2020ANNUAL REPORT
“The past 12 months do not reflect the
consistent growth the Group has achieved
over the past 5 years, nor does it reflect our
5,900 strong team’s hard work, commitment
& customer service first approach.
There are no road maps to navigate the
circumstances we have faced; however our
operational approach has been to put the
safety of our customers and team first,
whilst reshaping Mosaic Brands to take
advantage of the fundamental changes
to retail and digital acceleration to
deliver a return to sustainable
profitability in FY��.”
– SCOTT EVANS
CEO MOSAIC BRANDS LTD
ABN: 96 003 321 579
“We put the customer at the heart of everything we do.”
Mosaic Brands Limited is one of the largest fashion retail
groups in Australia and New Zealand.
Our brands include Millers, Noni B, W�Lane, Katies, Autograph, Rockmans, Crossroads,
beme and Rivers along with a majority shareholding of 50�1% of EziBuy� We span
Australia and New Zealand with a strong digital presence and a network of 1,333 stores�
Our collective purpose is to help our customers express their love of life – by embracing
the truth that every occasion is a special occasion worth feeling fabulous for�
Contents
Company Description ��������������������������������������� 1
Financial Highlights ����������������������������������������� 2
Financial Management ������������������������������������ 4
Chairman’s Report �������������������������������������������� 5
Managing Director’s Report ��������������������������� 6
Board of Directors ������������������������������������������� 8
Our Portfolio of Brands ��������������������������������� 10
Online Growth ������������������������������������������������ 14
Digital Customers ������������������������������������������ 16
Department Store �������������������������������������������17
Our Customer Experience ���������������������������� 19
EziBuy ��������������������������������������������������������������� 20
Ethical Sourcing ��������������������������������������������� 22
People & Culture �������������������������������������������� 23
Annual Financial Report �������������������������������� 24
Corporate Directory �������������������������������������� 86
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 1
F I N A N C I A L H I G H L I G H T S
The following charts reflect Mosaic Brands' journey since 2014�
GROUP REVENUE $m
GROUP REVENUE by Half $m
900
800
700
600
500
400
300
200
100
0
500
450
400
350
300
250
200
150
100
50
0
2014
2015
2016
2017
2018
2019
2020
2014
2015
2016
2017
2018
2019
2020
H1 Sales
H2 Sales
2020 H2 closed for 9�5 weeks due to COVID-19
EBITDA1 Full Year (incl. EziBuy) $m
EBITDA1 by Half (incl. EziBuy) $m
60
40
20
600
0
-20
-40
-60
40
30
20
10
0
-40
-80
2014
2015
2016
2017
2018
2019
2020
2014
2015
2016
2017
2018
2019
2020
H1 EBITDA
H2 EBITDA
1� EBITDA is a not a financial measure under Australian Accounting Standards, but is defined for the purposes of this
document as earnings before interest, tax, depreciation, amortisation, non-recurring income/expenditure and certain
non-cash items such as share based payments and unrealised foreign exchange gains/losses�
2� Graphs exclude EziBuy to allow for year-on-year comparisons unless otherwise stated�
2 “We put the customer at the heart of everything we do.”
F I N A N C I A L H I G H L I G H T S
The following charts reflect Mosaic Brands' journey since 2014�
H2 ONLINE SALES $m
FULL YEAR ONLINE SALES $m
60
50
40
30
20
10
0
100
90
80
70
60
50
40
30
20
10
0
16%
14%
12%
10%
8%
6%
4%
2%
0%
2017
2018
2019
2020
2014
2015
2016
2017
2018
2019
2020
FY Online Sales
FY % of Total Revenue
H2 STORE SALES (non comp) $m
FULL YEAR STORE SALES (non comp) $m
400
350
300
250
200
150
100
50
0
900
800
700
600
500
400
300
200
100
0
2014
2015
2016
2017
2018
2019
2020
2014
2015
2016
2017
2018
2019
2020
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 3
F I N A N C I A L M A N A G E M E N T
• JobKeeper received in Q4 FY20
Wages
• JobKeeper in Q1 FY21 net benefit expected $32m
• JobKeeper in Q2 FY21 likely to be circa $15m - $20m
net benefit
Rental
Concessions
• Negotiations remain ongoing with landlords� Material rental
assistance in the form of rent waivers having been secured for
a significant portion of the portfolio
• Further material benefits anticipated through ongoing
negotiations with balance of portfolio
• Lease expiry profile has 41% of stores on holdover or expiring
by December 2020, with 87% expiring over the next 24 months
Inventory
• Improved payment terms agreed with circa 90% of
trade creditors
• No intake for Q4 FY20 preventing overstock position and
preserving cash holdings
• Exited unseasonal stock in June deleveraging the balance
sheet, releasing cash
• Entered FY21 with 50% less stock holding than prior year
• Strong intake planned for key Christmas trading period
Capital
Management
• Temporary suspension of dividends
• Continued support from bank with reset of covenants to
reflect COVID-19 environment
4 “We put the customer at the heart of everything we do.”
