Increased representation in employment
of local Indigenous Peoples and people
from ethnic or racial minorities.
OUR PEOPLE
GOALS AND PERFORMANCE
FY23 PERFORMANCE
GENDER DIVERSITY OF OUR EMPLOYEES
As at 31 July, sourced from employee payroll data
Total employees:
4,843
2022: 4,887
36%
Male
2022: 35%
60
63%
Female
2022: 64%
1%
Another gender or prefer not to say
2022: 1%
MINORITY REPRESENTATION IN OUR TEAM
6%
10%
of our team identify as belonging to an
ethnic minority
of our team identify as LGBTQIA+
2022: 14%
2%
8%
of our team Identify as belonging to a local
Indigenous group
of our team are living with a health condition or disability
2022: 12%
*Sourced from Gallup Q12 Engagement survey conducted during FY23 and is based on responses received from respondents
GENDER DIVERSITY BY CATEGORY
Male
Female
Other/prefer not to say
FY23
FY22
% CHANGE FY22 VS FY23
Board
71%
29%
0%
71%
29%
0%
No change
Group Executive
50%
50%
0%
56%
44%
0%
6% increase in female leadership
Brand Executive
71%
29%
0%
71%
29%
0%
No change
Senior Management
56%
44%
0%
59%
41%
0%
3% increase in female leadership
Management
42%
58%
0%
42%
58%
0%
No change
Non-Management
35%
64%
1%
33%
66%
1%
2% decrease in female representation
GRI 405
61
ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESKMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS COMMUNITIES � OUR PEOPLE
MATERIAL ISSUES: PEOPLE AND WELLBEING • GLOBAL ECONOMY • CHANGE MANAGEMENT
OUR OBSERVATIONS
We are focused on positively
impacting the wellbeing of people
and places touched by our brands.
We want to be the best for our people
by providing a people-centric culture
and workplace that fosters health,
safety, wellbeing and inclusiveness.
As we navigated FY23, attracting and
retaining top talent was an ongoing
challenge in the fiercely competitive
labour market. With job seekers
having a wide range of options, it
was crucial that our brands fortified
their employer value proposition
(EVP) and elevate our already strong
presence in the job market. We
use available data from various job
boards to understand the current
trends and demands of potential
candidates and tailor our EVP and
recruitment strategies accordingly.
In the pursuit of the best talent,
one of our significant advantages
is our B Corporation Certification.
This demonstrates that we are part
of a community of businesses that
meet high standards of social and
environmental impact, and this
resonates with job seekers. The B
Corp Certification enhances our
reputation as a socially conscious
and sustainable employer, making
our EVP even more attractive to
prospective candidates who align
with these values. Emphasising our
B Corp status in the employment
landscape further sets us apart
from competitors, giving us a unique
advantage in talent acquisition.
KMD Brands also attracts talented
individuals who share a passion
for what our brands stand for. Rip
Curl is made for surfers, by surfers,
62
so our offices are located next to
some of the world’s best surf breaks.
Our ‘crew’, as we call them, have
the flexibility to take advantage of
this and go surfing during business
hours. At Kathmandu, employees can
work longer hours during the week
to access ‘Fri-Yay’ - a half day to
explore the foothills of Christchurch.
As well as being based in the Greater
Yellowstone Ecosystem, Oboz team
members have access to trails right
at their doorstep and are encouraged
to get out there as much as possible.
The pandemic drove a shift in
our team's ways of working, with
extended periods of remote work
changing the way many think about
work-life balance. We recognise the
value of in-person interactions in
fostering company culture, especially
as we tend to be in communities
that are so close to the nature that
inspires our brands and customers.
Because of this, we’ve encouraged
employees in our head office teams
to return to our physical offices.
Striking a balance, we've adopted a
hybrid work model underpinned by
flexibility and trust. We have three
set days during which all employees
are expected to come into the office.
Employees can choose to work in
the office or remotely for the other
days, based on their tasks and
preferences. In the current landscape
of remote work, maintaining and
nurturing organisational culture
has become a central challenge,
requiring us to think differently
about how we preserve our
company values, traditions and
core principles despite the physical
separation of people. The return of
travel elevated team engagement,
innovation and osmosis learning
as team members reconnected
across the Tasman and the globe.
In recent times, we have observed
an increase in employees seeking
counselling services for mental health
through our Employee Assistance
Program (EAP). This trend may
be partly as a consequence of our
successful educational programs to
raise awareness about the available
resources. However, it also indicates
a positive shift in attitudes towards
mental health, where employees are
more aware and more likely to seek
help when they need it. This is an
essential step for our brands as we
promote a healthy work environment.
The demand for initiatives that
support the wellbeing of our teams
is greater than ever, emphasising
the importance of comprehensive
mental health support and a
workplace culture that prioritises
the overall welfare of employees.
OUR ACTIONS
We harness the collective power of
our team by embracing and valuing
each team member for who they
are. We encourage people to grow
with us. We foster inclusivity and
diversity across our businesses to
inspire all people to explore and
love the outdoors and to provide
a workplace where everyone can
show up as their true selves.
We have set specific gender diversity
goals and we are making good
progress, with 50% female leadership
in our group executive team and
29% in our brand executive teams.
Rip Curl and Oboz are led by female
CEOs, with the new Kathmandu CEO
appointed during FY23 also female.
We still have work to do in building
the capability and experience of
our future female leaders, however
we know that seeing three women
lead our iconic brands will inspire
many to see themselves in these
roles. In early FY24, we will launch
our paid parental leave policy in
Australia and New Zealand which
aims to support and encourage
primary caregivers to continue with
their career paths following the
addition of a new family member.
This year, we also revised the wage
structure of our factory workers
in our Onsmooth wetsuit factory
in Thailand. This provided a lift
in salaries to align with the Anker
living wage methodology resulting
in an increased standard of living
for employees and their families.
The introduction of a living wage in
Thailand in August 2022 resulted in
widespread positivity and instantly
saw staff retention increase. We also
recognised some of our longest
serving team members, including
John ‘Sparrow’ Pyburne who has
been designing wetsuits for Rip
Curl for more than 50 years and is
integral to the success of the brand.
In FY23, our company has taken
significant strides towards fostering
a diverse and inclusive workplace.
Recognising the immense value
that different perspectives bring,
we actively champion diversity in all
dimensions. We have implemented
training focused on educating our
teams about the importance of
diversity and inclusion. Through
these initiatives, we aim to raise
awareness about unconscious
biases and encourage a more
empathetic and respectful workplace
culture, where everyone belongs.
As part of our commitment to
supporting marginalised communities,
we proudly rolled out International
Day Against Homophobia, Biphobia
and Transphobia (IDAHOBIT)
training to promote understanding
and acceptance of diverse
gender identities and sexual
orientations. This was attended
by a large cross section of KMD
Brands, Rip Curl, Kathmandu and
Oboz employees from Australia,
New Zealand and beyond.
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ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESKMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS Our people at a glance
BY REGION
3,000
2,000
1,000
AUS
NZ
THAI
USA
EUR
OTHER
CHALLENGES AND
OPPORTUNITIES AHEAD
KMD Brands is a great place to work,
but driving engagement in the retail
sector can be challenging. The nature
of the tasks, working hours, workforce
dispersion and customer service
can lead to higher turnover rates.
Attracting, developing and retaining
employees is crucial to our ongoing
business success. In a tight labour
market, we continue to articulate
our EVP to showcase each of our
brands as an employer of choice.
A key talent program is a strategic
opportunity to develop our future
leaders. This program can create
a pipeline of capable leaders who
understand the dynamics of our
industry, and can offer mentoring,
leadership training, and exposure
to different aspects of the business.
As workforce dynamics evolve, we
can support the skills and talent
development of our future.
Another opportunity over the
medium term is a global mobility
policy. This will further support
the development of internal
leadership, to allow movement
between brands and geographies.
A well-structured global mobility
policy can provide employees
with international experience,
enhancing their skills in managing
diverse teams and understanding
different markets which can be a
valuable skill for future leaders.
BY AGE
50+
7%
30 - 50
34%
<30
59%
EMPLOYMENT TYPE
Full time
42%
Casual
33%
Part time
25%
65
Kathmandu also re-accredited
as a Rainbow Tick business. The
Rainbow Tick status tells our
customers that we are a progressive,
inclusive and dynamic organisation
that embraces diverse sexual and
gender identities and reflects
the communities we serve.
Rip Curl continued its path of
reconciliation in Australia by
working closely with First Nations
communities, with cultural protocols
becoming part of events and
meeting agendas. Our commitment
to engaging with and supporting
these communities reflects our
dedication to acknowledging their
unique histories and challenges.
During FY23, we completed our
second global diversity and inclusion
survey across all our brands. This
gave us valuable insights about
the backgrounds of our employees
so we can support what matters
most to them. Through the results
of this survey, we have reported
some baseline statistics for the
first time this year in relation to
Indigenous and ethnic minority
representation amongst our
employees. This data will inform
and shape the specific targets, and
direct the activities, we will focus
on in FY24 and beyond, to support
and increase the representation of
these groups within our businesses.
We believe that, by celebrating the
uniqueness of each individual, we
are building a stronger and more
innovative business that welcomes
everyone to participate. As we
move forward, we will continue to
assess and improve our initiatives
to create a workplace where all
our team members feel valued,
respected and empowered to
make a meaningful impact.
GRI 401, 405
64
KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES COMMUNITIES � OUR PEOPLE
CASE
STUDY
Walking the path
to reconciliation
The long stretch of golden
sand known today as Djarrak
(Bells Beach), has been home
to the Wadawurrung people
for thousands of years. It
is with this knowledge that
Rip Curl launched our first
Reconciliation Action Plan
(RAP) in January 2023.
The RAP process provides Rip Curl
with a framework as we grow and
mature on our reconciliation journey.
Our first ‘Reflect’ RAP is focused on
recognition, respect and relationships
as we expand our understanding
and knowledge of Aboriginal and
Torres Strait Islander cultures.
“The RAP process has been a big,
beautiful learning journey,” says
Lucy Nakaroti, Rip Curl’s Chair
of the RAP Working Group.
As a part of the RAP process,
Rip Curl has introduced cultural
protocols, like an Acknowledgement
of Country at the start of meetings.
We also celebrate NAIDOC Week and
National Reconciliation Week, using
both events to educate our crew.
One of the most powerful new
initiatives is a Walk on Country,
that all new Torquay based crew
members undertake as part of their
induction program. “We take new
crew out to walk on country with local
Wadawurrung community members
who share stories of connection to
Country. It’s been great to hear new
crew say how much they appreciate
the chance to learn about First
Nations’ culture and Rip Curl’s
approach to reconciliation,” Lucy says.
Dale Hose, Rip Curl’s Inbound &
Inventory Manager, is also a member
of the RAP Working Group. “As a
First Nations person, the RAP makes
me proud to work for Rip Curl.” Dale
calls the RAP a “stepping stone”
that has sparked new conversations
and helped people learn more about
First Nations people and culture.
With time, Rip Curl’s commitment
to reconciliation will attract more
First Nations employees, Dale says.
Rip Curl has achieved the
deliverables set in the Reflect RAP
and will soon start work on the next
stage – an ‘Innovate’ RAP – with
the goal to engage more Rip Curl
people in conversations about
reconciliation. In the meantime, we
are proud of our progress. As Rip
Curl’s Team, Event & Partnership
Manager Mark Flanagan says: “I
walk taller as a Rip Curl employee
because we are doing this work.”
For the love of the outdoors
CASE
STUDY
Surfers, hikers or campers… Our
people are all different. Some
have been with us for decades;
others are just starting their
careers. But we all have one
thing in common: a love of the
outdoors and a commitment to
brands designed for purpose,
driven by innovation, best
for people and planet.
Take John ‘Sparrow’ Pyburne
(pictured), who began his quest for
the “ultimate wetsuit” back in the
1970s. Sparrow started designing
wetsuits for Rip Curl when we were
paying just $10 a week to rent the Old
Torquay Bakery in Victoria. The brains
behind Rip Curl’s durable double lined
neoprene suit, Sparrow developed
his designs so he could spend
more time in the surf. Work and
passions were intertwined. “I can surf,
develop something, and get direct
feedback on it,” he once said. It’s a
philosophy Rip Curl continues today.
Sparrow has made wetsuits for
professional athletes like Nat Young,
Tom Curren, Mick Fanning and Tyler
Wright, and initially joined Rip Curl
so he could spend his time making
wetsuits and going surfing in them.
Sparrow was awarded the prestigious
Surf and Boardshorts Industry
Association (SBIA) Service Industry
Award in 2017 and in 2023 CEO
Brooke Farris presented him with a
Rip Curl Gold Card celebrating his
ongoing contribution to the brand.
Corey McPherson is part of our Oboz
team and loves a backpack. Based
in Montana, Corey has achieved
the ‘Triple Crown’ of thru-hiking –
the Appalachian, Pacific Crest and
Continental Divide trails – across
nearly 8,000 miles and 22 states. As
a member of the Oboz development
team, Corey is helping us to build
the best products that solve hikers’
biggest problems. “I’m always
looking for ways to make time on
the trail a little bit easier,” he says.
Despite running a busy store, she
never misses a chance to chat to
customers. “Going above and beyond
is normal for me. I love to ensure
every customer has everything they
need for their next adventure.”
When Fale Maoama isn't hard at work
at Kathmandu's Christchurch CBD
store, she may be spotted at Godley
Head – the spectacular headland
known to Māori as Awaroa. In her
25 years with Kathmandu, Fale has
held many roles, from fabric sorter
to warehouse assistant, distribution
supervisor to store manager.
Every person who works for KMD
Brands has their own unique
story. But we have a collective
passion for our planet and the
people who live on it – and that
inspires us to be better, together.
66
67
ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESKMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS GOALS
Genuine transparency of, and effective
worker voice communications with, strategic
suppliers for each brand including:
ACCOUNTABILITY TO KMD
BRANDS CODE OF CONDUCT
Tier 1: Suppliers are 100% accountable
Tier 2: Increase by at least one Tier 2
supplier for each brand per year
TRANSPARENCY
Tier 1: % Increase year on year where
worker voice survey tools are in place
Tier 2: Trace and publish the input suppliers
of our strategic Tier 1 suppliers.
OUR WORKERS
GOALS AND PERFORMANCE
PERFORMANCE: ACCOUNTABILITY
PERFORMANCE: TRANSPARENCY
100%
Tier 1 suppliers independently verified
by Elevate as accountable to KMD
Brands Code of Conduct at May 2023
under our Sustainability Linked Loan.
2022: 91%
65
Tier 2 suppliers accountable to
KMD Brands Code of Conduct
2022: 3
8
Ethical Voice worker surveys
completed, assessing the
wellbeing of
2022: 1 survey
4,520 workers
7
Worker sentiment surveys
conducted
2022: 24
100%
Tier 1 suppliers traced and
published on Open Supply Hub
65
Tier 2 input suppliers traced
and published on Open Supply
Hub
68
69
OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES COMMUNITIES � OUR WORKERS
MATERIAL ISSUES: PEOPLE AND WELLBEING • CLIMATE CHANGE
OUR OBSERVATIONS
This year we have sharpened our
focus on business action beyond
goals and policy statements. We
continue to gather data and set ESG
targets, but we are also working
hard to translate our ambitious
targets into meaningful impact.
We are seeing demand for greater
transparency from consumer-
facing indices. Consumers are
increasingly concerned with
the journey of their product,
which we see as an opportunity
to highlight the investment we
and our suppliers are making in
innovation, green technology,
preferred fibres and worker wellbeing
within our supply chains. We
continue to champion transparency
and accuracy of disclosures
to build and maintain trust.
Against a backdrop of political and
regulatory change, all companies
must continue to assess and manage
the social and environmental impact
of their supply chains – and KMD
Brands continues to do this. We are
carefully considering a raft of issues,
from the proposed modern slavery
legislation in New Zealand to the
Uyghur Forced Labor Prevention
Act to the Australian Competition
and Consumer Commission’s
scrutiny of sustainability claims.
OUR ACTIONS
We care about the people our
suppliers employ and want to
ensure they are safe, paid fairly
and make our gear and clothes
in a positive environment. As the
world re-opened post-pandemic,
we enjoyed reconnecting in person
70
with our partners across the world.
This commitment to relationships
is valued by suppliers: 93% of
supplier respondents to our recent
engagement survey described
KMD Brands as a preferred partner.
We are also starting to bring
suppliers together and explore
creating communities of practice to
enhance social and environmental
performance. In FY23 we held
our first workshop with factory
representatives in Bangladesh
to share resources, learn from
and challenge one another.
KMD Brands continues to develop
our approach to human rights
due diligence, including through
our focus on accountability to the
KMD Brands Code of Conduct in
FY23, which includes a prohibition
against forced and child labour. We
assessed 176 Tier 1 factories in FY23
for social impacts. Assessments
were conducted both internally
and by third parties. Assessments
include contractual elements, third-
party audits, site visits, supplier
engagement, anonymous worker
surveys and grievance mechanisms.
We are expanding our understanding
of human and environmental risks
beyond Tier 1 suppliers and will
continue to focus on input and
raw material suppliers in FY24.
In FY23, four suppliers were found to
have significant actual or potential
negative social impacts. Three
suppliers were located in China
and one in Indonesia. Impacts
identified were excessive overtime
combined with a lack of willingness
to improve, lack of clarity relating
to worker compensation and
potential underpayment of overtime.
Corrective action plans were agreed
upon with 75% of suppliers. Two
of these suppliers were supported
with additional training relating
to management records and
expectations. One relationship was
terminated due to lack of willingness
to address excessive overtime.
Transparency continues to
underpin our relationships with
suppliers. We disclose all Tier 1
and an increasing number of Tier
2 suppliers on the Open Supply
Hub. We actively monitor the social
performance of our suppliers, listen
to the perspective of suppliers and
their workers, and support relevant
training for factory human resource
managers. According to our recent
engagement survey, 83% of supplier
respondents agreed that KMD
Brands is working consistently
to improve working conditions
in facilities in its supply chain.
Collective action has continued
to be a key focus. In FY23, KMD
Brands became a signatory to the
International Accord to support
health and safety programs within the
apparel industry in Bangladesh. We
maintained our Fair Labor Association
accreditation, participated in the
Collaborative Advantage and joined
the B Corp movement of brands
seeking to use business as a force
for good. We also contributed to
multi-stakeholder initiatives including
Be Slavery Free and the Mekong
Sustainable Manufacturing Alliance.
KMD Brands has taken a broad
approach to addressing modern
slavery risks. In FY23, we actively
advocated for legislation that
encourages transparency, so that
businesses can work together to
address systematic causes of modern
slavery. Our Tier 1 manufacturing
operations are at low risk due to
social screening and monitoring.
Tiers 2 and beyond present a
higher risk, due to less established
relationships and monitoring
systems. Known instances of child
labour have been reported by the
US Department of Labor in the
following countries within our supply
chain: Nepal, Vietnam, Thailand,
India, China and Bangladesh. We
consider each of these regions, plus
Cambodia, Indonesia, Taiwan and
the United States, to present risk
beyond Tier 1. For more information
on our approach to addressing
modern slavery, please refer to our
Modern Slavery Statement here.
KMD Brands recognises risks to
freedom of association and collective
bargaining in some of the countries
in which our suppliers are located.
Just over half of KMD Brands
suppliers are located in China. We
recognise the risks that limitation on
independent unions presents in this
region. We also consider Bangladesh,
Indonesia, India, Thailand, Cambodia,
the United States and Vietnam to
present increased risk beyond Tier
1. To support rights to exercise
freedom of association and
collective bargaining, KMD Brands
focuses on supplier relationships
and emphasises a zero tolerance
approach to violation of the right
to exercise freedom of association.
In FY23, we have prioritised
worker voices through 4,500-
plus anonymous worker surveys,
providing a grievance mechanism
to the majority of workers in our
Tier 1 factories and supporting the
International Accord in Bangladesh.
CHALLENGES AND
OPPORTUNITIES AHEAD
We set a goal in FY23 to increase
the use of worker voice survey
tools in our Tier 1 factories. It
would be tempting to meet these
by surveying the workforce of our
long-term, low-risk suppliers with
whom we have strong relationships.
However, in FY24 we are committed
to deploying these tools based on
human rights due diligence, to allow
greater visibility into higher risk
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ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESKMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS 11
Assessments completed by our
nominated third-party auditor
2022: 54
4
Factories identified as having
significant actual or potential
negative social impacts
100%
New Tier 1 suppliers' social
performance screened against
KMD Brands Code of Conduct
189
Tier 1 factories making our
branded product
2022: 163
110
Tier 1 suppliers we partner with
2022: 88
26
factories exited
2022: 11
areas of our supply chain. We also
want to harness the opportunity for
worker surveys to be a value-add
for factory management, rather than
another compliance mechanism.
Minimum wages do not always
allow for a decent standard of living.
Addressing low wages of apparel
supply chain workers is a challenge,
but not an excuse for inaction. In
FY24, KMD Brands will promote a
living wage as an essential aspect
of decent work. This will include
collecting data to assess any gaps
between current basic pay and
living wages, providing internal
training on responsible purchasing
practices and continuing to consult
with stakeholders, including
workers’ representative groups.
In some countries within our supply
chain, the experience of women
includes discrimination, violence
and harassment. We recognise that
the prevailing model of low-cost
production within apparel supply
chains exacerbates the vulnerability
experienced by many female workers.
One of our focus areas for FY24 is
working with suppliers to promote
gender equality. This will build
upon the family-friendly workplace
training funded in FY23. We will
also support our teams to apply a
gender lens within procurement
and supply chain practices.
GRI 2-24, 2-25, 407, 408, 409, 414
72
1,326
employees completed the B Corp
Mindset & Human Rights
Awareness Training
65
Copy audits accepted
2022: 109
73
ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESKMD Brands Annual Integrated Report 2023 COMMUNITIES � OUR WORKERS
Empowering many voices
CASE
STUDY
CASE
STUDY
Engaging with the people who
make our products
KMD Brands is committed
to worker wellbeing – and
that’s why we are listening
to what workers tell us.
We have engaged New Zealand
company AskYourTeam to help us
maintain our commitment to the
people touched by our brands.
In May, we piloted AskYourTeam’s
real-time, transparent survey
system, Ethical Voice, in eight
factories in our Kathmandu and
Oboz supply chains. More than
4,500 office and production workers
completed the survey, most of
them on their own smartphones.
We asked for feedback on a
range of topics, from human
rights to workplace health and
safety, remuneration to worker
aspirations. The 70% response
rate was higher than expected and
all suppliers demonstrated their
commitment to deploy the survey
at scale. More than 700 optional
extra text comments told us that
workers want to share their views.
GRI 2-25
74
Online conversations with factory
management complemented
the survey data, and we gained
valuable insights to help us create
safer, fairer work environments.
When we asked what KMD Brands
could do to make the world a better
place, the feedback was clear: use
recycled and durable materials;
reduce waste; elevate our attention
on workers’ compensation and
benefits; support humanitarian
projects; and focus on high-quality
products and order stability.
Factory partners told us they
appreciated the results, with one
manager in particular noting:
“The survey tool is valuable to
our business, and we would
use it independently.”
The next survey is set to be deployed
in China in FY24. In the meantime,
we will continue to refine our survey
process and work with our partners
to enhance the value of the data.
As AskYourTeam’s Head of
Product Craig Whitcombe notes:
“AskYourTeam and KMD Brands
are aligned about making a real
difference for workers in supply
chains. We acknowledge that
existing audits have their place while
recognising their limitations. We are
working together to define a new
approach to building transparency in
the supply chain, by giving workers
a voice in expressing how they
experience their workplace while
creating products for KMD Brands.
We want to provide a solution that
not only provides value to KMD
Brands but to the suppliers and,
ultimately, the workers as well.”
KMD Brands seeks not to be
the best in the world, but the
best for the world. It’s with this
attitude that we continue to
look for ways to improve the
transparency of our supply
chains and support the workers
who make our products.
This year we held our first ESG
Conference with suppliers in
Bangladesh to better understand how
we can work together to enhance
our social and environmental
impact. We explored ideas on
measurement and monitoring,
worker engagement, traceability, fair
compensation and gender equality.
We visited workers on the factory
floor and held our first worker
committee consultation to listen
to the views of people who
understand how one of our largest
factories in Bangladesh operates.
We funded training for Rip Curl
and Kathmandu suppliers in
China to help them improve their
environmental management and
develop family-friendly workplaces.
We also deployed a comprehensive
survey across our Tier 1 suppliers –
in countries from India to Indonesia,
Nepal to New Zealand – for all three
of our brands. The multi-language
survey asked suppliers to share their
views on purchasing and commercial
practices, and to consider how
KMD Brands could better support
them to improve their social and
environmental impact. We now have
clear priorities for FY24 as we strive
to be the best for people and planet.
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ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESKMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS MAT ERIAL ISSU ES: PEOPLE AND WELLBEING • BRAND POWER • GLOBAL ECONOMY • BIODIVERSITY IMPACT
OUR OBSERVATIONS
There are many communities
impacted by, and impacting, our
brands; but an important impact
for us is the local environments
and communities where our
employees and our customers
play and explore. We want to
engage, inspire and protect those
communities where we operate and
where we have an impact. It is part
of what makes each of our brands
authentic, relevant and appealing.
Each of our brands has a strong
foundation in the communities
from which they have grown. Rip
Curl was founded, and remains
headquartered, in Torquay, Victoria,
the Australian home of surfing.
As the largest employer in a town
that has grown around it, Rip Curl
has an enduring connection to
its community. And because of
that, we have a responsibility to
support that local community, and
to preserve the environment in
which our team and our customers
use our products – the ocean.
Oboz was founded in Montana’s
Yellowstone country; the name
literally means Outside + Bozeman,
and community is at the heart of the
brand. Oboz has a deep connection
to the mountains where its products
have been developed, tested and
refined, and invests significant
time giving back to the community
from which it was inspired.
Surrounded by mountains and hill
trails, Kathmandu was founded in
Christchurch, New Zealand, an area
that is perfect for adventure, and
which has served as the ultimate
backdrop for designing and testing
outdoor gear and apparel.
Our employees and our
customers expect our brands
to take responsibility to support
the communities which have
served as their foundation.
OUR ACTIONS
Each of our brands support
community partnerships and
projects that are meaningful to their
individual purpose and values. Our
team members’ love for the outdoors
is what draws them to Kathmandu,
Rip Curl and Oboz. We support and
encourage all our team members
to be a part of our effort to make a
positive social and environmental
impact. When considering which
initiatives to support, we look for
opportunities that are aligned to
the values of our respective brands
and provide opportunities for our
team members to take part in.
During FY23, we have continued
to build on the community
partnerships and programs for each
of our brands. We have expanded
our ‘Planet Day’ activities across
the Group, with the inaugural
Kathmandu event taking place in
Christchurch and with overwhelming
GOAL
Supported local community projects
through donations, fundraising
and paid employee time to
create a positive impact for the
wellbeing of people and planet.
OUR
COMMUNITIES
GOALS AND PERFORMANCE
PERFORMANCE
NZD $1.14m *
invested with our local community
partners in FY23 including over
3,405
volunteer hours
*includes company financial donations, product
donations, partnership fees, employee donations
and volunteer hours. Volunteer hours calculated
using average hourly rate of $28 per hour.
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ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESOUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS support from our head office and
distribution centre team members.
Oboz’ Trees for the Future program
has now planted more than five
million trees, supporting regenerative
agriculture in Tanzania. And it doesn’t
stop there. As well as an ongoing
commitment to plant one tree for
every pair of footwear sold during
FY23, Oboz launched the Fast
Trail Challenge which plants a tree
each time a customer undertakes
a hike that is over a mile long.
Our brands have also responded
when disaster strikes. Kathmandu
supported the Red Cross relief
appeal following Cyclone Gabrielle
in New Zealand in January 2023,
collecting and matching customer
donations from across its store
network, and sending much-needed
product to impacted communities.
For the second year running, Rip Curl
also sponsored a hole at the Mick
Fanning Charity Golf Day, helping
to raise funds for the communities
hit by the Northern River floods in
New South Wales and Queensland.
This year, despite a challenging
economic climate, we have
maintained our level of monetary
donations year-on-year. Our number
of paid, voluntary hours also
increased substantially due to the
growth of our Planet Day program.
The Rip Curl Torquay Community
Golf Day was rescheduled to be a
Spring event, to take advantage of
better weather, which impacted our
overall community contributions.
CHALLENGES AND
OPPORTUNITIES AHEAD
Each of our brands will further
embed community partnerships
and programs to create awareness,
connect with our customers and
deliver real impact. Meaningful
community work provides an
important opportunity to connect
with new and existing customers
and is a key reason why our people
are proud to work for our brands.
We are presented with a wide range
of causes, initiatives and programs
to support and it is challenging to
make choices which align with our
values and provide the necessary
transparency. We will continue to
work with partners and support
programs to amplify meaningful
impact in the communities where
we operate and play. We are also
looking at how we involve team
members from our wider retail
store teams and target support
for regional communities, given
our extensive store network.
Partnerships
Kathmandu works with youth and mental health focused organisations that align with our purpose to improve
the wellbeing of the world through the outdoors. We know that being outdoors is transformative. Science has
shown that it changes our brains for the better. When we spend time in nature our stress levels decrease, our
empathy increases and we feel happier. And that’s why we’re proud to partner with organisations that help
people experience all that nature has to offer.
Beyond Blue provides information and support for
anxiety, depression and suicide prevention in Australia.
Kathmandu is the official partner of #teambeyondblue
challenge events.
www.beyondblue.org.au
OVER
NZD $402k
Invested in FY23 through partnership fees ($218k),
customers donations ($155k) from sales of paper
shopping bags and employee giving matched by
Kathmandu ($29k).
Graeme Dingle Foundation is a leader in positive child and
youth development throughout New Zealand. Through
our partnership, we support a series of wilderness
adventures, adventure camps, activity days and career
navigators that empower thousands of young people.
www.dinglefoundation.org.nz
NZD $205k
Invested in FY23 through partnership fees ($101k),
customers donations ($85k) from sales of paper
shopping bags and employee giving matched by
Kathmandu ($19k).
During FY23 Kathmandu’s funding supported
6,857
young people across Aotearoa New Zealand.
Kathmandu supported the Red Cross relief appeal
following Cyclone Gabrielle in New Zealand in January
2023, collecting and matching customer donations from
across its store network.
www.www.redcross.org.nz
COMMUNITY VOLUNTEER HOURS
Planet Day, Christchurch
Working with the Avon-Heathcote Estuary
Ihutai Trust
TOTAL
NZD $66k
invested through product donations (RRP $40k) and
customer giving matched by Kathmandu ($26k).
TOTAL
385
volunteer hours for FY23
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KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES Community and care for the environment are embedded into the Rip Curl company policy, crew behaviour
and daily operations. This means giving back to communities in which we operate as well as protecting the
environment around those communities.
Oboz partners with individuals, organisations and causes which are aligned to our purpose of empowering
the people of the world to blaze their own trail. We call these our Compass Partners, and together we focus
on educating the broader community in two key areas: land conservation and equitable access. We support in
a variety of ways, including grants, sponsorships, product givebacks, volunteer service and brand advocacy.
SurfAid’s mission is to improve the lives of families in
isolated corners of the globe connected through surfing.
SurfAid was selected as Club Rip Curl loyalty program
charity partner due to its alignment with Rip Curl values.
www.surfaid.org
NZD $38k
invested in FY23
The Ondas Project is a Civil Society Organisation
of the two-time Brazilian surfing champion Jojó de
Olivença, whose mission is to contribute to the integral
development of children and adolescents in situations
of socioeconomic vulnerability and their families,
awakening citizen awareness through surfing.
The Project was selected due to its alignment with
Rip Curl company values.
www.projetoondas.org.br/
NZD $3k
invested through product donations
and cash contribution.
The 2023 Mick Fanning Charity Golf Day raised
AUD$580,000 for flood relief victims still struggling in
parts of Queensland and New South Wales. Rip Curl’s
hole sponsorship supported the success of the day.
NZD $16k
invested in FY23
COMMUNITY VOLUNTEER HOURS
Planet Day activities included rubbish removal,
tree planting, weeding and mulching
TOTAL
2,690
volunteer hours for FY23
Black Folks Camp Too’s (BFCT’s) mission is to increase
diversity in the outdoors by making it more accessible,
familiar and fun for Black folks to go camping. Oboz will
advise BFCT on the footwear segments of its digital
education initiative, while BFCT will assist and advise
Oboz with its justice, equity, diversity and inclusion work.
Oboz continues to sell through the O FIT Insole®️ 'Unity
Blaze' with a portion of the proceeds supporting BFCT's
digital education Initiative.
www.blackfolkscamptoo.com
NZD $32k
invested in FY23
Together with outdoor brands Osprey and Outdoor
Research, Oboz launch the 52 Hike Challenge. This is a
group of women over 50 who commit to hiking 52 times
a year. The group meets monthly to share experiences,
encouragement and product feedback.
www.52hikechallenge.com
MORE THAN
NZD $7k
invested in FY23
150
women participating
Since 2007, we have planted a tree for every pair of
Oboz sold. This equates to more than five million trees
– and counting. Oboz Footwear specifically supports
the Tabora Forest Garden Project in Tanzania.
www.trees.org
NZD $145k
invested in FY23
COMMUNITY VOLUNTEER HOURS
Gallatin Valley Land Trust
Trail cleanups
Bozeman Forestry Division
Trail maintenance Continental Divide Trail
Coalition | Trail maintenance and stewardship
Gallatin Watershed Council
Community tree planting
TOTAL
330
volunteer hours for FY23
80
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KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES COMMUNITIES � OUR COMMUNITIES
Planet Day goes global
CASE
STUDY
CASE
STUDY
Changing the world
one campfire at a time
Inclusion is at the heart of being
True to the Trail – and Oboz
has teamed up with Black Folks
Camp Too (BFCT) to invite
more people to experience
the joys of the outdoors.
BFCT was founded in 2019 by
Earl B. Hunter with a mission to
remove fear, enhance knowledge
and raise awareness of the reasons
why more Black folks don’t
participate in outdoor activities.
Most new campers and hikers
feel a mix of fear, excitement and
nerves. But many Black people
have intergenerational fears of
camping as the woods were unsafe
places for hundreds of years.
As Earl says, many Black folks
will continue to avoid outdoor
activities until they feel invited and
welcomed around the campfire.
Last year, Oboz and BFCT released
our first collaborative product, the
BFCT + OBOZ O FIT Insole Plus.
This insole features the Unity
Blaze – BFCT’s symbol of inclusion
– in each heel cup. The phrase
“Put a little soul in your step” is
featured in the left forefoot.
This year, we launched Outside
101, a series of videos that answer
questions and address concerns
that people may have about
any outdoor activity, whether
that’s hiking, camping or even
enjoying a family picnic.
Unity Blaze Oboz Trail Experiences
also echo BFCT’s inclusion
strategy by encouraging people
who join to “bring someone
who doesn’t look like you”.
As Earl says: “The BFCT + Oboz
Footwear partnership is a prime
example of two companies starting
at the toenail of the elephant.
