ANNUAL REPORT
2021
k
o
g
a
n
.
c
o
m
A
n
n
u
a
l
R
e
p
o
r
t
2
0
2
1
HIGHLIGHTS 2021
3,971,000
Kogan Group Active Customers1
$61.8m
$1.179b
$203.7m
Adjusted EBITDA2
GROSS SALES3
GROSS PROFIT
1. Combined Active Customers of Kogan.com and Mighty Ape at 30 June 2021.
2. Adjusted EBITDA, Adjusted NPAT and Adjusted EPS are measures of the underlying performance of the Business, they remove non-cash
items including the unrealised FX gain/ (loss), equity-based compensation and one-off non-recurring items. Refer to page 21 of this Annual
Report for a detailed reconciliation of adjusting items.
3. Non-IFRS measure.
46.9%
YOY GROWTH
IN KOGAN.COM
ACTIVE
CUSTOMERS
STRONG
GROWTH IN:
KOGAN FIRST
EXCLUSIVE BRANDS
KOGAN MARKETPLACE
NEW
BUSINESS
EXPANSION:
MIGHTY APE
CONTENTS
2 Chairman’s Letter
4 Founder & CEO’s Report
7 Operating & Financial Review
23 Directors’ Report
30 Remuneration Report
42 Environmental, Social
and Governance
45 Auditor’s Independence Declaration
46 Financial Report
51 Notes to the Financial Statements
Independent Auditor’s Report
96 Directors’ Declaration
97
103 Shareholder Information
106 Corporate Directory
Annual Report 2021
1
The 2021 financial year was one of
The 2021 financial year was one of
milestones, rapid growth and evolution
milestones, rapid growth and evolution
for our Company. We celebrated our
for our Company. We celebrated our
15th birthday and marked the occasion
15th birthday and marked the occasion
by surpassing $1 billion in Gross Sales11. .
by surpassing $1 billion in Gross Sales
We stayed true to our mission and values
We stayed true to our mission and values
in spite of the continued obstacles of
in spite of the continued obstacles of
COVID‑19 – pioneering new ways to delight
COVID‑19 – pioneering new ways to delight
over three million Active Customers by
over three million Active Customers by
making the most in‑demand products
making the most in‑demand products
and services more affordable and
and services more affordable and
accessible. With that, I am pleased to
accessible. With that, I am pleased to
present the Kogan.com Ltd (Kogan.com)
present the Kogan.com Ltd (Kogan.com)
Annual Report for the financial year
Annual Report for the financial year
ended 30 June 2021 (FY21).
ended 30 June 2021 (FY21).
As always we welcome the opportunity to engage
with our stakeholders, actioning feedback where
immediately possible, as we continue to evolve our
framework. This was no different post the 2020
Annual General Meeting in which our Company
received a vote of 43.81% of eligible votes against
the 2020 Remuneration Report, receiving a First
Strike. Further information regarding our response
to stakeholders can be found in the Remuneration
Report within this Annual Report.
Our Corporate Governance Statement and other
policies and charters are available on the Company’s
corporate website, www.kogancorporate.com.
STRATEGIC OPPORTUNITIES
Our Company was built on our mission to make
the most in‑demand products and services more
affordable and accessible for all. There are always
ways to operate more efficiently and improve
offerings that our loyal customers will benefit from.
We see enormous opportunity in the Kogan First
loyalty program, the continued growth of the
Exclusive Brands product division and Kogan
Marketplace. Ruslan will discuss these opportunities
amongst others on page 4.
In the first half of FY21, we made our largest
acquisition which has accelerated our expansion into
New Zealand. Mighty Ape’s trading for the seven
months to 30 June 2021 has shown strong sales over
the Christmas peak trading period and end of financial
year sales. We are excited to see what we can achieve
together once the Mighty Ape team and operations
have been fully integrated into the Kogan Group
which is anticipated over the next financial year.
CHAIRMAN’S LETTER
Dear Kogan.com Shareholders,
Our actions stem from our core values –
to always put the customer first. We do this by
making data‑driven decisions and pioneering
technology‑based solutions to benefit our loyal
community. This ensures that we are able to deliver
on our long‑term strategies, which in turn continues
to benefit customers and Shareholders alike.
Our ability to be agile and promptly respond
to the changing conditions throughout the year
is a testament to the strength and capabilities
of our team.
In FY21 Kogan Marketplace continued its rapid
growth, nearly doubling its Gross Sales1 compared
to the prior year. There continues to be a strong
pipeline of sellers ready to be onboarded in addition
to the increased number of sellers already using the
platform throughout FY21, enabling more choice for
our customers.
Our Exclusive Brands portfolio continued to achieve
year‑on‑year Revenue growth, up 62.5% and Gross
Profit growth of 63.4% on FY20, respectively,
resulting in a contribution of 51.6% to the Group’s
overall Gross Profit in FY21.
We place great emphasis on customer experience
and are currently progressing exciting projects to
enhance our Kogan First offering, further
incentivising and rewarding our loyal customers.
In FY21 we continued to strengthen Kogan.com’s
governance framework. Kogan.com now operates
with a majority independent Board as we welcomed
two new Independent Non‑Executive Directors,
Janine Allis and James Spenceley, during the year.
The Board is supported by a majority independent
Audit and Risk Committee and Remuneration and
Nomination Committee.
1
Non‑IFRS measure.
2
kogan.com
OUR TEAM
The safety, health and wellbeing of the Kogan.com
team are at your Company’s top priorities. Our
business takes all measures necessary to ensure that
our team is safe, including the mental health of our
team members. Our business was one of the first
companies in Australia to switch to a ‘work from
home’ model, now almost two years ago, at the
beginning of the COVID‑19 pandemic. The team
continues to work from home during the current
imposed lockdowns, supported by a flexible work
model for when we are able to return to the office
and various health and wellbeing initiatives.
I am extremely proud of the Kogan.com team who,
through all of the uncertainty this pandemic continues
to bring, remained focused and found ways to support
our customers when they needed our help most.
On behalf of the Board, thank you for your continued
commitment to the Kogan.com mission, values
and community.
CASH BEING UTILISED TO SUPPORT GROWTH
PLANS
Kogan.com has a strong balance sheet, and attractive
short‑term and long‑term growth opportunities. To
support your Company with its growth plans, the
Board has decided to conserve cash for business
investment and growth purposes and has paused
dividends – having not declared a FY21 final Dividend.
LOOKING AHEAD
The Board is excited by the potential our Company
has to further build and grow our trusted brand. Our
loyal customers and Shareholders continue to be the
beneficiaries of our ongoing commitment to bring our
long‑term strategy to life into FY22 and beyond.
Greg Ridder
Chairman
Annual Report 2021
3
It’s been a challenging year for so many
It’s been a challenging year for so many
people around the country and the world.
people around the country and the world.
Our team remained focused through
Our team remained focused through
difficult COVID‑impacted operating
difficult COVID‑impacted operating
conditions, and found ways to support our
conditions, and found ways to support our
customers when they needed our help
customers when they needed our help
most. It’s been a transformative year where
most. It’s been a transformative year where
we scaled to new heights and continued to
we scaled to new heights and continued to
build for the long term.
build for the long term.
FOUNDER & CEO’S REPORT
Dear Kogan.com Shareholders,
It’s in these challenging times, that you are seeing
the true importance of how your Company is helping
Australians and New Zealanders when they need it
most. By offering the most in‑demand products and
services at more affordable prices, we are ensuring
that all our customers have access to what they need
around the clock, delivered directly to their door.
Over the past 12 months, Kogan.com turned 15 years
young, surpassed $1 billion in Gross Sales1 for the first
time ever, surged past three million Active Customers,
had record‑breaking Black Friday sales and made our
largest acquisition to accelerate our expansion into
New Zealand. And those are just the highlights.
We work extra hard to delight Kogan First subscribers
and we continue to improve the offering to enable us
to achieve our medium term goal of reaching 1 million
Kogan First subscribers.
Over the past 18 months we have witnessed a massive
swing towards the eCommerce retail revolution, one
Kogan.com has been ready and predicting, for well
over a decade. We look forward to continuing our
quest to delight our customers by making the most
in demand products and services more affordable
and accessible.
BUILDING THE KOGAN.COM PORTFOLIO
These are nice numbers. What’s more important
though, is what it means we were able to do for our
millions of customers. The world has changed, and
the convenience of shopping anywhere, at any time,
on any device is no longer just a luxury.
We’re continually evolving the Company to respond
to the needs of our customers and to strengthen our
competitive advantage. Our growing portfolio of
businesses provides diversification of income, making
us a more resilient business.
While we recently celebrated our 15th birthday, we
feel like we’re just getting started. Over the next year
we’ll be rolling out new and exciting projects to
further reward our loyal Kogan Community with
Kogan First membership benefits, new and improved
delivery solutions, and further enhancements to the
online shopping experience.
We’re attracting more and more customers to our
platform. Active Customers grew by 46.9% in the
last 12 months. This comprised Kogan.com Active
Customers, that grew to 3.2 million and Mighty Ape
Active Customers that grew to 764,000. As a
reminder, we count someone as an Active Customer
if they have made a purchase in the last 12 months.
Our Kogan First subscription program was launched
in the last quarter of FY19. At 30 June, we had grown
our Kogan First subscribers to more than 120,000
subscribers, who have received an average of $105
of member benefits this financial year. It’s an
incredibly good deal. Kogan First Members2 have
stronger loyalty and repeat purchase behaviour than
non‑members, because they get such a great deal.
As more smart shoppers engage with our platform
for the first time, our marketing investment is also
expected to have ongoing long‑term benefits to
our Business, through repeat purchasing from these
incremental Active Customers and growth in Kogan
First subscribers.
Kogan Marketplace has gone from strength to
strength, increasing Gross Sales1 by 91% in FY21
compared to FY20. The platform continues to
resonate with sellers, with Kogan Marketplace
increasing the number of sellers significantly, while
1
2
Non‑IFRS measure.
Kogan First Members excludes Kogan First customers who are in a trial period, and includes only non‑trial members.
4
kogan.com
Outlook – continued accelerated growth across the Business
Kogan
First
Exclusive
Brands
Kogan
Marketplace
Logistics
Solutions
Operating
Leverage
there continues to be a strong pipeline of new sellers
about to be onboarded. This is wonderful for
competition — enabling many small, medium and
large businesses to grow through the pandemic by
appealing directly to the millions of Kogan.com
customers. Of course, it’s also a real win for customers,
as our selection grows rapidly, enabling more choice.
We are continually improving our proprietary
marketplace platform which will enable the Business
to achieve ongoing growth without a corresponding
investment in inventory. The growth of Kogan
Marketplace means that customers have more choice
than ever, and our team worked hard to launch the
Kogan Marketplace in New Zealand prior to the
financial year end.
FY21 also saw the Company’s largest acquisition,
being the purchase of Mighty Ape. The Mighty Ape
team and operations are progressively integrating
into the Kogan Group. Trading for the seven months
to 30 June 2021 has shown strong sales over the
Christmas peak trading period and end of financial
year sales, with Revenue and Gross Profit of
$80.2 million1 and $19.9 million1, respectively. Active
Customers grew to 764,000 as at 30 June 2021.
PRODUCT OFFERING AND EXPANSION
This year, we navigated through the challenges that
come with rapid growth. We are a data‑driven
business and our decision to significantly invest in
inventory and operational capacity was made based
on forecasts using the best available data points at
the time.
As I’m writing this, global supply chains have once
again been thrown into chaos. There are fresh reports
of other retailers struggling with not being able to
secure stock in the leadup to the busy and important
Christmas period. Due to the planning and monitoring
of market conditions by our team, we are in a strong
position to service our customers heading into the
festive season. Santa can turn to Kogan.com for
millions of in‑stock items.
The Group held $191.8 million dollars of inventory in
warehouse at the end of the period, of which more
than 99% of Kogan.com inventory and 94% of Mighty
ape inventory in warehouse was aged less than 365
days. Total inventory was $227.9 million, an increase
of $115.0 million held at the same time last year.
Our ongoing investment in Exclusive Brands
inventory to broaden our range and meet customer
demand has enabled our business to achieve
continued year‑on‑year growth. In FY21 Revenue
grew 62.5% on FY20 and a CAGR2 of 43.3% since
FY19. Exclusive Brands also achieved Gross Profit
growth of 63.4% on FY20 and a CAGR2 of 52.7%
since FY19, contributing 51.6% to the Group’s overall
Gross Profit in FY21.
1
2
Values stated in AUD using the AU/NZ average rate from 1 December 2020 to 30 June 2021 of 0.9315.
Compound Annual Growth Rate (CAGR) between FY19 and FY21 is an informative metric to consider the underlying growth of the
Business, given the volatility over the COVID impacted period.
Annual Report 2021
5
FOUNDER & CEO’S REPORT CONTINUED
The online retail market continues to grow rapidly in
Australia and Kogan.com has consistently taken market
share. Online retail is in its infancy in Australia, NAB
estimates that online retail is a mere 13.3% of total retail
sales1 – far lower than comparable economies. But, online
retail is growing quickly, and Kogan.com is taking market
share in that growing market. There remains a long
runway ahead, and we are excited about the future.
FY22 & BEYOND
As we shift our focus to the next financial year
we expect to see strong growth in Kogan First
memberships, ongoing growth in Exclusive Brands,
further enhancement and development of Kogan
Marketplace, and the benefits from further Mighty
Ape synergies flowing through.
To improve the Company’s capabilities, we also
anticipate potentially implementing logistics projects
that would not require significant capital expenditure
and can be supported by the Company’s balance
sheet, and improved operating leverage, consistent
with the Company’s long term track record.
Kogan.com is a dynamic portfolio of businesses
driven by our core values to delight and win
customers for life — as our business scales we are
able to operate more efficiently, providing bigger
and better offers to our loyal customers well into
FY22 and beyond.
We’ve been working hard for more than 15 years to
become an overnight success. We are motivated and
inspired by the important role we play in the retail
landscape and the wider economy, and we’re excited
about this new stage of growth and scale that we’ve
entered. Your Company is stronger than it’s ever been.
Ruslan Kogan
Founder & CEO
1
Source: https://business.nab.com.au/nab‑online‑retail‑sales‑index‑june‑2021‑47896/
6
kogan.com
OPERATING & FINANCIAL REVIEW
ORGANISATIONAL OVERVIEW & BUSINESS MODEL
OUR BUSINESS MODEL
OUR BUSINESS MODEL
Kogan.com is a portfolio of retail and services businesses that includes Kogan Retail,
Kogan.com is a portfolio of retail and services businesses that includes Kogan Retail,
Kogan Marketplace, Kogan Mobile, Kogan Internet, Kogan Insurance, Kogan Travel,
Kogan Marketplace, Kogan Mobile, Kogan Internet, Kogan Insurance, Kogan Travel,
Kogan Money, Kogan Cars, Kogan Energy, Dick Smith, Matt Blatt and Mighty Ape.
Kogan Money, Kogan Cars, Kogan Energy, Dick Smith, Matt Blatt and Mighty Ape.
Kogan.com is a leading Australian consumer brand renowned for price leadership
Kogan.com is a leading Australian consumer brand renowned for price leadership
through digital efficiency. The Company is focused on making in‑demand products
through digital efficiency. The Company is focused on making in‑demand products
and services more affordable and accessible.
and services more affordable and accessible.
We have created a business model that allows us to be agile, bold and innovative.
We have created a business model that allows us to be agile, bold and innovative.
We can leverage our platform to seize opportunities like the expansion of Kogan
We can leverage our platform to seize opportunities like the expansion of Kogan
Marketplace and acquisition of leading online New Zealand retailer Mighty Ape to
Marketplace and acquisition of leading online New Zealand retailer Mighty Ape to
drive future growth, bringing best in market offers to our customer base.
drive future growth, bringing best in market offers to our customer base.
Our aim is to continue to build our portfolio of businesses synonymous with great
Our aim is to continue to build our portfolio of businesses synonymous with great
value, service and compelling offerings.
value, service and compelling offerings.
WHO WE ARE
Our community and our portfolio continue to grow at pace.
At 30 June 2021, we had 3,207,000 Active Customers 1 (excluding
Mighty Ape), representing year‑on‑year growth of 46.9%. Mighty Ape
Active Customers grew to 764,000 at 30 June 2021.
Kogan Retail & Kogan Marketplace
Kogan.com is part of a ‘Next Generation’ of online retailers. Kogan.com’s
technology and sourcing driven business model is more than just
a disruptive, low‑cost distribution platform. In combining the data
analytics, systems and culture with the deep technological expertise
of its management and team, Kogan.com has created a vertically
integrated business model with a market leading Exclusive Brands
capability. This is complemented by a compelling range of in demand
Third‑Party Brands, supporting website traffic and cash generation.
Kogan Marketplace partners with select brands and distributors,
giving them access to our Kogan Community, in addition to our
marketing and online distribution capability. Our curated marketplace
works with brands and distributors who generate incremental sales with
exposure on the Kogan.com platform and marketing initiatives to the
Kogan Community.
Kogan First
Kogan First membership rewards program was launched in the last
quarter of FY19.
Kogan First Members2 are offered exclusive deals on top of everyday
discounts on the platform, Kogan First Reward Credits, free shipping
and priority Customer Care.
1
Active customers refers to unique customers who have purchased in the last twelve months from reference date, rounded to the
nearest thousand.
2
Kogan First Members excludes Kogan First customers who are in a trial period, and includes only non‑trial members.
Annual Report 2021
7
OPERATING & FINANCIAL REVIEW CONTINUED
Kogan Mobile
Kogan Mobile launched in October 2015 offering pre paid mobile phone
plans online in partnership with Vodafone. The strong commercial
relationship with Vodafone has translated into strong growth for Kogan
Mobile. The unique model means that Vodafone is responsible for
operations, while Kogan is responsible for branding, marketing and
customer acquisition.
Kogan Travel
Kogan Travel launched in May 2015 and offers directly sourced holiday
packages and travel bookings.
Kogan Insurance
Kogan Insurance launched in August 2017 in partnership with Hollard
Insurance Company to offer general insurance, covering home, contents,
landlord, car and travel insurance, with a focus on value for money. The
underwriting of our general insurance policies is provided by Hollard,
with Kogan earning commission on the sale of all insurance policies.
Similar to Kogan Mobile and Kogan Internet, Kogan provides branding,
marketing and customer acquisition for all insurance offerings.
Kogan Internet
Under an expanded partnership with Vodafone Hutchison Australia that
was announced in June 2017, Kogan Internet launched in April 2018,
providing fixed line NBN plans. NBN has an estimated market size
of 11.9 million premises.
Kogan Money
In August 2018, Kogan.com announced Kogan Money Home Loans
in partnership with Pepper Group Limited. This partnership has seen
Kogan.com offer competitively priced home loans to Australian
homeowners and investors under the brand, Kogan Money. Kogan
Money Home Loans is the first of a suite of financial products to be
rolled out under the Kogan Money brand. Kogan Money continues
to focus on simplifying financial services for all Australians and making
them more affordable through digital efficiency.
Kogan Money Super
In partnership with Mercer Australia, Kogan.com offers a no frills, ultra
low fee Australian superannuation fund, Kogan Super. Kogan Super
leverages Kogan.com’s digital efficiency as one of Australia’s lowest fee
superannuation options and aims to manage a share of the 28.6 million
Aussie superannuation accounts, which represent a combined total
of more than $2.6 trillion in assets.
Kogan Mobile New Zealand
Kogan Mobile New Zealand launched in 1HFY20 in partnership with
Vodafone New Zealand Limited offering telecommunications services
in New Zealand. Vodafone NZ is New Zealand’s largest mobile network
operator.
8
kogan.com
Kogan Energy
Kogan Energy offers competitive power and gas deals and was launched
in September 2019 in partnership with part of the Meridian Energy
Limited group.
Kogan Money Credit Cards
Kogan Credit Cards is a credit card with uncapped Kogan reward points,
no annual fee, complimentary Kogan First membership, and competitive
rates and fees. It was launched in October 2019 in partnership with
Citigroup Pty Ltd.
Dick Smith
In 2016, Kogan.com acquired Dick Smith, one of Australia’s premier
consumer electronics brands and a pioneer of the consumer electronics
industry in Australia.
Matt Blatt
In May 2020, Kogan.com acquired Matt Blatt, one of Australia’s premier
furniture and homewares brands and a pioneer of the online furniture
industry in Australia.
NEW BUSINESS IN FY21
Mighty Ape
In December 2020, Kogan.com acquired Mighty Ape, one of New
Zealand’s largest online retailers with a focus on gaming, toys and other
entertainment categories.
HOW WE DELIVER VALUE TO OUR CUSTOMERS:
Compelling offering:
We aim to bring market leading prices to our customers on in‑demand products and services across our
portfolio of businesses.
We achieve this by leveraging our 15+ years’ experience in Exclusive Brands, extensive Third‑Party Brands
offering, and using the strength of the Kogan platform to partner with industry leaders for Kogan Mobile,
Kogan Insurance, Kogan Internet and Kogan Money Home Loans.
We are able to pass on savings to customers by streamlining and cutting overheads in our supply chains
and marketing.
Customer‑centric approach:
We are customer obsessed. Understanding and servicing our customers’ needs is central to what we do.
Our customers have high expectations and we aim to offer a seamless shopping experience.
Our analytics capability ensures we know what our customers want and when they want it. Our investment
in automation has driven faster fulfilment of products and services and happier customers.
Our portfolio of retail and services businesses is focused on making in‑demand products and services more
affordable and accessible.
Annual Report 2021
9
OPERATING & FINANCIAL REVIEW CONTINUED
Industry leading IT platform & data driven culture:
The Kogan platform is renowned for price leadership through digital efficiency. We believe ‘There is always
a better way’ and our vision is to harness the power of technology and personalisation to change the way our
customers shop online.
We understand our customers, what inspires them and what interests them. We leverage this understanding,
driven by data analytics and long‑term investments in systems to continue to reach and inspire our customers
in new and exciting ways.
We use machine learning and A.I. to ensure that our customers’ get the tailored shopping experience they
deserve. Our proprietary algorithms and A.I. technology means that we are communicating the right product
or service to the right person at the right time. We have also created proprietary systems to reduce fraud, and
optimise marketing spend, making Kogan.com smarter and stronger as a business and leading to the best
deals for customers ensuring we stay ahead of the curve in offering price leading goods and services
in Australia and New Zealand.
BUILDING THE KOGAN PLATFORM
In the twelve months to 30 June 2021, the Company achieved 46.9% growth in Active Customers 1. The
Company had 3,207,000 Active Customers 1 (excluding Mighty Ape) as at 30 June 2021 (compared with
2,183,000 as at 30 June 2020). Mighty Ape Active Customers 1 grew to 764,000 at 30 June 2021.
Given our record marketing investment during the year, the proportion of traffic from free sources reduced
on last year. However, more importantly, free traffic sources still represent the vast majority of visits to our
websites, which demonstrates that satisfied customers continue to return to Kogan.com. Spend per new
active customer was consistent with last year while significantly growing Active Customers 1.
The Company places great emphasis on customer experience and we are currently progressing exciting
projects to enhance our Kogan First offering further incentivising and rewarding our loyal customers in the
near future. The Kogan First loyalty program grew to over 120,000 members as at 30 June 2021, with Kogan
First Members2 demonstrating stronger loyalty and repeat purchase behaviour than non‑members. Kogan
First Members2 on average have received $105 of member benefits in FY21. Kogan First subscription revenues
grew to $8.9 million in FY21, while member benefits totalled $12.7 million in FY21.
Our commitment to bring the most in‑demand products and services to our Kogan Community at great prices
continues to resonate.
Figure 1.1 Active Customers 1 Kogan.com
Figure 1.2 Active Customers 1 Mighty Ape
)
s
0
0
0
(
s
r
e
m
o
t
s
u
C
e
v
i
t
c
A
3,500
3,100
2,700
2,300
1,900
1,500
9
1
Y
F
H
1
9
1
Y
F
H
2
0
2
Y
F
H
1
0
2
Y
F
H
2
1
2
Y
F
H
1
1
2
Y
F
H
2
)
s
0
0
0
(
s
r
e
m
o
t
s
u
C
e
v
i
t
c
A
800
700
600
500
400
300
200
4
1
Y
F
5
1
Y
F
6
1
Y
F
7
1
Y
F
8
1
Y
F
9
1
Y
F
0
2
Y
F
M
T
L
A
0
2
-
t
c
O
0
2
-
c
e
D
1
2
Y
F
1
2
Active customers refers to unique customers who have purchased in the last twelve months from reference date, rounded to the
nearest thousand.
Kogan First Members excludes Kogan First customers who are in a trial period, and includes only non‑trial members.
10
kogan.com
Figure 1.3 Traffic – free vs paid marketing 1
Figure 1.4 12-month return on investment
in marketing 1,2
Paid
34%
Free
66%
$58
$57
$31
$30
12 months Gross Profit
per Active Customer
Market spend per new
Active Customer
FY20
FY21
PERFORMANCE REVIEW & OUTLOOK
RESULTS SUMMARY
Refer to Table 1.5 for an explanation of non‑IFRS measures used throughout this report.