C H A I R M A N ’ S R E P O R T
During this very challenging time, I am proud that our Group’s
resilience, agility and strategic mindset have resulted in the
Group adapting to the new norm post-COVID-19�
Looking ahead, we believe that our demographic will a play a
key role in retail spending as the majority are of a generation
more likely to return to spending as the virus recedes�
As we all know, change is never easy and only the strong will
lead through such a challenging time� As a result, we will see
our portfolio shrink potentially by 300 and up to 500 stores
over the next 24 months, in part driven by some landlords
not demonstrating a preparedness to accept or embrace the
seismic shift in retail behaviour and spending patterns being
seen globally�
The Group recently took a very public stand on this issue and
we’re heartened by the support we’ve received from retail
sector colleagues for changes to occur and for sparking a
wider discussion about what the new retail landscape will
look like�
Given all that we’ve faced in the last financial year, I believe
your company is in the strongest possible position to
weather this continuing uncertainty and come out strongly
on the other side, returning to sustainable profitability in the
2021 financial year�
– RICHARD FACIONI
CHAIRMAN
Over the past six years at Mosaic Brands our company
strategy has been driven by two very simple principles�
We have had a relentless and continuous focus on shareholder
value� This has seen us consistently deliver improved annual
earnings and turn loss-making businesses into strong
vibrant brands�
Secondly, we have put the customer at the heart of everything
we do�
The events over the last 12 months have put those principles
to the test in the most extreme of ways�
They have seen us focus on delivering the right balance
between our duty to our shareholders, team members and
customers, as well as to our business partners�
In his update, our Managing Director, Scott Evans, details how
we’ve navigated and sought to gain this balance in the most
challenging retail conditions for decades and in our lifetimes,
not only in Australia and New Zealand, but globally�
However, speaking broadly, both the board and management
in the last financial year have sought to avoid the temptation
of short-term financial sugar hits over positioning the business
for the longer term�
That has seen the result for the financial year ended
28th June 2020 headlined by a large accounting loss�
This is largely due to non-cash write-downs, impairments
and provisions�
Having now taken those steps, we enter the new financial
year well-placed to ride out the current continuing uncertainty
and to benefit from the eventual recovery�
We closed the 2020 financial year with Mosaic holding a
strong cash balance of $77 million, brands not weighed down
by excess stock, a growing online business, diversification and
innovation in our product offering, and a large and growing
loyal customer data base�
Putting the customer at the heart of everything we do
made our decision to close stores while other retailers
remained open at the onset of COVID-19 a difficult but
straightforward one�
Many of those customers, and crucially our team, are in the
segment where all the statistics point to them being more
vulnerable to the effects of this virus� Keeping stores open
may have been fiscally appealing, but it would have been
morally wrong�
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 5
M A N A G I N G D I R E C T O R ’ S R E P O R T
At the 2019 annual general meeting in November, we
confirmed that the company was on track to achieve EBITDA
of $75 million for the year to June 2020, compared with
underlying EBITDA of $45�5 million the previous year and in
line with market consensus� Importantly, we also were able
to report the five new brands had achieved comparable store
sales and margin growth for the first four months of the
financial year – a significant turnaround after several years
of decline� This was achieved through the Group’s continued
focus on increasing margin, rather than pursuing sales at any
price, improved product collections and instore experience�
Unfortunately this forecast was utterly derailed, due to the
impacts of bushfires followed by the COVID-19 pandemic�
The catastrophe caused to many communities by the
devastating bushfires from late November to January
impacted the Group’s performance heavily, especially during
the key Christmas trading period� Some 20% of the Group’s
1,386 stores were directly affected by the fires and 32% were
in regional areas where consumer confidence suffered�
On 25 February when we reported the company’s interim
results we announced that despite the bushfires' impact
trading had started to recover and the Group looked forward
to a positive second half, including the all-important Mother’s
Day period�
The first half’s gross margin had increased to 59�7% from
56�7% a year earlier, delivered through our core strategy of
reduced discounting and margin growth� As a result, first half
EBITDA was $32�7 million, up 12�4% from $29�1 million the
previous year�
We are very proud that Mosaic could provide some support
to our customers in these communities by donating $50,000
to the St� Vincent de Paul Bush Fire Appeal and close to
$1 million worth of clothing to the GIVIT charity�
During March, the potential impact of the COVID-19 pandemic
was becoming more apparent across Australia� As the
government introduced guidelines to limit infection, store
traffic declined and on 26 March, to protect the health and
wellbeing of our customers and team, we became one of the
first national retail chains to close all our stores� Team and
customer safety is our highest priority and, particularly given
the risk profile of the segment which we serve, we made this
move decisively�
Throughout this period, and the later Victorian lockdown, we
communicated weekly with all team members to ensure they
kept abreast of the evolving rules and government guidelines,
while also providing support and helping to maintain their
morale during this unprecedented time� Team members
affected by the closure were stood down with access to
their leave entitlements pending the federal government’s
introduction of its JobKeeper support program�
We also continued to progress and invest in the Group’s core
digital department store strategy� The range of products
offered was expanded to 14 categories and over 150,000
SKUs were added to our nine brands’ websites� As a result,
online sales increased by over 80% during the store closure
period� Our digital strategy continues to deliver strong
performance following stores’ re-opening, and in July 2020
online sales were 40% above July 2019�
In addition, during the nine and a half weeks stores were
closed nationally, we worked swiftly to reset our cost of doing
business to allow the Group to enter FY21 in a strong position�
Cost reductions of $18 million will be fully realised in FY21�
Stores re-opened in June and we focused on clearing
non-appropriate seasonal stock, ensuring we entered FY21
in a strong cash and clean stock-holding position� I am very
pleased with the cash balance of $77 million at the end of the
year along with our stock levels being 50% less than a year
earlier� These two key action have given the Group a strong
foundation entering FY21, enabling us to continue to focus on
margin and navigate the uncertainties posed by the pandemic�
Prepared for the new retail world
We believe that the changes in consumer behaviour we
have seen since March will have a permanent impact on
the retail sector� The pandemic has accelerated the shift to
online shopping and we anticipate this will continue, along
with subdued foot traffic in shopping centres for some
time� Accordingly, we are very confident that, in focusing on
delivering our core digital department store strategy and
improving customer experience and product collections,
Mosaic Brands will prosper in this ‘new retail world’�
OUTLOOK
The decisions and actions we have taken since the pandemic
began to spread in Australia have placed Mosaic Brands in a
solid financial position for FY21�
The Group remains focused on our strategy to drive margin
growth rather than sales at any cost� With centre traffic
expected to remain subdued over the coming months,
this strategy positions us well to manage through these
ongoing challenges�
Further evidence of this is our strong start to FY21 with 4%
comparable store margin growth for July�
The Group’s brands have strong relationships with their
customers and our database continues to grow with a total
of 5�2 million names in June 2020� This major asset remains
core to our digital department store strategy which enables
the Group to grow our ‘share of wallet’ through offering a
wider range of products and categories supplied online only�
The second half of FY20 saw results from the ‘share of wallet’
strategy accelerate ahead of expectation and there was no
slowdown in the first month of FY21�
6 “We put the customer at the heart of everything we do.”