Together, we discussed and
developed a plan, we methodically
and expeditiously moved forward,
now we are trusting our work as we
continue to improve our process to
educate folks about footwear and
trails. We are changing the world…
one campfire at a time folks!”
Rip Curl’s team has always kept
our feet in the sand and our
hearts in the surf – which is
why we started Planet Day in
2000. Over the last 23 years,
Rip Curl’s people have spent
more than 3,500 days of work
– or around 17,500 hours – on
Planet Day activities that
celebrate our company values of
‘community and environment’.
From planting trees and eradicating
weeds to removing rubbish that
threatens local ecosystems, Rip
Curl’s Planet Day efforts support
the sustainability of our coastal
ecosystems on Australia’s Surf
Coast. But this year, Planet Day went
global as our teams from Kathmandu
and Oboz rolled up their sleeves
to partner with local charities on
projects in their own backyards.
More than 110 staff from Kathmandu’s
head office and distribution centre
in New Zealand spent a morning
working hand-in-glove with the
Avon-Heathcote Estuary Ihutai Trust.
After weeding, mulching and planting
native species to restore biodiversity,
we hope to attract more birdlife to
Canterbury’s beautiful estuaries.
In Bozeman, Montana, members
of the Oboz crew spent a day
restoring a 6.5-kilometre stretch
of the Continental Divide Trail that
we adopted in 2022. Working with
our partner, the Gallatin Valley Land
Trust, we cleared brush from water
bars and drainage dips, carefully
retreading and restoring parts of
the trail to ensure more people
can enjoy the great outdoors.
“Each year Planet Day gets bigger
and bigger, as more regions, suppliers,
customers and partners join us to
contribute to our local communities
and environments,” says Rip Curl
CEO Brooke Farris. “Planet Day is a
powerful illustration of what it means
to think globally and act locally.”
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ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESKMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS CLIMATE
GOALS
Reduced absolute Scope 1 and 2 emissions by
a minimum of 47% by 2030, from a FY19 base
year (4.2% per annum emissions reduction).
Reduced absolute Scope 3 emissions by
a minimum of 28% by 2030 from a FY19
base year (2.5% reduction per annum).
Organisation GHG intensity
192 tCO2e
(per $m sales NZD)
GOALS AND PERFORMANCE
44
Tier 1 and 35 Tier 2 suppliers
reporting on environmental
performance
2022: 72
0
suppliers identified as having
significant actual and potential
negative environmental impacts
2022: 1
84
PERFORMANCE
SCOPE 1 EMISSIONS
Our direct emissions
FY19 baseline1:
FY22 Emissions:
FY23 Emissions3:
SCOPE 2 EMISSIONS
FY19 Location-based method baseline1:
FY19 Market-based method baseline1:
FY22 Location-based method:
FY23 Location-based method3:
FY23 Market-based method3:
SCOPE 3 EMISSIONS
FY19 Reporting boundary baseline1:
FY19 Target boundary baseline2:
FY23 Reporting boundary emissions3:
FY23 Target boundary emissions3:
+
+
25%
66%
increase to baseline
increase to FY22
+
-
0. 3%
12%
increase to baseline (Market-based method)
reduction to FY22 (Location-based method)
Tonnes CO�e
662
497
825
Tonnes CO�e
11,904
10,474
9,246
8,149
10,508
Tonnes CO�e
206,253
192,803
202,939
186,590
-
-
1.6%
3.2%
reduction from reporting baseline
reduction from target baseline
1. Estimated based upon verified FY19 Kathmandu inventory, verified FY20 Rip Curl inventory, and verified FY21 Oboz inventory and a Scope 3 screening
including all relevant emissions sources for all brands. Our Scope 1 FY19 baseline has been restated from prior year reporting following the approval and
validation process with SBTi.
2. Our Scope 3 target baseline boundary represents 70.9% of our Scope 3 reporting baseline boundary. It includes the following GHG Protocol categories:
purchased goods and services, fuel and energy related activities, upstream transportation and distribution, waste generated in operations,
use of sold products, end of life treatment of sold products, and investments.
3. FY23 figures are audited, pre-verified numbers. Previous year's carbon emissions reported were pre-verified estimates and are now updated with final verified
numbers, aligned with our annual greenhouse gas inventory assurance statements. Scope 1 emissions are our direct emissions. Scope 2 emissions are our
indirect purchased electricity emissions. Scope 3 are our indirect value chain emissions including all relevant upstream and downstream emissions sources,
noting that only a subset of these are included within our Science-Based Target boundary. The audit requirements of ISO 14064-1:2018 was
used to assess conformance. We obtained reasonable assurance over Scope 1 and 2 emissions and limited assurance over Scope 3 emissions.
4. Emissions from biogenic sources amounted to 50.49 tCO2e.
5. Nitrogen oxide emissions from N2O amounted to 9.5 tCO2e.
GRI 2-4, 2-5, 305, 308
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KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES CLIMATE
MATERIAL ISSUES: CLIMATE CHANGE • BRAND POWER • BIODIVERSITY IMPACT
OUR OBSERVATIONS
Our brands Kathmandu, Oboz
and Rip Curl are built on a love for
the outdoors. All our brands are
dedicated to supporting, enhancing
and encouraging activities which get
people into the outdoors, whether
its hiking on a trail, catching a wave
or simply enjoying the open air. We
seek to inspire our customers to
share in our connection with the
outdoors and to respect, protect
and live in recognition of the
interdependent relationships we have
with nature. Demonstrating that we
take responsibility for the climate
impact created by our businesses is
essential to protect the reputation
of each brand and to meet the
expectations of our customers.
The world is already 1.1°C warmer
than it was in the 1800s and the
time we have left to limit warming
to 1.5°C is rapidly running out.1
The Intergovernmental Panel on
Climate Change’s (IPCC’s) final issue
of the of the Sixth Assessment
Report (AR6), published in March
2023, continues to emphasise
the potentially catastrophic
consequences of rising greenhouse
gas emissions, and cites the
damaging impacts of climate change
the world is already experiencing.1
The impacts of climate change
disproportionately affect the world’s
most vulnerable communities,
including those that are essential
to the apparel sector.2 For example,
climate scientists suggest that
climate change likely played a role
in the unprecedented flooding in
Pakistan in 2022 which resulted in
more than 1,500 deaths, displaced
more than 30 million people and
destroyed or damaged around
40% of the nation’s cotton crop.3
The climate impact of the global
fashion industry was an estimated
897 million tonnes of carbon
dioxide equivalent (CO2e) in
2021 — roughly 1.8% of global
GHG emissions.2 As part of this
industry, KMD Brands is focused
on the transition to a low-carbon
world by reducing greenhouse gas
emissions in line with global goals.
OUR ACTIONS
In April 2023 we received our formal
validation from the Science Based
Targets initiative (SBTi), confirming
that our carbon reduction targets
met its stringent and internationally-
recognised criteria. By 2030, KMD
Brands commits to reduce absolute
Scope 1 and 2 emissions - the
emissions that come directly from
our company’s owned or controlled
sources and from our purchased
electricity – by at least 47% from our
FY19 baseline. This is in line with
limiting global warming to 1.5°C.
We also commit to reduce absolute
Scope 3 greenhouse gas emissions
from purchased goods and services,
fuel and energy related activities,
upstream transportation and
distribution, waste generated in
operations, use of sold products, end
of life treatment of sold products,
and investments by a minimum of
28% within the same timeframe.
For our Scope 3 emissions, which
includes all the other indirect
emissions in our supply chain
where we have less control, our
target aligns with keeping global
warming well below 2°C. Our Scope
3 target boundary represents 70%
of our Scope 3 emissions reporting
boundary, aligned with SBTi’s
criteria for Scope 3 targets. This
selection of emissions sources was
included in our Scope 3 target due
to its materiality and our ability to
influence reductions. Emissions
sources excluded from our Scope
3 emissions reduction target, but
still forming part of our reporting
are: capital goods, business travel,
employee commuting, downstream
transportation and distribution
(retail storage) and licensed stores.
To set this target, we calculated
every relevant source of emissions
for our business under the GHG
Protocol Corporate Value Chain
(Scope 3) Accounting and Reporting
Standard. We now have the most
complete picture of our emissions
impact ever and have committed
to reduce these emissions outside
our direct control by at least 28%
by 2030, from our FY19 baseline.
The approval of these targets
is a significant achievement in
itself, requiring input from across
our business and value chain.
They set out our high-level
1. IPCC, 2023: Summary for Policymakers. In: Climate Change 2023: Synthesis Report. Contribution of Working Groups I, II and III to the Sixth Assessment Report of
the Intergovernmental Panel on Climate Change [Core Writing Team, H. Lee and J. Romero (eds.)]. IPCC, Geneva, Switzerland, pp. 1-34, doi: 10.59327/IPCC/
AR6-9789291691647.001
2. Apparel Impact Institute: "Taking Stock of Progress Against the Roadmap to Net Zero", 2 June 2023
3. NPR: "Climate change likely helped cause deadly Pakistan floods, scientists find", 19 September 2022
86
decarbonisation requirements,
but the real challenges lay ahead
of us. Progressing towards these
targets will require collaboration
across the business, but also with
those we do business with as part
of the outdoor apparel industry.
FY23 saw us continue our journey
to understand, track and reduce
our unique carbon impact. We have
continued rolling out energy efficient
LED lighting upgrades across our
store network. All but a handful of
stores have been upgraded, and LED
lighting is now part of the design
brief for all new sites. The solar array
at the Onsmooth wetsuit factory in
Thailand was also energised in April
2023, and early indications show
a 5% displacement in electricity
sourced from the local grid and a
payback period of less than three
years. Despite this progress, one of
our largest solar arrays located at
our Truganina distribution centre
was inoperable for the full financial
year, and at time of reporting is
being replaced under warranty.
Following energy audits across
significant parts of our business,
we are prioritising cost-effective
onsite solar and energy efficiency
projects, with significant
investment planned for FY24.
In FY23, 100% of new Tier 1
suppliers (19) were screened using
environmental criteria, including
site visits and internal qualitative
assessment of indicators such as
investment in green technology,
preferred fibre use, product and
facility certifications. The screening
of 16% of new suppliers included an
assessment of performance using
the Higg Index Facility Environmental
Module (FEM). No critical issues
were identified during environmental
monitoring. This financial year
we extended the coverage of
our environmental monitoring by
supporting more suppliers to report
via the Higg Index FEM, including
the provision of FEM training. We
also gathered additional information
on environmental risks through
third-party assessments including
the Elevate responsible sourcing
assessment tool and SMETA
(Sedex Members Ethical Trade
Auditing) 4-pillar assessments.
While the purchase of carbon offsets
for some unavoidable emissions will
remain a component of our strategy,
we are focused on investing in
reduction policies as the priority.
Our commitment to science-based
climate action is an opportunity to
elevate the distinctiveness of each
of our brands and build rapport with
our customer base through product
design and sustainable innovation.
CHALLENGES AND
OPPORTUNITIES AHEAD
We know what must be done.
Decoupling emissions and economic
growth is no small task, and the
challenges, consequences and
impacts ahead of us are daunting.
Although the path ahead may not
be entirely clear, we are committed
to face into the issues we encounter
openly; sharing our successes,
learnings and challenges along the
way. We can and must continue
to collaborate, share knowledge
and experience with our teams,
customers, other businesses
and our suppliers, to collectively
work to address the systemic
challenges in our industry.
Our commitment to climate action
is important to stakeholders
throughout our business – from
employees to shareholders and,
ultimately, our customers who want
responsibly made products, created
with a focus on positive planetary
impact. Based on feedback gathered
during our most recent materiality
assessment, there is a role for KMD
Brands to provide more education
for our stakeholders on what climate
change means to our business.
To better share this information,
we’re building on our climate
related disclosures each year to
address the impact of climate
change on our business, how we
are investing in climate action, and
how these actions will benefit our
company while meeting growing
consumer interest and demand.
In addition to our near-term reduction
targets, to support our transition to a
low-carbon future, we are developing
a Climate Transition Plan to ensure
our long-term strategy reflects what
will be required to achieve global
goals and decarbonise our business.
We aim to publish our initial Climate
Transition Plan next calendar year.
Increasing ESG regulation reinforces
our strategy to showcase leadership
in ESG, which we believe will set our
brands up for continued success.
Recently announced regulations
that will likely impact our brands
in the future include the revised
Waste Framework Directive which
obliges EU member states to
separately collect textile waste from
2025. The Aotearoa New Zealand
Climate Standards (NZ CS), which
broadens non-financial reporting
by requiring and supporting
the making of climate-related
disclosures, will apply to the Group
from the FY24 reporting year.
GRI 305, 308
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KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES Brands' risk management framework
which includes climate-related issues
and both officers report directly to
the Group CEO. Brand CEOs are
ultimately responsible for driving
activities within the business units
comprising their brands. KMD Brands’
Executive team are responsible for
regular assessment and monitoring
of all risks, including climate-
related risks and opportunities. The
wider management team conduct
regular risk assessments using
the risk management framework
and implement appropriate risk
mitigation strategies and controls.
KMD Brands has undertaken a
Group-wide materiality assessment
and, informed by this assessment,
has developed a KMD Brands ESG
Strategy that covers the entire Group.
As part of implementing this Group-
wide ESG Strategy, governance
over climate change-related issues
is centrally coordinated. The Board
was involved in the development
process which led to the formation
of this Group ESG Strategy and
approved the final focus areas,
metrics and targets which include
the metrics for managing climate-
related risks and opportunities.
Climate related disclosures
PREPARED WITH
REFERENCE TO AOTEAROA
NEW ZEALAND CLIMATE
STANDARDS (NZ CS)
times each year, and is updated
on the management and strategic
risks of climate-related issues on a
periodic basis during meetings.
The Board is supported in this
function by the Audit and Risk
Committee, which meets five times
per year, and assists the Board in
discharging its responsibility for
strategic risk oversight. KMD Brands
has a Risk Management Policy
(available on our investor website at
kmdbrands.com) which is reviewed
and updated regularly and a Risk
Management Framework which
outlines the assessment process
for the identification, classification,
review and control of business risks
and opportunities. The Audit and
Risk Committee reviews risk reports
from management and ensures
risks are managed in accordance
with the Risk Management
policy and Risk Framework.
KMD Brands’ Group Chief Executive
Officer & Managing Director, Michael
Daly, has oversight of climate-related
issues for the Group. The Chief
Legal & ESG officer, in conjunction
with the Chief Financial Officer, are
responsible for overseeing KMD
Following our initial disclosure
in our 2022 Annual Integrated
Report under the Taskforce on
Climate-related Financial Disclosure
framework (TCFD), this year we have
evolved our reporting to refer to
the Aotearoa New Zealand Climate
Standards (NZ CS) as we work
towards disclosing under the regime
for FY24. The following disclosures
summarise our current approach
to the NZ CS recommendations
and are structured around four
areas: Governance, Strategy, Risk
Management, Metrics and Targets.
We will continue to expand on
the depth of our disclosures in
subsequent reporting periods.
GOVERNANCE
Objective: To enable primary
users to understand both the
role an entity’s governance body
plays in overseeing climate-
related risks and climate-related
opportunities, and the role
management plays in assessing
and managing those climate-
related risks and opportunities.
The Board of KMD Brands is
responsible for the overall corporate
governance and oversight of
risk for the Group, including the
company’s response to the risks
and opportunities presented by
climate-related issues. The Board
approves and adopts the appropriate
policies and procedures to enable
directors, management and
employees to fulfil their functions
effectively and responsibly. The
Board meets regularly, at least eight
88
Our Group CEO has ultimate
oversight over our Group ESG
Strategy, with regular reporting to
the Board on strategic performance.
The Chief Legal & ESG Officer is
responsible for implementation of
the strategic plan including climate
reporting, science-based target
setting, supply chain engagement,
and our emissions reduction
strategy with support from the
KMD Brands ESG team, including
our Climate Impact Specialist,
appointed during FY23. Updates
are provided at least twice a year to
the Board on the progress against
key metrics tied to the Group
ESG Strategy, including climate-
related risks and opportunities.
STRATEGY
Objective: To enable primary
users to understand how climate
change is currently impacting
an entity and how it may do so
in the future. This includes the
scenario analysis an entity has
undertaken, the climate-related
risks and opportunities an entity
has identified, the anticipated
impacts and financial impacts
of these, and how an entity will
position itself as the global and
domestic economy transitions
towards a low-emissions,
climate-resilient future.
During FY23, we have collaborated
with other retail industry participants
to develop relevant sector-level
climate-related scenarios with
reference to the requirements of
the Aotearoa New Zealand Climate
Standards and other guidance
that the New Zealand External
Reporting Board (XRB) has issued.
Scenarios are not predictions,
but instead are part of a process
for systematically exploring the
effects of a range of plausible and
challenging future events under
conditions of uncertainty to build
a better understanding of the
potential impacts on our strategy.
As a starting point for our own
process and to enable us to meet
the climate-related disclosure
requirements, the sector group
chose the following three NGFS
scenarios as the basis for the
sector-level scenarios.
Category
Summary
Net Zero 2050 (Orderly
Category)
Delayed Transition
(Disorderly Category)
Current Policies (Hot
House World Category)
An ambitious and
coordinated transition to
a low-emissions, climate-
resilient future. Stringent
climate policies, innovation,
ambitious investment,
and medium-to-high
deployment of carbon
removal solutions limit
global warming to 1.6°C in
2050 and 1.4°C by 2100.
Ambitious action is delayed
to 2030, followed by
sudden and uncoordinated
economic transformation.
Extensive, stringent
and punitive but late
government intervention,
in combination with some
deployment of carbon
removal solutions limit
global warming to 1.7°C in
2050 and 1.6°C by 2100.
Current emissions
reduction policies are
implemented. Current
socio-economic trends
continue, resulting in 2°C
global warming by 2050
and more than 3°C by 2100.
Severity of physical
impacts
Lowest
Low to moderate
Highest
Severity of transition-
related impacts
Moderate (greatest
in short term)
Highest (greatest
in medium term)
Lowest (steadily increasing,
but also giving businesses
more time to adapt)
Financial impact of
supply chain disruptions
Lowest
Low to moderate
Highest
Policy reaction to
climate change
Immediate and smooth
Delayed
Current policies only
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ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESKMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS We formed a retail sector narrative
for each scenario identifying the
critical interactions and key outcomes
and indicators. We considered
three different time horizons for
each scenario: short (2023-2030),
medium (2031-2040) and long (2041-
2050) and explored the political,
environmental, societal, technological,
legal and economic impacts
across each potential pathway.
During FY24, we will take these
base assumptions and learnings
and update them to reflect the
specifics of the KMD Brands
business. This will include expanding
the sector scenarios to cover the
global footprint of our operations
with more focus on our specific
business model (encompassing
both retail and wholesale channels)
and by making additional or
differentiated assumptions where
needed. These Group-specific
scenarios will then be used to
complete our individual scenario
analysis and model how climate
change may impact the Group.
We have identified a number
of climate-related risks and
opportunities through our existing
risk management processes, as
previously reported in our Carbon
Disclosure Project (CDP) disclosures,
and our materiality assessment. We
have assessed these risks to have
the potential to materially impact
our business, including on our
operations, strategy, and financial
planning if they are not managed
appropriately. The climate-related
opportunities, when taken, have the
potential to improve our financial
performance, and also reduce our
impact on the planet. We understand
there is a lot of uncertainty around
the timing and severity of these
risks and opportunities depending
on how the future unfolds. We will
leverage the scenario analysis
work to build a transition plan that
will support the adaptation of our
business strategy for the resilient
business model required as the world
transitions to a low-carbon future.
DESCRIPTION
IMPACT OF RISK/OPPORTUNITY
POTENTIAL IMPACT
Transition
Consumer preference
Investor sentiment
Reduction in sales due to loss
of customer preference
Impairment of the carrying value
of intangible assets (goodwill,
brand and customer relationships)
Reduction in investor
confidence and potential
reduction in share price
KMD Brands' sustainability values include a
commitment to minimise our environmental
footprint. Consumers expect us to address our
environmental impact, including GHG emissions.
Failure to uphold this reputation for responsible
environmental management may damage the
company’s reputation and lead to a loss of
consumer confidence. This risk is especially
relevant to our business given our brands'
connection to the natural environment as a
supplier of outdoor apparel and equipment, and
our customers’ generally high level of awareness
of environmental sustainability issues.
Our commitment to Lead in ESG is embedded
in our corporate strategy and is part of what our
investors expect us to deliver. Many investors
consider sustainable business processes in
determining whether to invest in KMD Brands.
Those investors expect us to address and
take responsibility for our environmental
impacts, including GHG emissions. Failure
to uphold this reputation for responsible
environmental management may damage our
reputation with the investor community.
DESCRIPTION
IMPACT OF RISK/OPPORTUNITY
POTENTIAL IMPACT
Transition
Emerging regulation
Litigation/claims
Carbon pricing
Access to renewable
energy
Physical
Rising temperatures
To achieve the Paris Agreement, governments will
need to set more ambitious Nationally Determined
Contribution targets. This may introduce
domestic and international policies (e.g. carbon
taxes, product stewardship legislation) which will
impact our operations. Regulation for reporting
and disclosure of climate related impacts also
brings a compliance cost and risk if we do not
keep pace with the reporting requirements.
Government plans to reach net zero emissions
could also impact our electricity suppliers, and
the potential for cost-pass through is an area of
uncertainty which creates risk for our business.
Climate change legislation is increasing globally and
as a global business we need to keep pace with the
legislation that we are required to comply with in
our business operations, or we could be exposed
to punitive punishments. Public activists have used
the courts to bring claims against businesses that
are not taking effective action on climate change.
The cost to offset carbon emissions is increasing
with greater demand for carbon credits as
the number of businesses committing to net
zero targets grows. While the purchase of
carbon offsets for our unavoidable emissions
remains a component of our strategy where
it makes sense, we are focused on investing
in reduction policies as the priority.
Price and availability of renewable energy as a
commodity, and renewable energy technology
infrastructure as a capital investment, could
become a challenge as more businesses
want to access these energy sources as part
of commitments to emissions reduction.
Increased indirect (operating)
costs and impact on margin
Cost of corporate compliance and
increasing complexity requiring
allocation of time and resources
Cost of potential fine,
sanction or claim
Damage to brand reputation
Increase in cost of Directors &
Officers Liability insurance
Impact on cost to meet or maintain
carbon reduce certifications
Higher supply chain costs as
businesses increase prices to
reflect a higher carbon price
Increased capital and
operational expenditure
Increases in heatwaves may lead to increased
energy consumption through operation of
air conditioning across our premises during
peak electricity demand periods. This could
increase KMD Brands' operational costs and
emissions. Higher temperatures could reduce
seasonal need for insulation products.
Increased capital and
operational expenditure
Impact on market demand
for insulation product
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DESCRIPTION
IMPACT OF RISK/OPPORTUNITY
POTENTIAL IMPACT
Physical
Changing rainfall
patterns / flooding
Sea level rise
Unpredictable and extreme rainfall
Increases flood risk and severity, risk of
damage to KMD Brands' owned and operated
office, store and warehouse network.
Sea level rise may impact access to shipping
lines, coastal areas for access for water-based
recreation activities. This may require KMD
Brands to reconsider the location of stores
and whether to execute rights of renewals
available in our lease agreements.
Resource scarcity
Wildfires
Scarcity of resources could lead to declining
access to raw materials needed to manufacture
goods at affordable prices as habitat loss
and soil degradation reduces yield.
Increase in incidence of uncontrollable wildfires
raises risk of damage to owned and operated
office, store and warehouse network.
Climate-linked
migration
Migration, either within country, or internationally,
driven by physical Impacts of climate change, such
as sea level rise, severe flooding or wildfire, could
impact employee availability/mobility, population
growth corridors and ultimately store locations.
Damage to capital assets,
investment needed in natural
hazard defences or asset relocation
Increased cost to obtain
adequate insurance cover
Impact on supply chains
Increased operational costs
Supply chain disruptions
resulting in longer lead times,
increased inventory and potential
waste for excess inventory
Impact on market demand
for water-related products
Increased exposure to impairment
losses on right of use assets
Higher cost to produce goods
Disruption to manufacturing
processes and longer/
uncertain lead times
Impact on capital assets -
increased investment needed
in natural hazard defences
or asset relocation
Loss of jobs for our employees
and damage to communities
where we operate
Increased insurance costs
Loss of sales due to reduced
workforce availability or sub-
optimal store network locations
Opportunity
Investor, customer and
employee attitudes
and expectations
92
Meeting growing investor and customer
expectations to demonstrate leadership in
climate action could drive long term growth for
KMD Brands and an improve market value.
Increase share price performance
Growth in customer base
Attraction and retention
of key employee talent
Political factors –
emerging policy
In Australia, Product Stewardship Regulation
poses a significant opportunity for our
brands to demonstrate we are taking
steps to reduce our negative impact and
embrace more circular business models.
Increased brand awareness
and consumer loyalty
DESCRIPTION
IMPACT OF RISK/OPPORTUNITY
POTENTIAL IMPACT
Opportunity
Financing
Technology – emerging
business models
New product
development
Better access to, and more competitive cost
of debt capital, through financing linked to
achievement of sustainability goals positions KMD
Brands to benefit from reduced interest rates.
Lower cost of debt through
sustainability linked loans
Climate change is a disruptive catalyst driving
the development of new technologies that
can enhance the energy efficiency of our
direct operations, improve the resilience of
our supply chain and maximise customer
engagement through responsible sourcing
of materials, sustainable innovation in our
product range, and circular business models.
KMD Brands can develop new products and
business models in response to changing
climate conditions, presenting opportunities
to secure competitive advantage.
Savings in operational costs
Increased brand awareness
and consumer loyalty
New revenue streams
Increase in profitability and value
of the KMD Brands Group
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RISK MANAGEMENT
Objective: To enable primary
users to understand how an
entity’s climate-related risks are
identified, assessed, and managed
and how those processes are
integrated into existing risk
management processes.
KMD Brands maintains a Group Risk
register covering all three brands.
Assigned risk owners are required
to regularly assess, at least twice
per year, the potential impact of
each identified business risk and the
likelihood of occurrence, in line with
accepted risk tolerances and the
organisation risk appetite statements.
This process involves an assessment
of the inherent risk, considers the
controls currently in place, the
residual risk after application of
those controls, and establishes
targets to reduce the severity of
risks further to a lower level. Risks
are classified by strategic themes to
assign responsibility for key actions
to specific functional managers
of the business. Risk reporting is
prepared for the Board six-monthly
detailing any risks which are outside
the acceptable tolerance levels, or
where treatment options require
Executive and/or Board approval and
the details of any escalating risks,
and emerging risk issues considered
during the reporting period.
Risk management encompasses all
areas of the company's activities.
Once a business risk is identified,
the risk management processes
and systems implemented by the
company are aimed at providing
the necessary framework to enable
the business risk to be managed.
In the application of the controls
94
processes, opportunities for the
business are often also identified
through pro-active risk management.
Climate change affects various
aspects of our business and as such
identification of climate change-
related risks and opportunities is
fully integrated into our Group risk
management approach. Kathmandu,
Rip Curl and Oboz maintain several
risk themes within the Group risk
register relating to product safety,
service quality, supply chain and
technology that directly influence
our approach to supply chain
operation, retail store management
and product development, all of
which impact the climate change-
related impacts to our businesses.
The physical and transitional risks
of climate change, as well as the
identification of opportunities, are
assessed at an asset level including
our physical resources and products,
which informs not only our asset
management strategy, but also
our broader business strategy.
METRICS AND TARGETS
Objective: To enable primary
users to understand how an
entity measures and manages
its climate-related risks and
opportunities. Metrics and targets
also provide a basis upon which
primary users can compare
entities within a sector or industry.
As we carry out climate scenario
analysis we will gain a deeper
understanding of the risks and
opportunities for our business. This
understanding will drive further
consideration of the metrics we will
use to both measure and monitor
climate-related risks across our
businesses. We have recently
received validation of our carbon
reduction targets from Science
Based Targets initiative (SBTi). Our
climate emissions targets are:
Reduced absolute Scope
1 and 2 emissions by a
minimum of 47% by
2030, from a FY19 base
year (4.2% per annum
emissions reduction)
Reduced absolute Scope
3 emissions by a
minimum of 28% by 2030
from a FY19 base year
(2.5% reduction per
annum)*
*Our Scope 3 target includes the following
GHG Protocol categories: purchased goods
and services, fuel and energy related
activities, upstream transportation and
distribution, waste generated in operations,
use of sold products, end of life treatment
of sold products, and investments.
Our progress on these targets will be
closely monitored and we will report
on our successes and challenges
along our carbon reduction journey.
Our FY23 gross direct Scope 1
and 2, and gross indirect Scope 3
emissions are reported on page 85.
This year, for the first time, we are
reporting all relevant sources of
carbon emissions across the Group.
This expanded reporting boundary
includes all relevant emissions
sources categorised by the GHG
Protocol Corporate Standards and
supports tracking progress against
our science-based target. We use an
operational consolidation approach,
OUR JOURNEY TO 2030
2017
Started measuring
our impact
2022
B CDP Score
-29%
scope 1 and 2
reduction to date
since 20191
2030
Achieve reduction
target
2019
baseline
1. Based off location-based method reporting.
and our Group emissions inventory is
audited annually by Toitū Envirocare
and is aligned with the Greenhouse
Gas Protocol’s standards for
Corporate and Corporate Value Chain
(Scope 3) Accounting and Reporting.
The large increase in Scope 1
emissions this year is due to a return
to normal trading conditions off the
back of unsustainable reductions
from COVID-19 related store closures.
2023
Approved
science-based
Target
2023-2030
Reduce emissions
to limit warming to
well below 2°C
We have also improved our processes
for capturing and reporting on our
emissions data across all Scopes,
contributing to an overall increase in
reported emissions. These increases
were moderated by continued
LED lighting upgrades across our
store network group as well as the
activation of the solar array at our
wetsuit factory, Onsmooth Thailand,
contributing to an overall reduction
in Scope 2 location-based emissions.
Our Scope 3 emissions have
reduced overall since setting our
2019 baseline, however, our most
significant source of Scope 3, our
Purchased Goods & Services, has
increased 13%. Until we can uncouple
the growth of our business and
emissions, a challenge faced by many
companies and economies globally,
we can expect these emissions to
continue to increase overall in the
short term. This won’t deter us; we
have seen reductions since FY19
in our freight emissions due to
packing efficiencies and preferencing
sea-freight over air-freight. To
continue to drive reductions we
have identified hotspots and areas
for focus within Scope 3 and set
short-term reduction goals:
Category 3: Transmission
and distribution losses
Category 4: Upstream freight
Category 5: Waste
generated in operations.
Equally, we have identified focus
areas to improve our access
to Scope 3 data for significant
emissions sources, such as our
Category 1: Purchased Goods &
Services. We’re collecting data from
factories via the Higg Index Facility
Environmental Module, but until we
can integrate this data there are
likely emissions reduction activities,
such as our work on responsible
materials, that are not yet reflected
in our emissions reporting.
As we collect more representative
and primary data for our Scope 3
emissions, we will update calculation
methodologies, reporting boundaries
and baselines as required. Where
we do update our methods,
we will update our baseline to
ensure accurate comparison and
tracking of progress over time.
GRI 2-5, 305
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KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES CIRCULARITY
CIRCULAR
BUSINESS
MODELS
GOALS AND PERFORMANCE
RIP CURL RECYCLE YOUR WETSUIT
24,436
Kilograms diverted from landfill
since program launch
Locations involved
in program
75
stores across 5 countries
96
* based off average 1.2kgs per wetsuit.
FY23 REPAIR STATS
10,314
Rip Curl global wetsuit repairs
30,096
Rip Curl global watch repairs
1,627
Kathmandu Australia customer repairs
546
Kathmandu NZ customer repairs
GOALS
Commercialised brand-led circular
business models for product take
back, renewal, repair, re-commerce
or recycling.
20,363
Number of wetsuits
recycled to date*
6,507
Australia
5,544
USA
8,857
France, Spain and Portugal
* based off average 1.2 kilograms per wetsuit
KATHMAN-REDU STATS
5
Months in market for FY23 (March-July 2023)
2
Stores selling Kathman-REDU
2,931
Units renewed to date
47
Units deemed as unrepairable
91 hours
Number of quality control hours
1,480
Units sold
NZD $113k
Sales
Engagement:
320
customers donated their old gear and received an
AUD$10 REDU voucher
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MATERIAL ISS UES: CLIMATE CHANGE • BRAND POWER • BIODIVERSITY IMPACT
OUR OBSERVATIONS
Global growth of sales in clothing
and textiles has been driven by
factors such as fast fashion, the
introduction of online shopping,
changing consumer preferences
and, often, lower prices. But at
the same time as this growth has
occurred, there has been a steady
decline in clothing utilisation. This
means we aren’t holding on to and
using our clothes for as long as
we once did. While our brands are
not fast fashion – we build durable,
technical products over longer lead
times – we are part of an industry
that is structured around driving
consumer appetite to purchase
goods. The overconsumption and
rapid turnover of clothing increases
waste, depletes resources that
ultimately end up in landfill, and
generates carbon emissions. This
linear take-make-waste approach is
detrimental to the environment and
contributes to the fashion industry's
negative ecological footprint.
As awareness of the apparel and
footwear industry's environmental
impact grows, consumers are
becoming more mindful of their
purchasing choices. Many individuals
are now considering factors like
sustainability, ethical production
and durability when buying clothing
and prioritising quality over
quantity. This shift in consumer
behaviour is driving demand
for more responsibly produced
and longer-lasting garments.
Our responsibility lies not only
in minimising our waste as a
business, but by creating new
ways of moving toward circularity
98
in how we operate our business
and, ultimately, the products we
make and sell – from clothing and
footwear design right through the
chain to end-of-life solutions for our
products. Circularity is about keeping
resources in use for as long as
possible and this starts with making
quality, durable and innovative
products that last. Circularity
requires collaboration among
various stakeholders, including
designers, manufacturers, wholesale
customers, retailers, industry,
regulators and our consumers.
We are focused on embedding
circular thinking across our
businesses and we are committed
to fostering and investing in
innovation for circular business
systems throughout our value chain.
We actively seek opportunities
wherever possible to eliminate the
linear take-make-waste approach to
business and extend the lifespan of
resources for as long as possible.
Our goal is to increase our
commercialised brand-led circular
business model offering to our
customers. This means we are
actively pursuing innovation and
exploring opportunities within
circularity. Kathmandu and Rip
Curl have offered repair services
for more than two decades, with
textile and wetsuit take-back
recycling programs launched more
recently. Testing, exploration and
commercialisation of programs will
remain part of our ongoing strategy
as emerging technology advances
and as consumer appetites increase.
We will continue to review our
circular business models and feed
our learnings into a continual loop.
OUR ACTIONS
During FY23, we have invested
significant time into establishing
circular models within our business.
We have expanded our Australian
wetsuit recycling program in
partnership with TerraCycle to
include the United States, France,
Spain and Portugal. The program
allows anyone to go into a Rip
Curl store and hand in a wetsuit
of any brand to be recycled. The
uptake of this program – more
than 20,000 wetsuits have been
handed in for recycling since it
began – demonstrates to us that
customers buying our wetsuits want
to make a responsible choice when
a wetsuit reaches its end of life.