Figure 1.5 Kogan Group financial highlights
+52.7% on FY20
+46.2% CAGR5
since FY19
1,179.0
772.3
551.8
)
m
$
(
l
3
s
e
a
S
s
s
o
r
G
+61.0% on FY20
+49.9% CAGR5
since FY19
+24.5% on FY20
+40.0% CAGR5
since FY19
+43.2% on FY20
+51.8% CAGR5
since FY19
203.7
)
m
$
(
I
4
A
D
T
B
E
d
e
t
s
u
d
A
j
61.8
49.7
31.5
42.9
30.0
18.6
)
m
$
(
4
T
A
P
N
d
e
t
s
u
d
A
j
126.5
90.7
)
m
$
(
t
fi
o
r
P
s
s
o
r
G
9
1
Y
F
0
2
Y
F
1
2
Y
F
9
1
Y
F
0
2
Y
F
1
2
Y
F
9
1
Y
F
0
2
Y
F
1
2
Y
F
9
1
Y
F
0
2
Y
F
1
2
Y
F
Chart reflects Kogan.com excluding Mighty Ape
12‑month Gross Profit/Active Customers; marketing costs/sum of new customers in FY21.
1
2
3 Non‑IFRS measure.
4 Adjusted EBITDA, Adjusted NPAT and Adjusted EPS are measures of the underlying performance of the Business, they remove
non‑cash items including the unrealised FX gain/ (loss), equity‑based compensation and one‑off non‑recurring items. Refer to
page 21 of this Annual Report for a detailed reconciliation of adjusting items.
Compound Annual Growth Rate (CAGR) between FY19 and FY21 is an informative metric to consider the underlying growth of the
Business, given the volatility over the COVID impacted period.
5
Annual Report 2021
11
OPERATING & FINANCIAL REVIEW CONTINUED
Table 1.1 FY21 Kogan Group Results compared to FY20
$m
Gross Sales1
Revenue2
Cost of sales
Gross Profit
Gross margin
Operating Costs
Results from operating activities
Unrealised FX (loss)/gain
Net finance costs
Profit before tax
NPAT3
EBITDA1,3
Unrealised FX gain/(loss)
Penalties
Equity‑based compensation
Donations
COVID‑19 related stock provision
COVID‑19 related logistics costs
Mighty Ape Tranche 3 & 4 and acquisition costs
Adjusted EBITDA4
Adjusted NPAT4
EPS3
Adjusted EPS4
FY21
1,179.0
780.7
(577.0)
203.7
26.1%
(193.0)
10.7
1.4
(0.9)
11.3
3.5
22.5
1.4
0.0
(15.6)
(2.5)
(2.2)
(7.7)
(12.8)
61.8
42.9
0.03
0.41
FY20
772.3
497.9
(371.4)
126.5
25.4%
(85.5)
41.0
(1.4)
(0.7)
38.9
26.8
46.5
(1.4)
(0.7)
(1.0)
0.0
0.0
0.0
0.0
49.7
30.0
0.29
0.32
Variance
52.7%
56.8%
55.4%
61.0%
0.7pp/2.7%
132.5%
(73.8%)
200.2%
22.7%
(71.0%)
200.2%
100.0%
(>1000%)
(100.0%)
(100.0%)
(100.0%)
(100.0%)
24.5%
43.2%
27.2%
Any discrepancies between totals, sums of components and percentage variances in this table are due to
rounding.
Exclusive Brands continued to achieve year‑on‑year Revenue growth, up 62.5% on FY20 and achieving
a CAGR 5 of 43.3% since FY19. Exclusive Brands also achieved Gross Profit growth of 63.4% on FY20 and
a CAGR 5 of 52.7% since FY19, resulting in a contribution of 51.6% to the Group’s overall Gross Profit in FY21.
This was achieved through ongoing investment in Exclusive Brands inventory to broaden our range and meet
consumer demand from the growing base of Active Customers.
Third‑Party Brands achieved growth in Revenue and Gross Profit, delivering an increase of 18.9% and 10.1%
respectively on FY20, and a CAGR 5 of 7.9% and 7.7%, respectively since FY19.
1
2
Non‑IFRS measure.
The differential between Revenue and Gross Sales is reflective of Kogan Marketplace and New Verticals recognising only
commission‑based Revenue while the gross transaction values are recognised within Gross Sales.
3 Given the various adjustments (including provision for the likely payment of Mighty Ape Tranche purchase price instalments
and equity‑based compensation) the Company believes the data is not directly comparable to prior periods.
4 Adjusted EBITDA, Adjusted NPAT and Adjusted EPS are measures of the underlying performance of the Business, they remove
non‑cash items including the unrealised FX gain/ (loss), equity‑based compensation and one‑off non‑recurring items. Refer to
page 21 of this Annual Report for a detailed reconciliation of adjusting items.
Compound Annual Growth Rate (CAGR) between FY19 and FY21 may be an informative metric to consider the underlying growth
of the Business, given the volatility over the COVID impacted period.
5
12
kogan.com
The success of Kogan Marketplace has resulted in Gross Sales 1 increasing by 91.0% in FY21 compared to FY20.
The platform continues to resonate with sellers, with Kogan Marketplace having increased the number
of sellers significantly, while there continues to be a strong pipeline of new sellers ready to be onboarded.
The exceptional growth of Kogan Marketplace has led to a period of transition for the business. We are
continually improving our proprietary marketplace platform which enables the Company to achieve ongoing
growth without a corresponding investment in inventory. The growth of Kogan Marketplace means that
customers have more choice than ever, and it was launched in New Zealand prior to the financial year end.
The Company places great emphasis on customer experience and we are currently progressing exciting
projects to enhance our Kogan First offering further incentivising and rewarding our loyal customers in the
near future.
The newly acquired Mighty Ape team and operations are progressively being integrated into the Kogan
Group. For the seven months to 30 June 2021, Mighty Ape’s trading showed strong sales over the Christmas
peak trading and end of financial year sales periods, with Revenue and Gross Profit of $80.2 million 2 and
$19.9 million 2, respectively. Active Customers grew to 764,000 as at 30 June 2021. For a full 12‑month period
to 31 March 2021, Mighty Ape forecasted $14.3 million 3 EBITDA as disclosed in the ASX announcement
on 3 December 2020 – this forecast was achieved.
Variable Costs predominantly consist of warehousing and selling costs. The increase in selling costs was
largely driven by growing volumes of transactions, while the increase in warehousing costs was driven by the
significant inventory holding referred to earlier. Variable costs also include the one‑off logistics detention
charges of $7.7 million, driven by warehousing and supply chain interruptions from late 2020 to April 2021
(almost never previously incurred, and resolved prior to financial year end).
In order to reward and incentivise key talent and align their interests with our Shareholders, the Business has
made strategic investments in team members. Long‑Term Incentives remain in place and People Costs have
increased year‑on‑year, as a result. FY21 included equity‑based compensation expenses driven by the recent
awards of options after the Company’s AGM in November 2020, which are being expensed as per the
accounting treatment described in the Notice of Meeting of the 2020 AGM.
NPAT and EPS of $3.5 million and $0.03 per Share were materially impacted by the various items detailed on
page 21 of this Annual Report.
Adjusted EBITDA4, Adjusted NPAT 4 and Adjusted EPS 4 excluding unrealised FX gains, equity‑based
compensation and other adjusting items grew to $61.8 million, $42.9 million and $0.41 per Share,
respectively. Refer to page 21 of this Annual Report for a detailed reconciliation of adjusting items.
1
2
3
Non‑IFRS measure.
Values stated in AUD using the AU/NZ average rate from 1 December 2020 to 30 June 2021 of 0.9315.
Value stated in AUD using the AU/NZ spot rate of 0.95 as at 23 November 2020, as per the ASX announcement dated
3 December 2020.
4 Adjusted EBITDA, Adjusted NPAT and Adjusted EPS are measures of the underlying performance of the Business, they remove
non‑cash items including the unrealised FX gain/ (loss), equity‑based compensation and one‑off non‑recurring items. Refer to
page 21 of this Annual Report for a detailed reconciliation of adjusting items.
Annual Report 2021
13
OPERATING & FINANCIAL REVIEW CONTINUED
MIGHTY APE
For a full 12 month period to 31 March 2021, Mighty Ape forecasted $14.3 million1 EBITDA2 as disclosed in the
ASX announcement on 3 December 2020 – this forecast was achieved. For the seven months to 30 June 2021,
Mighty Ape has contributed 9.8% to the Group’s overall Gross Profit in FY21.
Table 1.2 Mighty Ape financial highlights for the seven months to 30 June 2021
A$m3
Gross Sales2
Revenue
Gross Profit
Gross Margin
EBITDA
EBITDA Margin
Adjusted EBITDA4
Adjusted NPAT4
FY21
80.3
80.2
19.9
24.8%
7.1
8.8%
6.9
3.7
PORTFOLIO BUSINESS MIX
More than half of our Gross Profit is generated from our Exclusive Brands Products.
Figure 1.6 Kogan Group Gross Profit Product & Business Mix
Other Income6
1.4%
Advertising Income
2.0%
Kogan First
4.4%
Kogan Mobile
5.6%
Kogan Marketplace
11.5%
Third-Party Brands
13.8%
Mighty Ape5
9.8%
Exclusive Brands
51.6%
Exclusive Brands generated 51.6% of the Group’s overall Gross Profit and continues to deliver the largest Gross
Profit contribution across the business. Third‑Party Brands, Kogan Marketplace, Kogan Mobile and now Mighty
Ape and Kogan First are material contributors to overall Gross Profit.
Kogan First reflects subscription revenues. In just its second full year since it was launched in late FY19 – it is
contributing 4.4% of overall Gross Profit indicating the growth opportunity in Kogan First.
1
Value stated in AUD using the AU/NZ spot rate of 0.95 as at 23 November 2020, as per the ASX announcement dated
3 December 2020.
2 Non‑IFRS measure.
3
4 Adjusted EBITDA, Adjusted NPAT and Adjusted EPS are measures of the underlying performance of the Business, they remove
non‑cash items including the unrealised FX gain/ (loss), equity‑based compensation and one‑off non‑recurring items. Refer to
page 21 of this Annual Report for a detailed reconciliation of adjusting items.
Values stated in AUD using the AU/NZ average rate from 1 December 2020 to 30 June 2021 of 0.9315.
5 Mighty Ape reflects the seven month period December 2020 to June 2021 Gross Profit
6 Other revenue includes Kogan Travel, Kogan Insurance, Kogan Internet, Kogan Credit Cards, Kogan Cars and Kogan Energy.
14
kogan.com
KOGAN FIRST
Figure 1.7 Kogan First Members 1
144.2%
99.7%
150000
s
r
e
b
m
e
M
t
s
r
i
F
n
a
g
o
K
112500
75000
37500
0
FY191
FY20
FY21
July-21
The Kogan First loyalty program grew to over 120,000 members as at 30 June 2021, with Kogan First
Members 2 demonstrating stronger loyalty and repeat purchase behaviour than non‑members.
Kogan First Members 2 on average received $105 of member benefits in FY21. Kogan First subscription
revenues grew to $8.9 million in FY21, while member benefits totalled $12.7 million in FY21.
The Company’s medium term goal is to reach 1 million Kogan First Members 2, and the Company is investing
in member benefits to work toward this goal
STATEMENT OF FINANCIAL POSITION
Table 1.3 Summary of Kogan Group Net Assets at 30 June 2021 and 30 June 2020.
$m
Current assets
Non‑current assets
Total assets
Current liabilities
Non‑current liabilities
Total liabilities
Net assets
30‑Jun‑21
30‑Jun‑20
329.2
112.8
442.0
(163.1)
(98.2)
(261.3)
180.7
266.4
13.3
279.7
(114.6)
(1.0)
(115.6)
164.0
Net cash balance (total cash less drawn debt) of $12.8 million at 30 June 2021.
More than 99% of Kogan.com inventory and 94% of Mighty Ape inventory in warehouse was less than
365 days old. Kogan.com inventory in warehouse was $171.8 million and Mighty Ape inventory in warehouse
was $20.0 million. Total inventory for the Group was $227.9 million, an increase of $115.0 million held at the
same time last year. The Business has significantly increased its inventory to reflect its internal projections
of demand from its growing customer base.
1
2
Kogan First launched in 4QFY19, the period (FY19) does not reflect a full period of trading.
Kogan First Members excludes Kogan First customers who are in a trial period, and includes only non‑trial members.
Annual Report 2021
15
OPERATING & FINANCIAL REVIEW CONTINUED
The acquisition of Mighty Ape resulted in the recognition of goodwill, as well as significant right‑of‑use assets,
lease liabilities and intangibles which has been reflected in the Group’s Net Assets.
Financial assets and financial liabilities reflect the unrealised FX gain/(loss) recognised against forward
contracts, which is non‑cash.
Trade and other payables reached a seasonal high following the end of financial year peak sales period.
CASH FLOWS
Table 1.4 Summary of Kogan Group Statutory Cash Flow from Operating Activities.
$m
Receipts from customers
Payments to suppliers and employees
Interest received
Finance costs paid
Income tax paid
Net cash (used in)/provided by operating activities
FY21
885.5
(926.3)
0.0
(0.6)
(21.7)
(63.0)
FY20
579.0
(523.8)
0.1
(0.6)
(9.0)
45.6
The Group significantly expanded it’s inventory levels to respond to forecasted demand leading out of the
first half of FY21. The Company invested in inventory and operational capacity to be able to fulfil that expected
growth, which drove the operating cash outflow during the period.
This resulted in an excess stock position which led the Business to focus on strong promotions to bring
inventory to the right level. This promotional activity combined with high warehousing costs and incurred
detention, impacted cash flows from operating activities in the second half.
The Group finished the period with a cash balance of $91.7 million.
OUTLOOK
At Kogan.com we are relentless in our mission to bring more in‑demand products and services to customers
at market‑leading prices. With that in mind, the pace continues into the new financial year.
In FY22, we expect:
• Growth of Kogan First memberships heading toward the medium‑term goal of 1 million members
• Growth in Exclusive Brands
• Growth in Kogan Marketplace
•
Integration of Mighty Ape team and operations
• To improve the Company’s capabilities, the Company also anticipates potentially implementing logistics
projects that would not require significant capital expenditure and can be supported by the Company’s
balance sheet
•
Improved operating leverage, consistent with the Company’s long‑term track record
NON‑IFRS MEASURES
Throughout this report, Kogan.com has included certain non‑IFRS financial information, including Gross Sales,
EBITDA, Adjusted EBITDA, Adjusted NPAT and Adjusted EPS. Kogan.com believes that these non‑IFRS
measures provide useful information to recipients for measuring the underlying operating performance
of Kogan.com’s business. Non‑IFRS measures have not been subject to audit.
16
kogan.com
The table below provides details of the Non‑IFRS measures used in this report.
Table 1.5 Non-IFRS Measures
Gross Sales
The gross transaction value, on a cash basis, of products and services sold, of Kogan
Retail, Kogan Marketplace and the New Verticals.
EBITDA
Adjusted EBITDA
Adjusted NPAT
Adjusted EPS
Earnings before interest, tax, depreciation and amortisation.
Earnings before interest, tax, depreciation, amortisation, unrealised FX gain/(loss),
equity‑based compensation and one‑off non‑recurring items. Refer to page 21 of
this Annual Report for a detailed reconciliation of adjusting items.
Net profit after tax and before unrealised FX gain/(loss), equity‑based compensation
and one‑off non‑recurring items. Refer to page 21 of this Annual Report for a
detailed reconciliation of adjusting items.
Earnings per Share before unrealised FX gain/(loss), equity‑based compensation and
one‑off non‑recurring items. Refer to page 21 of this Annual Report for a detailed
reconciliation of adjusting items.
STRATEGY, RISK AND OPPORTUNITIES
STRATEGY
Online retail is in its infancy in Australia. The Kogan Group’s market share of 2.7% has continually grown in a
market that continues to rapidly increase in size, the Australian Online Retail Market1 grew 35.3% in FY21
compared to FY20. NAB estimates that in the 12 months to June 2021, Australians spent $48.6 billion on online
retail, a level that is around 13.3% of the total retail trade estimate2.
Figure 1.8 Australian Online Retail Market size
and growth
Figure 1.9 Kogan.com market share
43,949
2.7%
)
n
b
$
(
26,791
l
i
a
t
e
R
e
n
i
l
n
O
17.9%
FY19
32,485
21.3%
35.3%
%
e
r
a
h
s
t
e
k
r
a
m
m
o
c
n
a
g
o
K
.
2.4%
2.1%
FY20
FY21
FY19
FY20
FY21
Kogan.com’s strategy involves a number of initiatives aimed at sustaining long‑term growth, which include
continued growth in our existing portfolio of businesses, growth of Kogan First memberships heading toward
the medium‑term goal of 1 million members and potentially implementing logistics projects to improve the
Company’s capabilities without requiring significant capital expenditure and that can be supported by the
Company’s balance sheet.
1
2
Source: IBISWorld X0004 Online Shopping in Australia Industry Report.pdf (https://www.ibisworld.com/au/industry/
online‑shopping/1837/).
Source: https://business.nab.com.au/nab‑online‑retail‑sales‑index‑june‑2021‑47896/.
Annual Report 2021
17
OPERATING & FINANCIAL REVIEW CONTINUED
KOGAN MARKETPLACE
The success of Kogan Marketplace has resulted in Gross Sales1 increasing by 91.0% in FY21 compared to FY20.
The platform continues to resonate with sellers, with Kogan Marketplace having increased the number of
sellers significantly, while there continues to be a strong pipeline of new sellers ready to be onboarded.
Figure 1.10 Kogan Marketplace Gross Sales1 growth
)
m
$
(
l
s
e
a
S
s
s
o
r
G
350
300
250
200
150
100
50
0
91.0%
FY192
FY20
FY21
The exceptional growth of Kogan Marketplace has led to a period of transition for the Business. We are
continually improving our proprietary marketplace platform which enables the Company to achieve ongoing
growth without a corresponding investment in inventory. The growth of Kogan Marketplace means that
customers have more choice than ever, and it was launched in New Zealand prior to the financial year end.
1
2
Non‑IFRS measure.
Kogan Marketplace launched in 3QFY19, the period (FY19) does not reflect a full year of trading.
18
kogan.com
EXCLUSIVE BRANDS STRATEGY
Exclusive Brands is a pillar of the Business and remains a focus area for FY22 and beyond. In FY21, Kogan.com
achieved year‑on‑year revenue growth of 62.5% in Exclusive Brands. In addition, Exclusive Brands continues
to be the largest contributor to Gross Profit, representing 51.6% of Gross Profit in FY21.
Figure 1.11 Exclusive Brands Revenue growth
+43.3% CAGR1 on FY19
+62.5% CAGR1 on FY20
)
m
$
(
e
u
n
e
v
e
R
400
300
200
100
0
FY19
FY20
FY21
In FY22, the Business is focused on continuing to launch new products and new ranges, where there is proven
demand. Our Exclusive Brands business benefits from:
• Full control of the end‑to‑end supply chain
• Strong competitive advantage
• Building trusted brands renowned for value
• Compelling consumer offering
• Ever expanding range of in‑demand products
•
15+ years’ experience
1
Compound Annual Growth Rate (CAGR) between FY19 and FY21 may be an informative metric to consider the underlying growth
of the Business, given the volatility over the COVID impacted period.
Annual Report 2021
19
OPERATING & FINANCIAL REVIEW CONTINUED
RISKS
Set out below are the key financial and operational risks facing the Business. Kogan.com manages and seeks
to mitigate these risks through internal review and control processes at the Board and management level.
Australian retail
environment and
general economic
conditions may
worsen
Many of Kogan.com’s products are discretionary goods and, as a result, sales levels
are sensitive to consumer sentiment. Kogan.com’s offering of products, and its
financial and operational performance, may be affected by changes in consumers’
disposable incomes, or their preferences as to the utilisation of their disposable
incomes. Any reduction in the disposable incomes of Kogan.com’s customers
as a result of changes to factors such as economic outlook, interest rates,
unemployment levels and taxation may decrease consumer confidence and
consumer demand, which may subsequently result in lower levels of revenue
and profitability.
Competition may
increase and change
Kogan.com could be adversely affected by increased competition in the various
segments in which it operates. The Australian online retail market is highly
competitive and is subject to changing customer preferences.
COVID‑19
Inventory
management
Key supplier, service
provider and
counterparty factors
Performance and
reliability of
Kogan.com’s websites,
databases and
operating systems
Manufacturing and
product quality
Events related to the Coronavirus pandemic (COVID‑19) have resulted in significant
market volatility. There is continued uncertainty as to ongoing and future response
of governments and authorities globally as well as a likelihood of an Australian
economic recession of unknown duration or severity. As such, the full impact
of COVID‑19 to consumer behaviour, suppliers, employees and the Company are
not fully known. Given this, the impact of COVID‑19 could potentially be materially
adverse to the Company’s financial and operational performance. Further, any
government or industry measures may adversely affect Kogan.com operations and
are likely beyond the control of Kogan.com.
In compliance with its continuous disclosure obligations, Kogan.com will continue
to update the market in regard to any material impact of COVID‑19 on Kogan.com.
In order to operate its business successfully, Kogan.com must maintain sufficient
inventory and also avoid the accumulation of excess inventory.
Kogan.com has a large number of international suppliers and service providers, from
which it sources a broad range of products and services. There is a risk that
Kogan.com may be unable to continue to source products or services from existing
suppliers or service providers, and in the future, to source products from new
suppliers or services from new service providers, at favourable prices, on favourable
terms, in a timely manner or in sufficient volume.
Kogan.com’s websites, Apps, databases, IT and management systems, including its
ERP and security systems, are critically important to its success. The satisfactory
performance, reliability and availability of Kogan.com’s websites, Apps, databases,
IT and management systems are integral to the operation of the Business.
Kogan.com currently uses a wide range of third‑party suppliers to produce its
Exclusive Brands products. While Kogan.com employs dedicated engineers
to assess product samples, and uses third‑party inspection agencies for quality
control and inspections, there is no guarantee that every supplier will meet
Kogan.com’s cost, quality and volume requirements.
Reputational product
sourcing factors
The Kogan.com portfolio of Exclusive Brands names and related intellectual
property are key assets of the Business. In addition, Kogan.com sells a range
of Third‑Party Branded products, where the intellectual property is owned by
third‑parties.
Exposure to litigation Kogan.com may be subject to litigation, claims, disputes and regulatory
investigations, including by customers, suppliers, government agencies, regulators
or other third parties. These disputes may be related to warranties, product
descriptions, personal injury, health, environmental, safety or operational concerns,
nuisance, negligence or failure to comply with applicable laws and regulations.
20
kogan.com
Changes in GST and
other equivalent taxes
Changes in local indirect tax, such as the goods and services tax in Australia
(“GST”), and duty treatment of any of the markets in which Kogan.com operates,
could have an impact on the sales of imported brands.
Retention of key team
members
Kogan.com relies on the expertise, experience and strategic direction provided by
its Executive Directors and key team members. These individuals have extensive
experience in, and knowledge of, Kogan.com’s business and the Australian online
retail market. Additionally, successful operation of Kogan.com’s business depends
on its ability to attract and retain quality team members.
Reliance
on third‑party
payment providers
Kogan.com is exposed to risks in relation to the methods of payment that it
currently accepts, including credit card, PayPal and vouchers. Kogan.com may incur
loss from fraud or erroneous transactions.
RECONCILIATION TO ADJUSTED EBITDA AND ADJUSTED NPAT
Table 1.5 Reconciliation to Adjusted EBITDA and Adjusted NPAT
Un‑realised
FX gain/
(loss)
Equity‑
based
compen‑
sation Donations
COVID‑19
related
stock
provision
COVID‑19
related
logistics
costs
Mighty Ape
purchase
– tranches
3&4 and
acquisition
costs
2.2
7.7
12.0
0.8
15.6
2.5
(1.4)
Revenue
Cost of sales
Gross Profit
Gross margin
Variable costs
Marketing costs
People costs
Other costs
Un‑
adjusted
780.7
(577.0)
203.7
26.1%
(44.9)
(58.7)
(59.6)
(19.4)
Total operating costs
(182.7)
Unrealised FX gain/
(loss)
EBITDA
EBITDA margin
Depreciation &
amortisation
EBIT
Interest
Profit before tax
Income tax expense
NPAT
EPS
1.4
22.5
2.9%
(10.9)
11.5
(0.3)
11.3
(7.7)
3.5
0.03
Annual Report 2021
Adjusted
780.7
(574.8)
205.9
26.4%
(37.2)
(58.7)
(32.0)
(16.2)
(144.1)
0.0
61.8
7.9%
(10.9)
50.9
(0.3)
50.6
(7.7)
42.9
0.41
21
OPERATING & FINANCIAL REVIEW CONTINUED
Adjusted EBITDA, Adjusted NPAT and Adjusted EPS: are measures of the underlying performance of the
Business, they remove non‑cash items including the unrealised FX gain/ (loss), equity‑based compensation
and one‑off non‑recurring items. In respect of FY21 the below items have been adjusted:
• Unrealised FX gain/(loss): unrealised FX gain at financial year end.
• Equity‑based compensation: significant equity‑based compensation expenses driven largely by the recent
awards of options after the Company’s AGM in November 2020.
• Donations: material donations of PPE by the Company to Australian charities.
• COVID‑19 related stock provision: write‑down of PPE held by Kogan.com following the reduction in
COVID‑19 cases in Australia.
• COVID‑19 related logistics costs: relates to material logistics demurrage charges driven by one‑off
warehousing and supply chain interruptions from late 2020 to April 2021. These charges have almost never
previously incurred, and have been resolved prior to the financial year end.
• Mighty Ape purchase – Tranches 3 & 4: refers to the provision for the likely payment of Mighty Ape
Tranche 3 & 4 purchase price instalments as part of the Sale Agreement, which are contingent on the
Mighty Ape Founder & CEO remaining with the Business until the delivery of the financial year 2023 results.