In November 2019, our digital strategy had a step-change
with the acquisition of a 50�1% shareholding in EziBuy,
one of the largest multi-channel retailers in Australia and
New Zealand with annual revenue of $115 million, over
87%] through its digital platform� We acquired our initial
shareholding for a nominal consideration and have an option
to buy the remaining 49�9% for $11 million on or before
31 December 2020� EziBuy continues to make solid progress
in its turnaround plan and has been successful in realising
opportunities to reduce its cost of doing business� We will
continue working with the EziBuy team to realise the strategic
benefits to our digital strategy and will review the purchase of
the additional shares over the coming months�
Following the reduction in shopping centre traffic, we are
reviewing our store portfolio, which consisted of 1,333 stores
at 28 June 2020 compared with 1,379 a year earlier� Leases for
over 87% of our stores expire over the next 24 months, giving
the Group a high level of agility to realign rentals to reflect the
new environment�
Currently we expect to close 300-500 stores unless
satisfactory terms can be agreed with landlords� We will
endeavour to redeploy as many as possible of our team
members who are affected by the closures�
These are not easy decisions but they are the right ones in
what is still a highly uncertain and fast changing pandemic-
driven environment� Your company has been able to come
through a national and international crisis in the last financial
year and the 12 months ahead may yet bring more external
shocks not in our direct control�
We are planning a number of innovations across the Group
to support our return to growth� These include the launch
of impulse merchandise in all stores, the roll-out of beauty
products in all stores in November, in-store catalogues
showcasing our widening range, and new categories available
on our department store websites�
During the past year, we have demonstrated the resilience of
our business� We have strong brands and a great team and
we look forward to building on these strengths to restore the
company to profitable growth�
Our team members, and their commitment to put the
customer at the heart of everything they do, are one of
Mosaic Brands’ great strengths� I thank them for their support
during the challenges and frustrations of the past year and
for their understanding that inevitably further changes will be
necessary in the future� I also thank our longstanding supply
partners for working with us during these difficult times to
help ensure that we all emerge in good shape from the shocks
which we have had to withstand�
– SCOTT EVANS
MANAGING DIRECTOR
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 7
B O A R D O F D I R E C T O R S
Joined the Board in November 2014
Richard Facioni
CHAIRMAN, NON-EXECUTIVE DIRECTOR
Richard is an experienced corporate finance and investment professional, with over 25 years’ experience in investment
banking, mergers and acquisitions, corporate advice, restructurings and principal investment� Richard leads the
private equity practice of Alceon Group and represents Alceon’s investment in Mosaic Brands� He also oversees and
is a Director of Alceon’s other retail investments in Alquemie Group and Cheap as Chips Discount Stores� Prior to
Alceon, Richard was a Managing Director of Silverfern Group, a global private equity origination and co-investment
firm, where he co-led the group’s activities in Australasia� He previously spent 15 years with Macquarie Group where
he held a number of roles including Head of Acquisition Finance and Head of Principal Transactions Group, and was a
co-founder of Shearwater Capital Group, a private credit opportunities investment firm�
QUALIFICATIONS: Bachelor of Engineering (Honours I) from the University of Sydney; Master of Business
Administration from the Wharton School at the University of Pennsylvania; Graduate Member of the Australian
Institute of Company Directors; Fellow of the Financial Services Institute of Australasia (FINSIA)�
SPECIAL RESPONSIBILITIES: Chair of the Remuneration and Nomination Committee and member of the Audit and
Risk Committee�
Joined the Board in November 2014
Scott Evans
CEO, MANAGING DIRECTOR
Scott has over 20 years’ experience in international retailing leading both private and public companies� Scott
started in the United Kingdom with Marks & Spencer before transitioning to Managing Director of Greenwoods
Menswear (150 store chain) where Scott orchestrated the sale of the business to Chinese brand Bosideng� Scott
moved to Australia and joined Specialty Fashion Group leading both Millers (largest ladies specialty business in
the country with a 400 store chain) and Crossroads (150 store chain)� Scott then transitioned to the role of CEO
at Bras N Things under the BBRC Group before taking on the opportunity at Mosaic Brands in November 2014�
QUALIFICATIONS: Scott holds a BTEC National Diploma in Business and Finance�
Joined the Board in November 2014
David Wilshire
NON-EXECUTIVE DIRECTOR
David has over 20 years’ experience in mergers and acquisitions, capital markets and principal investment�
He is also a Director of Alceon’s other retail investments in Alquemie Group and Cheap as Chips Discount Stores�
Prior to Alceon, David held roles within the corporate finance group of Babcock & Brown and the investment
banking divisions of Goldman Sachs and Macquarie Group, where he helped numerous leading Australian and
international companies across a broad range of industries with acquisitions, divestments and capital market
transactions, as well as strategic advice�
QUALIFICATIONS: David holds a Bachelor of Commerce from the Monash University; Member of the Australian
Institute of Company Directors�
SPECIAL RESPONSIBILITIES: Member of the Remuneration and Nomination Committee and Audit and
Risk Committee�
8 “We put the customer at the heart of everything we do.”