However, we acknowledge that
recycling is the last step in a circular
model and in FY23 we continued
to invest in repair services for our
customers. Rip Curl has offered
repairs for wetsuits and watches
for more than 35 years. Customers
can go into any brand-owned store
around the world and have their
wetsuit or watch repaired. We also
have a Rip Curl owned and operated
wetsuit and watch service centres
in Torquay, California, Hossegor
and Bali. This year, we repaired
30,096 watches and prolonged
the use of 10,314 of our customers’
favourite wetsuits. Kathmandu ANZ
also offers repairs via an external
partner and this year repaired 1,627
items in Australia and another 546
in New Zealand. Over the years our
repair services have challenged us
commercially, however we know it is
the right thing to do to support the
expected lifespan of our products.
Beyond these programs, FY23
saw our brands begin looking at
opportunities – beyond our existing
repair services – for refurbishment
and resale that would keep our
products in use for longer.
A significant project that
demonstrated this commitment in
FY23 was the launch of Kathman-
REDU, an apparel refurbishment and
repair program in Victoria, Australia.
This experimental initiative, which
was backed by an innovation grant
from Sustainability Victoria, arose
from a circular mapping project which
analysed our current systems to
identify our textile waste streams and
potential solutions. This pilot program
has allowed us to test our customers’
appetite for purchasing renewed
products and will further help us grow
our repair capabilities and systems.
In June 2023, Rip Curl became a
founding member of ‘Seamless’
alongside David Jones, Lorna Jane,
R.M. Williams, BIG W and THE
ICONIC. Seamless is the National
Clothing Product Stewardship
Scheme, led by the Australian
Fashion Council, with funding from
the Australian Government. The
scheme aims to make Australian
fashion and clothing truly circular,
and to drive the industry towards
a common solution. Each founding
member committed AUD$100,000
to fund a 12-month transition
phase to establish the scheme. By
becoming a founding member, Rip
Curl aims to set a benchmark that
other like-minded brands can follow.
CHALLENGES AND
OPPORTUNITIES AHEAD
As we embed circular thinking
across our businesses and invest
in innovation for circular business
systems throughout our value chain,
we find significant opportunities to
demonstrate leadership within our
industry and beyond. Through our
investment in resources – both time
and financial – we’ve shown that
we are committed to these goals.
As we move into FY24, we will
commence a circularity model
discovery project for Oboz, to
consider what a circular business
model could look like in footwear.
Through this project we will
explore priorities and purpose of
the model, as well as expectations
for its performance. We will also
look to expand repair capabilities
for Oboz customers in FY24.
In the medium term, there are
opportunities for us to look at ways to
expand our care and repair programs,
broadening the services we currently
offer, and looking for other innovative
ways we can help customers to keep
their products in use for as long as
possible. Another area of potential
opportunity in the longer term,
depending on customer demand and
scalability, is expanding our rental
models for key product categories.
Establishing circular business models
that deliver a commercial return is
a significant challenge. The cost to
run repair and recycling programs at
scale alongside other cost pressures
is even more challenging, as is a lack
of infrastructure in Australia and New
Zealand where a substantial part
of our operations are located. Our
focus is to commercialise our current
initiatives as revenue drivers rather
than cost centres for our business.
If we do not adopt circular practices
within our business models, the
negative impacts on resources,
the environment and people could
become a significant risk to the future
profitability of our industry and our
business. We also need to keep pace
with the offerings of our competitors,
or we risk being left behind.
Implementing circular practices
on a large scale requires changes
across our entire value chain.
We must consider design and
material selection for efficient use
of resources and ease of repair,
production processes to fully utilise
resources, infrastructure and systems
to support the modes of sale,
consumer appetite and education,
and more. This is a multi-faceted
challenge and one that needs to
be addressed at an industry-wide
level with a collaborative approach
to achieve meaningful change.
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ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESKMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS CIRCULARITY � CIRCULAR BUSINESS MODELS
Closing loops by thinking in circles
CASE
STUDY
A new lease on life
CASE
STUDY
Kathmandu’s garments are
built for a lifetime of adventure,
and we know a bit of wear and
tear shouldn’t mean the end
of a perfectly good product.
But even the smallest issue
with a garment – a broken zip,
missing button or tiny hole –
can mean it ends up in landfill.
We are building a circular business,
which means keeping clothing in
circulation for as long as possible. To
do this, we create quality products
that are made to last. We repurpose
excess stock through clearance,
charity donations and staff sales. But
we are always looking for new ways
to give our garments a second life.
In March 2023 we launched a new
circularity pilot program called
Kathman-REDU. Backed by a grant
from Sustainability Victoria, and with
the help of circularity specialists
Aleasha McCallion and Kirri-Mae
Sampson, we are tackling a global
challenge one stitch at a time.
Used and unwanted garments are
collected and sent to the skilful
artisans at the Remote Repairs
workshop. Meticulously cleaned,
repaired, restored and relabelled
Kathman-REDU, garments are
then ready for a new lease of life.
After launching the pilot at our
Richmond store in Melbourne,
Victoria, we expanded to our
Melbourne Galleria store in
the city and started a social
media and public relations
campaign to spread the word.
In tandem, we established a
partnership with Upparel at 24
Kathmandu stores in Victoria,
Australia, and 11 in New Zealand.
Customers can drop their used,
unwanted or faulty Kathmandu
gear in designated Upparel
bins to be reused, recycled or
repurposed. Some of these items
are donated to Upparel’s community
and charity partners, some are
recycled, and others returned to
retail as a part of Kathman-REDU.
A massive two tonnes of textiles
have been diverted from landfill
since the program’s launch.
What’s next? Our analysis of the
pilot project's outcomes will guide
future planning to ensure the lasting
success of Kathman-REDU.
Thinking in circles – rather
than in linear take-make-waste
models – often starts small. And
that’s what we’ve done with our
approach to wetsuit recycling.
We launched an innovative
wetsuit recycling scheme in
2018 in Torquay, Victoria, then
expanded across Australia in
2021 through a partnership with
TerraCycle. In FY23 we expanded
our efforts internationally
across five countries.
Most wetsuits are made from
neoprene – a strong and stretchy
material that is resistant to
abrasion and wear. But neoprene’s
superpower in the water can
be a challenge on dry land.
Rip Curl’s wetsuits are made to last.
But when their best surfing days are
behind them, most wetsuits find their
way to thrift stores and opportunity
shops, are piled up in cupboards
or shoved in the back of sheds.
Eventually they are tossed in the
general waste bin and sent to landfill.
Rip Curl’s repair centre is keeping
as many wetsuits in circulation
for as long as possible.
And our world-first wetsuit take-
back program has found a second
useful life for wetsuits – with more
than 20,000 transformed into soft fall
matting at children’s playgrounds.
After launching ‘Recycle Your Wetsuit’
with US-based TerraCycle in 2021, Rip
Curl expanded the program in FY23.
We now have 75 stores involved in
five countries – Australia, the United
States, France, Spain and Portugal –
and accept every brand of wetsuit.
Customers can drop off their dry
wetsuits to a Rip Curl store or mail
them back to us. TerraCycle then
removes the zips, elastic and metal
tags before the neoprene is sent
to a processor for crumbling and
repurposing into soft-fall matting.
The 20,363 wetsuits we’ve recycled
so far including 6,507 in Australia,
5,544 in the US, and 8,857 in France,
Spain and Portugal. Taken together,
we’ve diverted more than 24,436
kilograms of neoprene from landfill
since the program launched. By
repurposing wetsuits, we’re moving
closer to a circular economy and
creating playgrounds of possibility.
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ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESKMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS MATERIAL CHANGE INDEX
Cotton
Polyester
Polyamide
(Companies that are
pioneering industry
transformation)
MCI tracks the industry’s progress
towards better materials sourcing
and alignment with global efforts
like the United Nations’ Sustainable
Development Goals and the
transition to a circular economy.
Manmade cellulosics
Wool
Down
GOAL
Dedicated to our own brand products
being responsibly sourced.
100%
Sustainable Cotton
WATER RESTORATION
We source a mix of organic and cotton
sourced through the Better Cotton programme
to make up our sustainable cotton mix
RESPONSIBLE
MATERIALS
GOALS AND PERFORMANCE
100%
Responsible Down Standard (RDS)
1.4m litres
FY23 PolyPro process water saving
The Responsible Down Standard (RDS) aims
to ensure that down and feathers come from
animals that have not been subjected to any
unnecessary harm
Water saving from solution dyed fabrics used in our
KMDcore Polypro Thermal range
SUSTAINABLE WOOL
ALL POLYESTER RECYCLED
PRIORITISE BIOCHEMISTRY
The Responsible Wool Standard (RWS) ensures that
wool comes from farms that have a progressive
approach to managing their land, practice holistic
respect for animal welfare of the sheep, and respect
the Five Freedoms of animal welfare
GOAL
100%
Responsible Wool Standard (RWS) by 2025
We continue to work with our suppliers to trace the
origin of wool sources that go into our products as
we progress towards our goal of 100% RWS
certified product.
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GOAL
All polyester recycled or recyclable by 2030
FY23 PERFORMANCE
58%
% of overall kgs of polyester used in our
apparel fabrics, fills and yarns
GOAL
Prioritise biochemistry over petrochemistry in
innovation and performance development
FY23 PERFORMANCE
Unlike conventional odour control treatments
that use heavy metals and synthetic chemicals,
we have used natural peppermint oil to control
odour-causing bacteria in our SS23 new SUN-
Scout and WELL-DER-NESS collections
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OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES SUSTAINABLE COTTON
GOAL
100%
responsibly sourced cotton by 2026
We source a mix of organic, regenerated and cotton
sourced through the Better Cotton programme to
make up our responsibly sourced cotton mix
FY23 PERFORMANCE
58%
18% increase this year
FY22: 40%
WETSUITS
GOAL
75%
of our wetsuit range using
responsibly sourced
materials by 2030
FY23 PERFORMANCE
16%
of our produced quantities
are using responsibly
sourced materials
PREFERRED FIBRE MATERIALS IN APPAREL
AND ACCESSORIES
WATER RESTORATION
GOAL
100%
apparel and accessories in preferred fibre materials
by 2030
Our priority is to use materials including:
Recycled Synthetic: Top Green®, Econyl®, Repreve®
Sustainable cotton: Organic, Better Cotton™,
Regenerated
Sustainable man-made fibres: Lenzing™, EcoVero®
58,102,099
litres of water cleaned and restored to the
environment through Bloom™ material partnership
for footwear and accessories products
25,800
kilograms of Bloom materials were purchased
in FY23. Rip Curl is now Bloom’s second largest
partner globally
FY23 PERFORMANCE
54%
of our produced quantities are using preferred
fibre materials
24% increase this year
FY22: 30%
841%
increase this year
6,170,532
Litres in FY22
We are also using carbon
black, which is made from
100% tyre waste. While
this doesn't contribute
to our 'responsibility
sourced percentage', we
are always looking for
new ways to innovate.
100% of cord lock trims are
made from recycled materials
and we are transitioning to
100% recycled thread.
All yardages are digitally
printed and 100% of
our black wetsuits are
dope dyed resulting
in less water used in
the dyeing process.
Our commitment is
to transition to more
responsibly sourced
bio-based neoprene
alternatives
To date we have prioritised
water-based lamination
techniques and jerseys made
with recycled nylon
and polyester.
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105
PFAS/PFC-FREE
GOAL
100%
PFAS/PFC-free non-wicking treatments and
waterproof membranes by 2025
PFAS/PFC are man-made chemicals that are harmful
to human health and the environment, known as
forever chemicals, that never breakdown
FY23 PERFORMANCE
100%
We have achieved this goal through a new
PFAS-free waterproof membrane system
that is now used across all styles
ACHIEVED TWO YEARS
AHEAD OF TARGET
GOAL
Minimum
20%
Environmentally Preferred Materials by weight
as certified by global responsible sourcing
organizations and certifications by 2030
Continual focus on product design, innovation and
production methods to support this goal to have a
lesser or reduced effect on human health and the
environment when compared with other materials
that serve the same purpose
FY23 PERFORMANCE
WHAKATA COLLECTION
• 20-40% bio-based EVA midsoles/upper
• 25% recycled rubber outsole
BOZEMAN LIFESTYLE COLLECTION
• 20% bio-based Bloom foam insole
• 50-100% recycled content in lining materials
• 100% rPET insulated membrane
LEATHER WORKING GROUP
Leather Working Group (LWG) is a global multi-
stakeholder community committed to building a
sustainable future with responsible leather. LWG is a
not-for-profit that drives best practices and positive
social and environmental change for responsible
leather production
GOAL
100%
Leather Working Group gold-rated certified
leather uppers by 2023
FY23 PERFORMANCE
100% ACHIEVED
Finished leathers in all our footwear sourced from
gold-rated Leather Working Group certified tanneries
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OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES CIRCULARITY � RESPONSIBLE MATERIALS
MATERIAL ISSUES: CLIMATE CHANGE • BRAND POWER • BIODIVERSITY IMPACT
OUR OBSERVATIONS
A love of the natural world is intrinsic
to our brands, and a key competitive
strength is our commitment to
reduce the negative impact of our
operations, including the footprint of
our products, on the environment.
This commitment helps us to meet
the expectations of our customers
and challenges our team to
innovate to reduce our impacts.
The apparel and footwear industries
are resource-intensive, using vast
amounts of water, energy and raw
materials like cotton, polyester and
leather. Water is especially critical,
as cotton cultivation requires
substantial irrigation, and water
pollution can be generated from
dyeing and finishing processes,
contributing to water scarcity.
Each of our brands has set
challenging goals to increase the
responsibly sourced content in
our products. To us, ‘responsibly
sourced’ means that our products
are made, to a significant degree,
with environmentally preferred,
low climate impact materials. Our
goal is to source materials that are
regenerative, recycled or recyclable,
bio-based, biodegradable, responsibly
farmed or grown. This goal will be
progressed at a different pace, and in
different ways, for each of our brands,
but collectively we are focused
on responsibly sourced materials
for all our own-brand products.
OUR ACTIONS
During FY23, each of our brands
has made good progress on
our ambitious goals to increase
responsibly sourced content in our
own-brand products. Each step
forward requires testing a range of
potential materials, many of which
don’t make it into production. This
is because performance is our first
priority, particularly for products
that must stand up to the elements,
and any new material must meet
our requirements for durability and
longevity. This is the first crucial step
in circular design. We maintain a laser
focus on new and innovative material
options, testing and refining our
ideas to find the next opportunity to
increase responsibly sourced content.
Oboz and Rip Curl have joined
Kathmandu as Textile Exchange
members during the reporting
period. The Textile Exchange is a
global non-profit helping to align
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the fashion and textile industry’s
approach to responsibly sourced
materials through education and
standards. This membership confirms
our commitment to collaborative
leadership and provides our team
with access to leading industry
knowledge libraries and data on
preferred fibres and materials.
Regenerated cotton from recycled
factory floor waste is starting to
enter Rip Curl’s product range and
represents 2% of Rip Curl’s 58%
responsibly sourced cotton. We
have plans to increase this further.
Opportunities for responsibly sourced
content does not stop at apparel,
with the launch of Rip Curl’s Eco-
Wax – a non-toxic, biodegradable
surf wax that is made with natural
ingredients – earlier this year in
partnership with Surf Organic. All Surf
Organic surf wax profits are being
donated to the Surf Rider Foundation
in Australia, Europe and the USA,
demonstrating our commitment
to community partnerships in the
regions in which we operate.
Oboz has met its goal of 100% PFAS/
PFC-free non-wicking treatments in
waterproof membranes two years
earlier than planned. We are now
looking to develop products that
conform to the wider Zero Discharge
of Hazardous Chemicals (ZDHC)
Manufacturing Restricted Substance
list which restricts chemical usage
at the manufacturing stage. Our
approach to ‘designing out toxicity’
shows true leadership and supports
Oboz’ goal to increase responsibly
sourced content in the challenging
category of footwear manufacturing.
Kathmandu has evolved its iconic
Heli down jacket to lessen its impact
on the environment. The new ‘Heli
R’ is made from 100% recycled
polyester in the shell and lining and
100% RDS certified down. We are
also exploring the next generation of
potential recycled materials, looking
beyond recycled plastic bottles.
Across all of our brands, we are
working with our suppliers to
support use of the Higg Index
Facility Environmental Module (FEM),
which assesses the environmental
impact of product manufacturing at
facilities. The Higg Index assesses
everything from water intensity
and use to waste management,
and from chemical use to energy
and emissions. By encouraging our
suppliers to use FEM and to share
the results with us, we are gaining
greater visibility of the environmental
impacts from the manufacture of our
products. We intend to evolve and
expand our strategy in future years
to incorporate specific biodiversity
goals as we build the systems to
reliably track data in these areas.
CHALLENGES AND
OPPORTUNITIES AHEAD
Our focus on responsibly sourced
materials, underpinned by our
commitment to design products for
purpose and driven by innovation,
is a key competitive differentiator.
We are proud of our brands’
market leading innovations and
we are committed to the continual
search for new ways to achieve a
positive impact on the planet.
Long term, we are looking into
advanced recycling technologies
that will get us closer to a circular
manufacturing process. We are
also exploring several different
bio-based and next-generation
material solutions that will help
us decouple our synthetic
materials from petrochemicals.
In FY24, all our brands will report
through the Textile Exchange’s
Material Change Index (MCI),
the world’s largest peer-to-peer
comparison initiative in the textile
industry. This platform allows us to
track our progress towards more
sustainable material sourcing using
the same standardised approach.
GRI 301
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ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESKMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS CIRCULARITY � RESPONSIBLE MATERIALS
One goal, one standard
CASE
STUDY
CASE
STUDY
Advancing action on
responsible materials
In 2021, Oboz set a series of
responsible material goals. We’re
proud to say that not only are
we tracking well overall, but we
also hit one of these targets
two years ahead of schedule.
Our most challenging goal was to
eliminate PFAs from our products.
PFAs, or per- and polyfluoroalkyl
substances, are a group of human-
made chemicals that repel oil,
water and stains. PFAs are often
applied in durable water repellent
(DWR) coatings and used on
outdoor clothing and footwear
to make them water-resistant.
PFAs provide long-lasting water
repellency that can be a lifesaver
in the elements. However, PFAs
have been labelled “forever
chemicals” because they don’t
break down easily, raising concerns
about environmental impacts.
On 1 August 2022, Oboz introduced
a new chemical policy to our Tier 1
and Tier 2 suppliers. A cornerstone
of this policy is the elimination
of PFAs from all DWR finishes.
For instance, we’ve switched
to a new PFAs-free waterproof
membrane system across all styles.
This is a cost-effective solution
that is better for the environment.
We are proud that our suppliers have
stepped up. In FY23, we undertook
third party whole shoe lab tests with
Intertek, an independent third-party
lab, which confirmed our products
are compliant with Oboz’ PFAs-
free policy. We randomly tested
four shoe styles in FY23 and no
traces of PFAs were detected; our
plan is to commit more resources
to spot checking in FY24.
We’ve also achieved other goals,
like the commitment to 100%
Leather Working Group Gold-
certified leather uppers by 2023,
ahead of schedule. With Oboz’ first
responsible material goals met, we
are now looking to eliminate other
classes of chemicals by 2025.
Kathmandu is working with global
non-profit Textile Exchange to
revolutionise the international
standard system that certifies
the sustainability of raw materials
used in our products. In FY23,
Rip Curl and Oboz also become
members of Textile Exchange.
Textile Exchange believes in materials
sourcing that respects our planet, its
ecosystems and its communities. And
so do we, which is why Kathmandu
is proud of our acknowledgement
from Textile Exchange as a
Level 4 ‘leading’ company that is
pioneering industry transformation.
In recognition of this pioneering
approach, Textile Exchange
selected Kathmandu alongside
just five of our peers to participate
in an International Working Group
that is informing the development
of a unified global standard for
preferred fibres and raw materials.
With the International Working
Group’s input, Textile Exchange is
bringing together eight standards
covering recycled and organic
content, responsible sourcing of
wool, mohair, down and more. With a
unified standard, the textile industry
will more efficiently track its progress
and reduce its climate impact.
“Harmonising all of Textile
Exchange’s standards under one
system and embedding key climate
impact outcomes into it will be a
transformational change for the
textile industry,” says Manu Rastogi,
Kathmandu’s Head of Product
Innovation & Product Sustainability.
“Being able to participate and
influence this change for the
industry is a proud moment for us.”
Textile Exchange’s ultimate goal
– one Kathmandu supports – is
to reduce the emissions that
come from fibre and raw material
production by 45% by 2030.
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ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESKMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS FY23 PERFORMANCE
OPERATIONAL WASTE GENERATED FOR FY23*
100%
of footwear boxes are made from responsibly
sourced wood paper
100%
swing tags and footwear boxes are recyclable
GOALS
Reduced operational and packaging waste
including:
• Diversion of 90% of waste to landfill from our
direct operations by 2030.
• All primary and secondary packaging and
promotional material is recyclable or made
using recycled materials.
100%
of swing tags are made from materials that
can be recycled
92%
of swing tags are made from responsibly
sourced wood paper
Australian Packaging Forum Annual
Performance Rating for Rip Curl & Ozmosis:
ADVANCED
Soft plastic recycled
21
metric tonnes
Mixed plastic recycled
66
metric tonnes
Paper & cardboard recycled
175
metric tonnes
Glass & aluminium recycled
3metric tonnes
Neoprene offcuts recycled
154metric tonnes
TOTAL OPERATIONAL WASTE DIVERTED FY23
419metric tonnes
Stores/Warehouses/Offices/Factory
Waste to Landfill
1035
metric tonnes
29%
total operational waste diverted from
landfill during FY23 including paper and
cardboard, mixed recycling, soft plastics,
neoprene offcuts and composting
2022: 36%
POST CUSTOMER WASTE
RECOVERY FOR FY23
Recycle my rubber program
21.7
metric tonnes
Recycled textile through Upparel program
0.3
metric tonnes
TOTAL OPERATIONAL WASTE GENERATED FY23
TOTAL TEXTILE WASTE RECOVERY
1454
metric tonnes
* FY23 figures are audited, pre-verified numbers
based on available data and estimates.
22
metric tonnes
GRI 301, 306
113
WASTE
GOALS AND PERFORMANCE
FY23 PERFORMANCE
78%
of swing tags are made from recycled materials
100%
of swing tags are made from responsibly
sourced wood paper
Australian Packaging Forum Annual
Performance Rating: LEADING
112
* based off average 1.2kgs per wetsuit.
CIRCULARITY � WASTE
MATERIAL ISSUES: CLIMATE CHANGE • BIODIVERSITY IMPACT
and spare parts, others reimagined
as plant stakes for gardening. Our
approach prevented significant
product from ending up in landfill.
We also diverted a large number
of old coat hangers from landfill
by donating them to Thread
Together, an organisation that
collects and distributes unsold
clothing to people in need. Thread
Together is now using the coat
hangers in charity pop-up stores.
During FY23, Oboz redesigned
its consumer footwear box
packaging to reduce packaging
waste and allow for easier reuse
and recycling. We introduced best
practice HowToRecycle consumer
information to engage and inform
customers. All shoe boxes are
made with FSC certified paper.
Following several years of success
working in partnership with the
Packaging Forum to recycle soft
plastics in our Kathmandu stores in
New Zealand, we conducted a soft
plastic recycling trial with MG Waste
Management across 10 Victorian
Rip Curl, Ozmosis and Kathmandu
stores. A total of 238 kilograms
of soft plastic was collected and
recycled during the four-week period.
We will take the learnings from this
trial to drive scale during FY24.
The choices we make as a team
influence how much of our
waste ends up in landfill. We
have worked hard to change
established behaviours and habits
of our team members through
education and awareness, and
offer incentives by tying KPIs to
our “7 Rs”: rethink, refuse, reduce,
reuse, repair, regift or recycle.
To track and report on our waste
data, we collect a combination of
monthly and annual reports from
our waste service providers. These
OUR OBSERVATIONS
Waste is generated across our
business, both upstream and
downstream in our value chain
from material production and
manufacturing through to packaging,
transportation and warehousing,
and from operation of our store
network to our head office support
functions. Waste contributes to our
carbon footprint and is an inefficient
use of natural resources. It also
has a financial impact through
collection and disposal costs.
We are committed to reducing
our waste footprint. In the short
term, we have focused our goals
on the waste generated from our
direct operations – our head office
locations, retail store network,
occupied and controlled distribution
centres, and our Onsmooth
Thai manufacturing facility.
Looking longer term, we are
rethinking product design and
production processes, harnessing
new materials and technology to
eliminate waste from the outset, and
then repurposing and recycling to
keep resources in a closed loop.
OUR ACTIONS
In the last year, we have looked for
innovative ways to reduce our waste
to landfill. One investigation identified
pallets of tent poles, flies and tent
bags in our New Zealand distribution
centre that were all in good condition
but no longer needed and taking up
valuable storage space. We contacted
local community organisations and
scouting groups, and repurposed 10
pallets of unwanted products. Some
of these were used as replacement
114
include a breakdown of waste
types and quantities collected.
These figures are included in our
climate reporting. Where third party
providers manage waste services
on our behalf, they operate under
the legislation of the respective
countries where the services are
provided and, in line with our service
contract, must meet those standards.
compatibility with our automated
sortation systems. We still have
further work to do, but plan to phase
out Kathmandu’s use of pure LDPE
polybags and move to 100% recycled
LDPE polybags. Rip Curl does not use
automated sorting at our distribution
centres, enabling a move from a
30% recycled content polybag to
100% recycled content in FY23.
data from our Kathmandu and Rip
Curl store waste providers. Our store
operations teams are consolidating
waste collection providers to give us
better access to data and reporting
on waste collection and recycling.
By performing waste audits across
our store network, we will gain a
clearer understanding of how much
waste we are diverting from landfill.
We are exploring ways to reduce
the use of low-density polyethylene
(LDPE) bags, or polybags, in our
supply chain. These clear plastic
bags protect garments during
transit from manufacturing sites to
distribution centres and onwards to
retail stores and consumers’ homes.
Polybags play an important role in
preventing damage and wastage
during product transportation, so
we are looking for alternatives.
During FY23, Kathmandu trialled a
new type of recyclable polybag for
We have policies and process for
the disposal of hazardous waste
substances through specialist
waste contractors to minimise
negative environmental impact.
We are not currently tracking
this and are therefore not able to
report on hazardous waste data.
CHALLENGES AND
OPPORTUNITIES AHEAD
Measurement is the first step to
better waste management, and one of
our key challenges is gaining primary
Waste management is an industry-
wide challenge that demands
collaboration and innovation. A
lack of infrastructure and facilities
in many of our primary areas of
operation currently limit proper
waste management, diversion and
recycling systems and technology.
Large-scale investment in these
facilities will assist us to meet
our waste to landfill goals.
GRI 301, 306
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ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESKMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS From mannequins to mushrooms
CASE
STUDY
CIRCULARITY � WASTE
Repurposing soft plastics
CASE
STUDY
Soft plastic may seem like
unlikely source materials for
park benches, drainpipes and
fence posts. But through several
partnerships, KMD Brands is
transforming tonnes of soft
plastic otherwise destined for
landfill into new materials and
showing how positive change can
come from reimagining waste.
We know soft “scrunchable” plastic
is a problem around the world – and
addressing this starts by refusing,
reducing and reusing before we
consider recycling. Few recycling
providers are equipped to deal with
soft plastics on the scale the world
consumes them. But billions of pieces
of soft plastic can be transformed
into new products with the help of
leading-edge recycling techniques.
In partnership with the Packaging
Forum in New Zealand, we began
collecting Kathmandu’s soft
plastics several years ago. This
year 14 tonnes of soft plastic were
recovered from 22 Kiwi stores, which
was remade into fenceposts.
Expanding on our work in New
Zealand, this year we also undertook
an innovative trial across 10 stores
in Victoria. KMD Brands picked
the peak season over Easter to
commence our trial and worked
in partnership with local waste
provider MG Waste Management.
MG Waste Management collected
238 kilograms of soft plastic from Rip
Curl, Kathmandu and Ozmosis stores
over a four-week period, auditing
and removing any contamination
before transporting the material
to a recycling plant owned by GT
Recycling in Geelong. There, the
material was manually separated and
baled, based on colour and quality,
and processed into pellets. These
pellets can then be transformed into
new products – like park benches
and drainpipes. GT Recycling is also
collecting and auditing soft plastic
from our two distribution centres in
Torquay, Victoria, and our goal is to
scale the trial. Our soft plastic trial
– across two countries and multiple
stores – points to the possibilities
when we stop seeing waste and
start seeing wasted potential.
Can offcuts from our store
mannequins become food for
mushrooms? As we step into
the circular economy, this is
the sort of outlandish question
we are asking ourselves.
When Kathmandu established a new
partnership with visual merchandising
supplier Mannequino in FY23, we
saw this as an opportunity to look
at waste in a completely new light.
Mannequino manufactures super
lightweight, compact and recyclable
display assets. Designed with 3D
printing technology, Mannequino’s
products are made from durable
polypropylene that use up to
50 times less raw material than
traditional mannequins. Flat-packed
mannequins are easier to ship, which
reduces transport emissions. And
when they reach the end of their
useful life, each mannequin can
be recycled down to pellets and
remade into new display assets.
mannequin packaging into delicious
gourmet Oyster mushrooms. The
offcuts from Kathmandu mannequins
are shredded into mulch, mixed with
coffee waste, hardwood and straw,
and then transferred to growing
chambers alongside Mannequino’s
Cambridgeshire manufacturing
facilities. And voila! Mushrooms are
harvested and distributed to local
restaurants in the Cambridge area.
This year, Mannequino pushed the
boundaries even further with an
innovative process that transforms
the cardboard offcuts from
One ingenious idea that turns
fashion merchandising waste
into food embodies KMD Brands’
quest for circular innovation.
116
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ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESKMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS FINANCING OUR IMPACT
Introduction
CONTENTS
121 Directors’ Approval of Consolidated Financial Statements
IN THIS SECTION
122 Consolidated Statement of Comprehensive Income
Group CFO report
123 Consolidated Statement of Changes in Equity
124 Consolidated Balance Sheet
125 Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
127
Section 1: Basis of Preparation
130 Section 2: Results for the Year
139 Section 3: Operating Assets and Liabilities
152 Section 4: Capital Structure and Financing Costs
161
Section 5: Group Structure
164 Section 6: Other Notes
168 Auditors’ Report
Chris Kinraid
Group Chief Financial Officer
KMD Brands is pleased to
report that, in our first full year
of uninterrupted trade since
the pandemic, we achieved
record sales of $1.1 billion
for the first time, with an
underlying EBITDA of $105.9m.
The consolidated financial
statements have been
presented in a style which
attempts to make them less
complex and more relevant
to shareholders. We have
grouped the note disclosures
into six sections: ‘Basis of
Preparation’, ‘Results for the
Year’, ‘Operating Assets and
Liabilities’, ‘Capital Structure
and Financing Costs’, ‘Group
Structure’ and ‘Other Notes’.
Each section sets out the
accounting policies applied in
producing the relevant notes.
The purpose of this format
is to provide readers with a
clearer understanding of what
drives financial performance
of the Group. The aim of
the text boxes is to provide
commentary on each section
or note, in plain English.
KEEPING IT SIMPLE
Notes to the consolidated
financial statements provide
information required by
accounting standards or
NZX Listing Rules to explain
a particular feature of the
financial statements. The
notes that follow will also
provide explanations and
additional disclosures to
assist readers’ understanding
and interpretation of the
annual report and the
financial statements.
118
118
118
KMD Brands Annual Integrated Report 2023
KMD Brands Annual Integrated Report 2022
All our iconic brands grew sales
year-on-year, with particularly
strong sales growth through the
first three quarters. In the fourth
quarter, we saw consumer impacts
from interest rate rises and the
broader economic environment.
Rip Curl achieved record sales since
acquisition, growing sales year-on-
year across all major geographies.
Kathmandu achieved strong
sales and profit growth year-on-
year, benefiting from 12 months
of uninterrupted trade.
Oboz sales improved significantly,
achieving the best top line revenue
results in company history,
recovering from significant supply
constraints last year. Online sales
continue to grow strongly and
represent an exciting opportunity.
The KMD Brands team continued
to drive efficiency through industry-
leading systems and best-practice.
Key Group functions of Finance,
Commercial, People, Legal, ESG,
IT and Communications continue
to drive benefits across all our
brands. In this, we also create
opportunity to leverage our scale.
A global business needs a global
bank and this reporting year we
reduced the number of banks we
partner with from 30 to two: ANZ in
Australasia and HSBC globally. This
will deliver a cost saving of around
$1 million each year, strengthen
and simplify our reporting and
data analysis, and give us access
to best-in-class technology.
We’re committed to our 15%
underlying EBITDA margin goal, with
strategic workstreams continuing to
drive efficiency across the Group.
Across the industry we saw high
levels of inventory throughout the
year, which affected Rip Curl and
Oboz in particular. Kathmandu
inventory has normalised, and
we continue to drive ongoing
improvement in wetsuit and footwear
inventory for our other two brands.
We remain well placed with a strong
balance sheet, with further working
capital improvements expected.
OUR SUSTAINABILITY
LINKED LOAN
We’re proud to say we continued
our journey of sustainable finance,
announcing in May an extension
of the sustainability metrics to
our entire debt facilities (NZD
$310 million). We completed the
refinance of our syndicated debt
facilities with a three-and-a-half-
year facility, consisting of an A$240
million multi-currency revolving
facility and an NZ$54 million
multicurrency revolving facility.
The refinance increases tenor
and provides significant ongoing
liquidity to support the Group’s
growth objectives. The new
facility also builds on our previous
sustainability linked loan with
revised targets that incorporate a
pricing mechanism that incentivises
ongoing improvement in achieving
our key environmental, social and
governance (ESG) objectives.
After meeting all four of the original
targets we set ourselves in 2021 in
the second anniversary of the loan,
we have committed to four new
sustainability performance targets
(SPTs). These goals align with our
existing ESG strategy and broader
associated goals. Our sustainability
performance targets include:
119
ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURESKMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS Directors’ Approval of Consolidated
Financial Statements
For the Year Ended 31 July 2023
AUTHORISATION FOR ISSUE
The Board of Directors authorised the issue of these Consolidated Financial Statements on 20 September 2023.
APPROVAL BY DIRECTORS
The Directors are pleased to present the Consolidated Financial Statements of KMD Brands Limited for the year ended
31 July 2023 on pages 122 to 167.
David Kirk
Michael Daly
For and on behalf of the Board of Directors
20 September 2023
Date
20 September 2023
Date
Each SPT has an annual defined
performance assessment for a
discount to the overall interest rate
we pay across our debt facilities
(except for SPT 3 in Year 3). This
threshold is structured to be
ambitious in nature and incentivise
progressive improvement compared
to the respective baselines. Each SPT
also has a 'premium' threshold, which
if triggered will generate a premium
payable on the interest rate overall.