In line with accounting standards, Tranches 3 & 4 payments will be considered as compensation for post‑
combination services, and as such, treated as employee remuneration for accounting purposes. The Group
will proportionately account for these expenses up until the respective payment dates.
– For Australian income tax purposes, amounts paid for the acquisition of Mighty Ape shares are
considered as capital in nature and are therefore non‑deductible, rather increasing the tax cost base of
the shares. No deferred tax asset is recognised due to Kogan.com being able to control the timing of
the reversal of the temporary difference and it being probable that the temporary difference will not
reverse in the foreseeable future.
NPAT and EPS: were materially impacted by the items below
• Company’s excess inventory position in the second half of the financial year, significantly increasing storage
costs and subsequently marketing costs through promotional activity to rebalance inventory levels relevant
to the size of the Business.
• Logistics detention charges of $7.7 million incurred as a result of COVID related warehousing and supply
chain interruptions from late 2020 to April 2021 (almost never previously incurred, and resolved prior to
financial year end).
• People Costs of $12.0 million to provision for the likely payment of Mighty Ape Tranche 3 & 4 purchase
price instalments as well as $0.8 million relating to acquisition costs. For income tax purposes, this is
considered capital in nature, and therefore no tax deduction is available.
22
kogan.com
DIRECTORS’ REPORT
The Directors of Kogan.com Limited and its controlled entities (“The Group”) present their report together
with the consolidated financial report of the Group for the financial year ended 30 June 2021 and the audit
report thereon.
DIRECTORS
The following persons were Directors of the Group at any time during the financial year and up to the date
of signing this report.
Greg Ridder – Independent, Non‑Executive Chairman
Janine Allis – Independent, Non‑Executive Director (appointed 1 April 2021)
David Shafer – Chief Financial Officer, Chief Operating Officer and Executive Director
Harry Debney – Independent, Non‑Executive Director
James Spenceley – Independent, Non‑Executive Director (appointed 1 March 2021)
Ruslan Kogan – Founder, Chief Executive Officer and Executive Director
Particulars of each Director’s experience and qualifications are set out later in this report.
COMPANY SECRETARY
Kogan.com engages Mertons Corporate Services Pty Ltd to provide company secretarial services, with
Mark Licciardo as Kogan.com’s Company Secretary.
PRINCIPAL ACTIVITIES
Kogan.com is a portfolio of retail and services businesses that included Kogan Retail, Kogan Marketplace,
Kogan Mobile, Kogan Internet, Kogan Insurance, Kogan Travel, Kogan Money, Kogan Cars, Kogan Energy,
Dick Smith, Matt Blatt and Mighty Ape during the year ended 30 June 2021.
Kogan.com earns the majority of its Revenue and profit through the sale of goods and services to Australian
and New Zealand customers. Its offering comprises products released under Kogan.com’s Exclusive Brands,
such as Kogan, Ovela, Fortis, Vostok and Komodo (“Exclusive Brands Products”), and products sourced from
imported and domestic Third‑Party Brands such as Apple, Canon, Swann and Samsung (“Third‑Party
Brands Products”).
In addition to product offerings, Kogan.com earns seller‑fee based Revenue from Kogan Marketplace and
commission‑based Revenue from the New Verticals including Kogan Mobile, Kogan Internet, Kogan Insurance,
Kogan Money, Kogan Cars, Kogan Energy and Kogan Travel (“New Verticals”).
In December 2021, Kogan.com acquired Mighty Ape, one of New Zealand’s largest online retailers with a focus
on gaming, toys and other entertainment categories.
The results of Kogan HK Limited, a Hong Kong registered entity, Kogan US Trading Inc, a US incorporated
entity, and Mighty Ape Limited a New Zealand registered entity, have been compiled using International
Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board.
An operating and financial review of the Group during the financial year and the results of these operations are
contained on pages 7 to 22 of this report.
No significant change in the nature of other activities occurred during the year.
EVENTS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
There are no subsequent events post reporting date 30 June 2021.
Annual Report 2021
23
DIRECTORS’ REPORT CONTINUED
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
Kogan.com has entered into a deed of indemnity, insurance and access with each Director confirming the
Director’s right of access to Board papers and requires Kogan.com to indemnify the Director, on a full indemnity
basis and to the full extent permitted by law against all losses or liabilities (including all reasonable legal costs)
insured by the Director as an officer of Kogan.com or of a related body corporate.
Under the deeds of indemnity, insurance and access, Kogan.com must maintain a Directors’ and Officers’
insurance policy insuring a Director (among others) against liability as a Director and Officer of Kogan.com
related to body corporate (or the date any relevant proceedings commenced during the seven year period
have been finally resolved).
Disclosure of the total amount of the premiums paid under this renewed insurance policy is not permitted
under the provisions of the insurance contract.
INDEMNIFICATION AND INSURANCE OF AUDITORS
No indemnities have been given or insurance premiums paid, during or since the end of the year, for any
person who is or has been an auditor of the Group.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of court to bring proceedings on behalf of the Company or intervene in any
proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company
for all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
DIVIDENDS
In respect of the financial year ended 30 June 2021, the Directors declared a fully franked interim Dividend
of 16.0 cents per Ordinary Share. The record date for the dividend was 9 March 2021 and the Dividend was
paid on 31 May 2021.
To support the Company with its growth plans, the Board has decided to conserve cash for business
investment and has paused dividends – having not declared a FY21 final Dividend.
Details with respect to the distribution paid during the year are provided in Note 3.3.2.
A Dividend Reinvestment Plan was available for the 2021 interim Dividend.
NON‑AUDIT SERVICES
During the year KPMG, the Group’s auditors, performed certain other services in addition to the audit and
review of the financial statements.
The Board of Directors has considered the non‑audit services provided during the year by the auditor and
is satisfied that the provision of those non‑audit services during the year is compatible with, and did not
compromise the auditor’s independence requirements of the Corporations Act 2001. The Directors are
satisfied that the services disclosed below did not compromise the external auditor’s independence for the
following reasons:
• All non‑audit services were subject to the corporate governance procedures adopted by the Group and
have been reviewed by the Audit Committee to ensure they did not adversely affect the integrity and
objectivity of the auditor; and
• The non‑audit services provided do not undermine the general principles relating to auditor independence
as set out in APES 110: Code of Ethics for Professional Accountants, as they did not involve reviewing or
auditing the auditor’s own work, acting in a management or decision‑making capacity for the Group,
acting as an advocate for the Group or jointly sharing risks and rewards.
24
kogan.com
The following fees were paid or payable to KPMG for non‑audit services provided during the year ended
30 June 2021:
Other assurance
Tax advisory and compliance
$
235,000
17,830
252,830
LEAD AUDITOR’S INDEPENDENCE DECLARATION
The lead auditor’s independence declaration for the financial year ended 30 June 2021 can be found on
page 45 of the financial report and forms part of the Directors’ Report.
THE BOARD OF DIRECTORS AND COMPANY SECRETARY
Greg Ridder
(BBus (Acc), Grad Dip (Mktg), GAICD, CPA)
Independent, Non-Executive Chairman
Mr Ridder was appointed to the Board of Kogan.com in May 2016 as Independent,
Non‑Executive Chairman. Mr Ridder also serves as Chairman of the Remuneration and
Nomination Committee.
Formerly Asia Pacific Regional President at NYSE listed Owens‑Illinois, he is experienced
in leading businesses in multiple countries, cultures, economic circumstances and market
conditions. Mr Ridder is also a director at Spirit Technology Solutions Limited and
a number of unlisted and not for profit entities.
Mr Ridder holds a Bachelor of Business in Accounting from RMIT, a Graduate Diploma
in Marketing from Monash University, and has completed the Advanced Management
Programme at INSEAD in France. He is a CPA and a graduate member of the Australian
Institute of Company Directors.
Directorship of listed entities within the past three years
• Director of Spirit Technology Solutions Ltd (appointed in November 2019)
Board Committee membership
• Member of the Audit and Risk Management Committee
• Chairman of the Remuneration and Nomination Committee
Annual Report 2021
25
DIRECTORS’ REPORT CONTINUED
Janine Allis
Independent Non-Executive Director
Ms Allis was appointed to the Board of Kogan.com in April 2021, as an Independent,
Non‑Executive Director and also serves as a member of the Remuneration and
Nomination Committee and Audit and Risk Management Committee.
Ms Allis is the founder of Boost Juice and the Retail Zoo group of food retail brands.
Ms Allis has been Telstra Businesswoman of the Year, Amex Franchisor of the Year,
ARA Retailer of the Year and was inducted into the Australian Business Women Hall
of Fame.
Ms Allis was listed as one of BRW’s top 15 people who have changed the way we do
business in the last 20 years and is an ambassador for UNHCR.
Directorship of listed entities within the past three years
• Director of Australian Pharmaceuticals Industries (API) (appointed in October 2020)
Board Committee membership
• Member of the Audit and Risk Management Committee
• Member of the Remuneration and Nomination Committee
David Shafer
(LLB (Hons), BCom, CFA)
Chief Financial Officer, Chief Operating Officer and Executive Director
Mr Shafer has worked with Kogan.com since 2006, moving to a full‑time role as Chief
Financial Officer, Chief Operating Officer and Executive Director in November 2010.
Prior to joining Kogan.com, Mr Shafer was Senior Associate at Arnold Bloch Leibler.
Mr Shafer holds a Bachelor of Law (Honours) and Bachelor of Commerce from
The University of Melbourne and is a Chartered Financial Analyst.
Harry Debney
(BAppSc (Hons))
Independent Non-Executive Director
Mr Debney was appointed to the Board of Kogan.com in May 2016, as an Independent,
Non‑Executive Director and also serves as Chairman of the Audit and Risk Management
Committee.
Mr Debney was the CEO of Costa Group and oversaw the business’ transition from
a privately‑owned Company to a member of the S&P/ASX 200 Index until his retirement
in March 2021.
Prior to joining the Costa Group, Mr Debney spent 24 years at Visy Industries, including eight
years as CEO. During this time, he substantially grew the Visy business, both organically and
through acquisitions.
Mr Debney holds a Bachelor of Applied Science (Honours) from the University of Queensland.
Directorship of listed entities within the past three years
• Non‑Executive Director of Costa Group Holdings Ltd (appointed on 1 July 2021)
Board Committee membership
• Chairman of the Audit and Risk Management Committee
• Member of the Remuneration and Nomination Committee
26
kogan.com
James Spenceley
Independent Non-Executive Director
Mr Spenceley was appointed to the Board of Kogan.com in March 2021,
as an Independent, Non‑Executive Director and also serves as a member of the
Remuneration and Nomination Committee and Audit and Risk Management Committee.
Mr Spenceley founded Vocus Communications (now Vocus Group, ASX:VOC) in 2007 and
built it into an ASX100 company through organic growth and acquisitions. Mr Spenceley
is Chairman of local services provider Airtasker, Chairman at Swoop Telecom and
Non‑Executive Director at Think Childcare (ASX:TNK).
Mr Spenceley was the former owner of Illawarra Hawks NBL team and has twice won
Ernst & Young Australian Entrepreneur of the Year recognition. In 2018, he was inducted
into the Telecommunications Hall of Fame.
Directorship of listed entities within the past three years
• Chairperson of Airtasker Limited (appointed in December 2015)
• Chairperson of Swoop Telecom (appointed in February 2019)
• Non‑Executive Director of Think Childcare Group (appointed 15 May 2020)
Board Committee membership
• Member of the Audit and Risk Management Committee
• Member of the Remuneration and Nomination Committee
Ruslan Kogan
(BBS)
Founder, Chief Executive Officer and Executive Director
Mr Kogan founded Kogan.com in 2006, and has been its CEO since inception, growing
the Business into Australia’s leading Pure Play Online Retailer in under a decade.
Prior to founding Kogan.com, Mr Kogan held roles in the IT departments of Bosch and GE,
and as a consultant at Accenture.
Mr Kogan holds a Bachelor of Business Systems from Monash University.
Michael Licciardo (Mertons Corporate Services Pty Ltd)
(B Bus (Acc), GradDip CSP, FGIA, GAICD)
Company Secretary
Mr Licciardo is Managing Director of Mertons Corporate Services Pty Ltd (Mertons) which
provides company secretarial and corporate governance consulting services to ASX listed
and unlisted public and private companies.
Prior to establishing Mertons in 2007, Mr Licciardo was Company Secretary of the
Transurban Group and Australian Foundation Investment Company Limited. Mr Licciardo
has also had an extensive commercial banking career with the Commonwealth Bank and
State Bank Victoria. Mr Licciardo is a former Chairman of the Governance Institute
Australia (GIA) in Victoria and the Melbourne Fringe Festival, a fellow of GIA, the Institute
of Chartered Secretaries (CIS) and the Australian Institute of Company Directors (AICD)
and a Director of ASX listed Frontier Digital Ventures Limited, iCar Asia Limited and
Mobilicom Limited as well as several other public and private companies.
Annual Report 2021
27
DIRECTORS’ REPORT CONTINUED
MEETINGS OF DIRECTORS
Directors’ meetings held between 1 July 2020 and 30 June 2021:
Greg Ridder
Janine Allis 2
David Shafer
Harry Debney
James Spenceley 3
Ruslan Kogan
BOARD
AUDIT AND RISK
REMUNERATION
AND NOMINATION
A
16
7
16
16
8
16
B
16
7
16
16
8
16
A
4
1
4 1
4
1
4 1
B
4
1
4 1
3
1
4 1
A
2
–
2 1
2
–
2 1
B
2
–
2 1
2
–
2 1
1
2
3
Indicates that a Director is not a member of a specific committee and attended by invitation.
Janine Allis was appointed as an Independent Non‑Executive Director on 1 April 2021.
James Spenceley was appointed as an Independent Non‑Executive Director on 1 March 2021.
A Number of meetings held during the time the Director held office or was a member of the committee
during the year.
B Number of meetings attended.
CORPORATE GOVERNANCE STATEMENT
The Board is committed to achieving and demonstrating the highest standards of Corporate Governance.
The Board continues to refine and improve the governance framework and practices in place to ensure they
meet the interest of Shareholders
The Company complies with the Australian Securities Exchange Corporate Governance Council’s Corporate
Governance Principles and Recommendations 4th Edition (‘the ASX Principles’). Kogan.com’s Corporate
Governance Statement, which summarises the Company’s Corporate Governance practices and incorporates
the disclosures required by the ASX Principles, can be viewed at www.kogancorporate.com.
ENVIRONMENTAL REGULATIONS
The Group is not subject to any significant environmental regulations under Commonwealth or State legislation.
28
kogan.com
DIRECTORS’ INTERESTS
The following table sets out each Director’s relevant interest in shares of the Company at the date of this report.
Ruslan Kogan
David Shafer
Greg Ridder
Harry Debney
Janine Allis
James Spenceley
SHARE RIGHTS
Unissued Shares under Rights
Ordinary
Shares
15,853,321
5,075,642
158,000
98,099
4,761
–
At 30 June 2021 the Group had 789,654 unissued shares under Right which are expected to vest up until
31 December 2025, all unissued shares under Right are Ordinary Shares of the Company.
Shares Issued on Exercise of Rights
During the financial year, the Group issued 1,025,588 Ordinary Shares as a result of the Rights vesting.
RETENTION OPTIONS
Unissued Shares under Options
At 30 June 2021 the Group had 6,061,632 unissued shares under Options which are expected to vest up until
30 June 2023, all unissued shares under Options are Ordinary Shares of the Company.
Annual Report 2021
29
REMUNERATION REPORT
INTRODUCTION
The Directors are pleased to present the FY21 Remuneration Report, outlining the Board’s approach to the
remuneration for Key Management Personnel (KMP).
The Board recognises that the performance of the Group depends on the quality and motivation of its team
members. The Group remuneration strategy therefore seeks to appropriately attract, reward and retain team
members at all levels of the Business, but in particular for management and key executives. The Board aims
to achieve this by establishing executive remuneration packages that include a mix of fixed remuneration,
short‑term incentives and long‑term incentives.
At the 2020 Annual General Meeting (AGM) held on 20 November 2020, the Company received a vote
of 43.81% of eligible votes against the 2020 Remuneration Report, receiving a First Strike. We have since
consulted with proxy advisors, investors and other stakeholders and have actioned their feedback where
immediately possible as we continue to evolve our remuneration framework.
In February 2021, the Company announced the appointment of two new Independent Non‑Executive
Directors, Janine Allis and James Spenceley with both Directors also serving as members of the Board’s
Remuneration & Nomination and Audit & Risk Committees. With the addition of Ms Allis and Mr Spenceley
the Company has achieved a majority independent Board of Directors, Remuneration & Nomination and
Audit & Risk Committees.
The Company recently adopted an Equal Opportunity, Merit and Diversity Policy, a copy of which is available
on Kogan’s Corporate Website. The Company recognises that a diverse workplace is likely to be the natural
long‑term consequence of merit‑based decision‑making in hiring, firing and promotions, and that a diverse
workforce achieved through merit‑based decision‑making is integral to building and sustaining a culture that
fosters equal opportunity.
The quantum and conditions of Retention Options awarded to the Founder and CEO of Kogan.com Mr Kogan,
and the Company’s CFO/COO Mr Shafer were approved by Shareholders at the 2020 AGM. The details of this
awarded Long‑Term Incentive (LTI) are provided below and are accounted for in the same way the Company’s
other equity‑settled awards are treated (refer section 5.2 of the FY21 Annual Report), with their fair value
determined at their date of grant in line with AASB 2 Share-based payments. The cost of these transactions
is recognised in the Consolidated Income Statement and Consolidated Statement of Other Comprehensive
Income on a straight‑line basis over the vesting period after allowing for an estimate of shares that will
eventually vest. The level of vesting is reviewed annually and the charge adjusted to reflect actual and
estimated levels of vesting. Accordingly, any deductions allowable for tax purposes will also be in line with
current equity‑settled awards.
We continue to engage with Shareholders and look forward to receiving further feedback on our 2021
Remuneration Report.
The Report covers the following matters:
1. Details of Key Management Personnel;
2. Remuneration governance;
3. Remuneration policy;
4. Company’s performance;
5. Details of remuneration;
6. Equity instruments;
7. Executive and Other KMP service agreements;
8. Key Management Personnel transactions.
30
kogan.com
DETAILS OF KEY MANAGEMENT PERSONNEL
Key Management Personnel (KMP) are individuals who have authority and responsibility for planning,
directing and controlling the activities of the Group, directly or indirectly, and comprise the Directors and
the Senior Executives of the Group, as listed below.
KMP
POSITION HELD
Independent Non‑Executive Directors
Greg Ridder
Chairman, Independent Non‑Executive Director
Janine Allis
Independent Non‑Executive Director (from 1 April 2021)
Harry Debney
Independent Non‑Executive Director
James Spenceley
Independent Non‑Executive Director (from 1 March 2021)
Executive Directors
TERM AS KMP
Full year
Part year
Full year
Part year
David Shafer
Chief Financial Officer, Chief Operating Officer & Executive Director
Full year
Ruslan Kogan
Chief Executive Officer and Executive Director
Full year
Other KMP
Simon Barton
Mighty Ape, Chief Executive Officer (from 1 December 2020)
Part year
REMUNERATION GOVERNANCE
The Board has appointed the Remuneration and Nomination Committee (“the Committee”) whose objective
is to assist the Board in relation to the Group remuneration strategy, policies and actions. In performing this
responsibility, the Committee must give appropriate consideration to the Company’s performance and
objectives, employment conditions and external remuneration relativities.
Remuneration and Nomination Committee
Kogan.com’s Remuneration and Nomination Committee is comprised of Independent Non‑Executive Directors.
The responsibilities of the Committee include to:
• develop criteria for Board membership and identify specific individuals for nomination;
• establish processes for the review of the performance of individual Directors, Board Committees and the
Board as a whole and implementation of such processes;
•
•
•
•
review and make recommendations to the Board on board succession planning generally;
review and make recommendations to the Board on the process for recruiting a new Director, including
evaluating the balance of skills, knowledge, experience, independence and diversity on the Board;
review and make recommendations to the Board on the Company’s remuneration framework,
remuneration packages and policies applicable to the members of the executive management of the
Company (“Senior Management”) and Directors;
review and make recommendations to the Board on equity‑based remuneration plans for senior executives
and other employees;
• define levels at which the Chief Executive Officer must make recommendations to the Committee
on proposed changes to remuneration and employee benefit policies;
• ensure that remuneration packages and policies attract, retain and motivate high calibre executives; and
• ensure that remuneration policies demonstrate a clear relationship between key executive performance
and remuneration.
All Directors who are not members of the Committee are entitled to attend any meeting of the Committee.
The Committee may invite any Director, including members of Senior Management.
Annual Report 2021
31
REMUNERATION REPORT CONTINUED
A full Charter outlining the Committee’s responsibilities and the Process for Evaluation of Performance are
available at www.kogancorporate.com.
REMUNERATION POLICY
The Group has established incentive arrangements subsequent to listing on the ASX to assist in the attraction,
motivation and retention of the executive team and other selected team members. To align the interests of its
team members and the goals of the Group, the Directors have decided the remuneration packages of the
executive team and other selected team members will consist of the following components:
• Fixed remuneration (inclusive of superannuation);
• Short‑term cash‑based incentives; and
• Long‑term equity‑based incentives.
The payment of any cash and award of equity under the incentive arrangements will be subject to the
achievement of performance criteria or hurdles set by the Board. The remuneration packages of the senior
management team are determined by the Committee and reported to the Board. The remuneration of senior
managers are reviewed annually by the Committee. At the absolute discretion of the Committee, Kogan.com
may seek external advice on the appropriate level and structure of the remuneration packages of the senior
management team from time to time.
Fixed remuneration
Fixed remuneration is comprised of the base salary and team member benefits which include superannuation,
leave entitlements and other benefits.
The salaries are normally paid monthly and are based on:
•
•
•
responsibilities, abilities, experience and performance
team member’s performance in the period since the last review
the Group’s pay structure
The salaries are benchmarked against similar ASX‑listed and other online retail companies.
Some KMP’s received an adjustment to fixed remuneration in the 2021 financial year.
32
kogan.com
SHORT‑TERM INCENTIVES (STI) – CASH BASED
The following table outlines the significant aspects of the STI.
Purpose of STI plan
Provide a link between remuneration and both short‑term Company and
individual performance.
Eligibility
Create sustainable Shareholder value.
Reward individuals for their contribution to the success of the Group.
Actively encourage team members to take more ownership over the
EBITDA 1.
Offers of cash incentive may be made to any team member of the Group
(including a Director employed in an executive capacity) or any other person
who is declared by the Board to be eligible to receive a grant of cash
incentive under the STI.
Calculation & Target
The actual EBITDA 1 of Kogan.com shall exceed the management forecast for
the full financial year (after payment of the STI).
25% of the outperformance will be allocated to a ‘bonus pool’.
The ‘bonus pool’ will then be shared in cash bonuses among a number
of team members in fixed proportions.
Maximum opportunity
The maximum payable is 25% of the outperformance and 35% of the team
member’s annual salary.
Performance conditions
Outperformance of the actual EBITDA 1.
Continuation of employment.
Why were the performance
conditions chosen
To achieve successful and sustainable financial business outcomes as well
as any annual objectives that drive short‑term and long‑term business
success and sustainability.
Performance period
Timing of assessment
Form of payment
Board discretion
1 Non‑IFRS measure.
1 July 2020 to 30 June 2021.
August 2021, following the completion of the 30 June 2021 accounts.
Paid in cash.
Targets are reviewed annually and the Board has discretion to adapt
appropriately to take into account exceptional items.
Annual Report 2021
33
REMUNERATION REPORT CONTINUED
Long‑Term Incentives (LTI) – Equity Incentive Plan (EIP)
The Group has established an Equity Incentive Plan (EIP), which is designed to align the interests of eligible
team members more closely with the interests of Shareholders in the listed entity post 7 July 2016. Under
the EIP, eligible team members may be offered Restricted Shares, Options or Rights which may be subject
to vesting conditions. The Group may offer additional long‑term incentive schemes to senior management
and other team members over time.
The following table outlines the significant aspects of the current EIP.
Purpose of LTI plan
Support the strategy and business plan of the Group.
Eligibility
Align the interests of team members more closely with the interests
of Shareholders.
Reward individuals for their contribution to the success of the Group over
the long‑term.
Offers of Incentive Securities may be made to any team member of the
Group (including a Director employed in an executive capacity) or any other
person who is declared by the Board to be eligible to receive a grant
of incentive Securities under the EIP.
Service condition on vesting
Individuals must be employed by the Group at time of vesting and not be
in their notice period.
Form of award and payment
Performance Rights or Options.
Board discretion
Consideration
Rights
Restrictions on dealing
The Board has the absolute discretion to determine the terms and conditions
applicable to an offer under the EIP.
Nil.
Each Right confers on its holder an entitlement to a Share, subject to the
satisfaction of applicable conditions.
Shares allocated upon exercise of Performance Rights will rank equally
with all existing Ordinary Shares from the date of issue (subject only to the
requirements of Kogan.com’s Securities Trading Policy).
Upon vesting, there will be no disposal restrictions placed on the
Ordinary Shares issued to participants (subject only to the requirements
of Kogan.com’s Securities Trading Policy).
Lapse of Rights
A Right will lapse upon the earliest to occur of:
• expiry date;
•
failure to meet vesting conditions;
• employment termination;
•
the participant electing to surrender the Right;
• where, in the opinion of the Board, a participant deals with a Right
in contravention of any dealing restrictions under the EIP.
34
kogan.com
Executive Retention Options awarded at the 2020 AGM issued under the Group’s EIP
The number and class
of securities issued
to the Directors
Details of the
Retention Options
3,600,000 options granted to Mr Kogan and 2,400,000 granted
to Mr Shafer under the EIP.