B O A R D O F D I R E C T O R S
Sue Morphet
NON-EXECUTIVE DIRECTOR
Joined the Board in February 2015
Sue Morphet has over 30 years of brand management and retail experience across Australia and New Zealand�
Sue is currently a Non-Executive Director of Asaleo Care Ltd (since 2014), Non-Executive Director of Arnott’s
Biscuits Limited (since 2020), President of Chief Executive Women� Sue was previously CEO of Pacific Brands
Limited (2007 – 2012) having worked in the organisation for 12 years, most notably as Group General Manager
of Bonds�
Other prior roles include Chairperson of Manufacturing Australia (2013 – 2015), Non-Executive Director at Fisher
& Paykel Appliances Ltd (2014 – 2018), Non-Executive Director of Godfreys Group Limited (2014 – 2018) and
Chairperson of National Tiles Pty Ltd� (2015 - 2020)
QUALIFICATIONS: Sue holds a Bachelor of Science and Education, University of Melbourne; Scholar, Mt Eliza
Business School�
SPECIAL RESPONSIBILITIES: Member of the Remuneration and Nomination Committee; Chair of the Audit and
Risk Committee�
Jacqueline Frank
NON-EXECUTIVE DIRECTOR
Joined the Board in May 2019
Jackie is one of Australia’s most successful and highly regarded media executives with over 30 years’ experience
in publishing, management and marketing, brand innovation and retail consulting�
From 2014 to 2018, Jackie was General Manager of the health, fashion, beauty and lifestyle group at Pacific
Magazines and successfully led the brand’s multi-platform transformation, and new online-only brand launches�
In 2018, Jackie started her own company, Be Frank Group, helping brands engage with the female economy
and to date has consulted to Hearst US, Bumble Australia, SEED Heritage, SCCI, Westfield, EziBuy, French
Connection, Sapphire Group and McCann Agency Australia�
SPECIAL RESPONSIBILITIES: Member of the Remuneration and Nomination Committee�
Luke Softa
CFO, COMPANY SECRETARY
Appointed Company Secretary in March 2015
Luke has over 15 years’ experience as a Chief Financial Officer within the Asian, American and
Australian markets�
Luke has spent 18 years in the service industry and held a number of roles within the Millward Brown
Group, including regional Chief Financial Officer for Africa Asia Pacific, before transitioning to Michael Page
International as their Asia Pacific Chief Financial Officer� Luke then moved into the retail industry as the Chief
Financial Officer at Bras N Things before taking on the opportunity at Noni B in March 2015�
QUALIFICATIONS: Luke holds a Bachelor of Commerce, Graduate Member of the Australian Institute of
Company Directors and is a Fellow Certified Practising Accountant�
SPECIAL RESPONSIBILITIES: Secretary to the Remuneration and Nomination Committee and Audit and
Risk Committee�
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 9
Our Portfolio
of Brands
10 “We put the customer at the heart of everything we do.”
2 0 2 0 B R A N D R E V I E W
Millers is a destination for value, quality and ageless fashion. Creating
collections to inspire and make her feel good, and help her express her
individuality with confidence.
104
STORES
1.2m
MEMBERS
5.6m
ONLINE
VISITS
614k
EMAIL
SUBSCRIBERS
279
STORES
4.5m
MEMBERS
12.2m
ONLINE
VISITS
1.8m
EMAIL
SUBSCRIBERS
212
STORES
1.2m
MEMBERS
8.3m
ONLINE
VISITS
685k
EMAIL
SUBSCRIBERS
NONI B believes that every
day is a special occasion
worth feeling fabulous for. Curating classic,
timeless styles through beautiful collections.
Noni B is the style authority for smart casual
and smart elegance.
For an active and fulfilling
lifestyle, W.Lane exudes
understated and timeless elegance by keeping
styles relaxed, natural and fresh. W. Lane is the
home of natural fibres offering luxury in rich
colours and prints that inspire.
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 11
2 0 2 0 B R A N D R E V I E W
89
STORES
1.3m
MEMBERS
7.3m
ONLINE
VISITS
673k
EMAIL
SUBSCRIBERS
137
STORES
2.8m
MEMBERS
9.9m
ONLINE
VISITS
1.5m
EMAIL
SUBSCRIBERS
We create unique and
versatile fashion with
personality and individual style to suit any busy
lifestyle. Our ranges offer a taste of European
style and relaxed sophistication.
Embracing curves
with a signature style,
Autograph covers all occasions from relaxed
casual, to work style. With natural and
breathable fabrics that create a true fit and
comfort silhouette.
285
STORES
3.7m
MEMBERS
10.9m
ONLINE
VISITS
1.3m
EMAIL
SUBSCRIBERS
Bright, happy, fun & free lies at the heart of our crafted collections. Quality,
value and comfort are priorities when it comes to fashion. Creating unique
prints, shapes, and details that complement everyday life.
12 “We put the customer at the heart of everything we do.”
2 0 2 0 B R A N D R E V I E W
28
STORES
686k
MEMBERS
4m
ONLINE
VISITS
440k
EMAIL
SUBSCRIBERS
62
STORES
2.5m
MEMBERS
6.6m
ONLINE
VISITS
1.2m
EMAIL
SUBSCRIBERS
At Crossroads, we strive to
make women everywhere
look good and feel great by creating on-trend
outfits without the expensive price tag. To all
the 'Forever 30's' Crossroads is fun, vibrant
and confident.