Leaving KMD Brands after almost a
decade of adventures is bittersweet
as I see great things on the horizon
for this Group, which has in a short
time become a house of iconic
brands with global reach. I’d like
to take this opportunity to again
thank Michael Daly, the KMD Brands
Board and Executive Team, our
investors and shareholders for their
support throughout my time at KMD,
but especially in these last four
years as Chief Financial Officer.
SPT 1
Scope 3 emissions
Reduction in specified Scope
3 emissions categories of the
Group in line with the validated
Science-based target trajectory
(aligned with a ‘well below
2 degrees’ scenario), and
increasing measurement and
reporting of the Group’s Scope 3
emissions from purchased goods
and services by influencing and
supporting the Group’s suppliers
to disclose emissions data.
SPT 2
Scope 1 and 2 emissions
Reduction in absolute Scope 1
and Scope 2 emissions of the
Group in line with the validated
science-based target trajectory.
SPT 3
B Corp Certification
Amending KMD Brands’
constitution as required by B
Lab Global (by 31 July 2024)
and re-certifying the Group
as a B Corp by 31 July 2026.
SPT 4
Supply chain accountability
and transparency
Increasing accountability and
facilitating transparent disclosure
for Tier 1 and Tier 2 suppliers
through encouraging adoption
of, and progression towards,
verification by Higg Index Facility
Social & Labor Module and
Facility Environment Module.
120
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KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES
Consolidated Statement of
Comprehensive Income
For the Year Ended 31 July 2023
Consolidated Statement of
Changes in Equity
For the Year Ended 31 July 2023
Sales
Cost of sales
Gross profit
Other income
Selling expenses
Administration and general expenses
Section
2023
NZ$’000
2022
NZ$’000
2.2
2.2
1,102,994
(451,049)
651,945
1,840
(267,743)
(185,973)
(451,876)
979,802
(403,069)
576,733
9,857
(231,460)
(175,196)
(396,799)
Earnings before interest, tax, depreciation, and amortisation
200,069
179,934
Depreciation and amortisation
Earnings before interest and tax
Finance income
Finance expenses
Finance costs (net)
Profit before income tax
Income tax expense
Profit after income tax
Profit for the year attributable to:
Shareholders of the Company
Non-controlling interest
Other comprehensive income that may be recycled through profit or loss:
Movement in cash flow hedge reserve
Movement in foreign currency translation reserve
Movement in other reserves
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Total comprehensive income for the year attributable to:
Shareholders of the Company
Non-controlling interest
Basic earnings per share
Diluted earnings per share
Weighted average basic ordinary shares outstanding (‘000)
Weighted average diluted ordinary shares outstanding (‘000)
4.3.2
4.3.2
4.3.2
2.4
2.4
2.4
2.4
3.2-3.4
4.1.1
(123,713)
76,356
886
(24,940)
(24,054)
52,302
2.3
(15,688)
(112,516)
67,418
394
(14,187)
(13,793)
53,625
(16,797)
36,828
35,952
876
12,671
36,188
-
48,859
85,687
84,576
1,111
5.1cps
5.0cps
709,001
717,266
36,614
35,139
1,475
8,499
3,055
-
11,554
48,168
46,838
1,330
4.9cps
4.9cps
711,283
719,546
Cash
flow
hedge
reserve
NZ$’000
Foreign
currency
translation
reserve
NZ$’000
Share-
based
payments
reserve
NZ$’000
Share
capital
NZ$’000
Other
reserves
NZ$’000
Retained
earnings
NZ$’000
Non-
controlling
interest
NZ$’000
Total
equity
NZ$’000
Balance as at 31 July 2021
626,380
1,341
(29,462)
2,637
(47)
210,036
4,070
814,955
Profit after tax
Other comprehensive income
Dividends paid
Issue of share capital
Share based payment expense
Lapsed share options
Deferred tax on share-based
payment transactions
Amounts transferred to initial
carrying amount of hedged items
Dividends paid to
non-controlling interest
-
-
-
-
-
-
-
-
-
-
-
12,671
35,953
-
-
-
-
-
(7,794)
-
-
-
-
-
-
-
-
-
-
-
-
914
(77)
(309)
-
-
-
-
-
-
-
-
-
-
-
35,952
-
(42,540)
-
-
77
-
-
-
876
235
-
-
-
-
-
-
36,828
48,859
(42,540)
-
914
-
(309)
(7,794)
(455)
(455)
Balance as at 31 July 2022
626,380
6,218
6,491
3,165
(47)
203,525
4,726
850,458
Profit after tax
Other comprehensive income
Dividends paid
Issue of share capital
Share based payment expense
Deferred tax on share-based
payment transactions
Amounts transferred to initial
carrying amount of hedged items
Dividends paid to non-controlling
interest
-
-
-
2,699
-
-
-
-
-
8,499
-
3,200
-
-
-
-
(14,443)
-
-
-
-
-
-
-
-
-
-
(2,699)
568
252
-
-
-
-
-
-
-
-
-
-
35,139
-
(42,681)
-
-
-
-
-
1,475
(145)
-
-
-
-
-
36,614
11,554
(42,681)
-
568
252
(14,443)
(685)
(685)
Balance as at 31 July 2023
629,079
274
9,691
1,286
(47)
195,983
5,371
841,637
122
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KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES Consolidated Balance Sheet
As at 31 July 2023
Consolidated Statement of Cash Flows
For the Year Ended 31 July 2023
Section
2023
NZ$’000
2022
NZ$’000
Section
2023
NZ$’000
2022
NZ$’000
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Current tax asset
Other current assets
Total current assets
Non-current assets
Trade and other receivables
Property, plant and equipment
Intangible assets
Deferred tax assets
Right-of-use assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Derivative financial instruments
Current tax liabilities
Lease liabilities
Total current liabilities
Non-current liabilities
Trade and other payables
Interest bearing liabilities
Deferred tax liabilities
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity - ordinary shares
Reserves
Retained earnings
Non-controlling interest
Total equity
124
3.1.2
3.1.3
3.1.1
4.2
3.1.5
3.1.3
3.2
3.3
2.3
3.4.1
3.1.6
4.2
3.4.2
3.1.6
4.1
2.3
3.4.2
4.3.1
4.3.2
49,488
102,696
290,420
2,560
12,278
1,860
459,302
1,856
82,942
704,402
14,650
270,327
1,074,177
1,533,479
173,392
1,160
718
83,232
258,502
15,988
105,209
93,275
218,868
433,340
691,842
70,810
105,526
295,522
9,936
3,640
2,434
487,868
1,588
79,243
719,322
14,078
250,372
1,064,603
1,552,471
194,034
-
1,816
75,293
271,143
17,246
110,881
93,449
209,294
430,870
702,013
841,637
850,458
629,079
11,204
195,983
5,371
841,637
626,380
15,827
203,525
4,726
850,458
Cash flows from operating activities
Cash was provided from:
Receipts from customers
Government grants received
Interest received
Income tax received
Cash was applied to:
Payments to suppliers and employees
Income tax paid
Interest paid
1,103,833
6,019
886
1,892
955,968
3,407
394
448
1,112,630
960,217
919,847
22,969
22,226
965,042
843,605
22,181
12,623
878,409
Net cash inflow from operating activities
147,588
81,808
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 intangible assets
-
-
27,665
8,323
35,988
4
4
21,567
11,266
32,833
3.2
3.3
Net cash (outflow) from investing activities
(35,988)
(32,829)
Cash flows from financing activities
Cash was provided from:
Proceeds from borrowings
Cash was applied to:
Dividends paid
Repayment of borrowings
Repayment of lease liabilities
132,955
132,955
43,366
134,074
86,919
264,359
99,619
99,619
42,995
99,619
82,265
224,879
Net cash (outflow) from financing activities
(131,404)
(125,260)
Net (decrease) in cash and cash equivalents held
(19,804)
(76,281)
Opening cash and cash equivalents
Effect of foreign exchange differences
Closing cash and cash equivalents
70,810
(1,518)
49,488
142,614
4,477
70,810
3.1.2
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KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES RECONCILIATION OF NET PROFIT AFTER TAXATION WITH CASH INFLOW FROM
OPERATING ACTIVITIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Section 1: Basis of Preparation
Profit after taxation
36,614
36,828
Section
2023
NZ$’000
2022
NZ$’000
Movement in working capital:
(Increase) / decrease in trade and other receivables
(Increase) / decrease in inventories
(Increase) / decrease in other current assets
Increase / (decrease) in trade and other payables
Increase / (decrease) in current tax liability
Add non-cash items:
Depreciation of property, plant and equipment
Amortisation of intangibles
Depreciation of right-of-use assets
Impairment of assets
Foreign currency translation of working capital balances
Increase / (decrease) in deferred taxation
Employee share-based remuneration
Loss on sale of property, plant and equipment and intangibles
Cash inflow from operating activities
(776)
(1,121)
510
(17,360)
(9,002)
(27,749)
22,824
14,132
86,757
(1,675)
11,809
3,610
568
698
(27,953)
(66,555)
9
31,736
(8,518)
(71,281)
22,572
12,339
77,605
940
(2,294)
3,580
914
605
138,723
116,261
147,588
81,808
3.2
3.3
3.4.1
3.2, 3.4.1
6.3
3.2, 3.3
IN THIS SECTION
This section sets out the Group’s accounting policies that relate to the consolidated financial statements as a
whole. Where an accounting policy is specific to one note, the policy is described in the note to which it relates.
1.1 GENERAL INFORMATION
KMD Brands Limited (the Company) and its subsidiaries
(together the Group) is a designer, marketer, retailer and
wholesaler of apparel, footwear and equipment for surfing
and the outdoors. It operates in New Zealand, Australia,
North America, Europe, Southeast Asia and Brazil.
The Company is a limited liability company
incorporated and domiciled in New Zealand. KMD
Brands Limited is a company registered under the
Companies Act 1993 and is an FMC reporting entity
under Part 7 of the Financial Markets Conduct Act
2013. The address of its registered office is 223
Tuam Street, Central Christchurch, Christchurch.
The Company is listed on the NZX and ASX.
The consolidated financial statements of the
Group have been prepared in accordance with the
requirements of Part 7 of the Financial Markets
Conduct Act 2013 and the NZX Listing Rules.
These audited consolidated financial statements
have been approved for issue by the Board
of Directors on 20 September 2023.
1.2 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
These consolidated financial statements have been
prepared in accordance with Generally Accepted
Accounting Practice. They comply with the New Zealand
Equivalents to International Financial Reporting Standards
(NZ IFRS) and other applicable Financial Reporting
Standards, as appropriate for for-profit entities. The
consolidated financial statements also comply with
International Financial Reporting Standards (IFRS).
The consolidated financial statements are
presented in New Zealand dollars, which is
the Group’s presentation currency.
1.2.1 Basis of preparation
The principal accounting policies adopted in the
preparation of the consolidated financial statements are
set out below. These policies have been consistently
applied to all periods presented, unless otherwise stated.
Basis of consolidation
The consolidated financial statements reported are for
the consolidated Group, which is the economic entity
comprising KMD Brands Limited and its subsidiaries.
The Group is designated as a for-profit entity for financial
reporting purposes.
Subsidiaries are consolidated from the date on which
control is obtained to the date on which control is lost.
Non-controlling interests are measured at their
proportionate share of the acquiree’s identified net
assets at the acquisition date. Changes in the Group’s
interests in a subsidiary that do not result in a loss of
control are accounted for as equity transactions.
In preparing the consolidated financial statements, all
material intra-group transactions, balances and unrealised
gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated. When
necessary, amounts reported by subsidiaries have been
adjusted to conform to the Group’s accounting policies.
Historical cost convention
These consolidated financial statements have been
prepared under the historical cost convention, as
modified by the revaluation of certain assets as identified
in the specific accounting policies provided below.
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
126
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within the next financial year are discussed below.
Estimates and judgements are continually evaluated
and are based on historical experience as adjusted
for current market conditions and other factors,
including expectations of future events that are
believed to be reasonable under the circumstances.
Further explanation as to estimates and assumptions
made by the Group can be found in the following
notes to the consolidated financial statements:
Area of estimation
Goodwill and brand – assumptions underlying
recoverable value
Section
3.3
Foreign currency translation
The results and financial position of all the Group
entities (none of which have 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:
• 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 statement of
comprehensive income 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 in other comprehensive income.
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.
Changes in accounting policies
Details about changes in accounting policies applied
during the period are included in the following notes to the
financial statements:
New standards and interpretations first applied
in the period
Section
6.8
Use of non-GAAP disclosures
At times non-GAAP disclosures have been used in the
consolidated financial statements. These disclosures
have been included as they are key measurement
criteria on which the Group and operating segments are
reviewed by the Group Chief Executive Officer, Group
Executive Management team and the Board of Directors.
The following non-GAAP measures are relevant to the
understanding of the Group's financial performance:
• Earnings before interest, tax, depreciation and
amortisation (EBITDA) represents earnings
before income taxes excluding interest income,
interest expense, depreciation, and amortisation,
as reported in the financial statements.
• Earnings before interest and tax (EBIT) represents
EBITDA less depreciation and amortisation.
• Net debt represents cash and cash equivalents
less interest-bearing liabilities. Net debt
does not include lease liabilities.
Non-GAAP financial information does not have
a standardised meaning prescribed by GAAP
and therefore may not be comparable to similar
financial information presented by other entities.
The non-GAAP information within the consolidated
financial statements is subject to audit.
1.3 IMPACT OF COVID-19
1.4 CLIMATE CHANGE RISK
The comparative period was impacted by COVID-19,
with local and global restrictions on movement, travel
and gatherings resulting in a sustained reduction in
footfall. During the comparative period stores across
Australia and New Zealand were significantly impacted
by government mandated lockdowns and closures.
Although the risk has abated significantly from twelve
months ago some uncertainty remains that may
affect the Group’s ability to achieve future forecasts.
Despite this the Directors are satisfied that there will
be adequate cash flows generated from operating
and financing activities to meet the obligations of the
Group for a period of at least 12 months from the date
of approving the consolidated financial statements.
The Group was fully compliant with all banking covenants
during the year and, based on the current cash flow
forecasts, the Group expects to remain compliant with
all covenants for at least 12 months from the date of
approving the consolidated financial statements.
Taking into consideration the current trading
results, the net debt (excluding lease liabilities) of
$55,721,000 (2022: $40,071,000) and undrawn cash
facilities of $180,616,000 (2022: $195,290,000) at
31 July 2023 (note 4.1), the financial statements
continue to be prepared on a going concern basis.
The Group’s operations may be impacted by future
climate change. These impacts may be physical (e.g.
severe or unusual weather patterns and events) or
transitional (e.g. changes to government regulations
or customer and supplier needs and demands).
The Group regularly assesses its operating environment
with regards to the impact of climate change. Specific
consideration has been given in these financial statements
to the impact of future climate change on the useful lives
of the Group’s property, plant, and equipment (note 3.2),
impairment of intangible assets (note 3.3), the inclusion
of expected renewals in the lease term for Right-of-Use
assets (note 3.4) and sustainability linked loans (note
4.1). No significant impacts have been identified.
During the year the Group collaborated with other
retail industry participants, with guidance from the New
Zealand External Reporting Board (XRB), to develop
relevant sector-level climate-related scenarios with
reference to the Aotearoa New Zealand Climate Standards
(NZ CS). The Group will now model how different
scenarios of climate change may impact our global
footprint and report a summary of findings in 2024.
128
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KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES Section 2: Results for the Year
IN THIS SECTION
This section focuses on the results and performance of the Group. On the following pages you will find
disclosures explaining the Group’s results for the year, segmental information, taxation and earnings per share.
2.1 SEGMENT INFORMATION
An operating segment is a component of an entity
that engages in business activities that 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 has three operating segments, representing
three brands owned by the Group and a Corporate
segment. These segments have been determined based
on the reports reviewed by the Group Chief Executive
Officer and Group Executive Management team.
Rip Curl – designer, manufacturer, wholesaler
and retailer of surfing equipment and apparel.
Kathmandu – designer, retailer, and wholesaler of apparel,
footwear, and equipment for outdoor travel and adventure.
Oboz – designer, wholesaler and online
retailer of outdoor footwear.
The Corporate segment represents group costs,
holding companies and consolidation eliminations
and constitutes other business activities that
do not fall within the brand segments.
The default basis of allocating shared costs is percentage
of revenue with other bases being used where appropriate.
31 July 2023
Total segment sales
Sales to internal customers
Sales to external customers
EBITDA
Depreciation and amortisation
EBIT
Income tax expense
Total segment assets
Total assets include:
Non-current assets
Additions to non-current assets
Rip Curl
NZ$’000
581,504
-
581,504
97,079
(54,955)
42,124
(9,826)
Kathmandu
NZ$’000
422,233
-
422,233
105,322
(67,079)
38,243
(9,820)
Oboz
NZ$’000
102,819
3,562
99,257
8,228
(1,625)
6,603
(1,407)
Corporate
NZ$’000
-
-
-
(10,560)
(54)
(10,614)
5,365
Total
NZ$’000
1,106,556
3,562
1,102,994
200,069
(123,713)
76,356
(15,688)
759,398
586,676
179,669
7,736
1,533,479
488,250
80,673
466,778
59,733
118,401
1,004
748
810
1,074,177
142,220
Total segment liabilities
297,041
258,258
25,596
110,947
691,842
31 July 2022
Total segment sales
Sales to internal customers
Sales to external customers
EBITDA
Depreciation and amortisation
EBIT
Income tax expense
Total segment assets
Total assets include:
Non-current assets
Additions to non-current assets
Rip Curl
NZ$’000
536,830
-
536,830
95,462
(48,700)
46,762
(11,839)
Kathmandu
NZ$’000
381,628
-
381,628
87,642
(62,555)
25,087
(7,017)
Oboz
NZ$’000
62,298
954
61,344
3,641
(1,255)
2,386
(772)
Corporate
NZ$’000
-
-
-
(6,811)
(6)
(6,817)
2,831
Total
NZ$’000
980,756
954
979,802
179,934
(112,516)
67,418
(16,797)
740,778
649,205
158,793
3,695
1,552,471
465,152
55,629
482,873
55,159
116,578
975
-
-
1,064,603
111,763
Total segment liabilities
293,804
270,479
26,843
110,887
702,013
Sales to external customers by region
Non-current assets by region
Australia
New Zealand
North America
Europe
Rest of world
2023
NZ$’000
681,420
160,327
180,136
29,240
23,054
2022
NZ$’000
668,544
180,066
180,334
21,893
13,766
1,074,177
1,064,603
Australia
New Zealand
North America
Europe
Rest of world
2023
NZ$’000
557,013
128,185
243,398
105,325
69,073
1,102,994
Sales to external customers by channel
Retail
Online
Wholesale
Licensing
Other
2023
NZ$’000
653,108
99,300
336,952
13,158
476
1,102,994
2022
NZ$’000
508,258
113,943
195,713
99,747
62,141
979,802
2022
NZ$’000
555,732
109,556
302,101
12,000
413
979,802
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KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES 2.2 PROFIT BEFORE TAX
Revenue recognition
The Group recognises revenue from the sale of
footwear, clothing and equipment for surfing and the
outdoors, and brand licencing arrangements. Revenue
comprises the fair value of the consideration received
or receivable for the sale of goods and brand licences,
excluding goods and services tax and discounts,
and after eliminating sales within the Group.
Retail sales
For sales of goods to retail customers, revenue
is recognised when control of the goods has
transferred, being at the point the customer
purchases the goods at a retail outlet. Payment
of the transaction price is due immediately at the
point the customer purchases the goods.
Online sales
For online sales, revenue is recognised when control
of the goods has transferred to the customer, being
at the point the goods are delivered to the customer.
Delivery occurs when the goods have been shipped to
the customer’s specific location. When the customer
initially purchases the goods online, the transaction price
received by the Group is recognised as a contract liability
until the goods have been delivered to the customer.
Wholesale sales
For sales to the wholesale market, revenue is recognised
when control of the goods has transferred, being when
the goods have been shipped to the wholesaler’s specific
location (delivery). Following delivery, the wholesaler has
full discretion over the manner of distribution and price
to sell the goods, has the primary responsibility when on
selling the goods and bears the risks of obsolescence and
loss in relation to the goods. A receivable is recognised
by the Group when the goods are delivered to the
wholesaler as this represents the point in time at which
the right to consideration becomes unconditional, as only
the passage of time is required before payment is due.
Sales returns
Under the Group’s standard contract terms, customers
have a right of return, typically within 30 days. At the
point of sale, a returns liability and a corresponding
adjustment to revenue is recognised for those products
expected to be returned. The Group uses its accumulated
historical experience to estimate the number of returns
on a portfolio level using the expected value method.
Given the consistent level of returns over previous years,
it is considered highly unlikely that a significant reversal
in the cumulative revenue recognised will occur.
Royalty revenue
Royalty revenue from brand license arrangements
is related to the provision of a right to access
the license. Revenue from sales-based royalties
is recognised based on a reliable estimate of
subsequent sales made by a licensee.
Sale of goods
Royalty revenue
Commission revenue
2023
NZ$’000
1,091,290
10,819
885
1,102,994
2022
NZ$’000
969,161
10,047
594
979,802
A breakdown of revenue by operating segment, sales
channel and geographical area is provided in note 2.1.
Other income
Government grants
Other
2023
NZ$’000
366
1,474
1,840
2022
NZ$’000
9,060
797
9,857
Government grants are not recognised until there is
reasonable assurance that the grants will be received
and that the Group will comply with the conditions
attached to them. Government grants that compensate
the Group for expenses incurred are recognised as
revenue in the statement of comprehensive income
on a systematic basis in the same period in which
the expenses are recognised. In the current period
Government grants relate to Apprenticeship Boost
payments and grants to support sustainability initiatives.
In the prior year government grants income included
amounts related to US Employee Retention Credits, wage
and other subsidies received in response to the impact
of COVID-19. The $5,652,000 recognised as a receivable
at the previous balance date has been fully received as
cash during the current year. No further amounts have
been recognised as income in the current period.
Some of the property leases in which the Group is the
lessee contain variable lease payment terms that are
linked to sales generated from the leased stores. Variable
payment terms are used to link rental payments to store
cash flows and reduce fixed cost.
Overall, the variable payments constitute up to 0.4% (2022:
0.7%) of the Group's entire lease payments. The variable
payments depend on sales and consequently on the
overall economic development over the next few years.
Considering the development of sales expected over
the next 3 years, variable rent expenses are expected to
continue to present a similar proportion of store sales in
future years.
The total cash outflow for leases amounts to
$128,003,000 (2022: $109,163,000).
Employee entitlements
Wages, salaries, and other
short-term benefits
Post-employment benefits
Employee share-based
remuneration
2023
NZ$’000
218,104
12,459
568
2022
NZ$’000
189,864
10,483
914
231,131
201,261
Employee entitlements in the first quarter of the
comparative period were impacted by government
mandated lockdowns and closures. During this period
employees in some jurisdictions (including Australia) were
financially supported directly by the relevant government.
Lease expense
The Group is a lessee. Refer to note 3.4 for further details
around the Group’s leases and lease accounting policies.
Lease amounts recognised in the consolidated
statement of comprehensive income:
Short-term lease expense
Low-value lease expense
Variable lease expense
Rent concessions and
abatements
Lease outgoings
Depreciation right-of-use
asset (note 3.4.1)
Interest expense related
to lease liabilities (note
3.4.2)
2023
NZ$’000
7,924
1,176
439
(738)
17,667
86,757
11,022
2022
NZ$’000
7,987
546
754
(3,588)
15,423
77,605
8,476
124,247
107,203
132
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KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES 2.3 TAXATION
KEEPING IT SIMPLE
This section lays out the tax accounting policies, the current and deferred tax charges or credits in the year
(which together make up the total tax charge or credit in the consolidated statement of comprehensive income),
a reconciliation of profit before tax to the tax charge and the movements in deferred tax assets and liabilities.
The Group is subject to income taxes in multiple jurisdictions. As a result there is complexity and judgement
involved in determining the worldwide provision for income taxes.
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,
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.
Deferred income tax assets and liabilities are offset when
there is a legally enforceable right to offset current tax
assets against current tax liabilities and when the deferred
income tax assets and liabilities relate to income taxes
levied by the same taxation authority on either the same
taxable entity or different taxable entities where there
is an intention to settle the balances on a net basis.
Goods and Services Tax (GST)
The consolidated statement of comprehensive income
and the consolidated statement of cash flows have
been prepared so that all components are stated
exclusive of GST. All items in the consolidated balance
sheet are stated net of GST, except for receivables
and payables, which include GST invoiced.
ACCOUNTING POLICIES
Current and deferred income tax
The tax expense for the period comprises current and
deferred tax. Tax is recognised in the consolidated
statement of comprehensive income, except to the
extent that it relates to items recognised in other
comprehensive income or directly in equity. In this
case, the tax is recognised in other comprehensive
income or directly in equity, respectively.
The current income tax charge is calculated based on the
tax laws enacted or substantively enacted at the balance
sheet date in the countries where the Company and 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 are subject to interpretation
and establishes provisions where appropriate based on
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 liability is
not recognised if it arises from the initial recognition of
goodwill. 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.
Taxation – Consolidated statement of comprehensive income
The total taxation charge in the consolidated statement of comprehensive income is analysed as follows:
Current income tax charge
Deferred income tax charge / (credit)
Income tax charge reported in the consolidated statement of comprehensive income
2023
NZ$’000
12,078
3,610
15,688
2022
NZ$’000
13,354
3,443
16,797
To understand how, in the consolidated statement of comprehensive income, a tax charge of $15,688,000 (2022:
$16,797,000) arises on profit before income tax of $52,302,000 (2022: $53,625,000), the taxation charge that
would arise at the standard rate of New Zealand corporate tax is reconciled to the actual tax charge as follows:
Profit before income tax
Income tax calculated at 28%
Adjustments to taxation:
Adjustments due to different rate in different jurisdictions
Non-taxable income
Expenses not deductible for tax purposes
Utilisation of tax losses by group companies
Adjustments in respect of prior years
Tax losses not recognised
Income tax charge reported in the consolidated statement of comprehensive income
2023
NZ$’000
52,302
14,645
2022
NZ$’000
53,625
15,015
321
(1,799)
2,427
(35)
(370)
499
15,688
999
(2,025)
2,901
43
(136)
-
16,797
Adjustments for prior periods primarily arise where an outcome is obtained on certain tax matters which
differs from expectations held when the related provision was made. Where the outcome is more favourable
than the provision made, the difference is released, lowering the current year tax charge. Where the
outcome is less favourable than the provision, an additional charge to the current year tax will occur.
During the year the Group did not recognise any new previously unrecognised tax losses (2022: nil).
134
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KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES The tax credit / (charge) relating to components of other comprehensive income is as follows:
Movement in cash flow hedge reserve before tax
Tax credit / (charge) relating to cash flow hedge reserve
Movement in cash flow hedge reserve after tax
Foreign currency translation reserve before tax
Tax credit / (charge) relating to foreign currency translation reserve
Movement in foreign currency translation reserve after tax
Other reserves before tax
Tax credit / (charge) relating to other reserves
Movement in other reserves after tax
Total other comprehensive income / (expense) before tax
Total tax credit / (charge) on other comprehensive income
Total other comprehensive income / (expense) after tax
Current tax
Deferred tax
Total tax credit / (charge) on other comprehensive income
2023
NZ$’000
6,018
2,481
8,499
3,055
-
3,055
-
-
-
9,073
2,481
11,554
-
2,481
2,481
2022
NZ$’000
13,298
(627)
12,671
36,188
-
36,188
-
-
-
49,486
(627)
48,859
-
(627)
(627)
Taxation – Balance sheet
The following are the major deferred taxation liabilities and assets recognised by the Group and movements thereon
during the current and prior year:
Employee
obligations
NZ$’000
4,958
Intangibles
NZ$’000
(112,228)
Leases
NZ$’000
12,740
Other
temporary
differences
NZ$’000
19,073
Reserves
NZ$’000
(2,192)
Tax losses
NZ$’000
6,959
570
1,682
(893)
(5,544)
-
742
-
(309)
187
-
-
-
-
(5,753)
496
5,406
(116,299)
12,343
-
-
536
14,065
(627)
-
(111)
(2,930)
-
-
343
8,044
Total
NZ$’000
(70,690)
(3,443)
(627)
(309)
(4,302)
(79,371)
(124)
1,504
(665)
(6,564)
-
2,239
(3,610)
-
252
(112)
-
-
-
-
2,395
(282)
5,422
(112,400)
11,396
-
-
(214)
7,287
2,481
-
47
-
-
(211)
2,481
252
1,623
(402)
10,072
(78,625)
As at 31 July 2021
Recognised in the consolidated
statement of comprehensive income
Recognised in other comprehensive
income
Recognised directly in equity
Foreign exchange
As at 31 July 2022
Recognised in the consolidated
statement of comprehensive income
Recognised in other comprehensive
income
Recognised directly in equity
Foreign exchange
As at 31 July 2023
The deferred tax balance relates to:
• Property, plant and equipment temporary differences arising on differences in accounting and tax depreciation rates
• Employee benefit accruals
• Brands and customer relationships
• Unrealised foreign exchange gain / loss on intercompany loans
• Realised gain / loss on foreign exchange contracts not yet charged in the consolidated statement of
comprehensive income
• Lease accounting
• Inventory provisioning
• Temporary differences on the unrealised gain / loss in hedge reserve
• Employee share schemes
• Historic tax losses recognised
• Other temporary differences on miscellaneous items
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KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES 2.4 EARNINGS PER SHARE
KEEPING IT SIMPLE
Earnings per share (‘EPS’) is the amount of post-tax
profit attributable to each share.
Basic EPS is calculated by dividing the profit
after tax attributable to equity holders of the
Company of $35,139,000 (2022: $35,952,000) by
the weighted average number of ordinary shares
in issue during the year of 711,283,439 (2022:
709,001,384).
Diluted EPS reflects any commitments the Group
has to issue shares in the future that would
decrease EPS. In the current year, these are in the
form of share options / performance rights. To
calculate the impact, it is assumed that all share
options are exercised / performance rights taken,
and therefore, adjusting the weighted average
number of shares.
Weighted average number
of basic ordinary shares
in issue
Adjustment for:
Share options /
performance rights
2023
’000
711,283
2022
’000
709,001
8,263
8,265
719,546
717,266
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect
of the following items:
Deductible temporary
differences
Tax losses
2023
NZ$’000
-
4,735
4,735
2022
NZ$’000
-
3,879
3,879
The deductible temporary differences do not expire
under current tax legislation. Deferred tax assets have
not been recognised in respect of overseas subsidiaries
where it is not yet probable that future taxable profit will
be generated in those territories to utilise these benefits.
Imputation credits
Imputation credits
available
for use in subsequent
reporting periods based
on a tax rate
of 28%
2023
NZ$’000
90
2022
NZ$’000
75
The above amounts represent the balance of the
imputation account as at 31 July 2023, adjusted for:
• Imputation credits that will arise from the payment
of the amount of the provision for income tax.
• Imputation debits that will arise from the payment of
dividends recognised as a liability at the reporting date.
• Imputation credits that will arise from the receipt
of dividends recognised as receivables at the
reporting date.
The balance of Australian franking credits able to
be used by the Group in subsequent periods as at
31 July 2023 is A$1,312,000 (2022: A$7,497,000).
Section 3: Operating Assets and Liabilities
IN THIS SECTION
This section shows the assets used to generate the Group’s trading performance and the liabilities incurred as a
result. Liabilities relating to the Group’s financing activities are addressed in Section 4. Deferred tax assets and
liabilities are shown in note 2.3.
KEEPING IT SIMPLE
Working capital represents the assets and liabilities the Group generates through its trading activity. The Group
therefore defines working capital as inventory, cash, trade and other receivables, other financial assets, other
current assets and trade and other payables and other financial liabilities.
3.1 WORKING CAPITAL
3.1.1 Inventory
Accounting policies
Inventories are stated at the lower of cost and net
realisable value. The group uses the weighted average
cost, first in first out and standard cost methods to
determine cost. Cost includes expenditure incurred
in acquiring the inventories and bringing them to
their existing location and condition. In the case of
manufactured inventories and work in progress, cost
includes an appropriate share of production overheads
based on normal operating capacity. Net realisable value
is the estimated selling price in the ordinary course
of business, less applicable variable selling expenses.
Inventory is considered in transit when the risk and
rewards of ownership have transferred to the Group.
The Group assesses the likely residual value of inventory.
Inventory provisions are recognised for inventory that
is expected to sell for less than cost, and for the value
of inventory likely to have been lost to the business
through shrinkage between the date of the last applicable
stocktake and balance sheet date. In recognising the
provision for inventory, judgement has been applied
by considering a range of factors including historical
results, stock shrinkage trends and product lifecycle.
Inventory is broken down into trading stock and goods
in transit below:
Raw materials and
consumables
Work in progress
Trading inventory
Goods in transit
2023
NZ$’000
9,680
2,144
252,399
26,197
290,420
2022
NZ$’000
4,563
3,377
251,043
36,539
295,522
Inventory has been reviewed for obsolescence and
a provision of $5,026,000 (2022: $5,849,000) has
been made.
3.1.2 Cash and cash equivalents
Cash on hand
Cash at bank
Short term investments
convertible to cash
2023
NZ$’000
525
46,390
2,573
2022
NZ$’000
446
68,806
1,558
49,488
70,810
138
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KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES The carrying amount of the Group's cash and cash equivalents are denominated in the following currencies:
EUR
USD
AUD
THB
CAD
NZD
BRL
IDR
GBP
Other currencies
2023
NZ$’000
14,348
9,758
6,206
4,571
2,996
2,899
2,868
2,151
2,093
1,598
2022
NZ$’000
15,746
17,810
18,175
5,122
1,502
4,010
2,100
3,806
1,234
1,305
49,488
70,810
3.1.3 Trade and other receivables
Accounting policies
Trade and other receivables are recognised initially
at the value of the invoice sent to the customer (fair
value) and subsequently at the amounts considered
recoverable (amortised cost). The collectability of trade
and other receivables is reviewed on an on-going basis.
An allowance for lifetime expected credit losses is
recognised for trade and other receivables based on
the Group’s historical credit loss experience, adjusted
for factors that are specific to the debtors, general
economic conditions, and an assessment of both the
current as well as the forecast direction of conditions at
the reporting date, including time value of money where
appropriate. The expected credit loss is estimated as
the difference between all contractual cash flows that
are due to the Group in accordance with the contract
and all the cash flows that the Group expects to receive,
discounted at the original effective interest rate.
Current
Trade receivables
Allowance for expected
credit losses
Prepayments
Other receivables
Non-current
Other debtors
2023
NZ$’000
2022
NZ$’000
79,933
(5,620)
18,156
10,227
102,696
1,856
1,856
87,626
(5,964)
12,928
10,936
105,526
1,588
1,588
Other non-current debtors include security deposits paid
in relation to store leases.