The Board (excluding Mr Kogan and Mr Shafer) decided to grant the
Retention Options to Mr Kogan and Mr Shafer because the Board believed
it was in the best interests of the Company and Shareholders to incentivise
Mr Kogan and Mr Shafer to remain in their positions for the next 3 years
given their proven track records, in order to maximise the prospect of
Mr Kogan and Mr Shafer contributing to the creation of significant future
returns for Shareholders.
The Retention Options are being accounted for in the same way the
Company’s current equity‑settled awards are treated (refer section 5.2 of the
FY21 Annual Report), with their accounting value determined at their date
of grant (within 10 Business Days of the Meeting). Equity‑settled awards are
measured at fair value at the date of grant. The cost of these transactions
is recognised in the Company’s Consolidated Income Statement and
Consolidated Statement of Other Comprehensive Income and credited
to equity on a straight‑line basis over the vesting period after allowing for
an estimate of shares that will eventually vest. The level of vesting
is reviewed annually and the charge adjusted to reflect actual and estimated
levels of vesting. Accordingly, any deductions allowable for tax purposes will
also be in line with current equity‑settled awards.
The Company obtained an independent valuation of the Retention Options
from SLM Corporate dated 7 May 2020 to provide advice in relation
to whether the proposed grant of the Retention Options were reasonable
in the circumstances and by reference to industry standards. The valuation
applied a number of assumptions and variables, including the following:
•
the closing price of the Company’s Shares on ASX on 30 April 2020
(a reference date under the report), being $7.99 per Share;
• a risk‑free rate of 0.33%;
• a volatility factor of 62.5%;
• dividend yield of 1.96%; and
• a time to maturity of the underlying Options of 4 years.
The estimated value of each Retention Option pursuant to the valuation was
$4.13 as at the reference date of the report of 7 May 2020. On this basis, the
estimated value as at the reference date of the report of 7 May 2020 of:
•
•
the Retention Options to be granted to Mr Kogan under Item 5.1
was $14,872,133; and
the Retention Options to be granted to Mr Shafer under Item 5.2
was $9,914,756.
Annual Report 2021
35
REMUNERATION REPORT CONTINUED
Details of the Retention
Options (continued)
The report from SLM Corporate dated 7 May 2020 reflects the value of the
Retention Options on or about the date that the Company agreed to grant
the Retention Options to Mr Kogan and Mr Shafer. For completeness, given
the time that has elapsed between the AGM (at which the Retention Options
were approved by Shareholders) and both the date of the independent
valuation of the Retention Options from SLM Corporate and the date that
the Company agreed to grant the Retention Options, the Company obtained
an updated independent valuation of the Retention Options from SLM
Corporate dated 8 December 2020. This valuation applied the same
assumptions and variables as noted above, except that:
•
the closing price of the Company’s Shares on ASX on 30 November 2020
(date of issue of the Retention Options as per the updated independent
valuation), being $16.40 per Share;
• a risk‑free rate of 0.25%;
• a volatility factor of 62.5%; and
• dividend yield of 1.28%.
The value of each Retention Option pursuant to the valuation was $11.48
as at the issue date of the updated independent valuation of 8 December
2020. On this basis, the value as at the issue date of the updated
independent valuation of 8 December 2020 of:
•
•
the Retention Options granted to Mr Kogan was $41,325,935; and
the Retention Options granted to Mr Shafer was $27,550,623.
The increase in the value of the Retention Options reflects the increase
in the Company’s share price since the Company announced the terms
of the Retention Options to the ASX on 12 May 2020 and the grant of the
Retention Options following the Company’s AGM on 20 November 2020.
Strike price
Share price at grant date
Share price at close
28 September 2021
$5.29
$16.40
$10.84
Independent Non‑Executive Directors’ remuneration
Kogan.com Independent Non‑Executive Director remuneration policy is set up to attract and retain Directors
with the experience, knowledge, expertise and acumen to manage the Company.
Each of the Independent Non‑Executive Directors has entered into appointment letters with Kogan.com,
confirming the terms of their appointment, their roles and responsibilities and Kogan.com’s expectations
of them as Directors.
Under the Constitution, the Board may decide the remuneration from Kogan.com to which each Director
is entitled for their services as a Director. However, under the ASX Listing Rules, the total amount paid to all
Non‑Executive Directors for their services must not exceed in aggregate in any financial year the amount fixed
at Kogan.com’s general meeting.
This amount has been fixed by Kogan.com at $500,000 per annum. Any change to that aggregate annual
sum needs to be approved by Shareholders.
The annual Independent Non‑Executive Directors’ fees paid or payable to Greg Ridder (as Chairman),
Harry Debney, Janine Allis and James Spenceley for FY21 are $185,000, $110,000, $95,000 and
$95,000 respectively.
No additional fees are presently proposed to be paid for membership or Chairmanship of the Audit and Risk
Management Committee or the Remuneration and Nomination Committee. In subsequent years, additional
fees for membership or Chairmanship of these committees may apply.
36
kogan.com
All Directors’ fees include superannuation payments, to the extent applicable.
Independent Non‑Executive Directors are not eligible to participate in Kogan.com’s short‑term or long‑term
incentive programs.
COMPANY PERFORMANCE
Relationship to remuneration policy
In considering the consolidated entity’s performance and the benefits of Shareholder wealth, the Committee
considers a range of indicators in respect of senior executive remuneration and linked these to the previously
described short‑term and long‑term incentives.
At Kogan.com, we remunerate our KMP in a way which:
• aims to align executive interests with Shareholders;
•
is sufficiently competitive in the marketplace to enable us to attract, retain, and motivate exceptional
talent; and
• encourages and rewards the behaviours and outcomes that will deliver business success and a good return
for our Shareholders.
To achieve this, we set challenging targets and monitor performance against them closely.
We have strengthened the connection between our key reward metrics and our business strategy by adapting
the performance conditions used for our STI.
We remain committed to the use of stretching performance metrics, and recognise the importance of having
performance conditions that are linked to customer engagement.
Shareholder wealth
The following table presents these indicators showing the impact of the Company’s performance
on Shareholder wealth, during the financial years:
Net profit after income tax (NPAT)
Adjusted NPAT 1
Earnings per Share (EPS)
Adjusted EPS 1
EBITDA2 (in $’m)
Adjusted EBITDA 1 (in $’m)
Dividends paid (in $’m)
Operating income growth
Share Price at 30 June
*
Share Price as at Tuesday 30 June 2020.
FY21
3.5
42.9
0.03
0.41
22.5
61.8
31.3
56.8%
11.58
FY20
26.8
30.0
0.29
0.32
46.5
49.7
14.8
13.5%
14.72*
Profit amounts have been calculated in accordance with Australian Accounting Standards (AASBs). EBITDA2
is calculated based on the operating profit before interest, tax, depreciation and amortisation. Operating
income is operating profit as reported in the Consolidated Income Statement and Consolidated Statement
of Other Comprehensive Income.
1
Adjusted EBITDA, Adjusted NPAT and Adjusted EPS are measures of the underlying performance of the Business, they remove
non‑cash items including the unrealised FX gain/ (loss), equity‑based compensation and one‑off non‑recurring items. Refer to
page 21 of this Annual Report for a detailed reconciliation of adjusting items.
2 Non‑IFRS measure.
Annual Report 2021
37
REMUNERATION REPORT CONTINUED
DETAILS OF STATUTORY REMUNERATION
KMP statutory remuneration
Details of the statutory remuneration to the executive Key Management Personnel is set out below.
SHORT‑TERM
POST‑
EMPLOY‑
MENT
LONG‑TERM
BENEFITS
EQUITY‑
BASED
COMPENS‑
ATION
Cash
Salary
$
Short‑Term
Incentives
$
Super‑
annuation
$
Year
Annual
& long
service
leave
$
Share‑
Based
Payments1
– Options
$
Total
$
OTHER
LONG
TERM
BENEFITS
Mighty
Ape –
acquisition‑
related
remunera‑
tion
$
Total
$
–
–
–
–
21,694
21,694
52,513 8,495,007
8,992,714
45,012
5,663,338
6,093,044
–
–
8,992,714
6,093,044
–
15,704
16,703
195,778
12,038,718 12,234,496
43,388
113,229 14,175,048 15,281,536 12,038,718 27,320,254
Executive KMP
R. Kogan
D. Shafer
Other KMP
2021
2021
423,500
363,000
S. Barton2
2021
163,371
949,871
Total
Executive KMP
R. Kogan
D. Shafer
Other KMP
2020
2020
423,500
101,026
363,000
86,581
21,003
21,003
48,788
41,818
S. Barton2
2020
–
–
–
–
Total
786,500
187,607
42,006
90,606
–
–
–
–
594,317
512,402
–
1,106,719
–
–
–
–
594,317
512,402
–
1,106,719
1
Share‑based payments shown relate to the expense incurred in accordance with accounting standards for unvested Options awarded
to the CEO & CFO/COO and other Non‑Executive KMP.
2 Mr Barton has been determined as a KMP upon the acquisition of Mighty Ape Limited, 1 December 2020. Mr Barton’s annual cash
salary of NZD$300,000 has been applied pro‑rata over the KMP period and stated in AUD using the AU/NZ average rate from
1 December 2020 to 30 June 2021 of 0.9315.
Mighty Ape – acquisition‑related remuneration
Mighty Ape acquisition related remuneration, refers to the likely payment of Mighty Ape Tranche 3 & 4
purchase price instalments as part of the Sale Agreement. Tranche 3 and 4 are contingent on the Mighty
Ape Founder & CEO, Simon Barton, remaining with the business until the delivery of the financial year 2023
results. In line with accounting standards, Tranches 3 & 4 payments will be considered as compensation
for post‑combination services, and as such, treated as employee remuneration for accounting purposes.
The Group will proportionately account for these expenses up until the respective payment dates.
As at 30 June 2021 a total of $12,038,718 has been provided for in relation to Tranche 3 & 4 in which remains
non‑payable if the Mighty Ape Founder & CEO, Simon Barton, resigns from the business prior to the delivery
of the financial year 2023 results.
38
kogan.com
Non‑Executive Directors’ remuneration
The table below sets out the remuneration paid to Non‑Executive Directors:
Greg Ridder
Harry Debney
Janine Allis 1
James Spenceley 2
Total
Greg Ridder
Harry Debney
Janine Allis 1
James Spenceley 2
Michael Hirschowitz 3
Total
Year
2021
2021
2021
2021
2020
2020
2020
2020
2020
SHORT‑TERM
BENEFITS
Total fees
$
POST‑
EMPLOYMENT
BENEFITS
Super‑
annuation
$
185,000
110,000
24,457
31,667
351,124
185,000
110,000
–
–
87,083
382,083
–
–
–
–
–
–
–
–
–
–
–
Total
$
185,000
110,000
24,457
31,667
351,124
185,000
110,000
–
–
87,083
382,083
1. Janine Allis was appointed as an Independent Non‑Executive Director on 1 April 201.
2. James Spenceley was appointed as an Independent Non‑Executive Director on 1 March 2021.
3. Michael Hirschowitz was appointed as an Independent Non‑Executive Director on 29 March 2019 and resigned on 20 May 2020.
EQUITY INSTRUMENTS
Kogan.com successfully listed on the ASX on 7 July 2016. The following table presents the interests of each
Director held directly, indirectly or beneficially, including their related parties:
Ruslan Kogan
David Shafer
Greg Ridder
Harry Debney
Janine Allis 1
James Spenceley 2
Simon Barton 3
Michael Hirschowitz 4
No. shares
held
2021
15,853,321
6,075,642
158,000
98,099
4,761
–
–
–
% ownership
2021
No. shares
held
2020
% ownership
2020
14.88%
21,132,522
5.70%
0.15%
0.09%
0.00%
–%
–%
–%
8,098,236
171,000
90,538
–
–
–
30,070
0.00%
20.41%
7.82%
0.17%
0.09%
–%
–%
–%
1. Janine Allis was appointed as an Independent Non‑Executive Director on 1 April 2021.
2. James Spenceley was appointed as an Independent Non‑Executive Director on 1 March 2021.
3. Simon Barton, has been determined as a KMP upon the acquisition of Mighty Ape Limited, 1 December 2020.
4. Michael Hirschowitz was appointed as an Independent Non‑Executive Director on 29 March 2019 and resigned on 20 May 2020.
Annual Report 2021
39
REMUNERATION REPORT CONTINUED
EXECUTIVE DIRECTORS’ AND OTHER KMP SERVICE AGREEMENTS
Notice and termination payments
Executives are on contracts with no fixed end date.
The following table captures the notice periods applicable to the termination of the Executive KMP and Other
KMP employment:
Executive KMP
CEO
CFO, COO
Other KMP
CEO – Mighty Ape
Termination
notice by
Kogan.com
Termination
notice by
employee
Termination
payments
provided for
under
contract
12 months
12 months
12 months
6 months
6 months
6 months
6 months
6 months
6 months
Executive and Other KMP Service Agreements
Prior to the Company’s ASX Listing on 7 July 2016, Ruslan Kogan and David Shafer were not subject
to employment arrangements and instead received profit distributions proportionate to their shareholdings
in the Group.
Subsequent to Listing, Ruslan Kogan and David Shafer entered into employment contracts.
Simon Barton has been determined as a KMP from the acquisition date of Mighty Ape Limited, 1 December 2020.
Mr Barton entered into a renewed agreement for his role as Chief Executive Officer – Mighty Ape.
Chief Executive Officer
Mr Kogan is employed in the position of Chief Executive Officer of Kogan.com.
Kogan.com has entered into an employment contract with Mr Kogan to govern his employment with
Kogan.com.
Mr Kogan or Kogan.com may terminate Mr Kogan’s employment by giving 12 months’ notice. Kogan.com may
elect to make payment in lieu of notice. Kogan.com may terminate Mr Kogan’s employment without notice
in circumstances warranting summary dismissal.
Upon termination of Mr Kogan’s employment, Mr Kogan will be subject to a restraint of trade period
of 12 months during which time Mr Kogan cannot compete with Kogan.com or provide services in any capacity
to a competitor of Kogan.com or solicit suppliers, clients or employees of Kogan.com. The enforceability of the
restraint clause is subject to all usual legal requirements.
The Board may invite Mr Kogan to participate in Kogan.com’s incentive programs.
Chief Financial Officer and Chief Operating Officer
Mr Shafer is employed in the position of Chief Financial Officer and Chief Operating Officer of Kogan.com.
Kogan.com has entered into an employment contract with Mr Shafer to govern his employment with
Kogan.com.
Mr Shafer or Kogan.com may terminate Mr Shafer’s employment by giving 6 months’ notice. Kogan.com may
elect to make payment in lieu of notice. Kogan.com may terminate Mr Shafer’s employment without notice
in circumstances warranting summary dismissal.
40
kogan.com
Upon termination of Mr Shafer’s employment, Mr Shafer will be subject to a restraint of trade period
of 6 months during which time Mr Shafer cannot compete with Kogan.com or provide services in any capacity
to a competitor of Kogan.com or solicit suppliers, clients or employees of Kogan.com. The enforceability of the
restraint clause is subject to all usual legal requirements.
The Board may invite Mr Shafer to participate in Kogan.com’s incentive programs.
Chief Executive Officer – Mighty Ape
Mr Barton is employed in the position of Chief Executive Officer of Mighty Ape.
Mighty Ape has entered into an employment contract with Mr Barton to govern his employment with Mighty Ape.
Mr Barton may terminate his employment by giving 6 months’ notice. Mighty Ape will not terminate Mr
Barton’s employment for any reason (except for reasons stated within Mr Barton’s employment contract)
during the period of three years from Mr Barton’s commencement date. Thereafter, Mr Barton’s employment
may be terminated at any time by Mighty Ape by giving Mr Barton six months’ notice. Mighty Ape may elect to
make payment in lieu of notice. Mighty Ape may terminate Mr Barton’s employment without notice in
circumstances warranting summary dismissal.
Upon termination of Mr Barton’s employment, Mr Barton will be subject to a restraint of trade period of
12 months during which time Mr Barton cannot compete with Mighty Ape or the Group or provide services in
any capacity to a competitor of Mighty Ape or the Group or solicit suppliers, clients or employees of Mighty
Ape or the Group. The enforceability of the restraint clause is subject to all usual legal requirements.
The Board may invite Mr Barton to participate in Kogan.com’s incentive programs.
KEY MANAGEMENT PERSONNEL TRANSACTIONS
Transactions between related parties are on normal commercial terms and conditions no more favourable
than those available to other parties unless otherwise stated.
The following transactions occurred with related parties:
Kogan Australia Pty Ltd entered into a Logistic Services Agreement with eStore Logistics Pty Ltd (“eStore”),
in a prior financial period, in relation to the provision of warehousing, distribution and logistics services by
eStore to Kogan Australia. Mr Kogan is a minority shareholder and Director of eStore. The agreement was
entered into on arm’s length terms.
KMP
Transaction type
Ruslan Kogan
Purchases from eStore warehousing
CONSOLIDATED GROUP
2021
$000
11,986
2020
$000
9,540
The Directors’ Report is signed on behalf of the Board in accordance with a resolution of the Directors.
Greg Ridder
Non‑Executive Chairman
Melbourne, 29 September 2021
Annual Report 2021
41
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
GOVERNANCE
The Kogan.com Board of Directors and senior management team operate the business with high regard
to Corporate Governance at all times and are transparent to its Shareholders, team members and suppliers.
Kogan.com operates with a majority independent Board of Directors and supporting majority independent
Audit and Risk Committee and Remuneration and Nomination Committee. The Audit and Risk Committee
is required to meet at least twice per annum and a Remuneration and Nomination Committee is required
to meet at least annually in order to perform their functions.
Kogan.com is committed to observing its disclosure obligations under the ASX Listing Rules (and the
Corporations Act 2001 (Cth) (the Act)) and is governed by the Companies Continuous Disclosure Policy.
Information is communicated to company Shareholders through the lodgment of all relevant financial and
other information with the ASX and continuous disclosure announcements made available on Kogan.com’s
Corporate Website.
MODERN SLAVERY AND ETHICAL SOURCING
Kogan.com takes its obligations under the Australian Modern Slavery Act 2018 (the Modern Slavery Act)
seriously and are committed to the ongoing review and improvement of its contribution and impact on human
rights whilst making the most in‑demand products and services more affordable and accessible.
Kogan.com has prepared its Modern Slavery Statement in accordance with the Modern Slavery Act and with
regard to the Commonwealth Modern Slavery Act 2018 Guidance for Reporting Entities (the Guidance). The
Company’s Modern Slavery Statement is available in the above Library. The Statement outlines the measures
taken by the Company to reduce the risk of modern slavery occurring in the Company’s businesses or its
supply chain.
Kogan.com’s supply chains are sophisticated and span the globe. The Company places a great emphasis
on working solely with ethical suppliers and expect its suppliers to comply with the mandatory non‑negotiable
requirements of its Ethical & Sustainable Sourcing Policy, with preference among those suppliers going to the
ones that also respond to the desirable elements, refer to the Company’s Ethical & Sustainable Sourcing Policy
available on Kogan.com’s Corporate Website.
The Company adopted a risk‑based approach in assessing which areas of business may have greater potential
for modern slavery to occur. Refer to the Kogan.com Modern Slavery Statement available on Kogan.com’s
Corporate Website for further detail on the supply chain risk assessment and mitigating actions the Company
engages to reduce the risk of modern slavery.
Kogan.com opposes modern slavery in all its forms.
42
kogan.com
OUR VALUES
Each team member is driven by the Company’s core values, they ensure that we individually and collectively
maintain focus on putting our customers first, being honest with ourselves and each other and being the
pioneers of our industry to deliver on the Company’s long term growth strategy.
Put our customer first
Deliver on promises and delight customers. Win customers for life. Use your creativity, imagination
and energy to deliver value.
Have fun
Don’t take yourself too seriously. Be positive and work as a team. Treat others as you’d like to be treated.
Be honest
With yourself, customers & co‑workers. Confront the facts, even the hard ones. Think from first principles.
Pioneer
Experiment, fail fast, learn quickly, fix things quickly, and repeat. Embrace technology and change. Have
an open mind and don’t be afraid of a challenge. We’re changing the way people shop. There is always a
better way – challenge the status quo.
Do more with less
Do things in the most efficient way possible. Being frugal allows us to keep prices low for customers.
Keep it real
Focus on doing good, not looking good. Ensure merit‑based decisions by placing facts at the heart of your
processes. Concentrate on real life results and being objective. Always put health and safety first; nothing is
more important.
Have high expectations
Work collaboratively, give your best in your work, and expect the same of the team.
Think long term
We’re creating customers for life and a company that’s built to last. Take the short term pain for a long
term gain.
Step up
Do what it takes. Solve problems that need to be solved. Be a doer.
Annual Report 2021
43
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
THE KOGAN.COM TEAM
The Kogan.com team thrive in a dynamic, high‑performance culture.
The Company’s success is built off technology and digital efficiency and it is our dedicated team that makes
it all happen. Kogan.com’s team is central to the business, its culture and its ability to continuously outperform
the expectations of Shareholders and customers.
The teams’ training sessions (Lunch & Learns) are held across the business to drive engagement, career
development and growth opportunities internally. Our highly skilled Software Engineering team holds
“Tech Talks” and Meetups for the industry, sharing knowledge and experiences with like minded professionals
in their field.
Kogan.com embraces growing talent from within our team. The business is dedicated to supporting the
growth of our team, with many of the role appointments made coming from internal team promotion within
the business.
Kogan.com recognises that a diverse workplace is achieved through merit‑based decision‑making which
is integral to building and sustaining a culture that fosters equal opportunity, diversity and inclusion.
Kogan.com operates under an Equal Opportunity, Merit and Diversity Policy, which can be located
on Kogan.com’s Corporate Website.
Our team and culture are at the heart of our business operations and a key ingredient in our success.
SAFETY, HEALTH AND WELLBEING
The safety, health and wellbeing of the Kogan.com team are the Company’s top priorities. The business takes
all measures necessary to ensure that its team is safe. This includes being one of the first companies in
Australia to switch to a ‘work from home’ model at the beginning of the COVID‑19 pandemic. A COVID‑Safe
Plan was immediately developed to ensure that our team, suppliers and customers remained as safe
as possible during this difficult and unprecedented time.
Since the beginning of the COVID‑19 pandemic, Kogan.com has supported a flexible work model for its team
members as well as providing all the necessary measures including hand sanitiser for each team member
as well as sanitiser stations set up around the office, masks and team members and visitors alike requiring
to scan or sign into the office in order to ensure contact tracing is available in the event that it may be required.
The health and wellbeing, including mental health, of our team members is imperative. There are various
health and wellbeing related activities the team are encouraged to participate in including yoga (onsite
but also done virtually), pilates, meditation, Kogan.com Fitness Squad activities including marathons, fun runs,
10,000 steps challenges, Corporate Games and team group social activities and team event celebrations
(onsite and virtual) to keep the team connected. In addition, all team members have access to the Company’s
independent and confidential Employee Assistance Program (EAP) if required.
44
kogan.com
AUDITOR’S INDEPENDENCE DECLARATION
Annual Report 2021
45
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation.Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 To the Director of Kogan.com Ltd I declare that, to the best of my knowledge and belief, in relation to the audit of Kogan.com Ltd for the financial year ended 30 June 2021 there have been: i.no contraventions of the auditor independence requirements as set out in the CorporationsAct 2001 in relation to the audit; andii.no contraventions of any applicable code of professional conduct in relation to the audit.KPM_INI_01 PAR_SIG_01 PAR_NAM_01 PAR_POS_01 PAR_DAT_01 PAR_CIT_01 KPMG Simon Dubois Partner Melbourne 29 September 2021 FINANCIAL REPORT
CONTENTS
47 CONSOLIDATED INCOME STATEMENT AND
CONSOLIDATED STATEMENT OF OTHER
COMPREHENSIVE INCOME
48 CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
49 CONSOLIDATED STATEMENT OF CHANGES
IN EQUITY
50 CONSOLIDATED STATEMENT OF CASH FLOWS
51 NOTES TO THE FINANCIAL STATEMENTS
51 BASIS OF PREPARATION
51
52
52
52
52
a. Principles of Consolidation
b. Uses of Judgements and Estimates
c. Common Control Transaction
d. Functional and Presentation Currency
e. New accounting standards and interpretations
53 SEGMENT INFORMATION
53
54
a. Basis of segmentation
b. Segment information provided to the Board
54 BUSINESS COMBINATION
a. Summary of acquisition
b. Details of the purchase consideration, the net
assets acquired and goodwill are as follows:
c. The assets and liabilities recognised at cost at
the date of the acquisition were as follows:
d. The goodwill arising on the acquisition:
f. Purchase consideration – cash outflow
g. Costs in relation to the acquisition have been
recognised as follows:
57
h. Measurement of fair values
54
55
55
56
56
56
56
57 SECTION 1: BUSINESS PERFORMANCE
57
58
58
59
62
1.1 Revenue
1.2a Operating activities
1.2b Finance costs
1.3 Tax Balances
1.4 Notes to the Cash Flow Statement
63 SECTION 2: OPERATING ASSETS AND LIABILITIES
63
67
69
2.1 Working Capital
2.2 Intangible Assets
2.3 Property, Plant and Equipment
71 SECTION 3: CAPITAL STRUCTURE AND FINANCING
71
72
79
81
82
3.1 Loan and Borrowings
3.2 Capital and Financial Risk Management
3.3.1 Issued Capital and Reserves
3.3.2 Dividends
3.4 Earnings per Share
83 SECTION 4: GROUP STRUCTURE
83
83
84
84
4.1 Controlled Entities
4.2 Deed of Cross Guarantee
4.3 Parent Entity Disclosures
4.4 Related Parties
85 SECTION 5: EMPLOYEE REWARD AND RECOGNITION
85
86
5.1 Key Management Personnel Compensation
5.2 Incentive Plans
95
95
95
95
6.1 Subsequent Events
6.2 Remuneration of Auditors
6.3 Contingent Liabilities
6.4 Company Information
96 DIRECTORS’ DECLARATION
97 INDEPENDENT AUDITOR’S REPORT
103 SHAREHOLDER INFORMATION
e. Revenue and Profit contribution
95 SECTION 6: OTHER
46
kogan.com
CONSOLIDATED INCOME STATEMENT AND CONSOLIDATED
STATEMENT OF OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2021
Revenue
Cost of sales
Gross profit
Selling and distribution expenses
Warehouse expenses
Administrative expenses
Other expenses
Results from operating activities
Finance income
Finance costs
Unrealised foreign exchange gain/(loss)
Net finance income/(cost)
Profit before income tax
Tax expense
Profit after income tax
Other comprehensive income
Exchange gain on translation of foreign operations
Other comprehensive income for the year
Total comprehensive income for the year
Basic earnings per Share
Diluted earnings per Share
The accompanying notes form part of these financial statements.