Empowering confidence in
every 'body through everyday
fashion with a true focus on
fit. For the woman that has places to go, is
passionate about fashion and wants the
latest trend.
137
STORES
3.5m
MEMBERS
10.4m
ONLINE
VISITS
2.4m
EMAIL
SUBSCRIBERS
Rivers have been providing quality fashion for the everyday Australian since 1836. Now
home to the biggest brands at the lowest prices, Rivers is the trusted go-to-destination
for exceptional value, providing the freedom to live life confidently.
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 13
Online
Growth
14 “We put the customer at the heart of everything we do.”
O N L I N E G R O W T H
TOTAL ONLINE SALES
$�3,���,���
+�5%
VS LAST YEAR
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 15
D I G I T A L C U S T O M E R S
+�8%
+�5%
5,���,���
EMAIL
ADDRESSES
�,���,���
MOBILE
NUMBERS
+��%
WE DELIVERED
�,5��,���
ORDERS
VS 1.2M LAST YEAR
+�6%
+�%
ONLINE SESSIONS
�5,���,���
VS 60M LAST YEAR
MOBILE SALES
REVENUE +�8%
VS 41% LAST YEAR
+�5%
+3�%
COMPARABLE SALES
GROWTH
VS LAST YEAR
(excluding EziBuy)
NEW MEMBERS
�,���,���
VS 1.3M LAST YEAR
16 “We put the customer at the heart of everything we do.”
D E P A R T M E N T S T O R E
GROWTH TO
�5�,��� SKUs
SPANNING
�4 CATEGORIES
Jewellery & Watches
Home Decor
Electrical Appliances
Clothing
Kids
Beauty
Kitchen
Bedroom
Sleepwear
Bags
Accessories
Health Essentials
Bathroom
Tech
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 17
"
D E P A R T M E N T S T O R E S T R A T E G Y
Category Expansion
2020 saw us expand our Department Store offering 14 categories across 150,000 SKUs� This core
strategy will continue to see growth in FY21 with 10 new categories being added�
FY��
FY��
CATEGORY & PRODUCTS ON SITE
CATEGORY & PRODUCTS ON SITE
3%
ACCESSORIES
775
97%
CLOTHING &
FOOTWEAR
24,428
KIDS
SLEEPWEAR
TECH
JEWELLERY &
WATCHES
HEALTH
ESSENTIALS
CLOTHING & FOOTWEAR 81,000
HOMEWARES 54,000
(home decor, kitchen, bathroom, bedroom)
JEWELLERY & WATCHES 1,723
KIDS 5,272
TECH 3,158
SLEEPWEAR 120
BAGS 1,472
HEALTH ESSENTIALS 21
ELECTRICAL 3,118
BEAUTY 116
HOMEWARES
36%
CLOTHING &
FOOTWEAR
54%
BAGS
ELECTRICAL
BEAUTY
18 “We put the customer at the heart of everything we do.”
O U R C U S T O M E R E X P E R I E N C E
as important as our products. We
"The shopping experience is just
"
Instore
We continue to invest in our stores and teams
to ensure that we always improve our instore
experience and service�
invite customers to discover; we
create surprise; and we deliver
great service that’s
second-to-none.
Enhanced Instore Experience
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 19
WE DELIVERED
���,���
ORDERS
20 “We put the customer at the heart of everything we do.”
E Z I B U Y
ONLINE SESSIONS
��,���,���
�,5��,���
EMAIL
ADDRESSES
MOBILE TRAFFIC
��%
�5�,���
MOBILE
NUMBERS
ONLINE CONVERSION
RATE �.6%
ACTIVE CUSTOMERS
5��,���
CATEGORY MIX %
Clothing
Plus Size
Home & Gift
Lingerie
Shoes & Accessories
Kids
Partner Brands
Sleep & Swim
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 21
"
E T H I C A L S O U R C I N G
Mosaic Brands is consistently embracing positive
change to build a better future� We know our
customers demand superior quality and collections,
but our obligation to our customers does not end
there� We are also committed to ensuring our
products are made under safe and all appropriate
working conditions as outlined in our Responsible
Sourcing policies� A fundamental part of Mosaic
Brands' ethical sourcing strategy continues to be
to limit the number of vendors used to supply our
product, and to work with vendors where we have
established close and long term relationships�
Mosaic Brands continues to commit to a strict
ethical sourcing policy and practices� We work
in close partnership with vendors, factories,
contractors and consultants that are like minded
and share our responsible sourcing philosophy and
behaviours� We support this through our sourcing
and procurement processes, our polices and our
principles of behaviour�
Our ethical sourcing policies are applied to all
vendors globally� All partners must adhere to the
Group’s ethical sourcing standards which are fully
aligned with the Ethical Trade Initiative (ETI) base
code and its principles of continuous improvement�
We will not knowingly source product from any
vendor that does not comply with these ethical
sourcing standards and they form part of all Group
product purchasing decisions�
• Child and forced labour will not be permitted;
• Employment is freely chosen;
• Freedom of association and the right to collective
bargaining are respected;
• All working conditions are safe and hygienic�
• Living wages are paid;
• Working hours are not excessive;
• Discrimination should never be permitted;
• Regular employment is provided; and
• No harsh or inhumane treatment is allowed�
Modern Slavery
Mosaic Brands Group is committed to reducing
the risk of slavery, servitude, forced or compulsory
labour within our business and supply chain� We
believe that business can be a force for good
if it acts responsibly towards those within its
supply chain� We consider modern slavery to be
a significant risk within the global garment and
textile sector and are committed to preventing
and addressing modern slavery in line with the UN
Guiding Principles on Business and Human Rights�
Sourcing Policy Insurance
Social and ethical implications are considered
in all Group product purchasing decisions�
Factories supplying our products, as well as
their subcontractors, are audited by accredited
independent auditors� These are reviewed on
a regular basis, so we can be certain they are
adhering to the Group code of practice, the ETI
base code and the requirements of the Modern
Slavery Act�
All vendors to the Group must sign up to the
Mosaic Brands supply terms and conditions,
which includes our ethical sourcing policies, ETI
base code, anti-corruption, chemical / process
policies and commitments to transparency, prior to
conducting any business with the Group�
Ethical Raw Material
Our sourcing commitment is supported by a
number of initiatives relating to raw materials,
including restrictions on where our raw materials
can be sourced, and restrictions on how the
materials are processed for our final product�
These restrictions cover cotton sourcing, angora,
azo dyes and sandblasting�
22 “We put the customer at the heart of everything we do.”