The carrying amount of the Group’s trade and other
receivables are denominated in the following currencies:
USD
AUD
EUR
THB
NZD
BRL
GBP
CAD
IDR
CHF
JPY
SEK
2023
NZ$’000
45,583
17,397
8,637
8,048
7,158
5,349
4,956
4,094
1,454
1,100
460
316
2022
NZ$’000
56,539
11,375
11,950
5,977
6,750
4,950
3,045
4,882
895
62
631
58
104,552
107,114
Allowance for expected credit losses
2023
NZ$’000
(5,964)
Opening balance
Additional allowance
recognised in the
consolidated statement of
comprehensive income
Receivables written-off
during the year
Unused provision
released to the
consolidated statement
of comprehensive income
during the year
(820)
256
1,023
2022
NZ$’000
(5,680)
(2,171)
484
1,751
Foreign exchange
Closing balance
(115)
(5,620)
(348)
(5,964)
3.1.4 Credit risk
Credit risk is the risk of financial loss to the Group if
a customer or counterparty to a financial instrument
fails to meet its contractual obligations.
Risk
Credit risk
Exposure
arising from
Cash and cash
equivalents
Credit ratings
Monitoring
Management
Obtaining
customer
credit rating
information
Confirming
references
Setting
appropriate
credit limits
Trade and other
receivables
Aging analysis
Derivative
financial
instruments
Review of
exposure with
regular terms of
trade
Exposure to credit risk
The below balances are recorded at their carrying
amount after any allowance for expected credit loss on
these financial instruments. The maximum exposure to
credit risk at reporting date was (carrying amount):
Cash and cash equivalents
Trade receivables (net)
Other receivables
Derivative financial instruments
2023
NZ$’000
48,963
74,313
10,922
1,400
135,598
2022
NZ$’000
70,364
81,662
11,220
9,936
173,182
As at balance sheet date the carrying amount is
considered to approximate fair value for each of the
financial instruments.
The credit quality of cash and cash equivalents can
be assessed by reference to external credit ratings,
such as Standard & Poors or Moody’s (if available) or to
historical information about counterparty default rates:
Cash and cash equivalents:
Standard & Poors - AA-
Standard & Poors - A+
Standard & Poors - A
Standard & Poors - A-
Standard & Poors - BBB+
Standard & Poors - BBB
Standard & Poors - BBB-
Standard & Poors - BB
Standard & Poors - BB-
2023
NZ$’000
2022
NZ$’000
11,605
7,015
588
8,949
10,757
3,599
2,208
1,380
2,862
48,963
29,148
14,114
599
1,709
14,256
6,986
-
1,456
2,096
70,364
Trade and other receivables consist of a large
number of customers spread across diverse
geographical regions, which reduces credit risk.
As at balance sheet date, trade and other receivables
of $32,318,000 (2022: $28,737,000) were past due. A
provision of $5,620,000 (2022: $5,964,000) is held
against these overdue amounts. This provision is based
on expected life time credit losses, taking into account
historic loss rates, age of the outstanding balances,
customer payment history and any arrangements,
leverage or security in place with the customer. Interest
is charged on overdue debtors in some instances.
The ageing analysis of these past due trade receivables is:
0 to 30 days
30 to 60 days
60 to 90 days
90 days and over
2023
NZ$’000
8,117
4,432
4,251
15,518
32,318
2022
NZ$’000
11,637
4,412
4,625
8,063
28,737
140
141
KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES As at balance date the 90 days and over category includes
$3,878,000 relating to a specific customer. Subsequent
to year end this specific customer has made a payment
of $4,371,000 against the total balance outstanding.
The Group considers a financial asset to be in default
when the debtor is unlikely to pay its credit obligations in
full, without recourse by the Group. The gross carrying
amount of a financial asset is written off when the
Group has no reasonable expectations of recovering
a financial asset in its entirety or a portion thereof.
3.1.5 Other assets
Accounting policies
Other assets relate to rights of return assets. Rights of
return recognises the estimated returned sales under
the Group's returns policies. Management estimates the
returned sales based on historical sales return information
and any recent trends that may suggest future claims
could differ from historical amounts. For sales that are
expected to be returned, the Group recognises a returns
provision as disclosed in note 3.1.6. The associated
inventory value for sales that are expected to be returned
is recognised as a right of return asset. The costs to
recover the products are not material because the
customers usually return them in a saleable condition.
Right of return assets
Opening balance
Additional amounts
recognised
Amounts incurred and
charged
Foreign exchange
2023
NZ$’000
2022
NZ$’000
2,434
199
(709)
(64)
1,860
2,320
10
(19)
123
2,434
3.1.6 Trade and other payables
Accounting policies
Trade payables, sundry creditors and accruals
principally comprise amounts outstanding for trade
purchases and ongoing costs. Trade and other
payables are initially measured at fair value and
subsequently measured at amortised cost, using
the effective interest method. The carrying value
of trade payables is considered to approximate fair
value as amounts are unsecured and are usually paid
by the 30th of the month following recognition.
142
Employee entitlements relates to benefits accruing to
employees in respect of wages and salaries, annual leave,
and long service leave when it is probable that settlement
will be required, and they are capable of being measured
reliably. Provisions made in respect of employee benefits
expected to be settled within 12 months are measured
at their nominal values using the remuneration rate
expected to apply at the time of settlement. Provisions
made in respect of employee benefits which are not
expected to be settled within 12 months are measured
as the present value of the estimated future cash
outflows to be made by the Group in respect of services
provided by employees up to the reporting date.
Current
Trade payables
Employee entitlements
Sundry creditors and accruals
Provisions
Revenue received in advance
Non-current
Employee entitlements
Provisions
Sundry creditors and accruals
2023
NZ$’000
2022
NZ$’000
89,909
25,105
49,904
7,862
612
102,296
25,619
56,600
8,306
1,213
173,392
194,034
3,020
11,832
1,136
15,988
2,946
11,394
2,906
17,246
The carrying amount of the Group’s trade and other
payables are denominated in the following currencies:
USD
AUD
NZD
EUR
THB
BRL
IDR
Other currencies
2023
NZ$’000
72,523
2022
NZ$’000
81,917
61,855
24,531
14,552
6,663
4,983
2,302
1,971
71,484
25,863
15,690
7,774
4,325
2,464
1,763
189,380
211,280
Provisions
A provision is recognised if, as a result of a past
event, the Group has a present legal or constructive
obligation that can be estimated reliably, and it
is probable that an outflow of economic benefits
will be required to settle the obligation.
The warranties provision represents the present value
of the estimated future outflow of economic benefits
that will be required under the Group’s obligations for
warranties under local sale of goods legislation. The
provision relates to wetsuits, watches and footwear and
is based on estimates made from historical warranty
data associated with similar products and services.
A restructuring provision is recognised when the Group
has approved a detailed and formal restructuring
plan, and the restructuring has either commenced
or has been announced publicly at balance date.
Lease restoration provision represents the present
value of the estimated cost to restore leased properties
to their original condition upon expiry of the lease.
Where a customer has a right to return a product
within a given period, the Group recognises a returns
provision for the consideration received that will be
required to be refunded to customers on return of
the product. The Group also recognises a right to
the returned goods as disclosed in note 3.1.5.
Other provisions relate to miscellaneous
amounts that meet the definition of a provision
and do not relate to the other categories.
Warranties
NZ$’000
Restructuring
NZ$’000
Lease
restoration
NZ$’000
Sales returns
NZ$’000
Other
NZ$’000
Total
NZ$’000
Year ended 31 July 2022
Opening balance
Additional provisions recognised
Provisions used during the year
Provisions re-measured during
the year
Foreign exchange
Closing balance
As at 31 July 2022
Current
Non-current
Year ended 31 July 2023
Opening balance
Additional provisions recognised
Provisions used during the year
Provisions re-measured during
the year
Foreign exchange
Closing balance
As at 31 July 2023
Current
Non-current
1,693
606
(473)
-
126
1,952
1,952
-
1,952
1,952
694
(644)
(405)
(27)
1,570
1,570
-
1,570
360
163
(45)
(23)
(10)
445
445
-
445
445
1,745
(167)
(113)
37
1,947
1,947
-
1,947
11,248
457
-
(826)
515
11,394
-
11,394
11,394
11,394
1,056
-
(528)
(90)
11,832
-
11,832
11,832
4,692
29
-
136
258
5,115
5,115
-
5,115
5,115
411
-
(1,044)
(137)
4,345
4,345
-
4,345
581
289
(87)
-
11
794
794
-
794
794
-
-
(789)
(5)
-
-
-
-
18,574
1,544
(605)
(713)
900
19,700
8,306
11,394
19,700
19,700
3,212
(167)
(2,829)
(222)
19,694
7,862
11,832
19,694
143
KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES 3.2 PROPERTY, PLANT AND EQUIPMENT
KEEPING IT SIMPLE
The following section shows the physical assets used by the Group to operate the business, generating revenues
and profits. These assets include store and office fit-out, as well as equipment used in sales and support activities.
Assets are recognised 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.
Accounting policies
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.
The assets’ residual value and useful lives are reviewed
and adjusted if appropriate at each balance sheet date.
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.
Depreciation
Depreciation of property, plant and equipment is
calculated using straight line and diminishing value
methods to expense the cost of the assets over
their useful lives. Store and office fitouts are typically
Property, plant and equipment
Property, plant and equipment can be analysed as follows:
depreciated over the expected primary lease term.
The rates are as follows:
Buildings
Leasehold improvements
Office, plant and equipment
Furniture and fittings
Computer equipment
5 – 10%
5 – 50%
5 – 50%
10 – 50%
10 – 50%
The useful lives of the Group’s property, plant and
equipment including store and office fitouts and wetsuit
manufacturing facilities are reviewed annually to
determine whether there have been any changes due to
operational or external factors, including climate change
considerations, and updated as appropriate. There have
been no such changes identified during the financial year.
Impairment of assets
Property, plant and equipment is reviewed for impairment
whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which
the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an
asset’s fair value less costs of disposal and value in use.
Land &
buildings
NZ$’000
Leasehold
improvements
NZ$’000
Office, plant &
equipment
NZ$’000
Furniture &
fittings
NZ$’000
Computer
equipment
NZ$’000
Total
NZ$’000
8,691
(3,925)
4,766
92,270
(65,270)
27,000
30,130
(18,179)
11,951
101,699
(71,642)
30,057
21,175
(15,665)
5,510
253,965
(174,681)
79,284
As at 31 July 2021
Cost
Accumulated depreciation
Closing net book value
144
Land &
buildings
NZ$’000
Leasehold
improvements
NZ$’000
Office, plant &
equipment
NZ$’000
Furniture &
fittings
NZ$’000
Computer
equipment
NZ$’000
Total
NZ$’000
11,951
1,335
(7)
(1,338)
-
(20)
-
559
12,480
31,253
(18,773)
12,480
12,480
3,014
(86)
(1,598)
-
(669)
(75)
13,066
32,325
(19,259)
13,066
30,057
10,227
(475)
(9,553)
(12)
1,535
-
1,300
33,079
115,582
(82,503)
33,079
33,079
11,024
(512)
(8,964)
-
(1,651)
91
33,067
97,762
(64,695)
33,067
5,510
1,453
(12)
(1,894)
-
(74)
(1,507)
129
3,605
79,284
21,567
(595)
(22,572)
(12)
-
(1,507)
3,078
79,243
19,293
(15,688)
3,605
276,641
(197,398)
79,243
3,605
1,132
(7)
(1,482)
-
276
47
3,571
79,243
27,665
(700)
(22,824)
-
(702)
260
82,942
17,879
(14,308)
3,571
266,718
(183,776)
82,942
Capital commitments
Capital commitments contracted for at balance sheet
date include property, plant and equipment of $1,790,000
(2022: $868,000).
Year ended 31 July 2022
Opening net book value
Additions
Disposals
Depreciation
Impairment
Transfers between categories
Transfers to intangibles
Foreign exchange
Closing net book value
As at 31 July 2022
Cost
Accumulated depreciation
Closing net book value
Year ended 31 July 2023
Opening net book value
Additions
Disposals
Depreciation
Impairment
Transfers between categories &
to intangibles
Foreign exchange
Closing net book value
As at 31 July 2023
Cost
Accumulated depreciation
Closing net book value
4,766
342
-
(353)
-
(15)
-
(105)
4,635
8,832
(4,197)
4,635
4,635
493
-
(404)
-
201
463
5,388
10,382
(4,994)
5,388
27,000
8,210
(101)
(9,434)
-
(1,426)
-
1,195
25,444
101,681
(76,237)
25,444
25,444
12,002
(95)
(10,376)
-
1,141
(266)
27,850
108,370
(80,520)
27,850
Depreciation expense is excluded from administration
and general expenses in the consolidated statement of
comprehensive income.
Sale of property, plant and equipment
Gains and losses on disposals are determined by
comparing proceeds with carrying amount. These
are included in the consolidated statement of
comprehensive income.
Loss on sale of property,
plant and equipment
2023
NZ$’000
698
2022
NZ$’000
591
145
KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES 3.3 INTANGIBLE ASSETS
KEEPING IT SIMPLE
The following section shows the non-physical assets used by the Group to operate the business, generating
revenues and profits. These assets include brands, customer relationship, software development and goodwill.
This section explains the accounting policies applied and the specific judgements and estimates made by the
Directors in arriving at the net book value of these assets.
Accounting policies
Goodwill
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 or more frequently if events
or changes in circumstances indicate that it might be
impaired. It is 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.
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, Oboz or
Rip Curl 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.
Customer relationships
Acquired customer relationships are carried at original
cost based on independent valuation obtained at the
date of acquisition less accumulated amortisation.
They are amortised on a straight-line basis over
a useful life of five to ten years. The estimated
useful life and amortisation period is reviewed
at the end of each annual reporting period.
Software costs
Software costs have a finite useful life. Software costs are
capitalised and amortised over the useful economic life.
Costs associated with maintaining computer software
programs are recognised as an expense when incurred.
Costs that are directly associated with the creation or
acquisition of an identifiable software asset 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 and contractors.
Software is amortised over the estimated useful economic
life of the asset ranging from two to ten years.
Software-as-a Service (SaaS) arrangements
SaaS arrangements are arrangements in which
the Group does not currently control the
underlying software used in the arrangement.
Where implementation costs for SaaS arrangements
result in the creation of an identifiable software asset,
and where the Group has the power to obtain the
future economic benefits flowing from the underlying
resource and to restrict the access of others to those
benefits, such costs are recognised as a separate
intangible software asset and amortised over the
useful life of the software on a straight-line basis.
Where costs incurred to configure or customise SaaS
arrangements do not result in the recognition of an
intangible software asset, then those costs that provide
the Group with a distinct service (in addition to access
to the SaaS software) are recognised as expenses
when the supplier provides the services. When such
costs incurred do not provide a distinct service, the
costs are recognised as expenses over the duration of
the expected renewable term of the arrangement.
Other intangibles
Other intangibles relate to lease rights expenditure
associated with acquiring existing lease agreements for
stores where there is an active market for key money.
They are carried at original cost less accumulated
impairment losses. Other intangibles have an indefinite
useful life and are tested annually for impairment.
Impairment
Assets are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying
amount may not be recoverable. Intangible assets that
Intangible assets
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 of disposal and value in use.
For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately
identifiable cash flows e.g., cash generating units.
As at 31 July 2021
Cost
Accumulated amortisation
Closing net book value
Year ended 31 July 2022
Opening net book value
Additions
Disposals
Amortisation
Transfers from property, plant and equipment
Foreign exchange
Closing net book value
As at 31 July 2022
Cost
Accumulated amortisation
Closing net book value
Year ended 31 July 2023
Opening net book value
Additions
Disposals
Amortisation
Transfers from property, plant and equipment
Foreign exchange
Closing net book value
As at 31 July 2023
Cost
Accumulated amortisation
Closing net book value
Goodwill
NZ$’000
Brand
NZ$’000
Customer
relationship
NZ$’000
Software
NZ$’000
Other
intangibles
NZ$’000
277,672
(1,271)
276,401
350,127
-
350,127
40,621
(9,237)
31,384
67,004
(45,721)
21,283
276,401
350,127
31,384
-
-
-
-
-
-
-
-
13,600
290,001
18,040
368,167
-
-
(5,188)
-
1,532
27,728
21,283
14,885
(14)
(7,151)
1,507
228
30,738
291,272
368,167
(1,271)
-
290,001
368,167
42,892
(15,164)
27,728
84,471
(53,733)
30,738
290,001
368,167
27,728
-
-
-
-
-
-
-
-
(2,121)
287,880
(7,246)
360,921
30,738
8,323
-
-
-
(5,303)
(8,822)
-
(704)
21,721
702
(13)
30,928
4,358
(1,544)
2,814
2,814
-
-
-
-
(126)
2,688
4,162
(1,474)
2,688
2,688
-
-
(7)
-
271
2,952
Total
NZ$’000
739,782
(57,773)
682,009
682,009
14,885
(14)
(12,339)
1,507
33,274
719,322
790,964
(71,642)
719,322
719,322
8,323
-
(14,132)
702
(9,813)
704,402
289,151
(1,271)
287,880
360,921
-
360,921
41,739
(20,018)
21,721
95,109
(64,181)
30,928
4,582
(1,630)
2,952
791,502
(87,100)
704,402
146
147
KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES Sale of intangibles
Gains and losses on disposals are determined by
comparing proceeds with carrying amount. These
are included in the consolidated statement of
comprehensive income.
Loss on sale of intangibles
2023
NZ$’000
-
2022
NZ$’000
14
Impairment tests for goodwill and brand
The aggregate carrying amounts of goodwill and brand
allocated to each unit for impairment testing are as follows:
Goodwill
Brand
2023
NZ$’000
2022
NZ$’000
2023
NZ$’000
2022
NZ$’000
Kathmandu
122,041
122,936
150,352
153,336
Oboz
Rip Curl
74,101
91,738
72,572
94,493
287,880
290,001
40,699
169,870
360,921
39,859
174,972
368,167
For the purposes of goodwill and brand impairment
testing, the Group operates as three cash generating
units, Kathmandu, Rip Curl and Oboz, which are aligned to
the Group’s operating segments as outlined in note 2.1.
The recoverable amount of each cash generating unit
(CGU) has been determined based on the fair value
less cost of disposal (FVLCOD). Five-year projected
cash flows are used to determine the FVLCOD.
The discounted cash flow valuations were calculated
using post tax cash flow projections based on financial
budgets prepared by management and approved
by the Directors for the year ended 31 July 2023.
Cash flows beyond July 2023 are based on three-
year business plans presented to the Directors.
The terminal growth rate assumption is based on
a conservative estimate considering the current
inflation targets and do not exceed the historical
long-term average growth rate for each CGU. Pre-
tax discount rates are calculated based on a market
participant expected capital structure and cost of
debt to derive a weighted average cost of capital.
The FVLCOD calculations confirmed that there was no
impairment of goodwill and brand during the year (2022: nil).
The Group has performed sensitivity analysis of the
key assumptions provided above and, in each case, a
reasonable change in assumption would not result in an
impairment. However, it is possible they could occur in
a combination. Furthermore, the CGU with the lowest
headroom is the Oboz CGU which has NZ$30 million of
headroom. Prior to the 2022 financial year the Oboz CGU
achieved an average EBITDA margin of approximately
16% each year. Over the last two years the Oboz CGU has
achieved an average EBITDA margin of approximately 7%.
The Oboz CGU EBITDA margin is forecasted to exceed
15% in the 2026 financial year. If the EBITDA margin
does not recover to its historical levels the CGU could
be impaired if all other assumptions remain unchanged.
The expected continued promotion and marketing of
the Kathmandu, Oboz and Rip Curl brands supports
the assumption that the brand has an indefinite life.
The Group has considered the impact of climate
change on the key assumptions included in its
impairment testing and has concluded that it will not
have a material impact on the key assumptions.
Capital commitments
Capital commitments contracted for at
balance sheet date include intangible assets
of $2,062,000 (2022: $2,962,000).
Kathmandu
14.6%
10.3%
2.9%
2023
Rip Curl
14.4%
10.1%
3.0%
Oboz
14.8%
10.7%
2.5%
Kathmandu
12.9%
9.1%
2.4%
2022
Rip Curl
12.8%
9.0%
2.5%
Oboz
14.5%
10.5%
2.2%
Assumptions used:
Pre-tax WACC rate
Post-tax WACC rate
Terminal growth rate
148
3.4 LEASES
KEEPING IT SIMPLE
The following section shows the assets leased by the Group to operate the business, generating revenues and
profits. These assets include the lease of retail stores.
This section explains the accounting policies applied and the specific judgements and estimates made by the
Directors in arriving at the carrying value of these assets and the corresponding lease liability.
Accounting policies
The Group assesses whether a contract is or contains a
lease, at inception of a contract. The Group recognises
a right-of-use asset and a corresponding lease liability
with respect to all lease arrangements in which it is the
lessee, except for short-term leases (defined as leases
with a term of 12 months or less) and leases of low value
assets. For these leases, the Group recognises the lease
payments as an operating expense on a straight-line basis
over the term of the lease unless another systematic
basis is more representative of the time pattern in which
economic benefits from the leased asset are consumed.
Lease liability
The lease liability is initially measured at the present
value of the lease payments that are not paid at the
commencement date, discounted by using the rate implicit
in the lease. If this rate cannot be readily determined, the
Group uses its incremental borrowing rate. The Group’s
incremental borrowing rate has been determined as
the rate of interest that the Group would have to pay to
borrow over a similar term and with a similar security the
funds necessary to obtain an asset of a similar value to
the right-of-use asset in a similar economic environment.
Lease payments included in the measurement
of the lease liability comprise:
• fixed lease payments (including in-substance
fixed payments), less any lease incentives; and
• variable lease payments that depend on an
index or rate, initially measured using the
index or rate at the commencement date.
The lease liability is subsequently measured by increasing
the carrying amount to reflect interest on the lease liability
(using the effective interest method) and by reducing the
carrying amount to reflect the lease payments made.
The Group remeasures the lease liability (and
makes a corresponding adjustment to the
related right-of-use asset) whenever:
• the lease term has changed in which case the lease
liability is remeasured by discounting the revised
lease payments using a revised discount rate;
• the lease payments change due to changes in an
index or rate or a change in expected payment
under a guaranteed residual value, in which cases
the lease liability is remeasured by discounting
the revised lease payments using the initial
discount rate (unless the lease payments change
is due to a change in a floating interest rate, in
which case a revised discount rate is used);
• a lease contract is modified, and the lease modification
is not accounted for as a separate lease, in which case
the lease liability is remeasured by discounting the
revised lease payments using a revised discount rate.
Right of use asset
The right-of-use assets comprise the initial measurement
of the corresponding lease liability, lease payments made
at or before the commencement day and any initial
direct costs. They are subsequently measured at cost
less accumulated depreciation and impairment losses.
Whenever the Group incurs an obligation for costs
to dismantle and remove a leased asset, restore the
site on which it is located or restore the underlying
asset to the condition required by the terms and
conditions of the lease, a provision is recognised
and measured under NZ IAS 37. The costs are
included in the related right-of-use asset.
Right-of-use assets are depreciated over the lease term
and including expected renewals. The depreciation
starts at the commencement date. Changes
due to operational or external factors, including
149
KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES climate change are considered when assessing the
inclusion of expected renewals in the lease term.
3.4.1 Right-of-use assets
The movements in right of use assets were as follows:
Lease liability maturity analysis
The Group applies NZ IAS 36 Impairment of Assets
to determine whether a right-of-use asset is impaired
and accounts for any identified impairment loss.
Variable rents
Variable rents that do not depend on an index or rate
are not included in the measurement of the lease liability
and the right-of-use asset. The related payments are
recognised as an expense in the period in which the
event or condition that triggers those payments occurs
and are included in the selling expenses line in the
consolidated statement of comprehensive income.
Group as a lessee
The Group leases several assets including buildings and
motor vehicles. Some of the existing lease arrangements
have right of renewal options for varying terms. Renewal
options are included within the lease if the Group is
reasonably certain to take up the option. The average
lease term for property leases, including expected rights
of renewal, is 9 years (2022: 9 years). The average lease
term for vehicle leases is 3 years (2022: 3 years).
Opening net book value
Additions and modifications to
right-of-use asset
Depreciation for the period
Impairment for the period
Foreign exchange
Closing net book value
Cost
Accumulated amortisation &
impairment
2023
NZ$’000
250,372
106,231
(86,757)
1,675
(1,194)
270,327
2022
NZ$’000
242,677
75,311
(77,605)
(928)
10,917
250,372
518,760
(248,433)
439,852
(189,480)
Closing net book value
270,327
250,372
3.4.2 Lease liabilities
The movements in lease liabilities were as follows:
Opening lease liabilities
Additions and modifications to
lease liability
Interest expense on lease
liabilities
Repayment of lease liabilities
(including interest)
Foreign exchange
Closing lease liabilities
2023
NZ$’000
284,587
108,025
2022
NZ$’000
279,271
75,816
11,022
8,476
(99,736)
(91,247)
(1,798)
302,100
12,271
284,587
As at 31 July 2022
Within one year
One to five years
Beyond five years
Current
Non-current
As at 31 July 2023
Within one year
One to five years
Beyond five years
Current
Non-current
Gross lease
payments
NZ$’000
82,992
184,404
40,849
308,245
Interest
NZ$’000
(7,699)
(13,683)
(2,276)
(23,658)
92,839
195,533
41,651
330,023
(9,607)
(16,168)
(2,148)
(27,923)
Carrying
amount
NZ$’000
75,293
170,721
38,573
284,587
75,293
209,294
284,587
83,232
179,365
39,503
302,100
83,232
218,868
302,100
150
151
KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES Section 4: Capital Structure and
Financing Costs
IN THIS SECTION
This section outlines how the Group manages its capital structure and related financing costs, including its
balance sheet liquidity and access to capital markets.
Capital structure is how an entity finances its overall operations and growth by using different sources of funds.
The Directors determine and monitor the appropriate capital structure of the Group, specifically how much is
raised from shareholders (equity) and how much is borrowed from financial institutions (debt) to finance the
Group’s activities both now and in the future.
The Directors consider the Group’s capital structure and dividend policy at least twice a year ahead of
announcing results and do so in the context of its ability to continue as a going concern, to execute strategy
and to deliver its business plan.
Interest is payable based on the BKBM rate (NZD
borrowings), the BBSY rate (AUD borrowings), SOFR
rate (US borrowings) or the applicable short-term rate
for interest periods less than 30 days, plus a margin
of between 1.05% - 1.31%. The debt is secured by
the assets of the guaranteeing group in accordance
with the Security Trust Deed dated 25 October 2019
as amended 12 May 2023. The guaranteeing group
comprises entities operating in New Zealand, Australia,
North America and the United Kingdom. The carrying
value of the assets held by the guaranteeing group
are $1,444,870,000 (2022: $1,408,254,000).
The covenants entered into by the Group require
specified calculations of Group earnings before interest,
tax, depreciation and amortisation (EBITDA) plus lease
rental costs to exceed total fixed charges (net interest
expense and lease rental costs) at the end of each half
during the financial year. Similarly, EBITDA must be no
less than a specified proportion of total net debt at the
end of each six-month interim period. The calculations
of these covenants are specified in the bank facility
agreement of 25 October 2019 as amended and restated
on 12 May 2023. The Group has complied with its banking
covenants at all measurement points during the year.
The current interest rates, prior to hedging, on the term
loans ranged between 5.31% - 6.65% (2022: 0.99% - 3.20%).
4.1 INTEREST BEARING LIABILITIES
Accounting policies
Interest bearing liabilities are the Group’s borrowings.
Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between
the proceeds (net of transaction costs) and the
redemption amount is recognised in the consolidated
statement of comprehensive income over the period of
the borrowings using the effective interest method.
Borrowings are classified as current liabilities
unless the Group has an unconditional right
to defer settlement of the liability for at least
12 months after the balance sheet date.
The table below separates borrowings into current and
non-current liabilities:
Current portion
Non-current portion
2023
NZ$’000
-
105,209
105,209
2022
NZ$’000
-
110,881
110,881
Group Facility Agreement
The Group has a multi-option syndicated facility, which
consists of an A$240 million multi-currency revolving
facility and a NZ$54 million multi-currency revolving
facility. Both facilities are sustainability linked with targets
such as reducing greenhouse gas emissions, continued B
Corp certification, and improving transparency within the
Group supply chain, including the wellbeing and labour
conditions of workers, and environmental metrics. All
facilities are repayable in full on 12 November 2026.
152
Refer to note 4.2 for notional principal amounts
and valuations of interest rate swaps outstanding
at balance sheet date. A sensitivity analysis of
interest rate risk on the Group’s financial assets
and liabilities is provided in the table below.
At the reporting date the interest rate profile of the
Group's banking facilities was (carrying amount):
Total secured borrowings
Less Principal covered by
interest rate swaps
Net principal subject to floating
interest rates
2023
NZ$’000
105,209
-
2022
NZ$’000
110,881
-
105,209
110,881
Interest rate swaps have the economic effect of
converting borrowings from floating to fixed rates.
The cash flow hedge loss on interest rate swaps
at balance sheet date was nil (2022: nil).
Interest rate sensitivity analysis
The following table summarises the sensitivity of the
Group’s financial assets and financial liabilities to interest
rate risk.
A sensitivity of 1% (2022: 1%) has been selected for
interest rate risk. The 1% is based on reasonably possible
changes over a financial year, using the observed range of
historical data for the preceding five-year period.
Amounts are shown net of income tax. All variables other
than applicable interest rates are held constant. The
impact on equity is presented exclusive of the impact on
retained earnings.
Reconciliation of movement in borrowings
Opening balance
Net cash flow movement
Capitalised borrowing costs
Foreign exchange movement
2023
NZ$’000
110,881
(1,119)
(1,419)
(3,134)
2022
NZ$’000
105,597
-
(340)
5,624
Closing balance
105,209
110,881
Borrowings maturity analysis
2023
NZ$’000
2022
NZ$’000
Principal of interest-bearing
liabilities:
Payable within 1 year
Payable 1 to 2 years
Payable 2 to 3 years
Payable 3 to 4 years
4.1.1 Finance costs
Interest income
Interest expense on interest
bearing liabilities
Interest on lease liabilities
Other finance costs
Net exchange loss / (gain) on
foreign currency
-
-
-
105,209
105,209
2023
NZ$’000
(886)
7,828
11,022
3,692
2,398
-
110,881
-
-
110,881
2022
NZ$’000
(394)
1,809
8,476
3,057
845
24,054
13,793
Other finance costs relate to facility fees on banking
arrangements and debt underwriting costs.
4.1.2 Cash flow and fair value interest rate risk
Interest rate risk is the risk that fluctuations in interest
rates impact the Group’s financial performance.
Risk
Interest rate
risk
Exposure
arising from
Interest
bearing
liabilities
at floating
interest rates
Monitoring
Management
Interest rate
swaps
Cash flow
forecasting
Sensitivity
analysis
153
KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES As at 31 July 2023
Financial assets
Cash and cash equivalents
Financial liabilities
Interest bearing liabilities
Net increase / (decrease)
As at 31 July 2022
Financial assets
Cash and cash equivalents
Financial liabilities
Interest bearing liabilities
Net increase / (decrease)
Carrying amount
NZ$’000
Profit
NZ$’000
Equity
NZ$’000
Profit
NZ$’000
Equity
NZ$’000
-1%
+1%
49,488
(356)
105,209
758
402
-
-
-
356
(758)
(402)
-
-
-
Carrying amount
NZ$’000
Profit
NZ$’000
Equity
NZ$’000
Profit
NZ$’000
Equity
NZ$’000
-1%
+1%
70,810
(510)
110,881
798
288
-
-
-
510
(798)
(288)
-
-
-
4.1.3 Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
Risk
Liquidity risk
Exposure arising from
Trade and other payables
Interest bearing liabilities
Monitoring
Cash flow forecasting
Management
Active working capital management
Flexibility in funding arrangements
The Group has borrowing facilities of $311,605,000 (2022: $332,772,000) and operates well within this facility. This
includes short term bank overdraft requirements, and at balance sheet date no bank accounts were in overdraft.
Of this total facility $25,482,000 is available for instruments including letters of credit and bank guarantees.
154
KEEPING IT SIMPLE
The table below analyses the Group’s financial liabilities and net-settled derivative financial liabilities into
relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity
date. The amounts disclosed in the table are the contractual undiscounted cash flows, so will not always
reconcile with the amounts disclosed on the balance sheet.
As at 31 July 2022
Trade payables and accrued expenses
Interest bearing liabilities
As at 31 July 2023
Trade payables and accrued expenses
Interest bearing liabilities
Less than
1 year
NZ$’000
Between
1 - 2 years
NZ$’000
Between
2 - 5 years
NZ$’000
Over 5 years
NZ$’000
152,278
2,239
154,517
133,794
5,735
139,529
1,771
112,716
114,487
1,136
5,751
6,887
1,136
-
1,136
-
112,563
112,563
-
-
-
-
-
-
The Group enters into forward exchange contracts to manage the risks associated with the purchase of foreign currency
denominated products.
The table below analyses the Group’s derivative financial instruments that will be settled on a gross basis into relevant
maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The
amounts disclosed in the table are the contractual undiscounted cash flows. They are expected to occur and affect the
profit or loss at various dates between balance sheet dates and the following five years.
Less than
1 year
NZ$’000
Between
1 - 2 years
NZ$’000
Between
2 - 5 years
NZ$’000
Over 5 years
NZ$’000
As at 31 July 2022
Forward foreign exchange contracts
Inflow
Outflow
Net inflow / (outflow)
As at 31 July 2023
Forward foreign exchange contracts
Inflow
Outflow
Net inflow / (outflow)
180,362
(170,426)
9,936
178,278
(176,878)
1,400
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
155
KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES 4.2 DERIVATIVE FINANCIAL INSTRUMENTS
Derivative financial instruments
KEEPING IT SIMPLE
A derivative is a type of financial instrument typically used to manage risk. A derivative’s value changes over time
in response to underlying variables such as exchange rates or interest rates and is entered into for a fixed period.
A hedge is where a derivative is used to manage an underlying exposure.
The Group is exposed to changes in interest rates on its borrowings and to changes in foreign exchange rates on
its foreign currency (largely USD) purchases. The Group uses derivatives to hedge these underlying exposures.
Derivative financial instruments are initially included in the balance sheet at their fair value, either as assets or
liabilities, and are subsequently re-measured at fair value at each reporting date.
An interest rate swap is an instrument to exchange a fixed rate of interest for a floating rate, or vice versa, or one
type of floating rate for another.
Foreign exchange contracts
Current asset
Current liability
Net foreign exchange contracts -
cash flow hedge (asset /(liability))
Interest rate swaps
Current liability
Non-current liability
Net interest rate swaps - cash flow
hedge (asset / (liability))
2023
NZ$’000
2022
NZ$’000
2,560
(1,160)
1,400
9,936
-
9,936
4.2.1 Foreign exchange risk
Foreign exchange risk is the risk that fluctuations
in exchange rates will impact the Group’s financial
performance. The Group operates internationally and is
exposed to foreign exchange risk arising from various
currency exposures, primarily with respect to the AUD,
USD and EUR.