CONSOLIDATED GROUP
2021
$000
2020
$000
780,742
497,904
(577,037)
(371,374)
Note
1.1
1.2a
203,705
(68,865)
(34,735)
(86,403)
(2,967)
10,735
25
(938)
1,446
533
11,268
(7,731)
3,537
272
272
3,809
0.03
0.03
126,530
(34,196)
(13,574)
(35,687)
(2,033)
41,040
52
(796)
(1,443)
(2,187)
38,853
(12,033)
26,820
–
–
26,820
0.29
0.28
1.2b
1.3
3.4a
3.4b
Annual Report 2021
47
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Prepayments and other current assets
Current tax asset
TOTAL CURRENT ASSETS
NON‑CURRENT ASSETS
Property, plant and equipment
Intangible assets
Deferred tax assets
TOTAL NON‑CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Lease liabilities
Financial liabilities
Current tax liabilities
Employee benefits
Provisions
Deferred income
TOTAL CURRENT LIABILITIES
NON‑CURRENT LIABILITIES
Other payables
Loans & borrowings
Lease liabilities
Employee benefits
Deferred income
Deferred tax liabilities
TOTAL NON‑CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Share capital
Merger reserve
Other reserves
Retained earnings
TOTAL EQUITY
CONSOLIDATED GROUP
Note
2021
$000
2020
$000
2.1.2a
2.1.1
2.1.2b
1.3
2.3
2.2
1.3
2.1.3a
2.1.3b
1.3
2.1.3c
2.1.3a
3.1
2.1.3b
2.1.3c
1.3
3.3.1a
3.3.1c
91,691
5,810
227,873
205
1,981
1,689
146,726
5,390
112,882
–
1,400
–
329,249
266,398
17,668
95,098
–
112,766
442,015
140,607
5,554
–
–
1,638
3,480
11,777
163,056
5,247
78,699
10,279
173
86
3,746
98,230
261,286
180,729
299,186
(131,816)
15,648
(2,289)
180,729
2,603
8,279
2,387
13,269
279,667
82,495
1,987
1,060
5,451
1,134
3,159
19,334
114,620
–
–
453
197
372
–
1,022
115,642
164,025
269,033
(131,816)
1,352
25,456
164,025
The accompanying notes form part of these financial statements.
48
kogan.com
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2021
CONSOLIDATED GROUP
Share
capital
$000
Retained
earnings
$000
Merger
reserve
$000
Note
Share‑
based
pay‑
ments
reserve
$000
Trans‑
lation
reserve
$000
Total
equity
$000
Balance at 1 July 2019
167,823
13,436
(131,816)
(291)
1,828
50,980
Comprehensive income
Net profit and other comprehensive
income for the year
Total net profit and other
comprehensive income for the year
Transactions with owners,
in their capacity as owners
Issue of Ordinary Shares
under performance plans
Tax deduction for difference between
accounting expense and funds paid
to issue performance plans
Equity‑settled share‑based payments
5.2c
Institutional placement net of
tax impact
Dividend reinvestment plan
Dividends paid
Total transactions with owners,
in their capacity as owners
Balance at 30 June 2020
Balance at 1 July 2020
Comprehensive income
Net profit after tax
Other comprehensive income
Total net profit and other
comprehensive income for the year
Transactions with owners,
in their capacity as owners
Issue of Ordinary Shares under
performance plans
–
–
26,820
26,820
3.3.1b
1,217
1,042
–
98,147
–
–
–
–
804
(804)
3.3.2
–
(13,996)
101,210
(14,800)
–
–
–
3,537
–
3,537
3.3.1b
1,537
Tax deductions for difference between
accounting expense and funds paid
to issue performance plans
Equity‑settled share‑based payments
5.2c
Institutional placement net
of tax impact
Dividend reinvestment plan
4,812
–
19,751
4,053
–
–
–
–
(4,053)
Dividends paid
3.3.2
–
(27,229)
Total transactions with owners,
in their capacity as owners
30,153
(31,282)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
26,820
26,820
(1,217)
–
–
1,032
1,042
1,032
–
–
–
98,147
–
(13,996)
(185)
86,225
–
–
–
–
–
–
–
–
–
–
–
272
272
–
–
–
3,537
272
3,809
–
–
–
–
–
–
–
(1,537)
–
–
15,561
–
–
–
4,812
15,561
19,751
–
(27,229)
14,024
12,895
269,033
269,033
25,456 (131,816)
(131,816)
25,456
(291)
(291)
1,643
1,643
164,025
164,025
Balance at 30 June 2021
299,186
(2,289) (131,816)
(19)
15,667
180,729
The accompanying notes form part of these financial statements.
Annual Report 2021
49
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Finance costs paid
Income tax paid
CONSOLIDATED GROUP
Note
2021
$000
2020
$000
885,495
578,954
(926,285)
(523,813)
25
(596)
(21,671)
52
(589)
(8,971)
Net cash (used in)/provided by operating activities
1.4
(63,032)
45,633
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
Purchase of intangible assets
Business acquisition
Net cash (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Transaction costs related to the issue of shares
Dividends paid net of dividend reinvestment plan
Repayment of loans & borrowings
Draw down on debt facility
Transaction costs on draw down facility
Repayment of lease liabilities
Net cash provided by financing activities
Net (decrease)/increase in cash held
Cash and cash equivalents at beginning of financial year
Effects of exchange rate changes on cash
Cash and cash equivalents at end of financial year
3.2
The accompanying notes form part of these financial statements.
(810)
(3,919)
(50,960)
(55,689)
(219)
(7,935)
–
(8,154)
20,001
100,000
(250)
(27,229)
(20,002)
94,749
(234)
(3,276)
63,759
(54,962)
146,726
(73)
91,691
(2,646)
(13,996)
(38,700)
38,700
–
(1,573)
81,785
119,264
27,462
–
146,726
50
kogan.com
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
BASIS OF PREPARATION
The financial report of Kogan.com Ltd and its controlled entities (“the Group”; “Kogan.com”) for the year
ended 30 June 2021 was authorised for issue in accordance with a resolution of the Directors
on 29 September 2021.
The Group is a for‑profit entity for financial reporting purposes under Australian Accounting Standards and
the nature of its operations and principal activities are described in the Director’s Report on page 23.
These General Purpose Financial Statements have been prepared in accordance with the Corporations Act
2001, Australian Accounting Standards and Interpretations of the Australia Accounting Standards Board and
International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB).
Accounting policies adopted in the preparation of these financial statements are presented below and have
been consistently applied unless stated otherwise.
The accounting policies applied in these financial statements are the same as those applied in the Group’s
consolidated financial statements as at and for the year ended 30 June 2020.
Except for cash flow information, the financial statements have been prepared on an accruals basis and are
based on historical costs, modified, where applicable, by the measurement at fair value of selected non‑
current assets, financial assets and financial liabilities.
Kogan.com is a Company of the kind referred to in ASIC Corporations (Rounding in Financial/Directors’
Reports) Instrument 2016/191 and in accordance with that instrument, amounts in the Directors’ Report and
the Financial Report are rounded to the nearest thousand dollars, except where otherwise indicated.
a. Principles of Consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the Group, in line
with AASB 10 Consolidated Financial Statements. Subsidiaries are entities the parent controls. The parent
controls an entity when its exposed to, or has rights to, variable returns from the involvement with the entity
and has the ability to affect those returns through its power over the entity. A list of the subsidiaries
is provided in Note 4.1.a.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of
the Group from the date on which control is obtained by the Group. The consolidation of a subsidiary
is discontinued from the date that the control ceases. Intercompany transactions, balances and unrealised
gains or losses on transactions between group entities are fully eliminated on consolidation. Accounting
policies of subsidiaries have been changed and adjustments made where necessary to ensure uniformity
of the accounting policies adopted by the Group.
Annual Report 2021
51
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
BASIS OF PREPARATION (continued)
b. Uses of Judgements and Estimates
In preparing the financial report, management have made judgements, estimates and assumptions that affect
the application of the Group’s accounting policies and the reported amounts of assets, liabilities, income and
expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised prospectively.
Estimates and judgements that have the most significant effect on the amounts recognised in the financial
statements are:
•
•
the provisions for warranties and sales returns which are based on estimates from historical warranty and
sales returns data associated with similar products and services. The Group expects to incur most of the
liability during financial year 2021/22
the assessment of the recoverable value of non‑current assets, including intangible assets, which is
based on management’s assessment of the nature of the capitalised costs and their expected continued
contribution of economic benefit to the Group, having regard to actual and forecast performance
and profitability
•
the provision for slow moving and obsolete inventory is based on estimates of net realisable value
• The valuation of net assets acquired via the Mighty Ape purchase, and subsequent determination of Goodwill.
Key estimates and judgements have not changed from those disclosed in the Group financial report for the year
ended 30 June 2020, other than estimate/judgement applied around the acquisition of Mighty Ape Limited.
c. Common Control Transaction
On 6 July 2016 Kogan.com Ltd acquired control of Kogan Operations Holdings Pty Ltd and subsidiaries at
book value for consideration in preparation for the Initial Public Offering and the Group’s admission to the ASX
on 7 July 2016 pursuant to a replacement prospectus dated 24 June 2016.
d. Functional and Presentation Currency
These consolidated financial statements are presented in Australian dollars, which is the Group’s
functional currency.
e. New accounting standards and interpretations
In the current year, the Group has adopted all of the following new and revised Standards and Interpretations
issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and
effective for the current annual reporting period. Their adoption has not had any material impact on the
disclosures or on amounts reported in these financial statements.
(i) AASB 2018‑6 Amendments to Australian Accounting Standards – Definition of a Business
(ii) AASB 2018‑7 Amendments to Australian Accounting Standards – Definition of Material
(iii) AASB 2019‑1 Amendments to Australian Accounting Standards – References to the Conceptual
Framework
The effects of the following Standards and Interpretations that are issued but not yet effective are not
expected to be material:
(i) AASB 2014‑10 Amendments to Australian Accounting Standards: Sale or Contribution of Assets Between
an Investor and its Associate or Joint Venture (effective 1 January 2022)
(ii) AASB 2015‑10 Amendments to Australian Accounting Standards – Effective Date of Amendments to
AASB 10 and AASB 128 (effective 1 January 2022)
52
kogan.com
(iii) AASB 2017‑5 Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB
10 and AASB 128 and Editorial Corrections (effective 1 January 2022)
(iv) AASB 17 Insurance Contracts and AASB 2020-5 Amendments to Australian Accounting Standards
– Insurance Contracts (effective 1 January 2023)
(v) AASB 2020‑1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or
Non-Current (effective 1 January 2022)
(vi) AASB 2020‑3 Amendments to Australian Accounting Standards – Annual Improvements 2018-2020 and
Other Amendments (effective 1 January 2022)
(vii) AASB 2020‑8 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform
– Phase 2 (effective 1 June 2021)
(viii) AASB 2021‑2 Amendments to Australian Accounting Standards – Disclosure of Accounting Policies and
Definition of Accounting Estimates (effective 1 January 2023)
(ix) AASB 2021‑3 Amendments to Australian Accounting Standards – Covid-19-Related Rent Concessions
beyond 30 June 2021 (effective 1 April 2021)
Software-as-a-Service (“SaaS”) arrangements
In March 2021, the IFRS Interpretations Committee (“IFRIC”) issued an agenda decision to clarify the
accounting treatment for SaaS arrangements, including the accounting for related implementation,
customisation and configuration costs.
The IFRIC clarified that SaaS arrangements are service contracts that provide the Group with the right to
access the cloud provider’s software over a period of time. As a result, the underlying software the Group has
the right to access is not controlled by the Group and therefore ongoing access fees as well as costs incurred
to implement, customise and configure the cloud provider’s software are recognised as an expense when
incurred. Costs incurred related to software controlled by the Group are capitalised and amortised on a
straight‑line basis over their useful life.
The Group has not capitalised any SaaS arrangements and so this does not impact current or historical results.
SEGMENT INFORMATION
a. Basis of segmentation
The Group has the following two operating divisions, Kogan.com and Mighty Ape. These operating divisions
offer different products and services and are managed separately because they require different product
sourcing and marketing strategies.
The Board considers the business primarily from an operating divisions perspective, and receives monthly
reports that allow them to make strategic decisions about resource allocation to each. On this basis,
management has identified the operating divisions as the Group’s two reporting segments.
The Board monitors the performance of these two segments separately. The Group does not operate under
any other operating division.
Reportable segments Operations
Kogan.com
Online retailer selling in‑house and third‑party brand household and consumer
electronics products, as well as providing services for telecommunication, internet,
insurance, home finances, utilities, vehicles and travel.
Mighty Ape
Online specialist retailer of gaming and entertainment products.
Annual Report 2021
53
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
SEGMENT INFORMATION (continued)
b. Segment information provided to the Board
Information related to each reportable segment is set out below. Segment Adjusted EBITDA is used
to measure performance as management believes that this information is the most relevant in evaluating
the results of the respective segments relative to other entities that operate in the same sectors.
30 June 2021
External revenue
Segment revenue
Adjusted EBITDA
Interest income
Interest expense
Depreciation & amortisation
Segment assets
Capital expenditure
Segment liabilities
Kogan.com
$000
Mighty Ape 1
$000
700,537
700,537
54,934
22
675
10,015
390,192
3,758 2
219,638
80,205
80,205
6,899
3
263
925
49,650
971
39,475
1 Results of Mighty Ape reflect seven months only, being from acquisition in December 2020
2 Excludes the capital purchase of Mighty Ape by Kogan.com
BUSINESS COMBINATION
a. Summary of acquisition
On 3 December 2020, Kogan.com signed the agreement to acquire 100% of Mighty Ape Limited for a headline
purchase price of A$122.4m. Included in the identifiable assets and liabilities acquired at the date of acquisition
of Mighty Ape Limited are inputs (a head office, warehouse, patented technology, inventories and customer
relationships) and an organised workforce. The Group has determined that together the acquired inputs and
processes significantly contribute to the ability to create revenue. The Group has concluded that the acquired
set is a business.
The purchase price has been arranged in 4 tranches as follows:
Tranche Payment timing
Payment
split
Payment
1
2
3
4
3 December 2020
A$56.3m 1, subject to completion adjustments.
Post 31 March 2021
Post 31 March 2022
Post 31 March 2023
70%
15%
15%
Up to A$29.5m based on a multiple of the amount by
which full‑year FY21 normalised EBITDA (year ending
31 March 2021) exceeds Sep‑20A LTM Normalised EBITDA.
Based on a multiple of the FY22 Normalised EBITDA
(year ended 31 March 2022).
Based on a multiple of the FY23 Normalised EBITDA
(year ended 31 March 2023).
1
This value differs from that stated in ‘Kogan.com acquires Mighty Ape – Presentation’ released on the 3 December 2020 due to
movements in FX rates between the date of announcement and actual payment date.
54
kogan.com
Tranche 1 has been paid on 3 December 2020 and recorded at the applicable Australian dollar, being
A$56.3m. Additionally a payment of A$3.1m was made relating to completion adjustments on 16 March 2021.
Tranche 2 is payable following audit clearance and is included within current acquisition payables at
30 June 2021.
As part of the Sale Agreement, Tranche 3 and 4 are contingent on the Mighty Ape Founder & CEO remaining with
the business until the delivery of the financial year 2023 results. Per IFRS 3.B55(a), Tranches 3 and 4 payments will
be considered as compensation for post‑combination services, and as such, treated as employee remuneration.
The Group will proportionately account for these expenses up until the respective payment dates.
As at 30 June 2021 a total of $12.0m has been accrued for within Administrative Expenses and incorporated
within the Adjusted EBITDA result given it does not represent the actual performance of the business.
Mighty Ape is one of New Zealand’s leading online retailers, with a focus on gaming, toys and other entertainment
categories. The combination of two market leaders enables Mighty Ape to build on its strong customer offering,
and provides the infrastructure to further scale.
The acquisition of Mighty Ape was funded from the Company’s cash reserves.
b. Details of the purchase consideration, the net assets acquired and goodwill are as follows:
Purchase price consideration
Tranche 1
Completion adjustments
Tranche 2
Total purchase consideration
AUD
$000
56,267
3,130
29,500
88,897
c. The assets and liabilities recognised at cost at the date of the acquisition were as follows:
Current assets
Cash & cash equivalents
Trade & other receivables
Inventories
Non‑current assets
Property, plant & equipment
Intangibles
Deferred tax assets
Current liabilities
Trade & other payables
Current tax liabilities
Loans & borrowings
Provisions
Deferred income
Lease liabilities
Non‑current liabilities
Loans & borrowings
Lease liabilities
Deferred tax liabilities
Net identifiable assets acquired
Annual Report 2021
AUD
$000
8,437
2,286
25,851
11,581
43,696
130
17,964
1,088
3,104
422
2,759
998
1,254
8,862
12,553
42,977
55
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
BUSINESS COMBINATION (continued)
d. The goodwill arising on the acquisition:
Accounting standards permit a measurement period of up to one year during which acquisition accounting
can be finalised following the acquisition date. The Group have finalised acquisition accounting on the Mighty
Ape acquisition which occurred in December 2020, resulting in an adjustment to the fair values below and
a corresponding increase in goodwill.
Goodwill as at 31 December 2020
Adjustments to fair value of net assets:
Intangible assets
Property, plant & equipment
Lease liabilities
Provision for deferred taxes
Trade & other receivables
Consideration adjustment post completion accounts
Goodwill arising on acquisition
AUD
$000
74,959
(43,279)
(1,551)
464
12,423
(226)
3,130
45,920
The goodwill is attributable to various factors, including the high profitability potential of the acquired
business, the ability to provide an expanded range of products and services to customers, the value of growth
opportunities and inseparable intangible assets such as customers data and synergies with the existing
Kogan.com business. The goodwill arising on the acquisition will not be deductible for tax purposes.
e. Revenue and Profit contribution
The acquired business contributed revenues of A$80.2 million and net profit after tax of A$3.9 million to the
Group for the period 1 December 2020 to 30 June 2021. Had the Group acquired Mighty Ape at the start
of the financial year, it would have contributed an additional A$61.7 million of revenue and A$2.9 million
of net profit after tax for the period 1 July 2020 to 30 November 2020.
f. Purchase consideration – cash outflow
Net purchase consideration paid in cash at 30 June 2021
Less: cash & cash equivalent balances acquired
Outflow of cash – investing activities
g. Costs in relation to the acquisition have been recognised as follows:
Acquisition related transaction costs recognised in Other Expenses
Total
AUD
$000
59,397
(8,437)
50,960
AUD
$000
802
802
Within the statement of cash flows, acquisition related transaction costs have been recognised in operating
cash flows.
56
kogan.com
h. Measurement of fair values
The valuation techniques used for measuring the fair value of material intangible assets acquired were
as follows:
Assets acquired
Valuation technique
Software
Brands
Cost to replicate method: the cost to replicate method considers the time and
cost incurred to develop the web‑based e‑commerce platform of Mighty Ape. This
is considered appropriate as the platform does not directly generate independent
cash flows.
Relief from royalty method: the relief‑from‑royalty method considers the discounted
estimated royalty payments that are expected to be avoided as a result of the Mighty
Ape Brands being owned.
SECTION 1: BUSINESS PERFORMANCE
1.1 Revenue
Sale of goods
Revenue is recognised when the Group satisfies a performance obligation by transferring a promised good
to a customer. When a performance obligation is satisfied, the Group recognises as revenue the amount of the
transaction price which excludes the associated costs and possible return of goods. Prior to these conditions
being met, receipts from the sale of the goods are recorded in deferred income. Revenue is measured net
of returns, trade discounts and volume rebates.
As Kogan.com is an online‑only retailer, delivery fee income is not considered an independent rendering of
services, but rather part of the Sales of Goods.
The timing of transfer of control varies depending on the individual terms of the sales agreement. For sale
of goods, inclusive of delivery fee income, transfer usually occurs upon dispatch of the goods, where control
is contractually transferred to the customer.
A provision for warranties is recognised when the underlying products or services are sold, based on historical
warranty data and a specific review of warranty claims outstanding.
A provision for sales returns is recognised for the expected value of returns, based on historical sales return
data and a specific review of the profile of sales for the period and post period‑end.
Rendering of services
Revenue from the rendering of services is recognised when management has fulfilled its service obligations
to the Group’s customers, recovery of the consideration is probable, and the amount of revenue can be
measured reliably. Revenue is measured net of returns and trade discounts.
The timing of revenue recognition varies depending on the individual terms of the services agreement and the
contractual obligations of the Group.
Revenue from the rendering of services is deferred when a customer has paid up front but the Group has not
yet fulfilled its obligations to the customer, in line with the terms and conditions of sale.
Annual Report 2021
57
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
SECTION 1: BUSINESS PERFORMANCE (continued)
1.1 Revenue (continued)
Rendering of services (continued)
Revenue
Sales revenue:
• sale of goods1
•
rendering of services
Other revenue:
• marketing subsidies
• other revenue 2
CONSOLIDATED GROUP
2021
$000
2020
$000
729,927
45,466
775,393
4,000
1,349
5,349
461,251
30,809
492,060
3,676
2,168
5,844
Total revenue
780,742
497,904
1.2a Operating activities
Expenses
Cost of sales
Employee benefit expense 3
Depreciation and amortisation expense
1.2b Finance costs
Realised foreign exchange losses
Finance costs on debt facilities
Total finance costs
2021
$000
577,037
59,641
10,940
2021
$000
258
680
938
2020
$000
371,374
20,154
7,419
2020
$000
207
589
796
1
2
3
Includes associated delivery fee income.
The decrease in revenue year‑on year relates to Extended Warranties sold prior to March 2019 whose revenue is being recognised
in line with the requirements of AASB 15. Since FY19, Kogan.com has on‑sold all extended warranties to a Syndicate Underwriter at
Lloyd’s of London.
Included within Employee Benefits are the recent awards of Retention Options after the Company’s AGM in November 2020. The
Retention Options are accounted for in the same way the Company’s other equity‑settled awards are treated (refer section 5.2 of the
FY20 Annual Report), with their fair value determined at their date of grant in line with AASB 2 Share-based payments. The cost
of these transactions is recognised in the Consolidated Statement of Comprehensive Income on a straight‑line basis over the vesting
period after allowing for an estimate of shares that will eventually vest. The level of vesting is reviewed annually and the charge
adjusted to reflect actual and estimated levels of vesting. Accordingly, any deductions allowable for tax purposes will also be in line
with current equity‑settled awards.
58
kogan.com
1.3 Tax Balances
Income tax expense (income) for the year comprises current income tax expense (income) and deferred tax
expense (income).
Current income tax expense charged to profit or loss is the tax payable on taxable income. Current tax liabilities
(assets) are measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax assets and deferred tax liability balances
during the year as well as unused tax losses.
Current and deferred income tax expense (income) is charged or credited outside profit or loss when the tax
relates to items that are recognised outside profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when
the asset is realised or the liability is settled and their measurement also reflects the manner in which
management expects to recover or settle the carrying amount of the related assets or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only the extent
that it is probable that future taxable profit will be available against which the benefits of the deferred tax
asset can be utilised.
Deferred tax assets and liabilities are offset where: (i) a legally enforceable right of set‑off exists; and (ii) the
deferred 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 it is intended that net settlement or simultaneous
realisation and settlement of the respective asset and liability will occur in future periods in which significant
amounts of deferred tax assets or liability are expected to be recovered or settled.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or
financing activities which are recoverable from, or payable to, the ATO are presented as operating cash flows
included in receipts from customers or payments to suppliers.