Our Support
heart of everything we do
We put the customer at the
" P E O P L E & C U LT U R E
"
Our values guide us in the everyday
interactions with both our customers and
teams� We believe in continuous improvement;
we are always learning and adapting� Our
values form a culture that is unique and lives
through our behaviours�
through a core focus on service,
execution and differentiation.
Our Values
Through the devastating bushfires we were
proud to partner with GIVIT Australia, a charity
organisation that supports families directly
affected by the fires by donating 100,132 styles of
clothing to the Australians that needed it most�
CUSTOMERS ARE AT THE HEART OF EVERYTHING WE DO
INSPIRE AND MOTIVATE EACH OTHER
OWN WHAT YOU DO
GO ABOVE AND BEYOND
KNOW AND SHARE AND TALK MORE
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 23
Annual
Financial
Report
24 “We put the customer at the heart of everything we do.”
DIRECTORS' REPORT
The Directors present their report, together with the financial
statements, on the Consolidated Entity consisting of Mosaic
Brands Limited and the entities it controlled at the end of, or
during, the year ended 28 June 2020�
GENERAL
INFORMATION
DIRECTORS
The following persons were Directors of Mosaic Brands Limited
during the financial year and up to the date of this report, unless
otherwise stated:
Richard Facioni
Non-Executive Director
Scott Evans
Chief Executive Officer and
Managing Director
David Wilshire
Non-Executive Director
Sue Morphet
Non-Executive Director
Jacqueline Frank
Non-Executive Director
PRINCIPAL ACTIVITIES
The principal activities of the Consolidated Entity constituted by
the Company and the entities it controlled during the financial
year were the retailing of women’s apparel and accessories� On
23 December 2019 the Group acquired 50�1% with an option to
acquire the remaining 49�9% share of New EziBuy Limited (EziBuy)
with an effective date of 28 October 2019� EziBuy is one of the
largest multi-channel retailers in Australia and New Zealand,
generating approximately 80% of its revenue through its digital
platform� It houses expertise in digital and catalogue retailing
which the Group will leverage across the broader portfolio�
DIVIDENDS PAID, DECLARED OR RECOMMENDED
During the financial year ended 28 June 2020, the Mosaic
Brands Board announced a final dividend of 5�5 cents on
27 August 2019 which was made payable to shareholders
on 24 October 2019� Following this there were no further
dividends declared or paid throughout or since the end of the
financial year�
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
On 23 December 2019, Mosaic Brands Limited acquired 50�1%
with an option to acquire the remaining 49�9% of the ordinary
shares of New EziBuy Limited (EziBuy) from its substantial
shareholder Alceon Retail for the total consideration of
$1 effective from 28 October 2019� The purchase includes a call
and put option to either acquire the remaining 49�9% equity
interest on or prior to 31 December 2020 for a consideration of
$11,000,000 or return the current shareholding to Alceon Retail�
EziBuy is a multi-channel retailing business which operates
predominately in New Zealand and also Australia� It was acquired
to increase the Group’s online revenue share by gaining access
to the customer portfolio which includes a high customer
loyalty base�
During the 2020 financial year the Group was impacted by the
global COVID-19 pandemic which resulted in operational changes
in order to manage the effect on the Group and its environment�
As a result, for safety reasons the Group shutdown all of its
stores from end March to June�
There were no other significant changes in the state of affairs of
the Group during the financial year�
MATTERS SUBSEQUENT TO THE END OF THE
FINANCIAL YEAR
The impact of the Coronavirus (COVID-19) pandemic is ongoing
and as such it is not practicable to estimate the potential impact,
positive or negative, after the reporting date� The situation is
rapidly developing and is dependent on measures imposed by the
Australian Government and other countries, such as maintaining
social distancing requirements, quarantine, travel restrictions and
any economic stimulus that may be provided�
In the interests of the health and safety of its customers and
store teams, Mosaic Brands Limited closed all stores within
Victoria temporarily� In response to the state Government’s
imposition of stage 3 and 4 restrictions, the Group closed
25 stores on 1 July with an additional 135 stores on 8 July with
the balance 89 regional stores closed on 5 August� All stores will
remain closed until restrictions are reduced�
Mosaic Brands announced on 20 August temporary closure of
129 stores in the Westfield centres� The financial contribution
of these stores are not of a material nature with most impacted
team members being redeployed to other locations�
Apart from the above, no other matter or circumstances has
arisen since 28 June 2020 that has significantly affected, or may
significantly affect the Groups operations, the results of those
operations, or the state of affairs in future financial years�
LIKELY FUTURE DEVELOPMENTS AND
EXPECTED RESULTS
The likely developments in the operations of the Group and
the expected results of those operations in financial years
subsequent to the year ended 28 June 2020 is included in the
operational and financial highlights section of this report� No
additional information is included on the likely developments in
the operations of the Group and the expected results of those
operations as the Directors reasonably believe that the disclosure
of such information would be likely to result in unreasonable
prejudice to the economic entity if included in this report, and it
has therefore been excluded in accordance with section 299(3) of