-
-
-
-
-
-
Risk
Foreign
exchange risk
Exposure
arising from
Foreign
currency
purchases
(over 90% of
purchases in
USD)
Monitoring
Management
USD foreign
exchange
derivatives
Forecast
purchases
Reviewing
exchange rate
movements
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 consolidated statement of
comprehensive income. 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 consolidated statement of comprehensive income.
Foreign currency 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 consolidated
statement of comprehensive income, except when
deferred in other comprehensive income. Translation
differences on monetary financial assets and liabilities are
reported as part of the foreign exchange gain or loss.
Accounting policies
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 hedges of highly
probable forecast transactions (cash flow hedges).
At inception of the hedging relationship, the Group
documents the economic relationship between
hedging instruments and hedged items, including
whether changes in the cash flows of the hedging
instruments are expected to offset changes in the
cash flows of the hedged items. The Group also
documents its risk management objectives and
strategy for undertaking its hedge transactions.
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
consolidated statement of comprehensive income.
Amounts accumulated in equity are recycled in the
consolidated statement of comprehensive income in the
periods when the hedged item will affect profit or loss.
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
156
The Group is exposed to currency risk on any cash
remitted between entities in different jurisdictions.
The Group does not hedge for such remittances.
Interest on borrowings is typically denominated
in either New Zealand, Australian or US dollars
and is paid for out of surplus operating cashflows
generated in New Zealand, Australia and the US.
Foreign currency sensitivity analysis
The following table summarises the sensitivity
of the Group’s financial assets and financial
liabilities to foreign exchange risk.
A sensitivity of -10% / +10% (2022: -10% / +10%) 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 -10% / +10% (2022: -10% / +10%) is
reasonable given the exchange rate volatility observed
on a historic basis for the preceding five-year period and
market expectation for potential future movements.
Amounts are shown net of income tax. All variables
other than applicable exchange rates are held
constant. The impact on equity is presented
exclusive of the impact on retained earnings.
Total derivative financial
instruments
1,400
9,936
The above table shows the Group’s financial
derivative holdings at year end.
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 floating rate
borrowings of the business to minimise the impact of
interest rate volatility within acceptable levels of risk
thereby limiting the volatility on the Group's financial
results. The notional amount of interest rate swaps at
balance sheet date was nil (2022: nil). The fixed interest
rate is nil (2022: nil). Refer to note 4.1.3 for timing of
contractual cash flows relating to interest rate swaps.
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 notional amount of foreign exchange
contracts amounts to US$109,254,000 / NZ$173,717,000
(2022: US$106,730,000 / NZ$159,303,000).
No material hedge ineffectiveness for interest rate swaps
or foreign exchange contracts exists as at balance sheet
date (2022: nil).
Refer to note 4.2.1 for a sensitivity analysis of foreign
exchange risk associated with derivative financial
instruments.
157
KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES -10%
+10%
4.3 EQUITY
Profit
NZ$’000
Equity
NZ$’000
Profit
NZ$’000
Equity
NZ$’000
KEEPING IT SIMPLE
As at 31 July 2023
Financial assets
Cash and cash equivalents
Trade and other receivables
Foreign exchange contracts – cash flow hedge
Financial liabilities
Trade and other payables
Interest bearing liabilities
Foreign exchange contracts – cash flow hedge
Net increase / (decrease)
As at 31 July 2022
Financial assets
Cash and cash equivalents
Trade and other receivables
Foreign exchange contracts – cash flow hedge
Financial liabilities
Trade and other payables
Interest bearing liabilities
Foreign exchange contracts – cash flow hedge
Net increase / (decrease)
Carrying
amount
NZ$’000
49,488
85,234
2,560
(189,380)
(105,209)
(1,160)
Carrying
amount
NZ$’000
70,810
92,882
9,936
2,625
6,560
-
(13,188)
(8,417)
-
(12,420)
-
-
(12,251)
-
-
(6,626)
(18,877)
(2,147)
(5,367)
-
10,790
6,886
-
10,162
-
-
10,023
-
-
5,422
15,445
-10%
+10%
Profit
NZ$’000
Equity
NZ$’000
Profit
NZ$’000
Equity
NZ$’000
3,806
7,303
-
-
-
(16,764)
(3,114)
(5,975)
-
12,128
7,258
-
-
-
13,716
-
-
70
(211,280)
(110,881)
-
(14,823)
(8,870)
-
-
-
(86)
(12,584)
(16,850)
10,297
13,786
This section explains material movements recorded in shareholders’ equity that are not explained elsewhere
in the financial statements. The movements in equity and the balance at 31 July 2023 are presented in the
consolidated statement of changes in equity.
Accounting policies
Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares are shown
in equity as a deduction, net of tax, from the proceeds.
Dividends
Dividends are recognised through equity following
the approval by the Company’s directors.
4.3.1 Contributed equity - ordinary shares
2023
NZ$’000
629,079
626,380
2,699
-
2022
NZ$’000
626,380
626,380
-
-
Ordinary shares fully paid
Opening balance
Shares issued under Executive
and Senior Management Long-
Term Incentive Plan
Shares issued under share
entitlement offers and share
placement
Closing balance
629,079
626,380
Number of issued shares
Opening balance
Shares issued under Executive
and Senior Management
Long-Term Incentive Plan
Shares issued under share
entitlement offers and share
placement
2023
NZ$’000
709,001
2,346
-
2022
NZ$’000
709,001
-
-
Closing balance
711,347
709,001
As at 31 July 2023 there were 711,347,722 (2022:
709,001,384) ordinary issued shares in KMD Brands
Limited and these are classified as equity.
2,346,338 shares (2022: nil) were issued under the
‘Executive and Senior Management Long Term Incentive
Plan 24 November 2010’ during the year.
All ordinary shares carry equal rights in respect of voting
and the receipt of dividends. Ordinary shares do not have
a par value.
Refer to note 6.3 for employee share-based
remuneration plans.
4.3.2 Reserves and retained earnings
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 other comprehensive income,
as described in the accounting policy in note 4.2. The
amounts are recognised in profit or loss when the
associated hedged transaction affects profit or loss.
Foreign currency translation reserve
The foreign currency translation reserve is used to
record foreign currency translation differences arising
on the translation of the Group entities results and
financial position. The amounts are accumulated in other
comprehensive income and recognised in profit or loss
when the foreign operation is partially disposed of or sold.
Share based payments reserve
The share-based payments reserve is used to recognise
the fair value of share options and performance rights
granted but not exercised or lapsed. Amounts are
transferred to share capital when vested options are
exercised by the employee or performance rights
are vested.
158
159
KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES Cash flow hedging reserve
Opening balance
Realised (gains) / losses transferred to hedged asset
Revaluation movement
Deferred taxation movement
Closing balance
Foreign currency translation reserve
Opening balance
Currency translation differences – gross
Currency translation differences – taxation
Closing balance
Share-based payments reserve
Opening balance
Change during the year
Deferred taxation movement
Transfer to share capital on vesting of shares to employees
Share options / performance rights lapsed
Closing balance
Other reserves
Opening balance
Current year expense recognised in other comprehensive income
Deferred taxation movement
Closing balance
Total reserves
4.3.3 Dividends
Prior year final dividend paid
Current year interim dividend paid
Dividends paid
2023
NZ$’000
21,340
21,341
42,681
2022
NZ$’000
21,270
21,270
42,540
Dividends paid represent NZ$0.06 per share
(2022: NZ $0.06).
Section 5: Group Structure
2023
NZ$’000
2022
NZ$’000
KEEPING IT SIMPLE
6,218
(14,443)
6,018
2,481
274
6,491
3,200
-
9,691
3,165
568
252
(2,699)
-
1,286
(47)
-
-
(47)
1,341
(7,794)
13,298
(627)
6,218
(29,462)
35,953
-
6,491
2,637
914
(309)
-
(77)
3,165
(47)
-
-
(47)
2.3
2.3
2.3
2.3
11,204
15,827
4.3.4 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.
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.
This section provides information about the entities that make up the KMD Brands Limited Group and how they
affect the financial performance and position of the Group.
5.1 SUBSIDIARY COMPANIES
Subsidiaries are all entities over which the Group has control. Control is achieved when the Group:
• has power over the entity;
• is exposed to, or has rights to, variable returns from its involvement with the entity; and
• can use its power to affect returns.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when
the Group loses control of the subsidiary. All subsidiaries in the Group have a balance date of 31 July.
The following entities comprise the significant trading and holding companies of the Group:
Companies
Parent entity:
KMD Brands Limited
Subsidiaries:
Kathmandu Group Holdings Limited
KMD Brands Investments Limited
KMD Brands Finance (NZ) Limited
KMD Brands Finance (AU) Pty Limited
KMD Brands Managed Services (NZ) Limited
KMD Brands Managed Services (AU) Pty Ltd
Kathmandu Limited
Kathmandu Pty Ltd
Kathmandu (U.K.) Limited
Kathmandu US Holdings LLC
Oboz Footwear LLC
Barrel Wave Holdings Pty Ltd
Rip Curl Group Pty Ltd
Rip Curl International Pty Ltd
PT Jarosite
Rip Curl Pty Ltd
Onsmooth Thai Co Ltd
Rip Curl (Thailand) Ltd
Ozmosis Pty Ltd
Rip Curl Japan
Curl Retail No 1. Pty Ltd
RC Surf NZ Limited
Rip Curl Finance Pty Ltd
Rip Curl Europe S.A.S
Rip Curl Spain S.A.U
Rip Curl Suisse S.A.R.L
Rip Surf LDA
Rip Curl UK Ltd
KMD Brands Germany GMBH
Rip Curl Nordic AB
KMD Brands Italy SRL
Rip Curl Inc
Rip Curl Canada Inc
Rip Curl Brazil LTDA
Parties to Deed of
Cross Guarantee
Country of
incorporation
Parent % holding
2023
2022
√
√
√
√
√
√
√
√
√
√
√
√
√
New Zealand
100%
New Zealand
100%
New Zealand
100%
New Zealand
100%
Australia
100%
New Zealand
100%
Australia
100%
New Zealand
100%
Australia
United Kingdom
100%
United States of America 100%
United States of America 100%
100%
Australia
100%
Australia
100%
Australia
100%
Indonesia
100%
Australia
100%
Thailand
50%
Thailand
100%
Australia
100%
Japan
100%
Australia
100%
New Zealand
100%
Australia
100%
France
100%
Spain
100%
Switzerland
100%
Portugal
100%
United Kingdom
100%
Germany
100%
Sweden
Italy
100%
United States of America 100%
100%
Canada
100%
Brazil
100%
100%
100%
-
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
100%
100%
100%
160
161
KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES 5.2 DEED OF CROSS GUARANTEE
Pursuant to ASIC Corporations (wholly owned Companies)
Instrument 2016/785, the Australian-incorporated wholly
owned subsidiaries listed in note 5.1 as parties to the Deed
of Cross Guarantee are relieved from the Corporations Act
2001 requirements for preparation, audit and lodgement
of financial reports and directors’ reports in Australia.
It is a condition of the ASIC Corporations Instrument
that the Company and each of the subsidiaries listed
enter a Deed of Cross Guarantee. The effect of the Deed
is that each party guarantees to each creditor of each
other party payment in full of any debt in the event of
winding up of the other party under certain provisions
of the Corporations Act 2001. If a winding up occurs
under other provisions of the Act, the guarantee will
only apply if after six months after a resolution or order
winding up any creditor has not been paid in full.
A consolidated statement of comprehensive income
and balance sheet are prepared for the Company and
controlled entities that are parties to the Deed of Cross
Guarantee, which eliminate all transactions between
parties to the Deed of Cross Guarantee. These financial
statements are included as a separate disclosure within
the Consolidated Financial Statements in order to meet
the Group’s Australian statutory reporting obligations.
Consolidated Statement of Comprehensive Income and Retained Earnings for the year ended 31 July 2023
2023
NZ$’000
578,794
(534,747)
(25,281)
18,766
(6,429)
12,337
2
12,339
(56,567)
12,337
(42,681)
-
(86,911)
2022
NZ$’000
530,199
(484,712)
1,965
47,452
(12,848)
34,604
14,837
49,441
(48,708)
34,604
(42,540)
77
(56,567)
Sales
Expenses
Finance costs – net
Profit before income tax
Income tax expense
Profit after income tax
Other comprehensive income
Total comprehensive income for the year
Opening retained earnings
Profit for the year after income tax
Dividends paid
Share options / performance rights lapsed
Closing retained earnings
162
Consolidated Balance Sheet as at 31 July 2023
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Current tax asset
Other current assets
Total current assets
Non-current assets
Trade and other receivables
Investments
Property, plant and equipment
Intangible assets
Right-of-use assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Derivative financial instruments
Current lease liabilities
Total current liabilities
Non-current liabilities
Non-current trade and other payables
Interest bearing liabilities
Loans with related parties
Deferred tax
Non-current lease liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity – ordinary shares
Reserves
Retained earnings
Total equity
2023
NZ$’000
2022
NZ$’000
7,618
34,945
111,095
2,084
7,947
752
23,201
23,453
136,195
4,948
660
770
164,441
189,227
104,918
351,251
45,691
475,903
152,099
1,129,862
1,294,303
88,967
518
56,171
145,656
8,619
101,049
308,174
73,011
116,258
607,111
752,767
87,736
354,777
40,357
477,908
133,171
1,093,949
1,283,176
86,931
-
50,301
137,232
7,542
110,881
267,033
76,073
104,125
565,654
702,886
541,536
580,290
629,079
(632)
(86,911)
541,536
626,380
10,477
(56,567)
580,290
163
KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES Section 6: Other Notes
These derivatives have all been determined to be within
level 2 (for the purposes of NZ IFRS 13) of the fair value
hierarchy as all significant inputs required to ascertain
the fair value of these derivatives are observable.
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 are approximately
nil. All guarantees are payable on demand.
6.3 EMPLOYEE SHARE-BASED
REMUNERATION
Accounting policy
Equity settled long term incentive plan
The Executive and Senior Management Long Term
Incentive plan grants Group employee’s performance
rights subject to performance hurdles being met. The
fair value of rights granted is recognised as an employee
expense in the consolidated statement of comprehensive
income with a corresponding increase in the employee
share-based payments 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 KMD
Brands Limited share price as at the grant date less the
present value of the dividends forecast to be paid prior
to each vesting date. At each balance sheet date, the
Company revises its estimates of the number of shares
expected to be distributed. It recognises the impact of the
revision of original estimates, if any, in the consolidated
statement of comprehensive income, and a corresponding
adjustment to equity over the remaining vesting period.
Executive and Senior Management Long Term
Incentive Plan
On 20 November 2013, shareholders approved at the
Annual General Meeting the continuation of an Employee
Long Term Incentive Plan (LTI) (previously established 24
November 2010) to grant performance rights to Executive
Directors, Senior Managers, Other Key Management
Personnel and Wider Leadership Management.
6.1 RELATED PARTIES
All transactions with related parties were in the normal
course of business and provided on commercial
terms. No amounts owed to related parties have
been written off or forgiven during the period.
Key management personnel compensation
Salaries
Other short-term employee
benefits
Post-employment benefits
Termination benefits
Share-based payments
expense
2023
NZ$’000
5,442
2022
NZ$’000
5,189
120
344
-
568
468
201
468
308
6,474
6,634
6.2 FAIR VALUES
The following methods and assumptions
were used to estimate the fair values for
each class of financial instrument:
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. The fair value of term
liabilities equates to their current carrying value.
Foreign exchange contracts and interest rate swaps
The fair value of these instruments is determined using
valuation techniques (as they are not traded in an active
market). These valuation techniques maximise the use
of observable market data where it is available and
rely as little as possible on entity specific estimates.
Specific valuation techniques used to value financial
instruments include the fair value of interest rate
swaps. These are calculated at the present value of
the estimated future cash flows, based on observable
yield curves and the fair value of forward foreign
exchange contracts, as determined using forward
exchange rates at the balance sheet date, with the
resulting value discounted back to present value.
164
Long Term Performance Rights
Performance rights granted to Executive Directors and Senior Managers are summarised below:
Grant date
20 Dec 2022
20 Dec 2021
22 Dec 2020
9 Jul 2020
Opening
balance
Granted during
the year
Vested during
the year
Lapsed during
the year
Closing
balance
-
4,319,302
1,511,540
826,533
159,941
-
-
-
2,498,014
4,319,302
-
-
-
-
-
(614,535)
(197,256)
-
(159,941)
(971,732)
3,704,767
1,314,284
826,533
-
5,845,584
Long Term Incentive performance rights vest in equal
tranches. In each tranche the rights are subject to a
combination of a relative Total Shareholder Return
(TSR) hurdle and / or an EPS growth hurdle. The relative
weighting and number of tranches for each grant date are
shown in the table below:
Grant date
Tranche
20 Dec 2022
20 Dec 2021
22 Dec 2020
9 Jul 2020
Tranche 1
Tranche 1
Tranche 1
Tranche 1
EPS
weighting
50%
TSR
weighting
50%
50%
50%
0%
50%
50%
100%
The proportion of rights subject to the relative TSR
hurdle is dependent on KMD Brands Limited’s TSR
performance relative to a defined comparable group of
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:
KMD Brands Limited relative
TSR ranking
Below 50th percentile
50th percentile
51st – 74th percentile
% vesting
0%
50%
50% + 2% for each percentile
above the 50th
75th percentile or above
100%
The TSR performance is calculated for the following
performance periods:
Tranche
Tranche 1
2023
36 months to 1
December 2025
2022
36 months to 1
December 2024
The fair value of the TSR rights have been valued under
a Monte Carlo simulation approach predicting KMD
Brands Limited’s TSR relative to the comparable group
of companies at the respective vesting dates for each
tranche. The fair value of TSR rights, along with the
assumptions used to simulate the future share prices
using a random-walk process are shown below:
Fair value of TSR rights
Current price at grant date
Risk free interest rate
Expected life (years)
Expected share volatility
2023
$0.72
$1.06
4.26%
3
70.0%
2022
$1.03
$1.47
2.02%
3
71.5%
The estimated fair value for each tranche of rights issued
is amortised over the vesting period from the grant date.
The proportion of rights subject to the EPS growth
hurdle is dependent on the compound average
annual growth in KMD Brands Limited’s EPS relative
to the year ending 31 July 2022 (2022: 31 July
2021). The applicable performance periods are:
Tranche
Tranche 1
2023
FY25 EPS relative to
FY22 EPS
2022
FY24 EPS relative to
FY21 EPS
The percentage of the December 2020 EPS growth
related rights scales according to the compound
average annual EPS growth over three years. Each
year’s target is set annually, and an average is taken
over the three years to determine overall achievement.
165
KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES The fair values of the EPS rights have been assessed as the KMD Brands Limited share price as at the grant date less
the present value of the dividends forecast to be paid prior to each vesting date. The estimated fair value for each
tranche of options issued is amortised over the vesting period from the grant date.
Vesting of Long Term Incentive performance rights also require remaining in employment with the Company during the
performance period.
Short Term Performance Rights
Transitional performance rights granted to Senior Managers and Wider Leadership Management are all Short Term
Incentives under the shareholder approved Employee Long Term Incentive Plan, and are summarised below:
Grant date
20 Dec 2022
20 Dec 2021
Opening
balance
Granted during
the year
Vested during
the year
Lapsed during
the year
Closing
balance
-
2,899,082
3,322,092
3,322,092
-
2,899,082
-
-
-
-
2,899,082
(3,322,092)
(3,322,092)
-
2,899,082
Short Term Incentive performance rights vest:
• upon the Company achieving non-
market performance hurdles; and
• the employee remaining in employment with
the Company until the vesting date.
The performance period and vesting dates are
summarised below:
Grant date
Performance period
(year ending)
Vesting date
2023
20 Dec 2022
2022
20 Dec 2021
31 July 2023
31 July 2022
31 July 2024
31 July 2023
The fair values of the rights were assessed as the KMD
Brands Limited share price at the grant date less the
present value of the dividends forecast to be paid prior
to the vesting date.
The non-market performance hurdles set for the year
ending 31 July 2023 were not met and accordingly no
expense (2022: nil) was recognised in the consolidated
statement of comprehensive income in respect of
Short Term Incentive performance rights granted
20 December 2021.
Expenses arising from equity settled share-based
payments transactions
Long term performance rights
Short term performance rights
2023
NZ$’000
616
(48)
568
2022
NZ$’000
308
606
914
6.4 CONTINGENT LIABILITIES
The Group is subject to litigation incidental to its
business, none of which is expected to be material.
No material provision has been made in the Group’s
consolidated financial statements in relation to any
current litigation and the Directors believe that such
litigation will not have a material effect on the Group’s
consolidated financial position, results of operations
or cash flows. There are $677,000 of contingent
liabilities as at 31 July 2023 (2021: $662,000).
6.5 CONTINGENT ASSETS
There are no contingent assets as at 31 July 2023
(2022: nil).
6.6 EVENTS OCCURRING AFTER BALANCE
SHEET DATE
On the 20 September 2023 the Board of Directors have
announced that they will pay a final dividend of 3.0 cents
per share, unfranked for Australian shareholders, and not
imputed for New Zealand shareholders. This dividend is
not recorded in the consolidated financial statements.
6.7 SUPPLEMENTARY INFORMATION
Directors’ fees
Directors’ fees
2023
NZ$’000
1,084
2022
NZ$’000
942
Directors’ fees for the Company were paid to the following:
• David Kirk (Chairman)
• Philip Bowman
• Brent Scrimshaw
• Andrea Martens
• Abby Foote
• Zion Armstrong (Appointed 1 December 2022)
• John Harvey (Retired 1 December 2022)
Audit fees
During the year, the following fees were paid or payable
for services provided by the auditor of the Company,
its related practices and other network audit firms:
2023
NZ$’000
2022
NZ$’000
Audit services – Group auditor
Group audit - KPMG New Zealand
Group audit - KPMG Australia
France statutory audit - KPMG France
Thailand statutory audit
- KPMG Thailand
UK statutory audit
- KPMG New Zealand
Audit services - other audit firms
Total fees for audit services
Non-audit services – Group auditor
Taxation services - KPMG US
Employee Retention Credits
application - KPMG US
Revenue certificates
- KPMG New Zealand
Banking compliance certificates
- KPMG New Zealand
513
-
58
38
-
609
114
723
332
87
1
5
386
131
51
33
20
621
106
727
167
135
-
-
425
302
6.8 NEW ACCOUNTING STANDARDS AND
INTERPRETATIONS
New standards and interpretations first applied in the
period
Non-current Liabilities with Covenants (Amendments to
NZ IAS 1) has been early adopted during the period. This
amendment;
• Changed the existing requirement to classify a
liability as current when a Company does not have
an unconditional right to defer settlement for at least
12 months after the reporting date by removing the
requirement for a right to be unconditional and instead
now requiring that a right to defer settlement must exist
at the reporting date and have substance.
• Specifies that classification is unaffected by
expectations about whether an entity will exercise its
right to defer settlement of a liability;
• Explains that rights are in existence if covenants are
complied with at the end of the reporting period and
clarify that only covenants that an entity is required to
comply with on or before the end of the reporting period
affect the entity’s right to defer settlement of a liability
for at least twelve months after the reporting date; and
• Covenants with which the company must comply after
the reporting date (i.e. future covenants) do not affect
a liability’s classification at that date. However, when
non-current liabilities are subject to future covenants,
companies need to disclose information to help users
understand the risk that those liabilities could become
repayable within 12 months after the reporting date.
The impact of early adoption is that the Group's Interest-
bearing liabilities under the new facility agreement are
classified as non-current.
There are no other new accounting standards or
interpretations first applied in the period.
Standards, interpretations and amendments to
published standards that are not yet effective
There are no standards or amendments published but not
yet effective that are expected to have a significant impact
on the Group.
166
167
KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES 169
© 2023 KPMG, a New Zealand Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Independent Auditor’s Report To the shareholdersofKMD Brands LimitedReport on theaudit of theconsolidated financial statementsOpinion In our opinion, the consolidatedfinancial statementsofKMD Brands Limited(the’company’)and its subsidiaries (the 'group')on pages 122to167presentfairly,in all material respects:i.the Group’sfinancial position as at 31 July 2023and its financial performance and cash flows for the yearended on that date;ii.in accordance withNewZealand Equivalents to International Financial Reporting Standards issued by the New Zealand Accounting Standards Board,andInternational Financial Reporting Standards.We have audited theaccompanyingconsolidated financial statementswhich comprise:—the consolidatedbalance sheet as at 31 July 2023;—theconsolidatedstatements of comprehensive income,changes in equityand cash flowsfor the yearthen ended; and—notes,including a summary of significant accounting policies.Basis for opinionWe conducted our audit in accordance with International Standards on Auditing (New Zealand)(‘ISAs (NZ)’).We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.We are independent of the groupin accordance with Professional and Ethical Standard 1 International Code of Ethics for Assurance Practitioners (Including International Independence Standards) (New Zealand)issued by the New Zealand Auditing and Assurance Standards Board and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards)(‘IESBA Code’), and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. Our responsibilities under ISAs(NZ)are further described in the Auditor’s responsibilities for the audit of theconsolidated financial statementssection of our report.Our firm has also provided other services to the group in relation to tax compliance services, reasonable assurance engagement in relation to bank covenant compliance and agreed upon procedures for store turnover certificates. Subject to certain restrictions, partners and employees of our firm may also deal with the group on normal terms within the ordinary course of trading activities of the business of the group. These matters have not impaired our independence as auditor of the group. The firm has no other relationship with, or interest in, the group.MaterialityThe scope of our audit was influenced by our application of materiality. Materiality helped us to determine the nature,timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and on the consolidated financial statements as a whole. The materiality for the consolidated financial statements as a whole was set at $3 million determinedwith reference to a benchmark of group profit before tax after certain adjustments have been made. We chose the benchmark because, in our view, this is a key measure of the group’s performance. 2 Key audit mattersKey audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements in the current period. We summarise below those matters and our key audit procedures to address those matters in order that the shareholdersas a body may better understand the process by which we arrived at our audit opinion. Our procedures were undertaken in the context of and solely for the purpose of our statutory audit opinion on the consolidated financial statements as a whole and we do not express discrete opinions on separate elements of the consolidated financial statementsThe key audit matter How the matter was addressed in our audit Impairment assessment of indefinite life intangible assets –Goodwill and Brands (note 3.3)The group has goodwill and brand assets of $287.9million and $360.9million respectively. These assets are a result of the historical acquisitions of the Kathmandu, Oboz and Rip Curl businesses. Impairment assessment of Goodwill and Brand assets is considered to be a key audit matter due to the significance of these assets to the group’s financial position and the level of management judgement involved in the impairment assessment. These judgements include:—Determination of cash generating units (CGUs), or group of CGUs, to consider for testing;—Forecast future performance for each CGU, or group of CGUs; and—Assessment of discount and terminal growth rates.Our audit procedures included:—Assessing the consistency of management’s approach against the requirements of the accounting standards, including assessment of the CGU level at which to test the intangible assets; —Utilising our corporate finance specialists to challenge and assess management’s assumptions,including the external expert support for terminal growth rates and discount rates. This involved independently developing a range for terminal growth and discount ratesbased on market data to challenge theratesdetermined by the external expert;—Assessing the integrity and mechanical accuracy of the impairment models; —Challenging the forecast cash flows in light of current market conditions and past performance of the group; and —Considering the sensitivity of key assumptions to changes within a reasonably possible range and associated financial statement disclosures.We did not identify any material misstatements in relation to the impairment assessment of indefinite life intangible assets or associated disclosures.Existence and valuation of inventory (note 3.1.1)The Group has inventory of $290.4 million. Inventory is a key component of working capital, andis required to be carried at the lower of cost and net realisable value. Existence and valuation of inventory is considered to be a key audit matter due to the significance of these assets to the group’s financial position and future performance, the judgement involved in assessing valuation, and the number of locations at which inventory is held.The Group performs stocktakes to confirm the existence of inventory, and Our audit procedures included:—Challenging the methodology applied by management to calculate the inventory provisions. In addition, we checked a sample of inputs in the inventory provision calculations for consistency with the last purchase date, aging, or last sale date;—Comparing products sold with negative margin during the year to the level of product on hand at year end and assessing whether inventory is held at the lower of cost and net realisable value; 170
171
3 The key audit matter How the matter was addressed in our audit recognises a reduction for shrinkage between stocktakes and year end.In recognising a provision for inventory, management apply judgement by considering a range of factors including historical results, stock shrinkage trends, aging of products relative to purchase and last sale dates and product lifecycle.—Assessing a sample of inventory items to recent purchase invoices, and assessing the weighted average cost of items; and—Attending selected stocktakes and performing test counts or obtaining third party confirmation of inventory on hand.We did not identify any variations that would materially affect the carrying value of inventory.Other informationThe Directors, on behalf of the group, are responsible for the other information included in the entity’s Annual Integrated Report. Other information comprises the information in the Annual Integrated Reportthat is not the financial statements or independent auditor’s report.Our opinion on the consolidated financial statements does not cover any other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements our responsibility is to read the other information and, in doing so, consider whether the other information is materiallyinconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information,weare required to report that fact. We have nothing to report in this regard.Use of this independent auditor’s reportThisindependent auditor’s report is made solely to the shareholdersas a body. Our audit work has been undertakenso that we might state to theshareholdersthose matters we are required to state to them in the independent auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the shareholdersas a bodyfor our audit work, this independent auditor’s report,or any of the opinionswe have formed. Responsibilities of the Directors for the consolidated financial statementsThe Directors, on behalf of thecompany,are responsible for:—the preparation and fair presentation of theconsolidated financial statementsin accordance with generally accepted accounting practice in New Zealand (being New Zealand Equivalents to International Financial Reporting Standards) and International Financial Reporting Standardsissued by the New Zealand Accounting Standards Board;—implementing necessary internal controlto enable the preparation ofaconsolidated set of financial statementsthat isfree from material misstatement, whether due to fraud or error; and—assessing the ability to continue as a going concern. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless theyeither intend to liquidateor to cease operations orhave no realistic alternative but to do so. 4 Auditor’s responsibilities for the audit of the consolidated financial statements Our objective is:—to obtain reasonable assurance about whether the financial statementsas a whole arefree from material misstatement, whether due to fraud or error;and—to issue an independent auditor’s report that includes our opinion.Reasonable assurance is a high level of assurance butis not a guarantee that an audit conducted in accordance with ISAs NZ will always detect a material misstatement when it exists.Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate,they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.A further description of our responsibilities for the audit of these consolidated financial statementsis located at the External Reporting Board (XRB) website at:http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1/This description forms part of our independent auditor’s report.The engagement partner on the audit resulting in this independent auditor's report is Peter Taylor.For and on behalf ofKPMGChristchurch20 September 2023 ADDITIONAL DISCLOSURES
Corporate Governance Statement
The Board and management of KMD
Brands Limited (the “Company”) and
its related companies (“the Group”)
are committed to adhering to best
practice governance principles
and maintaining the highest ethical
standards. The Board is responsible
for the overall governance of the
Group, including adopting the
appropriate policies and procedures
and guiding Directors, management,
and employees of the Group’s
businesses to fulfil their functions
effectively and responsibly.
The Company regularly examines its
governance arrangements against
national and international standards.
The Company has developed its
corporate governance policies and
practices in line with the principles
and recommendations set out in
the New Zealand Stock Exchange
(“NZX)” Corporate Governance
Code 1 April 2023 (“NZX Code”) and
Listing Rules (“NZX Listing Rules”).
This Corporate Governance
Statement details the Company’s key
corporate governance arrangements.
Our disclosures below also include
disclosures under the GRI universal
standards. For the duration of the
reporting period, the Company has
followed the recommendations
set out in the NZX Code where
appropriate, having regard to the
size of the Group and the Board, the
resources available and the activities
of the Group’s businesses. After due
consideration, the Board considers
that the only significant departures of
the Company’s corporate governance
practices from the recommendations
set out in the updated NZX Code
during the reporting period are in
relation to Recommendation 2.5
where the Company must state a
specified period for the measurable
objects for achieving gender diversity
172
in relation to the composition of
the Board. Information about the
Company’s approach in these
areas is separately identified in this
corporate governance statement.
The Company’s relevant charters
and policies are available in the
“Governance” section of the
Company’s Investor Website at
https://www.kmdbrands.com/
corporate-governance.
The information in this Corporate
Governance Statement is provided
as at 31 July 2023 (except where
otherwise specified). This Corporate
Governance Statement has
been approved by the Board.
PRINCIPLE 1 – CODE OF
ETHICAL BEHAVIOUR
The Company is committed to
fostering a culture of best practice
and ethical behaviour and therefore
expects the members of its
Board and all employees to act in
accordance with the Company’s
values, policies, and legal obligations.
All Directors and employees
joining the Group are provided with
information and training on the
Group’s values, and the following
policies, and updates and refreshers
are provided on a regular basis.
Code of Ethics
The Board recognises the need
to observe the highest standards
of ethical corporate practice and
business conduct. The Board has a
formal Code of Ethics, to be followed
by all Directors and employees,
which provides a guide for both
behaviour and decision making,
reflecting the values of the Group.
Any material breaches of the Code
of Ethics are reported to the Board.
The key aspects of the
Code of Ethics are to:
• act with openness, fairness, integrity
and with the benefit mindset;
• operate with diligence and
carry out responsibilities to
the highest standard;
• act ethically, responsibly and
to comply with the law;
• be accountable for acts
and decisions; and
• speak up if aware of conduct
that may be a breach of
the Code of Ethics.
Training on the Code of Ethics was
last provided to all employees in
Australia, New Zealand, USA and
Canada in October 2022 following
a material review and update of
the Code of Ethics approved by
the Board in August 2022. 30% of
the employees that were provided
the training completed it during
the current reporting period.
The Group maintains a formal
Whistleblowing Policy recognising
that the protection of whistleblowers
is integral to fostering transparency,
promoting integrity, and detecting
misconduct. The best way to fulfil
this commitment is to create an
environment in which employees
who have genuine concerns about
improper conduct, unacceptable
behaviour, or wrong-doing feel
safe to report it without fear of
reprisal. Our whistleblowing policy
outlines the mechanisms available
to raise concerns about the
organisation’s business conduct
including reporting to the designated
Whistleblower Protection Officer
or to KMD Brands external and
independent Whistleblower hotline.
Any material incidents are
required to be communicated to
the Board throughout the year.
In the current reporting period,
there have not been any critical
concerns that were required to
be communicated to the Board.
Securities Trading Policy
The Company has a formal Securities
Trading Policy for dealing in the
Company’s securities by Directors
and employees, which provides
transparency about expectations and
requirements. The Securities Trading
Policy is not designed to prohibit
Directors and employees from
investing in the Company’s securities
but recognises that there are times
when Directors or employees cannot,
or should not, deal in those securities.
In addition to the overriding
restriction that persons may not
deal in the Company’s securities
while they are in possession of
non-public material information,
all Company personnel are not
permitted to deal in securities
during certain ‘blackout periods’;
being the eight weeks prior to the
Company's half year and full year
balance date until the first trading
day after the release of the half and
full year results announcements.
Directors and senior executives
must always receive clearance from
the Chairperson of the Board before
any proposed dealing in Company
securities. Where a Director or senior
executive is subject to exceptional
circumstances (such as severe
financial hardship), written approval
may be granted by the independent
Directors for the disposal of Company
securities during a blackout period,
provided the individual concerned
is not in possession of any non-
public material information.