Annual Report 2021
59
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
SECTION 1: BUSINESS PERFORMANCE (continued)
1.3 Tax Balances (continued)
a. The components of tax expense comprise:
Current tax
Deferred tax
(Over)/Under provision in respect of prior years
b. The prima facie tax on profit from ordinary activities before income tax is
reconciled to income tax as follows:
Prima facie tax payable on profit from ordinary activities before income
tax at 30% (2020: 30%):
• Consolidated Group
Add:
Tax effect of:
• amortisation of intangibles
• entertainment (non‑deductible)
• current year revenue losses not recognised
• other non‑allowable items1
• Research and development expenditure
• Other non‑allowable items
Less:
Tax effect of:
• variations in tax rates of foreign controlled entities
• New Zealand COVID relief payments
• prior year losses now recognised
•
research and development tax benefit
• (Over)/Under provision of prior year income tax
Income tax attributable to the Group
The applicable weighted average effective tax rates are as follows:
CONSOLIDATED GROUP
2021
$000
13,231
(5,335)
(165)
7,731
2020
$000
12,146
(120)
7
12,033
3,380
11,656
451
22
252
3,914
319
40
(120)
(13)
(2)
(347)
(165)
7,731
69%
53
11
75
277
–
–
–
–
(1)
(45)
7
12,033
31%
The effective tax rate for FY21 of 69% reflects the impact of non‑deductible accruals for the Mighty Ape
acquisition Tranches 3 & 4 and transactions costs, tax effected to $3.8 million. For income tax purposes, these
are considered capital in nature, and therefore no tax deduction is available. Additionally, there is no deferred
tax asset recognised in relation to this transaction as it is considered probable that the temporary difference
will not reverse in the foreseeable future.
1
Relates to Mighty Ape Tranches 3 & 4 and transaction costs. For tax purposes these are treated as capital in nature and therefore are
non‑deductible.
60
kogan.com
Current and deferred tax balances:
Assets
CURRENT
Current tax asset
Deferred tax asset
Total
Liabilities
CURRENT
Current tax liabilities
Deferred tax liabilities
Total
Movements in deferred tax balances
CONSOLIDATED GROUP
2021
$000
2020
$000
1,689
–
1,689
–
3,746
3,746
–
2,387
2,387
5,451
–
5,451
(671)
(8)
(772)
Intangible assets
(899)
173
Financial assets
318
2021
$000
Property, plant
& equipment
Employee
benefits
Provisions
Deferred
Income
Lease liability
Other items
Share‑based
payments
reserve
Tax losses
carried forward
Net tax assets
(liabilities)
Net
balance
at 1 July
Under/
Over
Recog‑
nised
in profit
or loss
Recog‑
nised
in OCI
Recog‑
nised
directly
to equity
Acqui‑
sitions
Other
Net
Deferred
tax
assets
Deferred
tax
liabilities
BALANCE AT 30 JUNE
1,182
(431)
155
1,337
(250)
(242)
(17)
4,207
166
–
–
–
–
–
–
–
–
346
609
422
732
1,037
493
–
2,387
165
5,335
–
–
–
–
–
–
–
–
–
–
–
–
–
– (14,444)
–
–
–
–
–
–
–
–
37
118
236
–
2,361
59
–
–
– (11,633)
–
–
–
–
–
–
–
–
–
–
–
(1,451)
–
(1,451)
(13,988)
1,106 (15,094)
(76)
318
(394)
619
619
2,182
2,182
172
2,851
1,079
258
2,851
1,079
4,700
4,700
166
166
–
–
(86)
–
–
–
–
(3,746) 13,279 (17,025)
Annual Report 2021
61
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
SECTION 1: BUSINESS PERFORMANCE (continued)
1.3 Tax Balances (continued)
Movements in deferred tax balances (continued)
2020
$000
Net
balance
at 1 July
Under/
Over
Recog‑
nised
in profit
or loss
Recog‑
nised
in OCI
Recog‑
nised
directly
to equity
Acqui‑
sitions
Other
Net
Deferred
tax
assets
Deferred
tax
liabilities
BALANCE AT 30 JUNE
Property, plant
& equipment
(341)
Intangible assets
(1,351)
Financial assets
(115)
Employee
benefits
Provisions
Deferred
income
Lease liability
Other items
Tax losses
carried forward
Net tax assets
(liabilities)
232
521
963
375
1,058
132
1,474
–
–
–
–
–
–
–
–
–
–
(330)
452
433
114
88
(541)
357
(321)
(132)
120
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
793
–
793
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(671)
(899)
318
346
609
422
732
34
–
318
346
609
422
732
(705)
(899)
–
–
–
–
–
1,530
1,680
(150)
–
–
–
2,387
4,141
(1,754)
1.4 Notes to the Cash Flow Statement
Reconciliation of Cash Flows from Operating Activities with Profit after
Income Tax
Profit after income tax
Non‑cash flows in profit:
• depreciation & amortisation
•
issue of Performance Rights and Shares
• unrealised foreign exchange movement
•
Income tax expense
Changes in assets and liabilities:
• decrease/(increase) in trade and term receivables
• (increase) in prepayments and other assets
• (increase) in inventories
•
increase in trade payables and accruals
• (decrease)/increase in deferred income
•
•
increase in provisions
tax paid
Cash flows from operating activities
CONSOLIDATED GROUP
2021
$000
2020
$000
3,537
26,820
10,940
20,373
(1,507)
7,731
670
(640)
(87,463)
13,634
(10,591)
1,954
(21,670)
(63,032)
7,419
1,033
1,443
12,033
(25)
(918)
(37,032)
30,769
10,759
2,302
(8,970)
45,633
62
kogan.com
SECTION 2: OPERATING ASSETS AND LIABILITIES
2.1 Working Capital
2.1.1 Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on
the weighted average cost principle and includes all direct costs attributable to purchase, such as freight
and insurance.
CURRENT
Inventory in transit
Inventory on hand
CONSOLIDATED GROUP
2021
$000
2020
$000
36,102
191,771
227,873
32,467
80,415
112,882
In 2021, inventories of $577 million (2020: $371 million) were recognised as an expense during the year and
included in ‘cost of sales’.
In addition, inventories have been reduced by $3.0 million (2020: $0.6 million) as a result of the write‑down to
net realisable value. This write‑down was recognised as an expense during the year.
2.1.2a Trade and other receivables
Trade and other receivables include amounts due from customers for goods sold and services performed
in the ordinary course of business. Receivables expected to be collected within 12 months of the end of the
reporting period are classified as current assets.
Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost
using the effective interest method, less any provision for impairment.
CURRENT
Trade receivables
Other receivables
Total current trade and other receivables
Credit risk
CONSOLIDATED GROUP
2021
$000
4,925
885
5,810
2020
$000
5,197
193
5,390
The Group has no significant concentration of credit risk with respect of any single counterparty or group
of counterparties other than those receivables specifically provided for and mentioned within Note 3.2. The
class of assets described as “trade and other receivables” is considered to be the main source of credit risk
related to the Group.
On a geographical basis, the Group has significant credit risk exposures in Australia given the substantial
operations in this region. The Group’s exposure to credit risk for receivables at the end of the reporting period
in those regions is as follows:
Annual Report 2021
63
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
SECTION 2: OPERATING ASSETS AND LIABILITIES (continued)
2.1 Working Capital (continued)
2.1.2a Trade and other receivables (continued)
AUD
Australia
New Zealand
Total
CONSOLIDATED GROUP
2021
$000
5,259
551
5,810
2020
$000
5,390
–
5,390
The following table details the Group’s trade and other receivables exposed to credit risk with ageing analysis
and impairment provided for thereon. Amounts are considered as “past due” when the debt has not been
settled, within the terms and conditions agreed between the Group and the customer or counterparty to the
transactions. Receivables that are past due are assessed for impairment by ascertaining solvency of the
debtors and are provided for where there are specific circumstances indicating that the debt may not be fully
repaid to the Group.
The balance of receivables that remain within initial trade terms (as detailed in the table) is considered to be
of high credit quality.
The Group had one customer that owed more than 10% of total trade and other receivables as at 30 June 2021
and 30 June 2020.
PAST DUE BUT NOT IMPAIRED
(DAYS OVERDUE)
Gross
Amount
$000
Past Due
and
Impaired
$000
< 30
$000
31–60
$000
61–90
$000
> 90
$000
4,925
885
5,810
5,197
193
5,390
–
–
–
–
–
–
3,765
885
4,650
4,233
193
4,426
813
–
813
41
–
41
91
–
91
616
–
616
256
–
256
307
–
307
2021
Trade and
term receivables
Other receivables
Total
2020
Trade and
term receivables
Other receivables
Total
2.1.2b Prepayments and Other Current Assets
Prepayments
Rental bond
64
CONSOLIDATED GROUP
2021
$000
1,954
27
1,981
2020
$000
1,373
27
1,400
kogan.com
2.1.3a Trade and other payables
Trade and other payables represent the liabilities for goods and services received by the entity that remain
unpaid at the end of the reporting period. The balance is recognised as a current liability with the amounts
normally paid within 45 days of recognition of the liability.
CURRENT
Trade payables
Other payables
Accrued expenses
NON‑CURRENT
Other payables
2.1.3b Lease liability
CONSOLIDATED GROUP
2021
$000
2020
$000
65,351
66,036
9,220
140,607
5,247
5,247
35,910
42,794
3,791
82,495
–
–
145,854
82,495
At inception of a contract, the Group assess whether a contract is, or contains, a lease. A contract is, or
contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time
in exchange for consideration. To assess whether a contract conveys the right to control the use of an
identified asset, the Group assesses whether:
•
the contract involves the use of an identified asset – this may be specified explicitly, and should be
physically, or represent substantially, all the capacity of a physically distinct asset. If the supplier has
a substantive substitution right, then the asset is not identified;
• The Group has the right to obtain substantially all of the economic benefits from the use of the asset
throughout the period of use; and
• The Group has the right to direct the use of asset. The Group has this right when it has the decision‑making
rights that are most relevant to changing how and for what purpose the asset is used. In rare cases where
all the decisions about how and for what purpose the asset is used. In rare cases where all the decisions
about how and for what purpose the asset is used are predetermined, the Group has the right to direct the
use of the asset if either:
– The Group has the right to operate the asset; or
– The Group designed the asset in a way that predetermines how and for what purpose it will be used.
The Group has applied this approach to all contracts effective as at 1 July 2019.
As a lessee
The Group recognises a right‑of‑use asset and a lease liability at the lease commencement date. The right‑of‑
use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for
any lease payments made at or before the commencement date, plus any initial direct costs incurred and
an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset, less any
lease incentives received.
The right‑of‑use asset is subsequently depreciated using the straight‑line method from the commencement
date to the earlier of the end of the useful life of the right‑of‑use or the end of the lease term. The estimated
useful lives of the right‑of‑use assets are determined on the same basis as those property, plant and equipment.
In addition, the right‑of‑use asset is periodically reduced by impairment losses, if any, and adjusted for certain
remeasurements of the lease liability.
Annual Report 2021
65
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
SECTION 2: OPERATING ASSETS AND LIABILITIES (continued)
2.1 Working Capital (continued)
2.1.3b Lease liability (continued)
As a lessee (continued)
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate
as the discount rate.
Lease payments included in the measurement of the lease liability comprise:
•
fixed payments, including in‑substance fixed payments;
• amounts expected to be payable under a residual guarantee; and
•
lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension
option, and penalties for early termination of a lease unless the Group is reasonably certain not to
terminate early.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when
there is a change in future lease payments arising from a change in an index or rate, if there is a change in the
Group’s estimate of the amount expected to be payable under a residual value guarantee or if the Group
changes its assessment of whether it will exercise a purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount
of the right‑of‑use asset, or is recorded in profit or loss if the carrying amount of the right‑of‑use asset has
been reduced to zero.
The Group does not have any short‑term or low‑value leases.
The Group presents right‑of‑use assets that do not meet the definition of investment property in ‘property,
plant and equipment’ and lease liabilities in ‘trade and other payables’ in the statement of financial position.
As at 30 June 2021, the net carrying amount of the right‑of‑use asset is $15.7 million (2020: $2.4 million),
please refer to note 2.3.
The lease liability as of 30 June 2021 is presented below:
Lease liability – Maturity analysis
Maturity analysis – contractual undiscounted cash flows
Less than one year
One to five years
More than five years
Total undiscounted lease liabilities as at 30 June
Lease liabilities included in the statement of financial positions as at 30 June
Current
Non‑current
2021
$000
6,349
8,313
2,522
17,184
15,833
5,554
10,279
2020
$000
2,030
507
–
2,537
2,440
1,987
453
66
kogan.com
2.1.3c Deferred income
The Group has adopted AASB 15 Revenue from Contracts with Customers using the cumulative effect method
(without practical expedients), with the effect of initially applying this standard recognised at the date of initial
application (i.e. 1 July 2018).
CURRENT
Deferred income
NON‑CURRENT
Deferred income
Total deferred income
2021
$000
2020
$000
11,777
11,777
86
11,863
19,334
19,334
372
19,706
2.2 Intangible Assets
(i) Website development and software costs
Website development and software costs are measured at cost less any accumulated amortisation and
accumulated impairment losses. Such development costs are only capitalised if they can be reliably measured,
the process is technically and commercially feasible, future economic benefits are probable, and the Group
has sufficient resources to complete development.
(ii) Intellectual property
Acquired intellectual property, including customer lists, which enable direct marketing of products and
services, are capitalised to the extent it is probably that expected future economic benefits attributable to the
asset will flow to the entity, and the cost can be reliably measured.
(iii) Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill
and brands, is recognised in profit or loss as incurred.
(iv) Amortisation
Amortisation is calculated to write‑off the cost of intangible assets less their estimated residual values using
the straight‑ line method over their estimated useful lives and is generally recognised in the Statement
of Comprehensive Income.
Intangibles that are considered to have indefinite useful lives are not subject to amortisation.
The estimated useful lives for the current and comparative periods are as follows:
Patents and trademarks – general
Patents and trademarks – Matt Blatt
Website development costs
Software costs
Intellectual property
2.5 years
10.0 years
2.5 years
2.5 years
2.0 years
Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted,
if appropriate.
Annual Report 2021
67
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
SECTION 2: OPERATING ASSETS AND LIABILITIES (continued)
2.2 Intangible Assets (continued)
(v) Impairment of Assets
At each reporting date, the Group reviews the carrying amounts of its non‑financial assets (other than
inventories and deferred tax assets) to determine whether there is any indication of impairment. If any such
indication exists, then the asset’s recoverable amount is estimated.
For impairment testing, assets are grouped together into the smallest group of assets that generates cash
inflows from continuing use that are largely independent of the cash inflows of other assets or Cash
Generating Units (CGU).
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell.
Value in use is based on the estimated future cash flows, discounted to their present value using a pre‑tax
discount rate that reflects current marketing assessments of the time value of money and the risks specific
to the asset or CGU.
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount.
Impairment losses are recognised in the Statement of Comprehensive Income. They are allocated to reduce
the carrying amount of assets in the CGU on a pro‑rata basis. An impairment loss is reversed only to the extent
that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net
of depreciation or amortisation, if no impairment loss had been recognised.
CONSOLIDATED GROUP
Patents and trademarks:
Cost
Accumulated amortisation
Net carrying amount
Website development costs:
Cost
Accumulated amortisation
Net carrying amount
Software costs:
Cost
Accumulated amortisation
Net carrying amount
Intellectual property:
Cost
Accumulated amortisation
Net carrying amount
Goodwill:
Cost
Accumulated impairment losses
Net carrying amount
Total intangibles
2021
$000
45,617
(3,004)
42,613
11,101
(6,624)
4,477
1,154
(940)
214
21,928
(20,054)
1,874
45,920
–
45,920
95,098
2020
$000
4,881
(816)
4,065
6,152
(4,984)
1,168
858
(845)
13
20,418
(17,385)
3,033
–
–
–
8,279
68
kogan.com
Patents
and trade‑
marks
$000
Website
develop‑
ment costs
$000
Software
costs
$000
Intellectual
property
$000
Goodwill
$000
Total
$000
Consolidated Group:
Year ended 30 June 2020
Balance at the beginning
of the year
Additions
Disposals
Amortisation
Closing value at
30 June 2020
Year ended 30 June 2021
Balance at the beginning
of the year
Additions
Additions through
acquisition of entities
Disposals
242
4,100
–
1,149
1,052
–
31
8
–
4,393
2,776
–
(277)
(1,033)
(26)
(4,136)
4,065
1,168
13
3,033
4,065
109
40,795
–
1,168
1,726
3,223
–
13
296
–
–
3,033
1,510
–
–
Amortisation/Impairment
(2,356)
(1,640)
(95)
(2,669)
–
–
–
–
–
–
–
5,815
7,936
–
(5,472)
8,279
8,279
3,641
45,920
89,938
–
–
–
(6,760)
Closing value at
30 June 2021
42,613
4,477
214
1,874
45,920
95,098
2.3 Property, Plant and Equipment
Property, plant and equipment
Each class of property, plant and equipment is carried at cost of fair value as indicated less, where applicable,
any accumulated depreciation and impairment losses.
Property, plant and equipment are measured on a cost basis and therefore carried at cost less accumulated
depreciation and any accumulated impairment losses. In the event the carrying amount of property, plant and
equipment is greater than the estimated recoverable amount, the carrying amount is written down immediately
to the estimated recoverable amount and impairment losses are recognised either in profit or loss or as a
revaluation decrease if the impairment losses relate to a revalued asset. A formal assessment of recoverable
amount is made when impairment indicators are present.
The carrying amount of property, plant and equipment is reviewed annually by the management to ensure it
is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis
of the expected net cash flows that will be received from the asset’s employment and subsequent disposal.
The expected net cash flows have been discounted to their present values in determining recoverable amounts.
The cost of fixed assets constructed within the Group includes the cost of materials, direct labour, borrowing
costs and an appropriate proportion of fixed and variable overheads.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probably that future economic benefits associated with the item will flow to the Group and the
cost of the item can be measured reliably. All other repairs and maintenance are recognised as expenses in the
Statement of Comprehensive Income during the financial period in which they are incurred.
Annual Report 2021
69
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
SECTION 2: OPERATING ASSETS AND LIABILITIES (continued)
2.3 Property, Plant and Equipment (continued)
Depreciation
The depreciable amount of all fixed assets purchased in 2021 is depreciated on a straight‑line basis over
the asset’s useful life to the Group commencing from the time the asset is held ready for use. Leasehold
improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated
useful lives of the improvements.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Depreciation Rate
Computer equipment (reducing balance & straight‑line basis)
Office equipment (reducing balance & straight‑line basis)
Leasehold improvements
Right‑of‑use asset
67%
10‑25%
20%
33‑50%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each
reporting period.
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.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains
and losses are recognised in the Statement of Comprehensive Income in the period in which they arise.
Equipment & vehicles:
Cost
Accumulated depreciation
Net carrying amount
Leasehold improvements:
Cost
Accumulated amortisation
Net carrying amount
Right‑of‑use asset:
Cost
Accumulated amortisation
Net carrying amount
Total property, plant and equipment
CONSOLIDATED GROUP
2021
$000
3,611
(1,669)
1,942
39
(32)
7
21,822
(6,103)
15,719
17,668
2020
$000
1,511
(1,274)
237
39
(25)
14
4,541
(2,189)
2,352
2,603
70
kogan.com
Movements in carrying amounts
Movements in the carrying amounts for each class of property, plant and equipment between the beginning
and the end of the current financial year:
Consolidated Group:
Balance at 1 July 2019
Additions
Depreciation expense
Balance at 30 June 2020
Balance as at 1 July 2020
Additions
Additions through acquisition of entities
Depreciation expense
Balance at 30 June 2021
Equipment &
vehicles
$000
Leasehold
improve‑
ments
$000
Right‑of‑use
asset
$000
345
217
(325)
237
237
305
1,795
(395)
1,942
20
2
(8)
14
14
–
–
(7)
7
1,201
2,763
(1,612)
2,352
2,352
6,928
10,352
(3,913)
15,719
Total
$000
1,566
2,982
(1,945)
2,603
2,603
7,233
12,147
(4,315)
17,668
SECTION 3: CAPITAL STRUCTURE AND FINANCING
3.1 Loan and Borrowings
Trade advance
Amortised borrowing costs
Net carrying amount
CONSOLIDATED GROUP
2021
$000
78,902
(203)
78,699
2020
$000
–
–
–
The Group’s interest‑bearing loans and borrowings have been measured at amortised cost.
Kogan.com has a $75.0 million multi‑option facility agreement with Westpac Banking Corporation, for a term
of three years, maturing on 31 March 2024. An additional debt facility of $10.0 million was entered into in May
2021, maturing on 31 July 2022.
There was $75.2 million drawn down under the facility at year end (2020: nil).
Mighty Ape Limited has an overdraft facility agreement with the Bank of New Zealand, with no set maturity
date. The agreed facility limit is NZ$1.5 million.
Mighty Ape Limited has a Trade Finance Facility agreement with the Bank of New Zealand with no set
maturity date. The agreed facility limit is NZ$6.0 million.
The Trade Finance Facility was drawn down by NZ$4.0 million as at 30 June 2021. The overdraft facility was
undrawn as at 30 June 2021.
Annual Report 2021
71
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
SECTION 3: CAPITAL STRUCTURE AND FINANCING (continued)
3.2 Capital and Financial Risk Management
The Group’s financial instruments consist mainly of deposits with banks, local money market instruments,
short‑term investments and payable derivatives.
Financial risk management policies
The Board’s overall risk management strategy seeks to assist the Group in meeting its financial targets, while
minimising potential adverse effects on financial performance. This includes the review of the use of hedging
derivative instruments, credit risk policies and future cash flow requirements.
Specific financial risk exposures and management
The main risks the Group is exposed to through its financial instruments are credit risk, liquidity risk, and
market risk consisting of interest rate risk and foreign currency risk. There have been no substantive changes
in the types of risks the Group is exposed to, how these risks arise, or the Board’s objectives, policies and
processes for managing or measuring the risks from the previous period.
Credit risk
Exposure to credit risk relating to financial assets arises from the potential non‑performance by counterparties
of contract obligations that could lead to a financial loss to the Group.
Credit risk is managed through internal procedures (such as the utilisation of systems for the approval,
granting and renewal of credit limits, regular monitoring of exposures against such limits and monitoring
of the financial stability of significant customers and counterparties), ensuring to the extent possible, that
customers and counterparties to transactions are of sound credit worthiness. Such monitoring is used
in assessing receivables for impairment.
Risk is also minimised through investing surplus funds in financial institutions that maintain a high credit rating,
or in entities that the Board has otherwise assessed as being financially sound. Where the Group is unable
to ascertain a satisfactory credit risk profile in relation to a customer or counterparty, the risk may be further
managed through title retention clauses over goods or obtaining security by way of personal or commercial
guarantees over assets of sufficient value which can be claimed against in the event of any default.
Credit risk exposures
The maximum exposure to credit risk by class of recognised financial assets at the end of the reporting period
excluding the value of any collateral or other security held, is equivalent to the carrying amount and
classification of those financial assets (net of any provisions) as presented in the Statement of Financial
Position. Credit risk also arises through the provision of financial guarantees, as approved at Board level, given
to parties’ security liabilities of certain subsidiaries.
The Group has no significant concentrations of credit risk with any single counterparty or group of counterparties.
However, the Group has significant credit risk exposures to Australia given the substantial operations in this
region. Details with respect to credit risk of trade and other receivables are provided in Note 2.1.2a. The Group’s
exposure to credit risk is minimised given a significant portion of sales are paid for at the time purchase.
Management has assessed that trade and other receivables that are not past due or are considered to be
of good credit rating. Aggregates of such amounts are detailed in Note 2.1.2a.
Cash and cash equivalents
Credit and risk related to balances with banks and other financial institutions is managed by the Board.
The Group held cash and cash equivalents of $91.7 million as at 30 June 2021 and $146.7 million as at the end
of 30 June 2020. The cash and cash equivalents are held with bank and financial institution counterparties,
which are rated A to AA–, based on the Standard & Poor’s ratings
Impairment of cash and cash equivalents has been measured on a 12‑month expected loss basis and reflects
the short maturities of the exposures. The Group considers that its’ cash and cash equivalents have low credit
risk based on the external credit ratings of the counterparties
72
kogan.com
The Group uses a similar approach for assessment of ECLs for cash and cash equivalents to those used for
debt securities.
No impairment allowance was recognised during FY21.
Liquidity risk
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or
otherwise meeting its obligations related to financial liabilities. The Group manages this risk through the
following mechanisms:
• prepared forward‑looking cash flow analysis in relation to its operating, investing and financing activities;
• using derivatives that are only traded in highly liquid markets;
• monitoring undrawn credit facilities;
• maintaining a reputable credit profile;
• managing credit risk related to financial assets; and
• only investing surplus cash with major financial institutions.
The table below reflects an undiscounted contractual maturity analysis for financial liabilities.
Cash flows realised from financial assets reflect management’s expectation as to the timing of realisation.
Actual timing may therefore differ from that disclosed. The timing of cash flows presented in the table to settle
financial liabilities reflects the earliest contractual settlement dates.
Financial liability and financial asset maturity analysis
Consolidated Group Note
2021
$000
2020
$000
2021
$000
2020
$000
2021
$000
2020
$000
2021
$000
2020
$000
WITHIN 1 YEAR
1 TO 5 YEARS
OVER 5 YEARS
TOTAL
Financial liabilities due for payment
Trade and other
payables
2.1.3a (140,607) (82,495)
(5,247)
–
–
– (145,854) (82,495)
Lease liabilities
2.1.3b
(5,554)
(1,987)
(7,568)
(453)
(2,711)
–
–
–
(78,699)
(1,060)
–
–
–
–
–
–
–
–
(15,833)
(2,440)
(78,699)
–
–
(1,060)
Loans & borrowings
3.1
Financial liabilities
Total expected
outflows
(146,161) (85,542)
(91,514)
(453)
(2,711)
– (240,386) (85,995)
Financial assets – cash flows realisable
Cash and cash
equivalents
91,691
146,726
Trade, term and
loan receivables
Other financial
assets
Total anticipated
inflows
Net (outflow)/inflow
on financial
instruments
2.1.2a
5,810
5,390
205
–
97,706
152,116
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
91,691
146,726
5,810
5,390
205
–
97,706
152,116
(48,455) 66,574
(91,514)
(453)
(2,711)
– (142,680)
66,121
Annual Report 2021
73
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
SECTION 3: CAPITAL STRUCTURE AND FINANCING (continued)
3.2 Capital and Financial Risk Management (continued)
Market risk
a. Interest rate risk
Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the
reporting period whereby a future change in interest rates will affect future cash flows or the fair value of fixed
rate financial instruments. The Group is also exposed to earnings volatility on floating rate instruments.