the Corporations Act 2001�
ENVIRONMENTAL REGULATION
The Group’s operations are not subject to any significant
environmental obligations or regulations under Australian
Commonwealth or State Law�
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 25
OPERATING AND FINANCIAL REVIEW
Review of operations
Mosaic Brands Limited operates within the women’s fashion and retail sector in Australia and New Zealand� During the 2020 financial
year, the Group comprised of the Noni B, Millers, W�Lane brands (“Classic” brands) as well as Rockmans, Katies, Crossroads, Autograph,
beme brands (“Contemporary” brands) and Rivers� The store portfolio on a like for like basis ended the year at 1,333 (2019: 1,379)� On
23 December 2019 the Group acquired 50�1% with an option to acquire the remaining 49�9% share of EziBuy, with an effective date of
28 October 2019� EziBuy is a multi-channel retailing business that operates predominately in New Zealand and Australia� It was acquired
to increase the Group’s online revenue share by gaining access to the customer portfolio which includes a high customer loyalty base�
Review of financial performance
A reconciliation of earnings before interest and tax to underlying EBITDA which includes occupancy expenses which is under current
negotiations with landlords for rent relief (provided for not paid) is as follows:
(Loss) / profit before tax
Interest expense
Interest on lease liabilities (per AASB 16)
Impairment on goodwill and brand name
Impairment on non-current assets
Impairment on right-of-use assets (AASB 16)
Depreciation & amortisation*
Other items**
EBITDA
Post
AASB 16
2020
$'000
Pre AASB 16
(unaudited)
2020
$'000
2019
$'000
(212,170)
(185,220)
2,594
10,841
97,386
1,991
16,109
129,320
11,201
57,272
2,594
–
97,386
1,991
–
26,280
11,201
(45,768)
11,873
1,864
–
–
79
–
22,346
9,296
45,458
* Depreciation and amortisation under AASB 16 includes rent amortisation which previously was classed as an operational expense�
** Other items in FY20 includes acquisition and legal costs ($2,410,000) and provision for stamp duty on acquisition ($1,247,000) and an increased obsolescence
provision attributed to COVID-19 store shutdown ($13,949,000) and an adjustment for non-cash share based payment and unrealized exchange gain of
$6,405,000� FY19 includes transaction ($5,480,000) and restructuring costs ($3,659,000) in respect to the acquisition of Millers, Katies, Crossroads, Autograph
& Rivers brands and an adjustment for non-cash share based payment and unrealized foreign exchange loss ($157,000)�
Review of financial position
The Group ended the year with a cash and cash equivalent balance of $86,928,000� Mosaic Brands (excluding EziBuy) ended with a
cash and equivalent balance of $77,553,000 (2019: $36,684,000)� Net cash position after loans and borrowings (excluding EziBuy) was
$3,590,000 (2019: $7,202,000)� Group cash from operating activities resulted in an inflow of $105,998,000, excluding EziBuy Mosaic
delivered on a like for like comparison with rent reclassed back to inflow $11,830,000 (2019: $23,483,000)�
26 “We put the customer at the heart of everything we do.”
DIRECTORS' REPORT Simplified Balance Sheet
Cash
Other receivables*
Inventories
Current assets
Trade and other payables
Provisions and other liabilities
Current Liabilities**
Loan (current)***
Loan (non-current)
Loans
Net Cash
Net Current Liabilities
Mosaic
$'000
June 2020
EziBuy
$'000
Group
$'000
June 2019
Mosaic
$'000
77,553
25,632
83,349
186,534
213,156
27,879
241,035
28,974
44,989
73,963
3,590
9,375
3,320
18,980
31,675
33,925
1,328
35,253
12,528
–
12,528
(3,153)
86,928
28,952
102,329
218,209
247,081
29,207
276,288
41,502
44,989
86,491
437
36,684
5,484
166,951
209,119
198,602
37,997
236,599
–
29,482
29,482
7,202
(83,475)
(16,106)
(99,581)
(27,480)
*
Includes Government grants of $17,507,000
** Excludes contingent consideration for EziBuy booked for acquisition accounting purposes
*** Includes bridging facility draw down of $14,155,000 for JobKeeper
Outlook
Although traffic and sales are expected to remained below prior year levels the actions taken in the second half of FY20 allows the
Group to continue its focus on comparable store margin growth� Managements also expect to further realise cost efficiencies in the
2021 financial year�
The recent closures across Victoria and New Zealand and the subsequent subdued sentiment across other states in August has
been challenging however the Group expects this to improve post September as restrictions are forecasted to ease and we remain
confident in a return to sustainable profitability for the 2021 financial year, subject to no further material disruptions to operations due
to COVID-19�
MEETINGS OF DIRECTORS
The number of meetings of the Company's Board of Directors (‘the Board’) held during the year ended 28 June 2020, and the number of
meetings attended by each Director were:
Richard Facioni
Scott Evans
David Wilshire
Sue Morphet
Jacqueline Frank
Board meeting
Audit and risk
management committee
Remuneration and
nomination committee
Held
Attended
Held
Attended
Held
Attended
18
18
18
18
18
18
18
17
18
18
3
–
3
3
–
3
–
3
3
–
3
–
3
3
3
3
–
3
3
3
Held: Represents the number of meetings held during the time the Directors held office�
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 27
INDEPENDENT DIRECTORS
The Directors considered by the Board to be independent are Sue Morphet and Jacqueline Frank�
In determining whether a Non-Executive Director is considered by the Board to be independent, the following relationships affecting
independence will be taken into account:
(1) whether the Director is a substantial shareholder of the Group or an officer of, or otherwise associated directly with a substantial