The Securities Trading Policy
prohibits Directors, senior executives,
key management personnel and
all other employees from entering
into hedging or other arrangements
that have the effect of limiting the
economic risk in connection with
unvested securities issued pursuant
to any employee option or share plan.
PRINCIPLE 2 – BOARD
COMPOSITION &
PERFORMANCE
Roles and Responsibilities
The Board is responsible for the
overall supervision and governance
of the Group. A framework for the
effective operation of the Board is
set out in the Board Charter, which
includes the following responsibilities:
• the long-term growth and
profitability of the Company;
• developing the strategic and
financial objectives for the
Company, including those related
to sustainable development;
• monitoring management’s
implementation of key policies,
strategies, and financial objectives;
• directing, monitoring and assessing
the Company’s performance
against strategic business plans;
• approving and monitoring
the progress of major capital
expenditure, capital management
and acquisitions and divestitures;
• identifying the principal risks
of the Company’s business;
• reviewing and ratifying the
Company’s systems of internal
compliance and control, risk
management, legal compliance,
corporate governance practices,
financial and other reporting;
• appointing and removing the Group
Chief Executive Officer (“CEO”);
• ratifying the appointment, and
where appropriate, the removal of
the senior executives of the Group;
• approving the remuneration
framework for the Group; and
• monitoring and reviewing
Board succession planning.
The Board is ultimately responsible
for overseeing the processes
to identify and manage the
Group’s impacts on the economy,
environment and people and has
appointed the Group CEO to direct
the day-to-day management of
Group operations and engage with
stakeholders to support these
processes. Each of the Group
Executive team members have
been delegated specific areas of
responsibility for managing these
impacts across the businesses’
operations including the Chief
Legal & ESG (Environmental, Social
and Governance) Officer, who is
responsible for execution of the
Group ESG strategy, the Chief People
Officer who is responsible for policies
and initiatives to support a people-
centred culture and workplace that
fosters health, safety, wellbeing and
inclusiveness; the Chief Commercial
Officer who is responsible for supply
chain impacts and the Chief Financial
Officer who oversees financial
health and stability for the Group.
Each of the brand CEOs are
ultimately responsible for driving
activities within their individual brand
business units. All Group officers
report directly to the Group CEO,
with written and in person updates
provided on the management of
economic, environmental and people
impacts at regular board meetings,
which occur at least eight times
a year. Matters reserved for the
Board and the scope and limitations
of delegations to the Group CEO,
Group executives and management
personnel are set out in a Group
Delegated Authority Policy approved
by the Board on an annual basis.
173
KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES Board Composition
At 31 July 2023, the Board is
comprised of seven Directors,
namely David Kirk, Michael Daly,
Philip Bowman, Brent Scrimshaw,
Andrea Martens, Zion Armstrong,
and Abby Foote. The Chairperson
of the Board is David Kirk, an
independent Director. Six out of the
seven Directors are non-executive
Directors. Michael Daly (Managing
Director and Group CEO) is the only
executive Director on the Board.
The Board assesses the
independence of its Directors in
accordance with the requirements
set out in the Board Charter, the NZX
Listing Rules and the NZX Code.
Michael Daly, as Managing Director,
is employed by the Company in
an executive capacity and is not
considered to be an independent
SKILLS OF OUR DIRECTORS
BUILD GLOBAL BRANDS
Director. David Kirk, Philip Bowman,
Brent Scrimshaw, Andrea Martens,
Zion Armstrong, and Abby Foote are
considered independent Directors.
group, the Board members hold the
skills, experience, knowledge, and
diversity needed to discharge the
Board’s functions and responsibilities.
A brief biography of each Board
member can be found in the “Board
and Management” section of the
Company’s Investor Website, including
the relevant qualifications and
experience of each Board member.
Nomination and Appointment
New Directors are selected through
a nomination and appointment
procedure administered by the Board,
as outlined in the Board Charter.
The Board has systems in place
which require that appropriate checks
are conducted before appointing
any new Director or putting a
candidate forward to the Company’s
shareholders for election as a
Director. Ensuring that, as a collective
The Company enters into written
agreements with each newly
appointed Director or senior
executive establishing the
terms of their appointment.
Skills Matrix
The Board benefits from a
combination of the different skills,
experiences, and expertise that
the Directors bring to the Board
and the insights that result from
this diversity. The Board is satisfied
that the current composition of
the Board reflects an appropriate
range of the skills, experience,
knowledge, and diversity needed
to discharge the Board’s functions
and responsibilities and to achieve
SUBSTANTIAL
MEDIUM
Global brand, consumer goods product development
Customer omni-channel management
Strategy development and commercial acumen
ELEVATE DIGITAL
Customer-centric e-commerce, digital and data
LEAD IN ESG
Sustainability for communities, climate and product circularity
Governance experience of listed companies
Risk mangement including non financial risk
LEVERAGE OPERATIONAL EXCELLENCE
Finance, integrated reporting and audit
Capital allocation, including mergers and acquisitions
Human capital, talent and culture
International business development
Executive leadership at scale
174
the strategic aims of the Group. The
Board continues to monitor and
review Board composition. The Board
has developed a skills matrix which
it uses to assist in developing plans
for long-term succession planning to
identify current and future skills gaps.
During the year, the measures taken
to advance the collective knowledge,
skills, and experience of the Board
of on sustainability governance
include information on science-based
targets, the NZ Climate-Related
Disclosure reporting framework and
the B Corp framework and purpose.
The Skills of our Directors chart
on page 174 summarises the skills,
attributes and experience held by
the Directors of the Company during
the reporting period. Percentages
are determined as at the date of this
Corporate Governance Statement.
Tenure
Directors are appointed and retire
by rotation in accordance with
the Company’s constitution and
the NZX Listing Rules. Director
tenure is taken into account by
the Board when considering the
independence of each Director in
accordance with the NZX Code.
The average tenure for non-
executive Directors is five years
with the following tenure mix:
Tenure of Non-Executive Directors
6 – 10 years
1
3 – 5 years
<2 years
3
2
Measuring Board Performance
The Board undertakes an annual
self-evaluation of its performance
against the requirements and
expectations of the Board Charter
and the Board’s role in overseeing
the Group, including its impacts
on the economy, environment, and
people. The performance of the
Board’s committees is also reviewed
on an annual basis, alongside
the goals and objectives for the
Board for the upcoming year. This
performance review also identifies
any changes needed to the Board
and Committee Charters and is
used to assist in developing plans
for long term succession planning
for Board composition and future
training needs. The Board approves
the criteria for assessing annual
performance of the Group CEO.
The performance review
process in respect of the FY23
reporting period is currently
underway, involving individual
interviews with each director.
The Board makes appropriate training
available to all Directors to enable
them to remain current on how best
to discharge their responsibilities
and to keep up to date on changes
in areas relevant to their roles.
Diversity and Inclusion
The Group embraces and
encourages a diverse and inclusive
workplace culture. This enriches
collaborative and creative thinking
to provide innovative products and
world class customer service to an
equally diverse global community.
The Company maintains a written
Diversity Policy in accordance
with the NZX Code, which affirms
the Group’s commitment to
harnessing differences to encourage
an innovative, responsive, and
productive workplace, creating value
and rewards for customers, the team,
shareholders, and the community.
As part of the Diversity Policy, the
People and Remuneration Committee
sets measurable objectives for
achieving diversity across the Group
which includes factors beyond
gender diversity. The People and
Remuneration Committee carries
out an annual assessment of its
diversity objectives and measures
its progress towards achieving
these objectives. Following this
review, the Board considers that the
principles of the Group’s Diversity
Policy are currently well-reflected
in the variety of cultures, unique
experiences, perspectives, and
beliefs represented by its teams.
More information about the Group’s
approach to diversity and inclusion,
including progress against the
measurable objectives set by
the People and Remuneration
Committee, can be found in the
“Our People” section of this report.
Gender Composition of the
Company’s Board of Directors
and Officers
The Group has set a measurable
objective for achieving gender
diversity in relation to the
composition of its Board and
Officers, of not less than 40% who
self-identify as male and 40%
who self-identify as female.
The Board has not determined a
specified period for meeting this
measurable objective. In recruitment,
the Company seeks candidates with
the specific capabilities, including
global apparel experience, required
to support the Group, selecting
from a balanced pool of candidates.
Ultimately, the best person for the
role is selected, notwithstanding
gender identification. The Company
is committed to its stated targets
and initiatives to improve diversity
and will transparently disclose its
progress on these objectives.
175
KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES
Each Committee is governed by its
own Charter, which has been adopted
by the Board, and is reviewed
periodically. The Committee charters
are available in the “Governance”
section of the Company’s Investor
Website at https://www.kmdbrands.
com/corporate-governance.
Membership of each Committee is
based on the needs of the Company,
relevant legislative and other
requirements and the skills and
experience, of individual Directors.
Meetings of the Committees are
scheduled to coincide with the Board
meeting timetable. Each Committee
makes recommendations to the full
Board for consideration and decision-
making as and when required.
The Company does not have a
nomination committee. Due to
the size of the Company’s Board,
the Board as a whole retains the
responsibility for recommending
new Director appointments. The
Board considers that it is able to
deal efficiently and effectively with
the processes of appointment
and reappointment of Directors to
the Board and considerations of
Board composition and succession
planning. The Board draws on
the experience and advice of
external recruitment specialists
for assistance when required.
The Board will continue to review
the needs of the Group in relation
to the Director nomination
process and whether a change of
approach in this area is needed.
A summary of the roles,
responsibilities, and membership
of these two Committees (as at 31
July 2023) is set out opposite.
For the purposes of the table below,
“Officer” means the Group executive
team, being those roles reporting
to Michael Daly in his capacity as
Group Chief Executive Officer.
As at 31 July 2023, the gender
composition of the Company’s
Board and Officers is as follows:
Directors
Officers
FY23 FY22 FY23 FY22
Male
Female
Gender
diverse
Total
5
2
0
7
5
2
0
7
4
4
0
8
5
4
0
9
% Male
71%
71% 50% 56%
% Female
29% 29% 50% 44%
As at 31 July 2023, the Group
had a total of 3,060 female
employees, 1,754 male employees,
8 gender diverse and 21 employees
with undisclosed gender.
We will work towards reporting
gender pay gap information
across the various management
levels within our Group in a
future reporting period.
PRINCIPLE 3 - BOARD
COMMITTEES
The Board has established and
maintains two committees to
assist with discharging the Board’s
responsibilities: the Audit and
Risk Committee and the People
and Remuneration Committee.
The Board may establish other
committees as and when required
based on the needs of the Group.
176
AUDIT AND RISK COMMITTEE
PEOPLE AND
REMUNERATION COMMITTEE
Roles and responsibilities
• Overseeing the process of
Membership
financial reporting, internal control,
continuous disclosure, financial and
non-financial risk management,
compliance, and external audit;
• Monitoring the Group’s compliance
with laws and regulations and
the Company’s Code of Ethics;
• Encouraging effective relationships
with, and communication between,
the Board, management, and the
Company’s external auditor; and
• 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.
At least three members, a majority
of whom must be independent
Directors and all of whom must
be non-executive Directors. At
least one member must have an
accounting or financial background.
The Chair is to be an independent
non-executive Director, who is
not the Chair of the Board.
Current members:
• Abby Foote (Chair)
• David Kirk
• Philip Bowman
• Zion Armstrong
Senior executives may be invited to
attend Audit and Risk Committee
meetings by invitation only.
• Overseeing the development and
application of the Group Human
Resources strategy, the remuneration
framework, and associated policies;
• Assisting the Board in relation to
matters concerning remuneration of
senior executives, and Directors;
• Providing effective remuneration
policies and programmes to
motivate high performance
from all employees; and
• Confirming that appropriate and
effective policies for managing the
performance and development of
employees at all levels are in place.
At least three members, a majority of
whom must be independent Directors
and all of whom must be non-executive
Directors. The Chair is to be an
independent, non-executive Director.
Current members:
• Andrea Martens (Chair)
• David Kirk
• Brent Scrimshaw
Senior executives may be invited to
attend People and Remuneration
Committee meetings by invitation only.
177
KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES Attendance
The number of meetings of the Board of Directors and the Board Committees held during the year ended 31 July 2023
and the numbers of meetings attended by each Director were:
Board
Audit and Risk Committee
People and
Remuneration Committee
Attended
Eligible to
attend
Attended
Eligible to
attend
Attended
Eligible to
attend
David Kirk
John Harvey
(retired 1 December 2022)
Andrea Martens
Brent Scrimshaw
Philip Bowman
Michael Daly
Abby Foote
Zion Armstrong
(appointed 1 December 2022)
9
2
9
8
9
9
9
5
9
4
9
9
9
9
9
5
5
2
-
-
4
-
5
2
5
3
-
-
5
-
5
2
5
-
4
4
-
-
-
-
5
-
5
5
-
-
-
-
Takeover Protocols
The Board has appropriate protocols
in place that set out the procedure to
be followed if there is an offer to take
a controlling interest in the Company.
A committee of independent
Directors would be formed who would
have responsibility for managing
the takeover process in accordance
with the Board protocols and the
New Zealand Takeovers Code.
PRINCIPLE 4 – REPORTING
& DISCLOSURE
The Company is committed to
promoting investor confidence by
providing all stakeholders with timely,
accurate and balanced disclosure of
information regarding its financial,
non-financial and operational matters.
The Company’s Code of Ethics,
Board and Committee Charters
and other key governance policies
and documents are available on
its Investor Website at https://
www.kmdbrands.com/investor-
centre/corporate-governance/
Continuous Disclosure Policy
The Company’s Continuous
Disclosure Policy provides that all
Directors, executives, and employees
are required to be aware of and
fulfil their obligations in relation to
the timely disclosure of material
information. The Continuous
Disclosure Policy explains the
respective roles and responsibilities,
procedures, and processes in place
to ensure the Company observes its
continuous disclosure obligations
under the NZX Listing Rules. The
Continuous Disclosure Policy is
available and accessible to all
Group employees and training on
its contents is provided regularly.
Financial Reporting
The Audit and Risk Committee
oversees the quality of external
financial reporting including the
veracity, comprehensiveness, and
timeliness of financial statements.
The Company seeks to provide
clear, concise financial statements.
Before the Board approves
financial statements for the Group
for a financial period, it receives
from the Group CEO and Group
Chief Financial Officer (“CFO”) a
declaration that, in their opinion:
178
• the financial records of the Group
have been properly maintained;
shareholders in relation to non-
executive Directors’ remuneration.
upon the achievement of
performance hurdles, and
• the financial statements comply
with the appropriate accounting
standards and other applicable
laws and regulations;
• the financial statements
give a true and fair view of
the financial position and
performance of the Group; and
• that the opinion has been
formed on the basis of a sound
system of risk management
and internal control which
is operating effectively.
Non-Financial Reporting
The Company is committed to
sharing information about its
environmental and social impact.
Across the Group, the Company is
committed to protecting workers’
rights, minimising waste, and
lowering the environmental impacts
of the Group’s business operations
through understanding its supply
chain. Throughout this report, the
Company has described the material
ESG risks faced by the Group and
how the Company plans to manage
those risks. The Company uses and
reports in reference to the Global
Reporting Initiative (GRI) Standards
framework and the Sustainability
Accounting Standards Board (SASB)
requirements, as well as the B Corp
framework to identify, monitor and
manage those risks. Refer also to the
Appendices for further information.
PRINCIPLE 5 –
REMUNERATION
The People and Remuneration
Committee is responsible for
reviewing remuneration packages for
the Group CEO and senior executives
and making recommendations to
The People and Remuneration
Committee adopts a series
of principles in determining
remuneration related decisions.
The principles used are:
• the remuneration structure should
reward those employees who
can influence the achievement of
the Group’s strategic objectives
and business plans to enhance
shareholder value for successful
Group performance outcomes
and their contribution to these;
• executive remuneration should
be market competitive, and
generally account for market
practice including consideration
of employee place of domicile;
• executives’ remuneration
packages have a mix of fixed and
variable pay and should have:
– a substantial portion of their
total remuneration that is “at
risk” and aligned with reward
for creating shareholder value,
– an appropriate balance
between short and long-
term performance focus
and outcomes,
– a mix of cash and equity-
based remuneration;
• due to the Group CEO’s leadership
role in establishing and delivering
achievement of medium and long
term Group strategic objectives
and business plans, and increasing
shareholder value over that
period, the Group CEO, relative to
other executives, should have:
– a greater proportion of total
remuneration (at least 50%)
that is “at risk”, i.e. contingent
– a greater proportion of “at
risk” remuneration weighted
towards equity-based
rewards rather than cash;
• 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; and
• the Board uses discretion
when setting remuneration
levels, taking into account
interests of shareholders, the
current market environment
and Group performance.
The current approved pool of
remuneration available for payment
to non-executive Directors is AUD
$1,250,000 in aggregate. This was
approved by shareholders at the
Annual Shareholders’ Meeting on
16 November 2022. In the year
ended 31 July 2023, total fees
paid to non-executive Directors
amounted to NZD $1,083,710.
Details of the total remuneration
and value of other benefits received
by each director from the Company
during the reporting period is set
out on page 185 of this report.
Remuneration Policy
The Company maintains a
Remuneration Policy in relation to its
Directors, executives and employees
which provides for remuneration at
fair and reasonable levels throughout
the Group. The purpose of the
Remuneration Policy is to provide
for coherent remuneration practices
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KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES which enable the attraction and
retention of high calibre individuals
who contribute positively to the
achievement of the Group’s strategy
and objectives, and ultimately
create value for the Company’s
shareholders. The remuneration
of executive and non-executive
Directors is clearly differentiated
in the Remuneration Policy.
The Board, through the People
and Remuneration Committee,
undertakes its governance
role in setting Group executive
remuneration including, where
required, use of external independent
remuneration consultants and/
or available market information.
The Group executive remuneration
structure has three components:
• base salary and benefits
(reviewed annually to assess
appropriateness to the position and
competitiveness within the market);
• Short Term Incentives (“STI”)
determined on the basis of
achievement of specific targets
and outcomes relating to annual
Group financial performance,
and individual value adding
performance objectives; and
• Long Term Incentives
(“LTI”) via participation in
the Company’s LTI Plan.
Short Term Incentives
Group executives and certain senior
employees are eligible to participate
in an annual STI that delivers rewards
by way of cash and/or deferred
equity. Group Earnings Before Interest
and Tax (EBIT), has been determined
as the appropriate financial
performance target to trigger
payment of STI. The amount of any
STI paid in a year is dependent upon:
180
a) the level of performance
achieved against the Group’s
financial performance target
(EBIT) for the year; and
b) the outcome of individual
value adding performance,
measured by achievement of
individual Key Performance
Indicators (“KPIs”), subject to a
minimum level of performance
achieved by the Group relative
to the financial performance
target (EBIT) for the year.
STI outcomes for the executive team
are aligned with the Group’s strategic
objectives. Each of the Group
executive team members, including
our CEO, has individual KPIs linked
to our four Group strategic pillars,
including non-financial performance
objectives, specific to each
executive’s role and responsibility.
For executives and senior employees
where a short-term equity incentive
is earned, vesting is subject to
ongoing employment by the Group
for a period of one year following
the end of the financial year in
which the incentive is earned.
Long Term Incentive Plan
Performance Share Rights (“PSRs”)
under the Group’s LTI Plan have been
offered each year since the LTI Plan
was originally implemented in 2010.
The LTI Plan 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 Board
continues to reassess the plan
and its structure to confirm it will
best support and facilitate the
growth in shareholder value over
the long term relative to current
business plans and strategies.
PSRs granted to the Group executive
during the reporting period are
dependent upon the following:
• 50% of vesting is subject to
an Earnings Per Share (“EPS”)
Compound Annual Growth Rate
(“CAGR”) hurdle over a three-year
period between 1 August 2022
and 31 July 2025 (“Performance
Period”). At the conclusion of
the Performance Period, the EPS
performance in each financial
year will be averaged to compare
against average EPS growth
from the start to the end of the
Performance Period. Vesting is on
a sliding scale proportionate to the
total EPS CAGR over the three-
year performance period; and
• 50% of vesting is subject to the
Company achieving relative Total
Shareholder Return (“TSR”) targets
over a three-year period from 1
August 2022 to 31 July 2025. TSR
is measured on a relative basis
against a comparator group of
Australian Stock Exchange (“ASX”)
listed companies (other than metal
and mining stocks) ranked 101
to 200 in the S&P/ASX200 as at
the date of the grant. Vesting is
on a sliding scale proportionate
to the TSR performance.
Performance measurement is at the
end of the applicable Performance
Period with no ability to re-test. In
respect of PSRs granted during
the reporting period, the relevant
portion of the award that will
vest is determined based on the
percentile ranking of the Company
against the comparator group at
the end of the performance period.
PSRs are granted at nil cost.
Group CEO Remuneration
Group CEO remuneration comprises
a mixture of base salary, STI and LTI.
performance against short-
and long-term targets; and
• All LTI (70% of fixed annual
The Group CEO remuneration
for the year ending 31 July 2023
is set out in the table below:
Michael Daly Group CEO
Remuneration package for FY23
A$
$1,127,500
($1,100,000 plus
super $27,500)
$676,500
$789,250
$2,593,250
Fixed
(Base salary,
superannuation)
STI
(60% of fixed)
LTI
(70% of fixed)
Maximum
potential
remuneration
The annual total compensation
ratio for the Group CEO, as the
highest paid individual in the
Group, to the median annual total
compensation of the rest of the
Group’s employees is NZD $24:1.
For the purposes of this calculation,
full-time equivalent rates have been
used for each part-time employee.
The types of compensation included
in the calculation are base salary,
superannuation contribution, bonuses
and deferred equity incentives.
The key principles of the Company’s
Remuneration Policy for the Group
CEO remuneration package are:
• More than half the total
remuneration for the
Group CEO is at risk;
• Over 85% of the at-risk
remuneration (all except for the
STI KPIs) is solely dependent
on outcomes of Group financial
remuneration) will be measured on
a single 3-year Performance Period.
FY23 STI Outcome
For the year ended 31 July 2023
the Group financial performance
targets were not met and as
a result, no short-term cash
incentives were paid to the Group
CEO or the Group executive.
PRINCIPLE 6 – RISK
MANAGEMENT
The identification and proper
management of the Group’s material
risks is an important priority of the
Board. The Company has a central
risk management framework in
place to identify, oversee, manage,
and control risks. The KMD Brands
risk framework supports the
identification of risk in order to
reduce potential negative impacts
and improve the likelihood of
beneficial outcomes, while providing
a standard to drive consistency and,
in turn, confidence that risk is being
managed in a consistent manner.
Risk identification and management
are viewed by the Company as
integral to its objectives of creating
and maintaining shareholder value,
and to the successful execution of
the Group's strategies. The KMD
risk framework sets out the guiding
principles, roles and responsibilities,
the risk assessment process and
reporting requirements. The KMD
risk framework is aligned to ISO
31000:2018 Risk Management
Guidelines. The Board regularly
reviews the KMD risk framework and
the assessments of how the material
risks are impacting its business. The
Board recognises that some element
of risk is inherently necessary in
order to achieve the strategic aims
for the Group’s businesses and
deliver value to shareholders.
Risk Management Policy
The purpose of the Company’s
Risk Management Policy is to
highlight the risks relevant to
the Group’s operations, and
the Company’s commitment to
designing and implementing
systems and methods appropriate
to minimise and control its risks.
The Audit and Risk Committee
assists the Board in discharging
its responsibility for monitoring
risk management. The Committee
is responsible for establishing
procedures which seek to provide
assurance that major business risks
are identified, consistently assessed,
and appropriately addressed in line
with the Group’s risk appetite and
defined tolerances. This Committee
oversees the implementation of
the risk management framework,
monitors its ongoing effectiveness,
and regularly reports to the Board.
The Audit and Risk Committee
undertook a formal review and
refresh of the risk management
framework, including the Group’s risk
appetite statements and supporting
policy, during the reporting period.
Health, Safety and Wellbeing
The Company is dedicated to
cultivating a strong safety culture
and awareness of health and
safety risks, performance, and
management within the Group. The
Company has adopted an integrated
approach to safety and wellbeing
across the Group, which recognises
that workplace safety, health and
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KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES are offered to other investors. The
Board has taken Recommendation
8.4 of the NZX Code into account,
along with a number of other factors
when considering options for the
capital raisings in previous reporting
periods. Ultimately the Board will
choose methods to raise equity,
when needed, which are necessary
and desirable to achieve the best
outcomes for the Company in the
context of any anticipated transaction
or proposal for which additional
equity capital may be required.
Meetings and Voting
Where voting by shareholders on
a matter concerning the Company
is required, the Board encourages
investors to attend the annual
shareholders’ meeting or to send
in a proxy vote. All voting at the
Company’s annual shareholder
meeting is conducted by way of poll
on the basis of one share, one vote.
In 2019, the Company began using
a virtual meeting platform for its
shareholder meetings to allow
participation where a shareholder
is unable to attend in person. The
Company’s notice of meeting will be
available at least 20 working days
prior to the meeting at https://www.
kmdbrands.com/announcements.
mental health all contribute to an
employee’s overall wellbeing.
The Board receives and reviews
detailed reports on health and safety
matters at each Board meeting. As
a lag indicator of health and safety
risks, performance and management
during the reporting period, at the
end of FY23, the rolling lost time
injury* frequency rate (number of
lost time injuries per 1,000,000 hours
worked) was 4.62 (target of 5.0).
More information on Health, Safety
and Wellbeing in the Group can be
found in the Operational Excellence
section of this report on pages 55-56.
PRINCIPLE 7 – AUDITORS
The Audit and Risk Committee
is responsible for making
recommendations to the Board about
the appointment or replacement of,
and for monitoring the effectiveness
and independence of, the Group’s
external auditor. The Committee
Charter requires that the external
auditor or lead audit partner be
changed at least every five years.
The Committee reviews and assesses
the independence of the external
auditor on an annual basis.
The Company’s external auditor
is KPMG, appointed in December
2021. The audit partner responsible
has continued from that date. The
Company maintains an internal
financial audit function. This
function provides a system for
evaluating and continually improving
the effectiveness of financial risk
management for the Group and
delivers appropriate objective
assurance on financial risk. The
Group uses a number of processes
for evaluating and continually
improving its risk management
and internal processes outside of
financial risk including the verification
process required to achieve B Corp
Certification and our information
and cyber security framework.
The Company’s external auditor
attends the annual meetings of
the Company and is available
to answer any questions from
investors relevant to the audit.
PRINCIPLE 8 –
SHAREHOLDER RIGHTS &
RELATIONS
The Company is committed to
keeping its stakeholders and owners
effectively and comprehensively
informed of all relevant information
affecting the Group in accordance
with all applicable laws and the
Company’s communication strategy.
Information is communicated to
investors through the lodgement
of all relevant financial and other
information with NZX and ASX,
publishing information on the
Company’s Investor Website, annual
shareholder meetings, annual
and interim reporting, analyst and
investor briefings and roadshows.
Investor Website
The Company’s Investor Website
(www.kmdbrands.com) contains all
key communications concerning the
Company and information about its
brands: Kathmandu, Rip Curl and
Oboz. Shareholders can also view
profiles of the Company’s Board
and Group executive management
team on the Investor Website,
along with its key governance
policies, the Charters of the Board
Committees, copies of current and
past annual reports and transcripts
of annual shareholder meetings.
All relevant announcements made
to the market are shown on the
Company’s Investor Website as soon
as they have been released to NZX
and ASX and can also be accessed
through the Company’s Investor
Website. Investors can subscribe
through the Investor Website to
receive an email alert when a
new announcement is lodged.
Communication
The Board encourages investors
to communicate with the Company
electronically. Investors can
contact the Company through the
Investor Website at https://www.
kmdbrands.com/contact. Investors
have the option of receiving their
communications, which includes
the Annual Integrated Report,
from the Company electronically.
The Company actively engages
with its investors through annual
shareholder meetings, its investor
briefings and roadshows, and meeting
with stakeholders on request.
Approach to Seeking Additional
Equity Capital
The Board acknowledges
Recommendation 8.4 of the NZX
Code which suggests that where
the Company requires additional
equity capital, where practical, the
Board should favour capital raising
methods that provide existing equity
security holders with an opportunity
to participate in the offer on a pro-
rata basis, and on no less favourable
terms, before further equity securities
* A lost time injury is an injury resulting in time lost greater than 1 shift
182
183
KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES Statutory information
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 2023 are as follows:
DAVID KIRK
NZ Rugby Players Association
Forsyth Barr Group Limited and Forsyth Barr Limited
Bailador Investment Management Pty Limited
Bailador Technology Investments Limited (including investee companies)
NZ Performance Horses Limited
Kiwi Harvest Limited
Sydney Festival
New Zealand Food Network Limited
New Zealand Food Rescue Trust
ANDREA MARTENS
ADMA – Australian Data Driven Marketing Association
HYG Holdco Pty Limited
PHILIP BOWMAN
Sky Network Television Limited
Majid al Futtaim Properties LLC
Tegel Group Holdings Limited
Ferrovial SA
Better Capital PCC Limited
Vinula Pty Ltd
Vinula Superfund Pty Ltd
Tom Tom Holdings Inc
Majid al Futtaim Capital LLC
Majid al Futtaim Holding LLC
BRENT SCRIMSHAW
Enero Group Limited
Rhinomed Limited
MICHAEL DALY
Stringydale Pty Ltd
ABIGAIL FOOTE
Sanford Limited
Freightways Limited
Christchurch City Holdings Limited (including subsidiary companies)*
ZION ARMSTRONG
Cosmostar Limited
Les Mills International
*Commenced appointment during the year ended 31 July 2023
Chairperson
Chairperson / Director
Managing Partner
Chairperson
Director
Chairperson
Chairperson
Chairperson
Director
CEO
Director
Chairperson
Chairperson
Chairperson
Director
Director
Director
Director
Director
Director
Director
CEO
Director
Director
Director
Director
Chairperson
Director
Strategic operating partner
DIRECTORS’ DETAILS, REMUNERATION AND OTHER BENEFITS
During the year ended 31 July 2023, the Directors and former Directors of the Company received the following
remuneration and other benefits, which were approved by the Board:
Director
David Kirk
Philip Bowman
John Harvey*
Andrea Martens
Brent Scrimshaw
Abigail Foote
Zion Armstrong**
Michael Daly
Total Remuneration Other benefits
NZD $274,741 None
NZD $148,486 None
NZD $50,372 None
NZD $181,209 None
NZD $148,486 None
NZD $182,300 None
NZD $98,115 None
NZD $1,199,564 $51,799
* Retired 1 December 2022. ** Appointed 1 December 2022
EMPLOYEE REMUNERATION
Role
Chairman, Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Managing Director and
Group Chief Executive Officer
During the year ended 31 July 2023, a number of employees or former employees, not being Directors of the
Company, received remuneration and other benefits that exceeded NZ$100,000 in value as follows:
Remuneration (NZD $)
110,000
100,000
120,000
110,000
130,000
120,000
140,000
130,000
150,000
140,000
160,000
150,000
170,000
160,000
180,000
170,000
190,000
180,000
200,000
190,000
210,000
200,000
220,000
210,000
230,000
220,000
240,000
230,000
250,000
240,000
260,000
250,000
270,000
260,000
280,000
270,000
290,000
280,000
300,000
290,000
310,000
300,000
320,000
310,000
330,000
320,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
DONATIONS
Number of Employees
58
45
47
27
28
19
21
15
19
8
12
5
6
4
5
2
7
1
5
3
3
2
3
Remuneration (NZD $)
330,000
340,000
350,000
360,000
380,000
390,000
400,000
450,000
460,000
470,000
480,000
500,000
560,000
590,000
600,000
610,000
650,000
700,000
730,000
770,000
810,000
1,250,000
340,000
350,000
360,000
370,000
390,000
400,000
410,000
460,000
470,000
480,000
490,000
510,000
570,000
600,000
610,000
620,000
660,000
710,000
740,000
780,000
820,000
1,260,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Number of Employees
3
2
1
2
1
1
1
3
1
1
2
1
1
1
1
1
1
3
1
1
1
1
During the year ended 31 July 2023, the Group has made total donations of NZD $ 225,452. The Group invested in
partnership fees, product donations and volunteer hours during FY23. See pages 76 to 83 for further information.
184
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KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES 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.
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 NZD$100,000 or more
during the year ended 31 July 2023, is included in the relevant bandings for remuneration disclosed on page 185.
No employee of the Group appointed as a Director of KMD Brands 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 (or the legal equivalent in various jurisdictions) of subsidiary companies
at 31 July 2023, and those who ceased to hold office during the year ended 31 July 2023, are as follows:
COMPANY
DIRECTOR / OFFICE HOLDER
COMPANY
DIRECTOR / OFFICE HOLDER
KMD Brands
Investments Limited
KMD Brands Managed
Services (NZ) Limited
KMD Brands Finance
(NZ) Limited
Frances Blundell, Chris Kinraid
Curl Retail No 1 Pty Ltd
Ozmosis Pty Ltd
Brooke Farris, Lachlan
Farran, Anthony Roberts*
Brooke Farris, Lachlan
Farran, Anthony Roberts*
KMD Brands Managed
Services (AU) Pty Limited
Chris Kinraid, Lachlan
Farran, Anthony Roberts*
Kathmandu Group Limited
Chris Kinraid
PT Jarosite
Rip Curl Brazil LTDA
Rip Curl Japan
Carla Trindade
Mitsui Nishina
Onsmooth Thai Co Ltd
Duncan Stewart, Michael Daly
James Hendy, Lachlan
Farran, Michael Daly,
Anthony Roberts*
Mathieu Lefin and
Isabelle Espil
Rip Curl Europe S.A.S
Rip Curl Spain SA Unipersonal
Mathieu Lefin
Rip Curl UK Ltd
Rip Surf Artigos De Desporto
Unipessoal LDA
KMD Brands Germany GmbH
(formerly Rip Curl Germany
GmbH)
KMD Brands Italy SRL
Rip Curl Suisse S.A.R.L
Rip Curl Nordic AB
50% subsidiary interests:
Rip Curl (Thailand) Co. Ltd
Mathieu Lefin and
Julien Haueter
Mathieu Lefin, Alois Bersan,
and Isabelle Espil
Sermchai Putamadilok,
Patranist Putmadilok, Brooke
Farris, Anthony Roberts*
Kathmandu Limited
Kathmandu (U.K.) Limited
RC Surf NZ Limited
Kathmandu Pty Ltd
Barrel Wave Holdings Pty Ltd
Chris Kinraid,
Anthony Roberts*
Chris Kinraid, Lachlan
Farran, Michael Daly,
Anthony Roberts*
Kathmandu US Holdings LLC
Chris Kinraid, Michael Daly
Oboz Footwear LLC
Rip Curl, Inc
Rip Curl Canada Inc
Rip Curl International Pty Ltd
Rip Curl Proprietary Limited
Rip Curl Finance Pty Ltd
Rip Curl Group Pty Ltd
Amy Beck, Chris Kinraid,
Michael Daly
Diem Culley, Michael Daly,
Anthony Roberts*
Diem Culley, Nick Russell,
Anthony Roberts*
Michael Daly, Brooke
Farris, Lachlan Farran,
Anthony Roberts*
* Ceased to hold office during the period ending 31 July 2023
186
PRINCIPAL SHAREHOLDERS
The names and holdings of the 20 largest shareholders as at 1 August 2023 were:
Name
Citicorp Nominees Pty Limited
New Zealand Superannuation Fund Nominees Limited
HSBC Custody Nominees (Australia) Limited
Briscoe Group Limited
BNP Paribas Nominees NZ Limited Bpss40
Accident Compensation Corporation
Tea Custodians Limited
Citibank Nominees (NZ) Ltd
New Zealand Depository Nominee
J P Morgan Nominees Australia Pty Limited
National Nominees Limited
National Nominees New Zealand Limited
HSBC Nominees (New Zealand) Limited
Forsyth Barr Custodians Limited
JPMORGAN Chase Bank
FNZ Custodians Limited
BNP Paribas Noms Pty Ltd
Pt Booster Investments Nominees Limited
HSBC Nominees (New Zealand) Limited
Public Trust
DIRECTORS’ SHAREHOLDINGS
Ordinary Shares
64,327,138
63,448,143
57,642,287
48,007,465
36,585,523
35,227,087
25,077,531
23,683,611
22,129,837
21,439,290
18,028,736
17,072,433
15,363,884
14,527,843
14,004,164
13,828,831
10,479,535
7,945,607
7,873,467
%
9.04
8.92
8.10
6.75
5.14
4.95
3.53
3.33
3.11
3.01
2.53
2.40
2.16
2.04
1.97
1.94
1.47
1.12
1.11
6,785,506
0.95
Directors held interests in the following ordinary shares of the Company at 31 July 2023:
Director/Senior Manager
Nature of interest
Number held at
31 July 2022
Acquired Disposed
David Kirk
Philip Bowman
Michael Daly
Abigail Foote
Beneficially owned
Beneficially owned
Beneficially owned
Beneficially owned
743,336
750,000
473,386
65,000
250,000
250,000
65,000
-
-
-
Total held at
31 July 2023
993,336
1,000,000
473,386
130,000
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KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES Michael Daly held the following interests in convertible financial products in the Company at 31 July 2023 due to his
participation in the Company’s LTI Plan in his capacity as Group Chief Executive Officer.