The financial instruments that primarily expose the Group to interest rate risk are borrowings and cash and
cash equivalents.
b. Foreign exchange risk
Exposure to foreign exchange risk may result in the fair value or future cash flows of a financial instrument
fluctuating due to movement in foreign exchange rates of currencies in which the Group holds financial
instruments which are other than the functional currency of the Group.
With instruments being held by overseas operations, fluctuations in the US dollar may impact on the Group’s
financial results unless those exposures are appropriately hedged.
Foreign currency transactions
Functional and presentation currency
The functional currency of each of the Group’s entities is measured using the currency of the primary
economic environment in which that entity operates. The consolidated financial statements are presented
in Australian dollars, which is the parent entity’s functional currency.
Foreign exchange forward contracts
The Group has open foreign exchange forward contracts at the end of the reporting period relating to highly
probable forecast transactions and recognised financial assets and financial liabilities. These contracts commit
the Group to buy and sell specified amounts of foreign currencies in the future at specified exchange rates.
It is the Group’s policy to manage pricing of its products (with exception of ageing and obsolete inventory)
according to specified target Gross Margins, rather than to sacrifice Gross Margin to drive sales volumes.
In an environment where the Australian dollar may be declining, in particular, relative to the United States
dollar, the Group’s ability to price Third‑Party branded international products competitively in comparison
with other Australian retailers deteriorates (to the extent that those retailers have not adjusted retail prices).
As a result, lower volumes of Third‑Party branded international products are generally sold during periods
of sharp decline in the Australian dollar, leading to lower revenues in that product segment. The reverse occurs
in periods in which there is a sharp increase in the Australian dollar, while there has historically been neutral
revenue impact in periods in which the currency is relatively stable, whether that is at high or low levels.
The following table summarises the notional amounts of the Group’s commitments in relation to foreign
exchange forward contracts. The notional amounts do not represent amounts exchanged by the transaction
counterparties and are therefore not a measure of the exposure of the Group through the use of the contracts.
NOTIONAL AMOUNTS
AVERAGE EXCHANGE RATE
Consolidated Group
Buy USD/sell AUD:
2021
$000
2020
$000
Settlement – less than 6 months
30,430
53,367
– 6 months to 1 year
–
2
2021
$
0.75
–
2020
$
0.66
0.69
The fair value of foreign exchange contracts at 30 June 2021 totalled $204,798 (2020: ($1,059,971)).
74
kogan.com
Sensitivity analysis
The following table illustrates sensitivities to the Group’s exposures to changes in exchange rates. The table
indicates the impact of how profit and equity values reported at the end of the reporting period would have
been affected by changes in the relevant risk variable that management considers to be reasonably possible.
These sensitivities assume that the movement in a particular variable is independent of other variables.
Year ended 30 June 2021
+/–10bps in foreign exchange rates
Year ended 30 June 2020
+/–10bps in foreign exchange rates
CONSOLIDATED GROUP
Profit
$000
Equity
$000
3,043
3,043
5,337
5,337
The Group, through its hedging of foreign exchange using forward contracts, reduces its exposure to foreign
exchange risk by locking in the exchange rate with the bank on deal date. Any movement in interest rates has
been deemed to be immaterial.
Fair values
The Group measures some of its assets and liabilities at fair value on either a recurring or non‑recurring basis,
depending on the requirements of the applicable Accounting Standards.
Fair value estimation
The carrying value of financial assets and financial liabilities are not materially different to their fair values.
Financial Instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual
provisions to the instrument. For financial assets, this is equivalent to the date that the entity commits itself
to either the purchase or sale of the asset (i.e. trade date accounting is adopted).
Financial instruments are initially measured at fair value plus transaction costs, except where the instrument
is classified “at fair value through profit or loss”, in which case transaction costs are expensed to profit or
loss immediately.
Classification and subsequent measurement
Financial instruments are subsequently measured at fair value, amortised cost using the effective interest
method, or cost.
Amortised cost is calculated as the amount at which the financial asset or financial liability is measured at
initial recognition less principal repayments and any reduction for impairment, and adjusted for any cumulative
amortisation of the difference between that initial amount and the maturity amount calculated using the
effective interest method.
The effective interest method is used to allocate interest income or interest expense over the relevant period
and is equivalent to the rate that discounts estimated future cash payments or receipts (including fees,
transaction costs and other premiums or discounts) over the expected life (or when this cannot be reliably
predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset
or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying
amount with a consequential recognition of an income or expense item in profit or loss.
Annual Report 2021
75
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
SECTION 3: CAPITAL STRUCTURE AND FINANCING (continued)
3.2 Capital and Financial Risk Management (continued)
Financial Instruments (continued)
Classification and subsequent measurement (continued)
The Group does not designate any interests in subsidiaries, associates, or joint ventures as being subject to the
requirements of Accounting Standards specifically applicable to financial instruments.
Financial assets and financial liabilities at fair value through profit or loss (FVTPL) are initially recognised at
fair value and thereafter carried at fair value.
a. Financial assets at amortised cost
Financial assets at amortised cost are non‑derivative financial assets with fixed or determinable payments
that are not quoted in an active market and are subsequently measured at amortised cost. Gains or losses are
recognised in profit or loss through the amortisation process and when the financial asset is derecognised.
b. Financial assets/financial liabilities at fair value through profit or loss
Financial assets/financial liabilities relating to foreign exchange forward contracts are measured at fair value
and fair value changes are recognised in profit or loss.
c. Financial liabilities at amortised cost
Non‑derivative financial liabilities other than financial guarantees are subsequently measured at amortised
cost. Gains or losses are recognised in profit or loss when the financial liability is derecognised.
Derivative instruments
The Group enters into forward contracts to manage the cash flow risk attached to inventory purchased
in foreign currency. The Group has elected not to adopt hedge accounting, with any period movements in
the fair value of the derivative contract taken to the income statement.
Impairment
The Group recognises loss allowances for expected credit loss (ECL) on:
•
•
financial assets measured at amortised cost;
financial assets measured at FVTPL.
The Group measured loss allowances at an amount equal to lifetime ECLs.
When determining whether the credit risk of a financial asset has increased significantly since initial
recognition and when estimating ECLs, the Group considers reasonable and supportable information that
is relevant and available without undue cost or effort. This includes both quantitative and qualitative
information and analysis, based on the Group’s historical experience and informed credit assessment and
including forward looking information.
The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 90 days
past due.
The Group considers a financial asset to be in default when:
•
the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group
to actions; or
•
the financial asset is more than 90 days past due.
76
kogan.com
Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial
instrument.
12‑month ECLs are the portion of ECLs that result from default events that are possible within the 12 months
after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).
The maximum period considered when estimating ECLs is the maximum contractual period over which the
Group is exposed to credit risk.
Measurement of ECLs
ECLs are a probability‑weighted estimate of credit losses. Credit losses are measured as the present value
of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the
contract and the cash flows that the Group expects to receive).
ECLs are discounted at the effective interest rate of the financial asset.
Credit‑impaired financial assets
At each reporting date, the Group assesses whether financial assets carried at amortised cost and financials
assets at FVTPL are credit‑impaired. A financial asset is ‘credit‑impaired’ when one or more events that have
a detrimental impact on the estimated future cash flows of the financial asset have occurred.
Evidence that a financial asset is credit‑impaired includes the following observable data:
• significant financial difficulty of the borrower or issuer;
• a breach of contract such as a default or being more than 90 days past due;
•
•
•
the restructuring of a loan or advance by the Group on terms that the Group would not consider otherwise;
it is probable that the borrower will enter bankruptcy or other financial reorganisation; or
the disappearance of an active market for a security because of financial difficulties.
Presentation of allowance for ECL in the statement of financial position
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount
of the assets.
For financials assets at FVTPL, the loss allowance is charged to profit or loss.
Write‑off
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. For individual customers, the Group has
a policy of writing off the gross carrying amount when the financial asset is 180 days past due based
on historical experience of recoveries of similar assets. For corporate customers, the Group individually makes
an assessment with respect to the timing and amount of write‑off based on whether there is a reasonable
expectation of recovery. The Group expects no significant recovery from the amount written off. However,
financial assets that are written off could still be subject to enforcement activities in order to comply with the
Group’s procedures for recovery of amounts due.
Annual Report 2021
77
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
SECTION 3: CAPITAL STRUCTURE AND FINANCING (continued)
3.2 Capital and Financial Risk Management (continued)
Derivative instruments (continued)
Write‑off (continued)
The Group holds the following financial assets and financial liabilities at reporting date:
Financial assets
Cash and cash equivalents
Financial assets at amortised cost
•
trade and other receivables
Financial assets at fair value through profit or loss
•
foreign exchange forward contracts
Total financial assets
Financial liabilities
Financial liabilities at amortised cost:
•
trade and other payables
• Loans & borrowings
•
•
lease liability – current
lease liability – non‑current
Financial liabilities at fair value through profit or loss
•
foreign exchange forward contracts
Total financial liabilities
Fair value measurements
CONSOLIDATED GROUP
Note
2021
$000
2020
$000
91,691
146,726
2.1.2a
5,810
5,390
2.1.3a
3.1
2.1.3b
2.1.3b
205
97,706
–
152,116
145,854
78,699
5,554
10,279
–
240,386
82,495
–
1,987
453
1,060
85,995
The Group measures and recognises the following assets and liabilities at fair value on a recurring basis after
initial recognition:
• cash and cash equivalents; and
•
foreign exchange forward contracts.
The Group does not subsequently measure any liabilities at fair value on a non‑recurring basis.
78
kogan.com
a. Fair value hierarchy
AASB 9 Financial Instruments requires the disclosure of fair value information by level of the fair value
hierarchy, which categorises fair value measurements into one of three possible levels based on the lowest
level that an input that is significant to the measurement can be categorised into as follows:
Level 1
Level 2
Level 3
Measurements based on quoted prices
(unadjusted) in active markets for
identical assets or liabilities that the entity
can access at the measurement date.
Measurements based on inputs other
than quoted prices included in Level 1
that are observable for the asset or
liability, either directly or indirectly.
Measurements based on
unobservable inputs for
the asset or liability.
Cash and cash equivalents are Level 1 measurements, whilst foreign exchange contracts are Level 2. The fair
values of assets and liabilities that are not traded in an active market are determined using one or more
valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable
market data. If all significant inputs required to measure fair value are observable, the asset or liability
is included in Level 2. If one or more significant inputs are not based on observable market data, the asset
or liability is included in Level 3.
The fair value of foreign exchange contracts at 30 June 2021 totalled $204,798 (asset) (2020: $1,059,971
(liability)). This represented the amount ‘in/out of the money’ on outstanding forward foreign exchange
contracts as at the reporting dates.
b. Disclosed fair value measurements
The carrying amounts of assets and liabilities are the same as their carrying values.
The Group enters into forward exchange contracts to manage the foreign exchange risk attached to inventory
purchased in foreign currency. The Group has elected not to adopt hedge accounting, with any period
movements in the fair value of the derivative contract taken to the income statement.
The fair value of forward exchange contracts is determined based on an external valuation report using
forward exchange rates at the balance sheet date.
3.3.1 Issued Capital and Reserves
a. Ordinary Shares
CONSOLIDATED GROUP
2021
$
2020
$
2021
No.
2020
No.
Fully paid Ordinary Shares
299,185,901
269,033,496
106,561,563
103,531,706
Ordinary Shares participate in dividends and the proceeds on winding‑up of the parent entity in proportion
to the number of shares held. At the Shareholders’ meetings each Ordinary Share is entitled to one vote when
a poll is called, otherwise each Shareholder has one vote on a show of hands.
Annual Report 2021
79
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
SECTION 3: CAPITAL STRUCTURE AND FINANCING (continued)
3.3.1 Issued Capital and Reserves (continued)
b. Movements in Ordinary Shares
Details
Balance
Shares issued to eligible employees
under an incentives plan
Shares issued to eligible employees
under an incentives plan
Shares issued to eligible employees
under an incentives plan
Dividend reinvestment plan
Institutional placement
Transactional costs incurred during
institutional placement net of tax
Tax deduction for difference between
accounting expense and funds paid
to issue incentive plans
Balance
Share purchase plan
Transaction costs incurred during
Share purchase plan net of tax
Shares issued to eligible employees
under an incentive plan
Dividend reinvestment plan
Tax deduction for difference between
accounting expense and funds paid
to issue incentive plans
Shares issued to eligible employees
under an incentive plan
Date
30 June 2019
Shares No.
93,729,852
Issue
price
$
167,822,590
20 August 2019
229,360
$1.65
379,369
18 February 2020
657,677
$1.27
833,421
18 February 2020
10 March 2020
17 June 2020
17 June 2020
30 June 2020
30 June 2020
10 July 2020
977
180,215
$5.12
$4.46
5,002
803,657
8,733,625
$11.45
100,000,006
–
–
103,531,706
–
–
(1,852,134)
1,041,585
269,033,496
1,746,733
$11.45
20,000,854
10 July 2020
–
–
(250,237)
17 August 2020
28 October 2020
343,440
86,648
$1.68
$21.19
576,746
1,835,644
31 December 2020
–
–
1,755,158
26 February 2021
682,454
$1.41
959,801
2,217,387
Dividend reinvestment plan
31 May 2021
170,582
$13.00
Tax deduction for difference between
accounting expense and funds paid
to issue incentive plans
Balance
c. Merger reserve
30 June 2021
30 June 2021
–
–
3,057,052
106,561,563
299,185,901
The acquisition of Kogan Operations Holdings Pty Ltd by Kogan.com Ltd has been treated as a common
control transaction at book value for accounting purposes, and no fair value adjustments have been made.
Consequently, the difference between the fair value of issued capital and the book value of net assets
acquired is recorded within a merger reserve of $131,816,250.
80
kogan.com
d. Performance Rights reserve
The reserve is used to recognise the value of equity benefits provided to employees as part of their remuneration.
The Group measures the cost of equity‑settled transactions with employees by reference to the fair value of the
Ordinary Shares at the date at which they are granted. The fair value is determined using a discounted cash flow
valuation model, taking into account the terms and conditions upon which the equity instruments were granted,
as discussed in Note 5.2.
e. Capital management
Management controls the capital of the Group in order to maintain a sustainable debt to equity ratio, generate
long‑term shareholder value and ensure that the Group can fund its operations and continue as a going concern.
The Group’s debt and capital include ordinary share capital and financial liabilities, supported by financial assets.
The Group is not subject to any externally imposed capital requirements.
Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting
its capital structure in response to changes in these risks and in the market. These responses include the
management of debt levels, distributions to Shareholders and share issues.
There have been no changes in the strategy adopted by management to control the capital of the Group since
the prior year.
3.3.2 Dividends
Dividends paid during the year
Dividend reinvestment plan
a. Ordinary Shares
Recognition and measurement
CONSOLIDATED GROUP
2021
$000
31,282
(4,053)
27,229
2020
$000
14,800
(804)
13,996
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at
the discretion of the entity before or at the end of the financial year but not distributed at balance date.
There was no final 2021 dividend declared and therefore is not reflected in the consolidated financial
statements for the year ended 30 June 2021.
Dividends
Dividend per Share (in cents)
Franking percentage
Payment date
Dividend record date
b. Franking credits
2021
Final
–
–
–
–
2021
Interim
16.0
100%
2020
Final
13.5
100%
2020
Interim
7.5
100%
31 May 2021
19 October 2020
10 March 2020
9 March 2021
24 August 2020 27 February 2020
The franking account balance as at 30 June 2021 is $8,657,001 (2020: $6,433,957).
Annual Report 2021
81
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
SECTION 3: CAPITAL STRUCTURE AND FINANCING (continued)
3.4 Earnings per Share
a. Basic Earnings per Share
Net profit for the reporting period
Net profit for the reporting period used in calculating EPS
CONSOLIDATED GROUP
2021
2020
3,536,756
26,819,740
3,536,756
26,819,740
Weighted average number of Ordinary Shares of the entity
105,803,451
94,027,393
Basic Earnings per Share
0.03
0.29
b. Diluted Earnings per Share
Net profit for the reporting period
CONSOLIDATED GROUP
2021
2020
3,536,756
26,819,740
Weighted average number of Ordinary Shares of the entity on issue
105,803,451
94,027,393
Adjustments to reflect potential dilution for Performance Rights
3,029,857
1,514,138
Diluted weighted average number of Ordinary Shares of the entity
108,833,308
95,541,531
Diluted Earnings per Share
0.03
0.28
82
kogan.com
SECTION 4: GROUP STRUCTURE
4.1 Controlled Entities
a. Information about Principal Subsidiaries
The subsidiaries listed below have share capital consisting solely of Ordinary Shares or, in the case of Kogan
Technologies Unit Trust, ordinary units, which are held directly by the Group. Kogan.com Holdings Pty Ltd
is the Trustee of the Kogan Technologies Unit Trust. The Trustee and the Trust are wholly‑owned entities within
the Group. The proportion of ownership interests held equal the voting rights held by the Group. Each
subsidiary’s principal place of business is also its country of incorporation.
Name of Subsidiary
Principal Place of Business
OWNERSHIP INTEREST
HELD BY THE GROUP
2021
%
2020
%
Kogan Mobile Operations Pty Ltd
(formerly Kogan Mobile Australia Pty Ltd)
Kogan Mobile Pty Ltd
Kogan Australia Pty Ltd
Kogan International Holdings Pty Ltd
Kogan HK Limited
Kogan HR Pty Ltd
Kogan Travel Pty Ltd
Dick Smith IP Holdings Pty Ltd
(formerly Kogan Technologies UK Pty Ltd)
Online Business Number 1 Pty Ltd
Kogan Technologies Unit Trust
Kogan.com Holdings Pty Ltd
Kogan Operations Holdings Pty Ltd
Kogan US Trading Inc
Kogan Superannuation Pty Ltd
Matt Blatt Pty Ltd
Mighty Ape Limited
Mighty Ape Australia Pty Ltd
b. Significant restrictions
Australia
Australia
Australia
Australia
Hong Kong
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United States
Australia
Australia
New Zealand
Australia
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
–
–
There are no significant restrictions over the Group’s ability to access or use assets, and settle liabilities,
of the Group.
4.2 Deed of Cross Guarantee
A deed of cross guarantee between Kogan.com Ltd and its entities listed above was enacted during the
financial year and relief was obtained from preparing individual financial statements for the Group under ASIC
Corporations (Wholly‑owned Companies) Instrument 2016/785. Under the deed, Kogan.com Ltd guarantees
to support the liabilities and obligations of its subsidiaries listed above. As its entities are a party to the deed
the income statement and balance sheet information of the combined class‑ordered group is equivalent to the
consolidated information presented in this financial report.
Annual Report 2021
83
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
SECTION 4: GROUP STRUCTURE (continued)
4.3 Parent Entity Disclosures
The following information has been extracted from the books and records of the parent and has been
prepared in accordance with Australian Accounting Standards.
Statement of Financial Position
ASSETS
Current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Performance Rights reserve
Dividends
Retained earnings
TOTAL EQUITY
Statement of Profit or Loss and Other Comprehensive Income
Total profit
Total comprehensive income
The parent did not have any material contingent liabilities at period end (2020: $nil).
4.4 Related Parties
a. The Group’s main related parties are as follows:
(i) Entities exercising control over the Group:
2021
$000
2020
$000
191,707
191,707
1,330
1,330
145,849
145,849
533
533
190,377
145,316
167,370
15,667
(31,282)
38,622
190,377
137,217
1,643
(14,800)
21,256
145,316
3,551
3,551
4,187
4,187
The ultimate parent entity that exercised control over the Group at year‑end was Kogan.com Ltd, which
is incorporated in Australia.
(ii) Key Management Personnel:
Any person(s) having authority and responsibility for planning, directing and controlling the activities of the
entity, directly or indirectly, including any Director (whether executive or otherwise) of the entity, are considered
Key Management Personnel (refer to 5.1).
(iii) Entities subject to significant influence by the Group:
An entity that has the power to participate in the financial and operating policy decisions of an entity, but does
not have control over those policies, is an entity which holds significant influence. Significant influence may be
gained by share ownership, statute or agreement. There are no such entities at year end (2020: nil).
84
kogan.com
(iv) Other related parties:
Other related parties include entities controlled by the ultimate parent entity and entities over which Key
Management Personnel have joint control.
b. Transactions with related parties:
Transactions between related parties are on normal commercial terms and conditions no more favourable
than those available to other parties unless otherwise stated.
The following transactions occurred with related parties:
Kogan Australia Pty Ltd entered into a Logistic Services Agreement with eStore Logistics Pty Ltd (“eStore”),
in a prior financial period, in relation to the provision of warehousing, distribution and logistics services by
eStore to Kogan Australia. Ruslan Kogan is a minority Shareholder and Director of eStore. The agreement was
entered into on arm’s length terms.
Purchases from eStore warehousing
Amounts payable to eStore as at 30 June
CONSOLIDATED GROUP
2021
$
2020
$
11,985,662
9,540,192
556,156
683,324
SECTION 5: EMPLOYEE REWARD AND RECOGNITION
5.1 Key Management Personnel Compensation
As deemed under AASB 124 Related Parties disclosures, Key Management Personnel (KMP) include each of
the Directors, both Executive and Non‑Executive, and those members who have authority and responsibility
for planning, directing and controlling activities within the business.
A summary of the KMP compensation is set out in the following table. Refer to the Remuneration Report for
full details.
Cash salary
Consulting fees
Short‑term incentives
Post‑employment
Long‑term benefits
Equity‑based compensation
Other long‑term benefits
CONSOLIDATED GROUP
2021
$
949,871
351,124
–
43,388
113,229
14,175,048
12,038,718
2020
$
786,500
382,083
187,607
42,006
90,606
–
–
27,671,378
1,488,802
Annual Report 2021
85
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
SECTION 5: EMPLOYEE REWARD AND RECOGNITION (continued)
5.1 Key Management Personnel Compensation (continued)
Movement in shares
The movement during the reporting period in the number of Ordinary Shares in Kogan.com held, directly,
indirectly or beneficially, by each key management person, including their related parties, is as follows:
Executive KMP
Ruslan Kogan
David Shafer
Other Non‑Executive KMP
Held at
1 July 2020
21,132,522
8,098,236
Received on
exercise
of rights
Shares
purchased
Shares sold
Held at
30 June 2021
–
–
5,240
2,620
(5,284,441)
15,853,321
(2,025,214)
6,075,642
Held at
1 July 2020
Received on
exercise
of rights
Shares
purchased
Shares sold
Held at
30 June 2021
Simon Barton
–
–
–
–
–
Non‑Executive Directors
Greg Ridder
Harry Debney
Janine Allis
James Spenceley
5.2 Incentive Plans
Held at
1 July 2020
171,000
90,538
–
–
Received on
exercise
of rights
Share
purchased
–
–
–
–
5,620
7,561
4,761
–
Shares sold
(18,620)
–
–
–
Held at
30 June 2021
158,000
98,099
4,761
–
Kogan.com Ltd has adopted an Equity Incentive Plan (EIP) to assist in the motivation and retention
of management and selected team members.
The Group has established incentive arrangements subsequent to listing on the ASX to assist in the attraction,
motivation and retention of the executive team and other selected team members. To align the interests of its
employees and the goals of the Group, the Directors have decided the remuneration packages of the executive
team and other selected team members will consist of the following components:
•
fixed remuneration (inclusive of superannuation);
• short‑term cash‑based incentives; and
• equity based long‑term incentives.
The Group has established the EIP, which is designed to align the interests of eligible employees more closely
with the interests of Shareholders in the listed entity post 7 July 2016. Under the EIP, eligible employees may
be offered Restricted Shares, Options or Rights which may be subject to vesting conditions. The Group may
offer additional long‑term incentive schemes to senior management and other employees over time.
86
kogan.com
Short‑term incentives – Cash based
The following table outlines the significant aspects of the STI.
Purpose of STI plan
Provide a link between remuneration and both short‑term Company and
individual performance.
Eligibility
Create sustainable Shareholder value.
Reward individual for their contribution to the success of the Group.
Actively encourage team members to take more ownership over the EBITDA.
Offers of cash incentive may be made to any team members of the Group
(including a Director employed in an executive capacity) or any other person
who is declared by the Board to be eligible to receive a grant of cash incentive
under the STI.
Calculation & Target
The actual EBITDA of Kogan.com shall exceed the management forecast for
the full financial year (after payment of the STI).
25% of the outperformance will be allocated to a ‘bonus pool’.
The ‘bonus pool’ will then be shared in cash bonuses among a number of team
members in fixed proportions.
Maximum opportunity
The maximum payable is 25% of the outperformance and 35% of the team
member’s annual salary.
Performance conditions
Outperformance of the actual EBITDA.
Continuation of employment.
Why were the performance
condition chosen
To achieve successful and sustainable financial business outcomes as well
as any annual objectives that drive short‑term and long‑term business success
and sustainability.
Performance period
1 July 2020 to 30 June 2021.
Timing of assessment
August 2021, following the completion of the 30 June 2021 accounts.
Form of payment
Board discretion
Paid in cash.