Executive Director – Michael Daly
Nature of Interest
Performance Share Rights
Performance Share Rights
Performance Share Rights
Number
Granted
876,944
503,462
483,621
Grant
Date
20 Dec 22
22 Dec 21
22 Dec 20
Vesting
Period
3 years
3 years
3 years
Vesting
Date
1 Aug 25
1 Dec 24
1 Dec 23
Total Fair Value of Performance
Rights at Grant Date $AUD
789,250
719,950
561,000
Directory
The details of the Company’s principal administrative and registered office in New Zealand is:
223 Tuam Street
Christchurch Central
PO Box 1234
Christchurch 8011
SHARE REGISTRY
In New Zealand:
Link Market Services (LINK)
No other Directors held interests in convertible financial products of the Company at 31 July 2023.
Physical Address:
Performance share rights granted will, subject to satisfaction of performance conditions, vest on the basis of one
ordinary share for each performance share right which vests, on the vesting date for each grant.
DISTRIBUTION OF SHAREHOLDERS AND HOLDINGS AS AT 31 JULY 2023
Postal Address:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 50,000
50,001 to 100,000
100,001 and over
Total
Number of Holders
3,108
3,845
1,463
1,782
291
227
10,716
%
29.03
35.93
13.64
16.61
2.67
2.12
100%
Number of Ordinary Shares
1,784,406
10,036,740
11,383,736
39,733,365
20,714,085
627,695,390
711,347,722
%
0.25
1.41
1.60
5.59
2.91
88.24
100%
SUBSTANTIAL PRODUCT HOLDERS
The substantial product holders of ordinary shares (being the only class of quoted voting products) of the Company and
their relevant interests as at 31 July 2023, were as follows:
Allan Gray Group
New Zealand Superannuation Fund Nominees Limited
Jarden Securities Limited, Harbour Asset Management Limited,
and Jarden Scientific Trading Limited
Briscoe Group Limited
Yarra Capital Management Limited
Accident Compensation Corporation
As at 31 July 2023, the Company had 711,347,722 ordinary shares on issue.
NZX CLASS WAIVERS RELIED ON
Ordinary Shares
73,653,753
57,809,139
56,986,736
48,007,465
46,593,663
35,671,470
%
10.35
8.13
8.01
6.75
6.55
5.01
During the year, the Company did not rely on any rulings or waivers granted by NZ RegCo.
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, provides 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.
Level 30, PwC Tower,
15 Customs Street West,
Auckland 1010
New Zealand
PO Box 91976,
Auckland, 1142
New Zealand
Telephone:
Investor enquiries:
Facsimile:
Internet address:
+64 9 375 5999
+64 9 375 5998
+64 9 375 5990
www.linkmarketservices.co.nz
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 ordinary shares are quoted on the NZX and the ASX.
INCORPORATION
The Company is incorporated in New Zealand.
188
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KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES
GRI Index
Statement of use: KMD Brands Limited has reported the information cited in this GRI content index for the year ended
1 August 2022 to 31 July 2023 with reference to the GRI Standards.
GRI INDICES DESCRIPTION
REFERENCE
PAGE #
SUPPORTING DETAILS
GRI INDICES DESCRIPTION
REFERENCE
PAGE #
SUPPORTING DETAILS
THE ORGANISATION AND ITS REPORTING PRACTICES
2-1
2-2
2-3
2-4
2-5
Organisational details
Entities included in
the organisation’s
sustainability reporting
Reporting period, frequency
and contact point
Our purpose and vision
Our World
Directory
Financial Statements Section 5:
Group Structure
Refer to statement of use above
Restatements of information
Lead in ESG - Climate
External assurance
Lead in ESG - Climate
Lead in ESG - Climate:
Climate Related Disclosures
P. 3
P. 8-9
P. 189
P. 161
P. 85
P. 85
P. 95
ACTIVITIES AND WORKERS
companysecretary@kmdbrands.com
Publication date:
20 September 2023
Activities, value chain and
other business relationships
How We Create Value
Financial Statements Section 1.1:
General Information
P. 22-23
P. 127
Employees
Tables 1-2 - Employee data
P. 195
STRATEGY, POLICIES AND PRACTICES
Statement on sustainable
development strategy
2-22
Governance at KMD Brands
P. 14
2-23
2-24
2-25
2-26
2-27
2-28
Policy commitments
Governance at KMD Brands
P. 14-15
Embedding policy commitments Governance at KMD Brands
Lead in ESG - Communities:
Our Workers
Corporate Governance
Processes to remediate
negative impacts
Lead in ESG - Communities:
Our Workers
P. 14
P. 70-73
P. 172
P. 71 & 74
Mechanisms for seeking
advice and raising concerns
Compliance with laws
and regulations
Corporate Governance
P. 172
Operational Excellence
P. 51
Membership associations
Our Partners
P. 202-206
KMD Brands Modern Slavery
Statement at https://www.kmdbrands.
com/reports
KMD Brands Modern Slavery
Statement at https://www.kmdbrands.
com/reports
KMD Brands Modern Slavery
Statement at https://www.kmdbrands.
com/reports
KMD Brands Modern Slavery
Statement at https://www.kmdbrands.
com/reports
Workers who are not employees
Information unavailable/incomplete
STAKEHOLDER ENGAGEMENT
Governance structure
and composition
Corporate Governance
Disclosure of Interests by Directors
P. 173-177
P. 184
2-29
2-30
Approach to stakeholder
engagement
What Matters Most
Corporate Governance
P. 19
P. 182
Collective bargaining agreements
Not applicable
Nomination and selection of
the highest governance body
Chair of the highest
governance body
Corporate Governance
Corporate Governance
Role of the highest governance
body in overseeing the
management of impacts
Governance at KMD Brands
What Matters Most
Corporate Governance
Corporate Governance
P. 174
P. 174
P. 14
P. 19
P. 173
P. 173
Delegation of responsibility
for managing impacts
Role of the highest governance
body in sustainability reporting
Conflicts of interest
Communication of
critical concerns
Collective knowledge of the
highest governance body
Evaluation of the performance
of the highest governance body
Remuneration policies
Process to determine
remuneration
Our Material Issues
P. 20-21
Corporate Governance
Disclosure of Interests by Directors
Corporate Governance
P. 174
P. 184
P. 172
Corporate Governance
P. 174-175
Corporate Governance
P. 175
Corporate Governance
Corporate Governance
P. 179-181
P. 180
Annual total compensation ratio
Corporate Governance
P. 181
MATERIAL TOPICS
3-1
3-2
3-3
Process to determine
material topics
List of material topics
What Matters Most
Our material issues
Management of material topics
Refer to sections referenced within
each material topic index
GRI 205: ANTI-CORRUPTION
GRI 3
3-3: Management of material
topics
205-2
Communication and training
about anti-corruption policies
and procedures
GRI 301: MATERIALS
GRI 3
3-3: Management of material
topics
301-2
301-3
Recycled input materials used
Reclaimed products and their
packaging materials
Corporate Governance
Corporate Governance
Lead in ESG - Circularity:
- Circular Business Models
- Responsible Materials
- Waste
Lead in ESG - Circularity:
Responsible Materials
P. 18-19
P. 20-21
P. 172
P. 172
P. 98-99
P. 108-109
P. 114-115
P. 109
Lead in ESG - Circularity: Circular
Business Models
Lead in ESG - Circularity: Waste
P. 96-97
P. 112-113
191
2-6
2-7
2-8
GOVERNANCE
2-9
2-10
2-11
2-12
2-13
2-14
2-15
2-16
2-17
2-18
2-19
2-20
2-21
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KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES
GRI INDICES DESCRIPTION
REFERENCE
PAGE #
SUPPORTING DETAILS
GRI INDICES DESCRIPTION
REFERENCE
PAGE #
SUPPORTING DETAILS
GRI 305: EMISSIONS
GRI 3
3-3: Management of material
topics
Lead in ESG - Climate
Lead in ESG - Climate: Climate
related disclosures
P. 84-87
P. 88-95
305-1
305-2
305-3
305-4
305-5
305-7
Direct (Scope 1) GHG emissions
Lead in ESG - Climate
Energy indirect (Scope 2) GHG
emissions
Other indirect (Scope 3) GHG
emissions
Lead in ESG - Climate
Lead in ESG - Climate
GHG emissions intensity
Lead in ESG - Climate
Reduction of GHG emissions
Lead in ESG - Climate
Nitrogen oxides (NOx), sulfur
oxides (SOx), and other
significant air emissions
Lead in ESG - Climate
P. 85
P. 85
P. 85
P. 84
P. 85
P. 85
GRI 306: WASTE
GRI 3
3-3: Management of material
topics
Waste generation and significant
waste-related impacts for the
organisation
Management of significant
waste-related impacts
Lead in ESG - Circularity: Waste
P. 113-115
Lead in ESG - Circularity: Waste
P. 113-115
Lead in ESG - Circularity: Waste
P. 113-115
Waste generated
Lead in ESG - Circularity: Waste
Waste diverted from disposal
Lead in ESG - Circularity: Waste
Waste directed to disposal
Lead in ESG - Circularity: Waste
306-1
306-2
306-3
306-4
306-5
GRI 308: SUPPLIER ENVIRONMENTAL ASSESMENT
GRI 3
3-3: Management of material
topics
Lead in ESG - Climate
308-1
308-2
New suppliers that were
screened using environmental
criteria
Negative environmental impacts
in the supply chain and actions
taken
Lead in ESG - Climate
Lead in ESG - Climate
P. 113-115
P. 113-115
P. 113-115
P. 84-87
P. 87
P. 84
GRI 401: EMPLOYMENT
GRI 3
3-3: Management of material topics
401-1
401-2
New employee hires and employee
turnover
Benefits provided to full-time
employees that are not provided to
temporary or part-time employees
Operational Excellence
Lead in ESG - Communities:
Our People
P. 49-51
P. 62-65
Tables 1-3 - Employee Data
P. 195-196
Table 4 - Employee Benefits
P. 197
401-3
Parental leave
Table 5 - Parental leave
P. 197
GRI 403: OCCUPATIONAL HEALTH AND SAFETY
3-3: Management of material topics
GRI 3
Occupational health and safety
management system
Hazard identification, risk
assessment, and incident
investigation
Worker participation, consultation,
and communication on
occupational health and safety
Worker training on occupational
health and safety
Operational Excellence
Operational Excellence
Operational Excellence
P. 49-56
P. 50
P. 55-56
Operational Excellence
P. 55-56
Operational Excellence
Promotion of worker health
Table 4 - Employee Benefits
Work-related injuries
Work-related ill health
Operational Excellence
Operational Excellence
GRI 404: TRAINING AND EDUCATION
3-3: Management of material topics
Operational Excellence
Operational Excellence
Operational Excellence
Average hours of training per year
per employee
Programmes for upgrading
employee skills and transition
assistance programmes
Percentage of employees receiving
regular performance and career
development reviews
Operational Excellence
P. 54
403-1
403-2
403-4
403-5
403-6
403-9
403-10
GRI 3
404-1
404-2
404-3
P. 55-56
P. 197
P. 55-56
P. 55-56
P. 53-54
P. 54
P. 51-54
GRI 405: DIVERSITY AND EQUAL OPPORTUNITY
3-3: Management of material topics
GRI 3
405-1
Diversity of governance bodies and
employees
Lead in ESG - Communities: Our
People
Lead in ESG - Communities:
Our People
Table 3 - Employee data
P. 62-65
P. 61
P. 196
192
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KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES
GRI INDICES DESCRIPTION
REFERENCE
PAGE #
SUPPORTING DETAILS
TABLE 1: EMPLOYEE DATA BY REGION
KMD Brands Modern Slavery
Statement at https://www.
kmdbrands.com/reports
P. 70-72
P. 71
P. 70-72
P. 71
P. 70-72
P. 71
P. 70-72
P. 72
P. 70-71
P. 55-56
P. 55
P. 40-41
P. 41
TOTAL
BY EMPLOYMENT TYPE
Full-time
Part-time
Casual
BY CONTRACT TYPE
Permanent
Temporary
Non-guaranteed hours
GENDER
Female
Male
Other
NEW HIRES
Number
Rate
TURNOVER
Number
Rate
AUS
2,837
731
591
1,515
1,310
12
1,515
1,809
1,003
25
1,712
63%
1,396
51%
TABLE 2: EMPLOYEE DATA BY GENDER
TOTAL
BY EMPLOYMENT TYPE
Full-time
Part-time
Casual
BY CONTRACT TYPE
Permanent
Temporary
Non-guaranteed hours
NEW HIRES
Number
Rate
TURNOVER
Number
Rate
NZ
659
297
317
45
606
8
45
430
226
3
360
55%
363
56%
FEMALE
3,060
1,235
779
1,046
1,945
69
1,046
1,722
56%
1,725
56%
GRI 407: FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING
GRI 3
3-3: Management of material topics
Lead in ESG - Communities:
Our Workers
407-1
Operations and suppliers in which the
right to freedom of association and
collective bargaining may be at risk
GRI 408: CHILD LABOUR
GRI 3
3-3: Management of material topics
Lead in ESG - Communities:
Our Workers
Lead in ESG - Communities: Our
Workers
408-1
Operations and suppliers at significant
risk for incidents of child labour
Lead in ESG - Communities: Our
Workers
GRI 409: FORCED OR COMPULSORY LABOUR
GRI 3
409-1
3-3: Management of material topics
Operations and suppliers considered
to have significant risk for incidents of
forced or compulsory labour
Lead in ESG - Communities: Our
Workers
Lead in ESG - Communities: Our
Workers
GRI 414: SUPPLIER SOCIAL ASSESSMENT
GRI 3
3-3: Management of material topics
Lead in ESG - Communities: Our
Workers
414-1
414-2
New suppliers that were screened using
social criteria
Lead in ESG - Communities: Our
Workers
Negative social impacts in the supply
chain and actions taken
Lead in ESG - Communities: Our
Workers
GRI 416: CUSTOMER HEALTH AND SAFETY
GRI 3
3-3: Management of material topics
416-2
Incidents of non-compliance concerning
the health and safety impacts of
products and service
GRI 418: CUSTOMER PRIVACY
GRI 3
3-3: Management of material topics
418-1
Substantiated complaints concerning
breaches of customer privacy and losses
of customer data
Operational Excellence
Operational Excellence
Elevating Digital
Elevating Digital
194
OTHER
195
TOTAL
4,843
THAI
445
445
0
0
445
0
0
346
99
0
122
20%
430
70%
USA
431
155
270
6
423
2
6
227
203
1
356
84%
365
86%
EUR
276
229
45
2
207
67
2
153
123
0
138
51%
113
42%
194
1
0
194
1
0
95
100
0
81
43%
72
38%
MALE
1,754
809
433
512
1,221
21
512
1,035
59%
1,002
57%
OTHER UNDISCLOSED
8
2
4
2
6
0
2
6
40%
5
40%
21
5
8
8
13
0
8
6
40%
7
40%
2,051
1,224
1,568
3,185
90
1,568
3,060
1,754
29
2,769
57%
2,739
56%
TOTAL
4,843
2,051
1,224
1,568
3,185
90
1,568
2,769
57%
2,739
56%
195
KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES TABLE 3: EMPLOYEE DATA BY AGE
TABLE 4: BENEFITS PROVIDED TO PERMANENT EMPLOYEES BUT NOT PROVIDED TO CASUAL EMPLOYEES
TOTAL
BY EMPLOYMENT TYPE
Full-time
Part-time
Casual
BY CONTRACT TYPE
Permanent
Temporary
Non-guaranteed hours
BY LEVEL
Group Executive
Brand Executive
Senior Management
Management
Non-Management
NEW HIRES
Number
Rate
TURNOVER
Number
Rate
<30
2,836
658
862
1,316
1,457
63
1,316
0%
0%
1%
32%
64%
2,200
78%
1,965
70%
30-50
1,668
1,182
288
198
1,444
26
198
75%
76%
80%
56%
30%
511
29%
705
41%
50+
339
211
74
54
284
1
54
25%
24%
19%
12%
6%
58
18%
69
22%
TOTAL
4,843
2,051
1,224
1,568
3,185
90
1,568
100%
100%
100%
100%
100%
2,769
57%
2,739
56%
KATHMANDU
Yes1
RIP CURL
Yes3
No
Yes2
Yes
Yes
Yes
Yes
Yes
Yes
Yes3
Yes2
Yes
Yes
Yes
Yes
Yes
Yes
OBOZ
Yes
Yes4
Yes
No
Yes
Yes
Yes
Yes
No
Life and health insurance
Disability & invalidity coverage
Retirement provision
Flu vaccines1
Phone/car allowance1
EAP1
Parental leave2
Additional leave purchase1
Product allowances & discounts1
1 For eligible employees only
2 As per local Government requirements
3 Certain countries only
4 Short-term disability cover
TABLE 5: PARENTAL LEAVE
Number of employees by gender who
were entitled to parental leave
Number of employees by gender who took parental leave
Number of employees who returned to work
after parental leave ended by gender
Number of employees who returned to work after
parental leave ended who were still employed 12
months after their return to work by gender
Retention rate of employees who returned to
work after parental leave ended by gender
FEMALE
2,355
MALE
1,248
OTHER UNDISCLOSED
16
6
TOTAL
3,625
67
79
69
5
4
3
0
0
0
1
0
0
73
83
72
87%
75%
N/A
N/A
87%
196
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KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES Sustainability Accounting Standards
Board (SASB) Index
SASB is an independent standards-setting organisation that promotes disclosure of material sustainability
information by companies to their investors. The index below refers to relevant indicators from the following
SASB Standards; Consumer Goods Sector - Apparel, Accessories & Footwear [CG-AA], Multiline and Specialty
Retailers and Distributors [CG-MR], and E-Commerce [CG-EC]. References and hyperlinks provided are to sections
within this Report, or to information available on our websites.
TOPIC
ACCOUNTING METRIC
Management of Chemicals
in Products
Discussion of processes to maintain compliance with restricted
substances regulations
SASB CODE
CATEGORY
CG-AA-250a.1
Discussion and Analysis
Discussion of processes to assess and manage risks and/or
hazards associated with chemicals in products
CG-AA-250a.2
CG-MR-410a.2
Discussion and Analysis
Environmental Impacts in
the Supply Chain
Percentage of (1) Tier 1 supplier facilities and (2) supplier
facilities beyond Tier 1 in compliance with wastewater
discharge permits and/or contractual agreements
CG-AA-430a.1 Quantitative
Percentage (%)
UNIT OF MEASURE RESPONSE / REFERENCE
n/a
n/a
We maintain compliance and manage risks associated with chemicals in our products through our Restricted
Substances lists. Please refer to links below.
https://files.kathmandu.co.nz/pdf/reports-policies/kathmandu_restricted_substances_list_v3_for_website.pdf
https://www.ripcurl.com/media/productattachments/0/160/Rip_Curl_Restricted_Substances_List-02-09-2022_online.pdf
https://obozfootwear.com/en-gb/oboz_chemical_policy_2022
100% of KMD Brands Tier 1 suppliers and 100% of our traced suppliers beyond Tier 1 are accountable to our Code of
Conduct. This Code of Conduct includes requirements around environmental compliance including wastewater permits
or industry standards, and an expectation for suppliers to incorporate environmentally responsible practices.
https://www.kathmandu.co.nz/worker-wellbeing
https://www.ripcurl.com/au/explore/social-compliance.html
https://obozfootwear.com/en-us/manufacturing-standards
Labour Conditions in the
Supply Chain
Raw Material Sourcing
Percentage of (1) Tier 1 supplier facilities and (2) supplier
facilities beyond Tier 1 that have completed the Sustainable
Apparel Coalition’s Higg Facility Environmental Module
(Higg FEM) assessment or an equivalent environmental data
assessment
Percentage of (1) Tier 1 supplier facilities and (2) supplier
facilities beyond Tier 1 that have been audited to a labour code
of conduct, (3) percentage of total audits conducted by a third-
party auditor
Priority non-conformance rate and associated corrective action
rate for suppliers’ labour code of conduct audits
Description of the greatest (1) labour and (2) environmental,
health, and safety risks in the supply chain
(1) List of priority raw materials; for each priority raw material:
(2) environmental and/or social factor(s) most likely to threaten
sourcing, (3) discussion on business risk and/or opportunities
associated with environmental and/or social factors, and
(4) management strategy for addressing business risks and
opportunities
(1) Amount of priority raw materials purchased, by material, and
(2) amount of each priority raw material that is certified to a
third-party environmental and/or social standard, by standard
CG-AA-430a.2 Quantitative
Percentage (%)
23% Tier 1 supplier facilities and 54% of our traced Tier 2 facilities completed the Sustainable Apparel Coalition's Higg
FEM during the financial year. These assessments cover a significant percentage of our total spend with suppliers.
CG-AA-430b.1 Quantitative
CG-AA-430b.2 Quantitative
CG-AA-430b.3 Discussion and Analysis
CG-AA-440a.3
Discussion and Analysis
Percentage (%)
100% of Tier 1 supplier facilities and 17% of our traced Tier 2 supplier facilities have been audited to the KMD Brands
Supplier Code of Conduct in FY23. Of the total audits, 94% were conducted by a third-party auditor.
Rate
n/a
n/a
See also Lead in ESG - Communities: Our Workers (P. 68-75)
In FY23, there was a 2% (2022: 6%) priority non-conformance rate from the audits performed. Corrective action plans
were agreed upon with 75% of suppliers and one factory was exited due to failure to remediate.
See also Lead in ESG - Communities: Our Workers (P. 68-75)
Please refer to KMD Brands Modern Slavery Statement at https://www.kmdbrands.com/reports
Environmental and social risks, at the raw materials level, are assessed within the existing Code of Conduct only when
such suppliers are fully vertical and also manufacture the final product.
These risks are discussed in the following sections of the report:
Lead in ESG - Communities: Our Workers (P. 68-75)
Lead in ESG - Climate (P. 84-87)
Lead in ESG - Climate: Climate related disclosures (P. 88-95)
CG-AA-440a.4 Quantitative
Metric tons (t)
Please refer to KMD Brands Modern Slavery Statement at https://www.kmdbrands.com/reports
198
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TOPIC
ACCOUNTING METRIC
Data Privacy &
Advertising Standards
Number of users whose information is used for secondary
purposes
SASB CODE
CATEGORY
CG-EC-220a.1
Quantitative
Data security
Labour practices
Product Packaging
& Distribution
Description of policies and practices relating to behavioural
advertising and user privacy
CG-EC-220a.2
Discussion and Analysis
Description of approach to identifying and addressing data
security risks
(1) Number of data breaches, (2) percentage involving
personally identifiable information (PII), (3) number of
customers affected
CG-MR-230a.1
CG-EC-230a.1
CG-MR-230a.2
CG-EC-230a.2
Discussion and Analysis
Quantitative
(1) Voluntary and (2) involuntary turnover rate for in-store
employees
CG-MR-310a.2
CG-EC-330a.2
Quantitative
Discussion of strategies to reduce
the environmental impact of
product delivery
CG-EC-410a.2
Discussion and Analysis
Activity Metric
Number of (1) Tier 1 suppliers and (2) suppliers beyond Tier 1
CG-AA-000.A
Quantitative
UNIT OF MEASURE RESPONSE / REFERENCE
Number
n/a
n/a
KMD Brands refrains from using consumer personal information without consent for purposes that do not align with
our established Privacy Policies/Statements.
https://help.kathmandu.co.nz/support/solutions/articles/51000164408
https://www.ripcurl.com/au/policies/privacy.html
https://obozfootwear.com/en-us/privacy-policy
Refer to Elevating Digital (P. 40-41).
Number,
Percentage (%)
Refer to Elevating Digital (P. 40-41).
Rate
n/a
Number
Our total turnover rate is 56% for FY23.
Please refer to Tables 1-3 for more information (P. 195-196).
Refer to Lead in ESG - Climate: Climate related disclosures (P. 95).
KMD Brands has 189 Tier 1 suppliers and 65 traced Tier 2 suppliers as at 31 July 2023. We are working to trace and
publish the input suppliers of our strategic Tier 1 suppliers in future reporting periods.
Number of: (1) retail locations and
(2) distribution centers
CG-MR-000.A
Quantitative
Number
Refer to Our World (P. 8-9) for a map and number of locations by country.
200
201
KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES Our partners
B CORP
Certified B Corporations® (B
Corps™) are for-profit companies
that use the power of business
to build a more inclusive and
sustainable economy.
CARBON DISCLOSURE
PROJECT
We submit an annual report
to CDP, which supports
our carbon measurement
and reduction program.
TEXTILE EXCHANGE
Our membership with the
Textile Exchange supports our
materials strategy, and we also
participate in its Preferred Fiber
& Benchmarking Programme.
CONVERGE
Workplaces thrive when their
people do. Converge offers
our employees an assistance
program designed to help
resolve personal problems that
may be negatively impacting
their day-to-day life and
workplace performance.
ELEVATE
Our chosen supply chain
partner is an industry leader
in sustainability, auditing and
improvement services.
TOITŪ ENVIROCARE
Our membership with Toitū
Envirocare helps us to
measure, manage and reduce
our carbon footprint through
our annual carbon audit.
FAIR LABOR ASSOCIATION
Kathmandu became the
first brand in the southern
hemisphere to achieve FLA
accreditation. This verifies that
our social compliance program
in our supply chain exceeds the
most stringent global standards.
MEKONG SUSTAINABLE
MANUFACTURING ALLIANCE
The Alliance, a US$10 million
partnership funded by USAID
and implemented by the Institute
for Sustainable Communities in
partnership with ELEVATE and
the Asian Institute for Technology,
uses a market-driven approach
to strengthen sustainable and
competitive manufacturing by
engaging the private sector,
catalysing market forces, and
advancing innovative regional
initiatives that will increase the
adoption of ESG standards.
SUSTAINABLE APPAREL
COALITION
Membership of the SAC gives
us discounted access to the
Higg Index modules. We’ve
been using the index since 2014,
which supports our sustainability
strategy. The index guides
us on the environmental and
social impacts of our products
and how we can improve.
REPREVE
High-quality fibres are made
from 100% recycled materials,
including post-consumer
plastic bottles and pre-
consumer waste, that are also
certified and traceable.
BEYOND BLUE
We work with Beyond Blue to
communicate the link between
good mental health and the
outdoors, encouraging people
in Australia to take positive
steps to look after their mental
health and get outdoors.
SYSTEM
PARTNER
BLUESIGN ®
Our bluesign ® system
partnership supports our
chemicals management program,
materials and products so
that they are environmentally
and socially friendly.
CANOPY
We have been partners with
Canopy since 2016 and use
our influence in our fabric
supply chain to protect the
world’s remaining ancient
and endangered forests and
endangered species habitat.
GRAEME DINGLE
FOUNDATION
We are partnered with the
Graeme Dingle Foundation to
encourage young people in New
Zealand to get outdoors for
their mental health, wellbeing
and personal growth.
UPPAREL
We partner with Upparel to
provide our customers with a
solution to keep their gear in
circulation for longer and keep
valuable textiles out of landfill.
CARBON CLICK
CarbonClick is an envirotech
company that makes it easy for
businesses and customers to
take climate action through fully
traceable carbon offsetting with
high-quality projects. Kathmandu
customers have an option to
offset part of their climate impact
on their purchases via an add-on
function at the online checkout.
PRIDE PLEDGE
We are partnered with Pride
Pledge, a public commitment that
all LGBTTQIA+ people should
have the freedom to be safe,
healthy and visible. We use our
voice and influence to support
visibility, safety, tolerance,
love, diversity and inclusion
for all LGBTTQIA+ people.
RAINBOW TICK
Our Rainbow Tick accreditation
demonstrates our commitment
to diversity and inclusion in
the workplace and creating a
supportive work environment
for our team members.
202
203
KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES 52 HIKE CHALLENGE
Together with Osprey and
Outdoor Research, we launched
the 52 Hike Challenge – where
150 women over 50 gain physical
fitness, mental wellbeing, make
new friends, explore new places,
and connect with family, friends
and themselves through nature.
BLACK FOLKS CAMP TOO
BFCT’s mission is to increase
diversity in the outdoors by
making it easier, more familiar
and more fun for Black folks to
go camping. We collaborated
on the O FIT Insole® 'Unity
Blaze' with a portion of
proceeds supporting BFCT's
Digital Education Initiative.
THE CONSERVATION
ALLIANCE
The mission of The Conservation
Alliance is to harness the
collective power of business
and outdoor communities to
fund and advocate for the
protection of North America’s
wild places. Amy Beck, President
at Oboz Footwear, serves
on its Board of Directors.
CONTINENTAL DIVIDE
TRAIL COALITION
The CDTC works in partnership
with the US Forest Service,
National Park Service, and
Bureau of Land Management
to complete, promote and
protect the Continental Divide
National Scenic Trail. In 2022,
we adopted a four mile section
of the trail in Montana.
GALLATIN VALLEY
LAND TRUST
The GVLT connects people
to the landscapes that
surround the Gallatin Valley in
Bozeman, Montana through the
conservation of open spaces
and creation of trail systems.
Rich Hohne, Marketing Director
at Oboz Footwear, serves
on its Board of Directors.
TREES FOR THE FUTURE
Oboz has planted a tree for
every pair of shoes sold since
2007. This equates to more than
five million trees - and counting.
TREES trains communities on
sustainable land use so that they
can grow vibrant economies,
thriving food systems, and
a healthier planet. Oboz
supports its work in Tanzania.
204
AIRSTEP AUSTRALIA
Our partnership with
Airstep Australia repurposes
neoprene offcuts created in
the Rip Curl Wetsuit factory
into carpet underlay.
ARCH & HOOK
With a mission to eliminate
the use of non sustainable
materials within fashion and
retail, Arch & Hook uses
recycled ocean bound and
post-consumer plastics to create
products to help our planet.
AUSTRALIAN INDUSTRY
GROUP
Ai Group provides unlimited
calls to the workplace advice
line, regular award and
compliance updates and access
to HR, safety and business
improvement resources,
webinars, podcasts, networking
and knowledge events.
LENZING GROUP
The Lenzing Group is dedicated
to producing innovative fibres
made from botanic products
derived from renewable
sources and processed with
unique resource conserving
technologies. LENZING™
ECOVERO™ Viscose fibres
derived from sustainable wood
and pulp are used in our products.
MAINETTI
Partnering with Mainetti, a
leader in innovating sustainable
packaging solutions, means
we can continually challenge
and adjust our supply chain
process to support a more
sustainable future.
OCEAN GARDENER
Ocean Gardener’s mission is
to ‘Save the Reef’ by providing
education and restoration
around coral reefs throughout
Indonesia. Our Rip Curl Bali surf
school adopted a reef to support
Ocean Gardener’s mission.
SURFAID
SurfAid's mission is to improve
the health, wellbeing and
resilience of remote communities
connected to us through surfing.
SURFRIDER
The Surfrider Foundation is
dedicated to the protection
and enjoyment of the world’s
ocean, waves and beaches,
for all people, through a
powerful activist network.
TERRACYCLE
TerraCycle is a global leader in
finding recycling solutions for
consumer waste. In partnering
with TerraCycle on our wetsuit
take back program, we found
innovative ways to reuse
used wetsuits, repurposing
them into another life.
205
KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS ELEVATING DIGITAL OPERATIONAL EXCELLENCE LEAD IN ESG FINANCING OUR IMPACT ADDITIONAL DISCLOSURES WSL Wordmark
continued
WORLD SURF LEAGUE
Rip Curl partners with WSL to
deliver surfing events and is
proud to support WSL's efforts
to divert waste from landfill,
offset carbon emissions, and
educate fans through ocean
responsibility campaigns.
Shared
Kathmandu &
Rip Curl
AUSTRALIAN PACKAGING
COVENANT ORGANISATION
Kathmandu &
Oboz
We submit an annual report
and action plan to APCO,
which supports our packaging
and waste strategies.
BETTER COTTON
We are proud to be members of
Better Cotton which means we
will support farmers who care for
the environment and respect the
rights and wellbeing of workers.
BLOOM
Our partnership with Bloom
transforms algae biomass
harvested from freshwater
sources into performance foams
that replace a percentage
of polymers in conventional
EVA midsoles and insoles.
Oboz &
Rip Curl
206
LEATHER WORKING GROUP
Our work with the LWG helps
us to assess the environmental
compliance and performance
capabilities of our tanneries
and to promote sustainable
and appropriate environmental
business practices within
the leather industry.
PRIMALOFT BIO
The first biodegradable synthetic
insulation and fibre developed
from 100% recycled materials
without compromising industry-
leading performance and comfort.
KMD Brands Annual Integrated Report 2023OUR JOURNEY LEADERSHIP & GOVERNANCE WHAT MATTERS MOST OUR STRATEGY BUILDING GLOBAL BRANDS KMDBrands.com
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