Targets are reviewed annually and the Board has discretion to adapt
appropriately to take into account exceptional items.
Long‑term incentives – Equity Incentive Plan
The following table outlines the significant aspects of the current EIP.
Consideration
Eligibility
Nil.
Offers of Incentive Securities may be made to any employee of the Group
(including a Director employed in an executive capacity) or any other person
who is declared by the Board to be eligible to receive a grant of incentive
Securities under the EIP.
Amount payable &
Entitlement
No amount is payable upon the exercise of a Performance Right that has
vested, with each Performance Right entitling the holder to one fully paid
Ordinary Share on exercise.
Service condition
on vesting
Individual must be employed by the Group at time of vesting and not be
in their notice period.
Annual Report 2021
87
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
SECTION 5: EMPLOYEE REWARD AND RECOGNITION (continued)
5.2 Incentive Plans (continued)
Long‑term incentives – Equity Incentive Plan (continued)
Restrictions on dealing
Shares allocated upon exercise of Performance Rights will rank equally with all
existing Ordinary Shares from the date of issue (subject only to the requirements
of Kogan’s Securities Trading Policy).
Upon vesting, there will be no disposal restrictions placed on the Shares issued
to participants (subject only to the requirements of Kogan.com’s Securities
Trading Policy).
Lapse of Rights
A Right will lapse upon the earliest to occur of:
• expiry date;
•
failure to meet vesting conditions;
• employment termination;
•
the participant electing to surrender the Right;
• where, in the opinion of the Board, a participant deals with a Right
in contravention of any dealing restrictions under the EIP.
Executive Retention Options awarded at the 2020 AGM issued under the Groups EIP
The following table outlines the significant aspects of the Executive EIP.
The number and class
of securities issued to the
Directors
Details of the
Retention Options
3,600,000 options granted to Mr Kogan and 2,400,000 granted to Mr Shafer
under the EIP.
The Board (excluding Mr Kogan and Mr Shafer) decided to grant the Retention
Options to Mr Kogan and Mr Shafer because the Board believed it was in the
best interests of the Company and Shareholders to incentivise Mr Kogan and
Mr Shafer to remain in their positions for the next 3 years given their proven
track records, in order to maximise the prospect of Mr Kogan and Mr Shafer
contributing to the creation of significant future returns for Shareholders.
The Retention Options are being accounted for in the same way the Company’s
current equity‑settled awards are treated (refer above), with their accounting
value determined at their date of grant (within 10 Business Days of the
Meeting). Equity‑settled awards are measured at fair value at the date of grant.
The cost of these transactions is recognised in the Company’s Consolidated
Statement of Comprehensive Income and credited to equity on a straight‑line
basis over the vesting period after allowing for an estimate of shares that will
eventually vest. The level of vesting is reviewed annually and the charge
adjusted to reflect actual and estimated levels of vesting. Accordingly, any
deductions allowable for tax purposes will also be in line with current equity‑
settled awards.
The Company obtained an independent valuation of the Retention Options from
SLM Corporate dated 7 May 2020 to provide advice in relation to whether the
proposed grant of the Retention Options was reasonable in the circumstances
and by reference to industry standards. The valuation applied a number of
assumptions and variables, including the following:
88
kogan.com
Details of the Retention
Options (continued)
•
the closing price of the Company’s Shares on ASX on 30 April 2020
(a reference date under the report), being $7.99 per Share;
• a risk‑free rate of 0.33%;
• a volatility factor of 62.5%;
• dividend yield of 1.96%; and
• a time to maturity of the underlying Options of 4 years.
The estimated value of each Retention Option pursuant to the valuation was
$4.13 as at the reference date of the report of 7 May 2020. On this basis, the
estimated value as at the reference date of the report of 7 May 2020 of:
•
•
the Retention Options to be granted to Mr Kogan under Item 5.1 was
$14,872,133; and
the Retention Options to be granted to Mr Shafer under Item 5.2 was
$9,914,756.
The report from SLM Corporate dated 7 May 2020 reflects the value of the
Retention Options on or about the date that the Company agreed to grant the
Retention Options to Mr Kogan and Mr Shafer. For completeness, given the
time that has elapsed between the AGM (at which the Retention Options were
approved by Shareholders) and both the date of the independent valuation
of the Retention Options from SLM Corporate and the date that the Company
agreed to grant the Retention Options, the Company obtained an updated
independent valuation of the Retention Options from SLM Corporate dated
8 December 2020. This valuation applied the same assumptions and variables
as noted above, except that:
•
the closing price of the Company’s Shares on ASX on 30 November 2020
(date of issue of the Retention Options as per the updated independent
valuation), being $16.40 per Share;
• a risk‑free rate of 0.25%;
• a volatility factor of 62.5%; and
• dividend yield of 1.28%.
The value of each Retention Option pursuant to the valuation was $11.48 as at
the issue date of the updated independent valuation of 8 December 2020.
On this basis, the value as at the issue date of the updated independent
valuation of 8 December 2020 of:
•
•
the Retention Options granted to Mr Kogan was $41,325,935; and
the Retention Options granted to Mr Shafer was $27,550,623.
The increase in the value of the Retention Options reflects the increase in the
Company’s share price since the Company announced the terms of the
Retention Options to the ASX on 12 May 2020 and the grant of the Retention
Options following the Company’s AGM on 20 November 2020.
Strike price
Share price at grant date
Share price at close
28 September 2021
$5.29
$16.40
$10.84
Annual Report 2021
89
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
SECTION 5: EMPLOYEE REWARD AND RECOGNITION (continued)
5.2 Incentive Plans (continued)
Recognition and measurement
a. Equity‑settled transactions
The charge related to equity‑settled transactions with team members is measured by reference to the fair value
of the equity instruments at the date they are granted, using an appropriate valuation model selected according
to the terms and conditions of the grant. The fair value is determined using a discounted cash flow valuation
model. Judgement is applied in determining the most appropriate valuation model and in determining the inputs
to the model. Third‑party experts are engaged to advise in this area where necessary. Judgements are also applied
in relation to estimations of the number of rights which are expected to vest, by reference to historic leaver rates
and expected outcomes under relevant performance conditions.
The Group issues equity‑settled share‑based payments to certain team members, whereby team members render
services in exchange for Shares or Rights over Shares of the Parent Company.
Equity‑settled awards are measured at fair value at the date of grant. The cost of these transactions is recognised
in the Consolidated Income Statement and Consolidated Statement of Comprehensive Income and credited to
equity on a straight‑line basis over the vesting period after allowing for an estimate of shares that will eventually vest.
The level of vesting is reviewed annually and the charge adjusted to reflect actual and estimated levels of vesting.
Where an equity‑settled share‑based payment scheme is modified during the vesting period, an additional charge
is recognised over the remainder of that vesting period to the extent that the fair value of the revised scheme at
the modification date exceeds the fair value of the original scheme at the modification date. Where the fair value
of the revised scheme does not exceed the fair value of the original scheme, the Group continues to recognise the
charge required under the conditions of the original scheme. Individuals must be employed by the Group at the
time of vesting, and not in their notice period, to be entitled to the equity incentives.
b. Cash‑settled transactions
The amount payable to team members in respect of cash‑settled share‑based payments is recognised
as an expense, with a corresponding increase in liabilities, over the period which the team members become
unconditionally entitled to the payment. The liability is measured at each reporting date and at settlement
date based on the fair value, with any changes in the liability being recognised in profit or loss.
c. Expense recognised in profit or loss
During the period the Group recognised a share‑based payment expense of $15.6 million (2020: $1.0 million)
which relates to Performance Rights granted during the year or in previous years.
The Group has recognised no expense in relation to cash based short‑term incentives in 2021 (2020: $0.9 million).
90
kogan.com
Incentive Plans inputs
Long‑term incentives – Equity
The following inputs were used in the measurement of the fair values of Performance Rights issued, at grant date:
Grant Dates
Number
Fair value at grant date
Share price at grant date
Strike price
Rights life
Vesting dates
LONG‑TERM INCENTIVE PLANS
29 July 2016 29 September 2016 20 December 2016 20 December 2016
495,140
$583,727
$1.49
$0.00
1 to 5 years
30 Jun 2017
30 Jun 2018
30 Jun 2019
178,573
$237,500
$1.52
$0.00
1 to 5 years
30 Jun 2017
30 Jun 2018
30 Jun 2019
30 Jun 2020
30 Jun 2020
30 Jun 2021
30 Jun 2021
1,451,856
$1,516,224
$1.34
$0.00
3 & 4 years
31 Dec 2019
31 Dec 2020
37,037
$42,029
$1.34
$0.00
1 to 5 years
31 Dec 2017
31 Dec 2018
31 Dec 2019
31 Dec 2020
31 Dec 2021
5.7%
Dividend yield
5.2%
5.1%
5.7%
Grant Dates
Number
Fair value at grant date
Share price at grant date
Strike price
Rights life
Vesting dates
LONG‑TERM INCENTIVE PLANS
29 June 2017
29 June 2017
29 June 2017
29 June 2017
436,365
$617,699
$1.70
$0.00
1 to 5 years
30 Jun 2018
30 Jun 2019
12,121
$17,667
$1.70
$0.00
1 to 4 years
30 Jun 2018
30 Jun 2019
18,182
$27,295
$1.70
$0.00
1 to 3 years
30 Jun 2018
30 Jun 2019
212,121
$290,244
$1.70
$0.00
3 & 4 years
30 Jun 2020
30 Jun 2021
30 Jun 2020
30 Jun 2020
30 Jun 2020
Dividend yield
30 Jun 2021
30 Jun 2022
6.3%
30 Jun 2021
6.3%
6.3%
6.3%
Annual Report 2021
91
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
SECTION 5: EMPLOYEE REWARD AND RECOGNITION (continued)
5.2 Incentive Plans (continued)
Incentive Plans inputs (continued)
Long‑term incentives – Equity (continued)
Grant Dates
Number
Fair value at grant date
Share price at grant date
Strike price
Rights life
Vesting dates
22 December 2017 22 December 2017
6 April 2018
28 June 2018
LONG‑TERM INCENTIVE PLANS
55,633
$324,011
$6.20
$0.00
1 to 4 years
31 Dec 2018
31 Dec 2019
30,810
$182,256
$6.20
$0.00
1 to 5 years
30 Jun 2018
30 Jun 2019
18,013
$151,273
$8.60
$0.00
1 to 5 years
31 Dec 2018
31 Dec 2019
21,708
$140,203
$6.76
$0.00
1 to 4 years
30 Jun 2019
30 Jun 2020
31 Dec 2020
30 Jun 2020
31 Dec 2020
30 Jun 2021
31 Dec 2021
Dividend yield
2.1%
30 Jun 2021
30 Jun 2022
2.1%
31 Dec 2021
30 Jun 2022
31 Dec 2022
1.5%
1.9%
Grant Dates
Number
Fair value at grant date
Share price at grant date
Strike price
Rights life
Vesting dates
27 February 2019
27 February 2019
20 August 2019
20 August 2019
LONG‑TERM INCENTIVE PLANS
10,491
$42,908
$4.09
$0.00
15,152
$23,837
$4.09
$0.00
30,711
$160,000
$5.21
$0.00
36,548
$190,420
$5.21
$0.00
1 to 3 years
1 to 2 years
1 to 4 years
1 to 4 years
31 Dec 2019
30 Jun 2020
31 Dec 2019
30 Jun 2020
31 Dec 2020
30 Jun 2021
31 Dec 2020
30 Jun 2021
31 Dec 2021
31 Dec 2021
30 Jun 2022
31 Dec 2022
30 Jun 2023
Dividend yield
2.0%
2.0%
1.3%
1.3%
92
kogan.com
Grant Dates
Number
Fair value at grant date
Share price at grant date
Strike price
Rights life
Vesting dates
18 February 2020 18 February 2020
17 August 2020
17 August 2020
LONG‑TERM INCENTIVE PLANS
9,766
$50,000
$5.21
$0.00
1 year
3,906
$20,000
$5.21
$0.00
21,767
$369,979
$17.00
$0.00
1 to 2 years
1 to 4 years
31 Dec 2019
30 Jun 2022
30 Jun 2021
30 Jun 2023
30 Jun 2022
30 Jun 2023
30 Jun 2024
11,831
174,744
$14.77
$0.00
1 to 5 years
31 Dec 2021
31 Dec 2022
31 Dec 2023
31 Dec 2024
31 Dec 2025
1.3%
Dividend yield
1.5%
1.5%
1.5%
Grant Dates
Number
Fair value at grant date
Share price at grant date
Strike price
Rights life
Vesting dates
LONG‑TERM INCENTIVE PLANS
17 August 2020
19 October 2020
19 October 2020
19 October 2020
9,077
$154,309
$17.00
$0.00
1 year
1,536
$30,000
$19.53
$0.00
1 to 2 years
512
$10,000
$19.53
$0.00
1 year
31 Dec 2021
30 Jun 2021
31 Dec 2021
30 Jun 2022
134
$1,973
$14.77
$0.00
1 to 3 years
31 Dec 2021
31 Dec 2022
31 Dec 2023
Dividend yield
1.3%
1.3%
1.5%
1.3%
LONG‑TERM INCENTIVE PLANS
Grant Dates
Number
Fair value at grant date
Share price at grant date
Strike price
Rights life
Vesting dates
1 December 2020 3 December 2020
25 January 2021
25 January 2021
6,000,000
$68,876,559
$16.40
$5.29
3 years
61,632
$571,945
$19.00
$16.38
3 years
6,125
$118,825
$19.40
$0.00
167,607
$3,251,576
$19.40
$0.00
1 to 3 years
1 to 4 years
30 Jun 2023
1 Apr 2023
31 Dec 2021
30 Jun 2021
Dividend yield
1.4%
1.7%
0.9%
0.9%
31 Dec 2022
30 Jun 2022
31 Dec 2023
30 Jun 2023
30 Jun 2024
Annual Report 2021
93
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
SECTION 5: EMPLOYEE REWARD AND RECOGNITION (continued)
5.2 Incentive Plans (continued)
Incentive Plans inputs (continued)
Long‑term incentives – Equity (continued)
Grant Dates
Number
Fair value at grant date
Share price at grant date
Strike price
Rights life
Vesting dates
LONG‑TERM INCENTIVE PLANS
16 April 2021
16 April 2021
30 June 2021
30 June 2021
11,279
$180,013
$15.95
$0.00
8,773
$140,017
$15.95
$0.00
1,806
$20,000
$11.07
$0.00
149,869
$1,652,050
$11.07
$0.00
1 to 3 years
1 to 3 years
1 to 2 years
1 to 3 years
31 Dec 2021
30 Jun 2022
31 Dec 2022
30 Jun 2022
31 Dec 2022
30 Jun 2023
31 Dec 2023
30 Jun 2023
30 Jun 2024
30 Jun 2024
Dividend yield
1.2%
1.2%
0.0%
0.0%
Reconciliation of outstanding Performance Rights
The following table details the total movement in Performance Rights issued by the Group during the year:
Outstanding at beginning of period
Granted during the period
Exercised during the period
Forfeited during the period
Expired during the period
Outstanding at the end of the period
Exercisable at the end of the period
LONG‑TERM
INCENTIVE PLANS
Performance Rights
No.
2021
1,514,138
390,316
(1,025,894)
(89,212)
–
789,348
326,646
No.
2020
2,342,370
80,931
(887,037)
(22,126)
–
1,514,138
343,440
94
kogan.com
SECTION 6: OTHER
6.1 Subsequent Events
Subsequent to the financial year end, there were no other events which would require adjustment or
disclosure to the financial statements.
6.2 Remuneration of Auditors
Remuneration of the auditor for:
• auditing or reviewing the financial statements
• Due diligence
• R&D tax
CONSOLIDATED GROUP
2021
$
2020
$
429,458
235,000
17,830
682,288
246,958
–
6,700
253,658
6.3 Contingent Liabilities
As at 30 June 2021, the Group had bank guarantees of A$1.2 million and NZ$8.6 million with Westpac Banking
Corporation in relation to its ordinary course of business.
6.4 Company Information
The registered office of the Company is:
Kogan.com Ltd
Level 7
330 Collins Street
Melbourne VIC 3000
The principal place of business is:
Kogan.com Ltd
139 Gladstone Street
South Melbourne VIC 3205
Annual Report 2021
95
DIRECTORS’ DECLARATION
1
In the opinion of the Directors of Kogan.com Ltd (‘the Company’):
(a) the consolidated financial statements and notes that are set out on pages 47 to 95 and the
Remuneration report on pages 30 to 41 in the Directors’ report, are in accordance with the
Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its
performance and its cash flows, for the financial year ended on that date; and
(ii) complying with Accounting Standards and the Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as
and when they become due and payable.
2 There are reasonable grounds to believe that the Company and the Group entities identified in Note 4.1
will be able to meet any obligations or liabilities to which they are or may become subject to by virtue
of the Deed of Cross Guarantee between the Company and those group entities pursuant to ASIC
Corporations (Wholly‑owned Companies) Instrument 2016/785.
3 The Directors draw attention to the Basis of Preparation note to the consolidated financial statements,
which includes a statement of compliance with International Financial Reporting Standards.
4 This declaration has been made after receiving the declarations required to be made to the Directors in
accordance with section 295A of the Corporations Act 2001 for the financial year ending 30 June 2021.
Signed in accordance with a resolution of the Directors:
David Shafer
Executive Director
Melbourne, 29 September 2021
96
kogan.com
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF KOGAN.COM LTD AND CONTROLLED ENTITIES
Annual Report 2021
97
Independent Auditor’s Report To the shareholders of Kogan.com LtdReport on the audit of the Financial Report Opinion We have audited the Financial Report of Kogan.com Ltd (the Company) and its controlled entities (the Group). In our opinion, the accompanying Financial Report of the Group is in accordance with the Corporations Act 2001, including: •giving a true and fair view of theGroup’s financial position as at30 June 2021 and of its financialperformance for the year ended onthat date; and•complying with Australian AccountingStandards and the CorporationsRegulations 2001.The Financial Report comprises: •Consolidated statement of financial position as at30 June 2021;•Consolidated income statement and consolidatedstatement of other comprehensive income,Consolidated statement of changes in equity, andConsolidated statement of cash flows for the yearthen ended;•Notes including a summary of significant accountingpolicies; and•Directors’ Declaration.The Group consists of the Company and the entities it controlled at the year-end or from time to time during the financial year. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with the Code. KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. INDEPENDENT AUDITOR’S REPORT CONTINUED
98
kogan.com
Key Audit Matters The Key Audit Matters we identified are: •Recognition of revenue;•Acquisition accounting; and•Valuation of inventory.Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Report of the current period. These matters were addressed in the context of our audit of the Financial Report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Recognition of revenue (AUD $780.7m) Refer to Note 1.1 to the Financial Report The key audit matter How the matter was addressed in our audit Revenue recognition is a key audit matter due to the significant audit effort to test the: •high volume of sale of goods transactionsrecorded as revenue and the significantvalue of revenue recognised;•Group’s judgement related to determiningthe timing of revenue recognition driven bythe conditions, associated with each of thetypes of services offered by the Group, suchas Kogan Marketplace; and•judgement to assess the Group’srecognition basis as a principal on a grossbasis or an agent on a net of costs paid basisusing the relevant terms of the underlyingcontracts against the requirements of theaccounting standard.Our procedures included: •evaluating the appropriateness of the Group’srevenue recognition policies against therequirements of the accounting standard;•testing key controls related to the sale of goodsand rendering of services, including approval ofrevenue rates and matching of invoices todelivery documents;•for a sample of sale of goods and servicesincome, we verified the transactions to therespective invoices and cash received from thecustomer in bank statements;•for a sample of sale of goods that were sold andservice income that was earned before andafter year end, we performed procedures toascertain that revenue was recorded in thecorrect financial year;•analysing the revenue recognition requirementsfor accurate presentation in terms of gross ornet presentation, in the financial statements;and•analysing the relevant terms for a sample of theunderlying contracts across each revenuestream to the criteria in the accountingstandards, those in the Group’s policy, andagainst what the Group identified asperformance obligations. Annual Report 2021
99
Acquisition accounting of Mighty Ape Limited and its controlled entities Refer to Note Business Combination to the Financial Report The key audit matter How the matter was addressed in our audit On 3 December 2020, Kogan.com Ltd purchased Mighty Ape Limited and its controlled entities (Mighty Ape). We consider the accounting for the purchase of Mighty Ape is a Key Audit Matter due to the: •size of the acquisition and therefore theimpact on the Financial Report; and•extent of judgement and complexity relatingto the purchase price allocation (PPA). TheGroup engaged an independent valuationexpert to advise on the identification andmeasurement of acquired assets andassumed liabilities, and in determining theallocation of purchase consideration togoodwill and separately identifiableintangible assets.Our procedures included: •reading the transaction documents related tothe acquisition to understand the structure, keyterms and conditions;•evaluating the methodology used for theacquisition accounting against accountingstandard requirements;•working with our valuation specialists to assessand challenge key assumptions used in the PPAto identify and value separate assets. Thisinvolved:−assessing the objectivity, competence,experience and scope of the Group’sindependent valuation expert;−challenging the Group’s significant judgmental assumptions such as identification of separate identifiable intangible assets and the Group’s independent valuation expert’s approach and methodology to valuing their assets by comparing to the requirements of the accounting standards; and −comparing inputs used by the Group’sindependent valuation expert; and•assessing the Group’s accounting treatment ofpost-acquisition payments against thetransaction documents and relevant accountingstandards. INDEPENDENT AUDITOR’S REPORT CONTINUED
100
kogan.com
Valuation of inventory (AUD $227.9m) Refer to Note 2.1.1 to the Financial Report The key audit matter How the matter was addressed in our audit The Group sells high volumes of private label and third-party branded products. In valuing inventory at the lower of cost and net realisable value, there are factors subject to judgement or estimation including: •consideration of market and consumerfactors that could impact the Group’s abilityto sell certain inventory items at profitablemargins, such as seasonality of demand,changing consumer preferences, andobsolescence due to technological orproduct change (particularly relevant toelectronic products); and•establishing a provision for slow movinginventory based on relevant factors such asinventory ageing and inventory turnover.. Our procedures included: •analysing the level of inventory by ageingcategories for each product type, includingmovements in ageing categories compared toprior periods, in order to highlight products orcategories at higher risk of impairment;•obtaining an understanding of how theinventory system computes ageing, andassessed the accuracy of inventory ageing bycomparing the inventory receipt date for asample of purchases to underlyingdocumentation such as supplier invoices;•comparing product unit cost to most recentsales price information for a sample of productsin order to identify inventory that may not beable to be sold above cost; and•assessing the Group’s inventory provision,based on the ageing of product category andother relevant factors such as those identifiedabove, for consistency with the Group’sestablished accounting policy and accountingstandards.Other Information Other Information is financial and non-financial information in Kogan.com Ltd’s annual reporting which is provided in addition to the Financial Report and the Auditor’s Report. The Director is responsible for the Other Information. Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not and will not express an audit opinion or any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion. In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report. Annual Report 2021
101
Responsibilities of the Directors for the Financial Report The Directors are responsible for: •preparing the Financial Report that gives a true and fair view in accordance with AustralianAccounting Standards and the Corporations Act 2001;•implementing necessary internal control to enable the preparation of a Financial Report thatgives a true and fair view and is free from material misstatement, whether due to fraud or error;and•assessing the Group and the Company’s ability to continue as a going concern and whether theuse of the going concern basis of accounting is appropriate. This includes disclosing, asapplicable, matters related to going concern and using the going concern basis of accountingunless they either intend to liquidate the Group and Company or to cease operations, or haveno realistic alternative but to do so.Auditor’s responsibilities for the audit of the Financial Report Our objective is: •to obtain reasonable assurance about whether the Financial Report as a whole is free frommaterial misstatement, whether due to fraud or error; and•to issue an Auditor’s Report that includes our opinion.Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards 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 the Financial Report. A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our Auditor’s Report. INDEPENDENT AUDITOR’S REPORT CONTINUED
102
kogan.com
Report on the Remuneration ReportOpinion In our opinion, the Remuneration Report of Kogan.com Ltd for the year ended 30 June 2021, complies with Section 300A of the Corporations Act 2001. Directors’ responsibilities The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with Section 300A of the Corporations Act 2001. Our responsibilities We have audited the Remuneration Report included in pages 30 to 41 of the Directors’ report for the year ended 30 June 2021. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. KPMG Simon Dubois Partner Melbourne 29 September 2021 KPM_INI_01 SHAREHOLDER INFORMATION
The Shareholder information set out below was applicable as at 14 September 2021.
Additional information required by the Australian Securities Exchange Limited Listing Rules and not disclosed
elsewhere in this report, is listed below.
A. NUMBER OF HOLDERS OF EQUITY SECURITIES
Ordinary share capital
106,888,209 fully paid ordinary shares are held by 46,384 individual Shareholders.
All issued ordinary shares carry one vote per Share and the rights to dividends.
Performance Rights
507,637 performance rights are held by 100 individuals.
All performance rights are unvested and do not carry a right to vote.
B. DISTRIBUTION OF EQUITY SECURITY
1 – 1000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Holding less than a marketable parcel
Fully paid
ordinary
shares
Performance
Rights
37,152
7,784
918
495
35
46,384
4,386
49
26
11
14
–
100
–
Annual Report 2021
103
SHAREHOLDER INFORMATION CONTINUED
C. EQUITY SECURITY HOLDERS
Twenty largest quoted equity security holders
Name
Units
% units
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
KOGAN MANAGEMENT PTY LTD
Continue reading text version or see original annual report in PDF format above