shareholder of the Group (as defined in section 9 of the Corporations Act);
(2) whether the Director is employed or has been employed in an Executive capacity by the Group or another group member and there
has not been a period of at least three years between ceasing such employment and serving on the Board;
(3) whether the Director is or has been a principal of a material professional adviser or a material consultant to the Group or another
group member, or an employee materially associated with the service provided;
(4) whether the Director is or has been employed by, or a partner in, any firm that has been the Group’s external auditors;
(5) whether the Director is a material supplier or customer of the Group or any other group member, or an officer of or otherwise
associated, directly or indirectly, with a material supplier or customer;
(6) whether the Director has a material contractual relationship with the Group or another group member other than as a Director of
the Group; and,
(7) whether the Director is free from any interest and any business or other relationship which could materially interfere with the
Director’s ability to act in the best interests of the Group�
REMUNERATION REPORT [AUDITED]
The remuneration report, which has been audited as required by section 308 (3C) of the Corporations Act 2001, outlines the key
management personnel remuneration arrangements for the Group, in accordance with the requirements of the Corporations Act 2001
and its Regulations� The Directors (Executive and Non-Executive) and the Senior Executives received the amounts set out in the table of
benefits and payments and explained in this section of the report as compensation for their services as Directors and/or Executives of
the Group during the financial year ended 28 June 2020�
Specific matters included in this Report are set out below under separate headings, as follows:
1. Details of remuneration
2. Remuneration policy
3. Service Agreements
4. Additional information
�. DETAILS OF REMUNERATION
Key Management Personnel
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of
the Group, directly or indirectly, including all Directors�
The key management personnel of the Group consisted of the following Directors of Mosaic Brands Limited and Chief Executive Officer
of EziBuy:
Richard Facioni
Chairman
Scott Evans
Chief Executive Officer and Managing Director
David Wilshire
Non-Executive Director
Sue Morphet
Non-Executive Director
Jacqueline Frank
Non-Executive Director
28 “We put the customer at the heart of everything we do.”
DIRECTORS' REPORT And the following Senior Executives:
Luke Softa
Chief Financial Officer and Company Secretary
Stephen Gosney
Chief Executive Officer of EziBuy
Remuneration of Key Management Personnel
Details of the nature and amount of each element of compensation for services for key management personnel of the Group paid in the
financial year are as follows:
Short term benefits
Post employment
benefits
Long term
benefits
Share
based
payments
Cash salary
and fees
$
Cash
bonuses
STI
$
Cash
bonuses
LTI
$
Non-
monetary
benefits
$
Super-
annuation
$
Termi-
nation
benefits
$
Long
service
leave
$
Equity
settled
$
Total
$
2020
Directors
Executive Directors
Scott Evans
1,068,789
Non-executive Directors
Richard Facioni*
David Wilshire*
Sue Morphet
Jacqueline Frank
232,545
147,545
100,000
100,000
Other key management personnel
Luke Softa
Stephen Gosney**
Total
557,932
278,014
2,484,825
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
23,606
24,941
–
–
–
–
–
–
–
–
1,309
24,904
–
10,501
24,915
60,346
–
–
–
–
–
–
–
–
16,698
–
1,134,034
–
–
–
–
153,586
386,131
–
–
–
147,545
100,000
100,000
9,258
4,770
23,217
616,620
26,154
319,439
30,726
202,957 2,803,769
*
Richard Facioni and David Wilshire are both Directors of EziBuy� Both Directors received $47,545 each in cash salary and fees during the period
28 October 2019 to 28 June 2020
** Stephen Gosney is key management personnel for EziBuy and currently holds the position of Director and Chief Executive Officer� The information above
represents the period 28 October 2019 to 28 June 2020
Short term benefits
Post employment
benefits
Long term
benefits
Share
based
payments
Cash salary
and fees
$
Cash
bonuses
STI
$
Cash
bonuses
LTI
$
Non-
monetary
benefits
$
Super-
annuation
$
Termi-
nation
benefits
$
Long
service
leave
$
Equity
settled
$
Total
$
2019
Directors
Executive Directors
Scott Evans
1,173,477
237,500
Non-executive Directors
Richard Facioni
David Wilshire
Sue Morphet
Jacqueline Frank
185,000
100,000
100,000
16,667
–
–
–
–
Other key management personnel
Luke Softa
Total
634,414
137,500
2,209,558
375,000
–
–
–
–
–
–
–
24,831
25,000
–
–
–
–
–
–
–
–
4,109
28,940
24,851
49,851
–
–
–
–
–
–
–
36,728
237,500 1,735,036
–
–
–
–
153,586
338,586
–
–
–
100,000
100,000
16,667
18,206
160,717
979,797
54,934
551,803 3,270,086
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 29
�. REMUNERATION
POLICY
Non-Executive Directors
Non-Executive Director remuneration is set by the Board’s
Remuneration and Nomination Committee and is subject to
shareholder approval as detailed below based on independent
external advice with regard to market practice, relativities, and
Director duties and accountability� Company policy is designed to
attract and retain competent and suitably qualified Non-Executive
Directors, to motivate these Non-Executive Directors to achieve
Mosaic Brand’s long term strategic objectives and to protect the
long term interests of shareholders�
Fee Pool
Non-Executive Directors’ fees are set by resolution of
shareholders at the annual general meeting� It is currently set at
$750,000 per annum in aggregate� The remuneration does not
include any participation by Independent Directors in Company
Share schemes which is separately approved by the Board and
ratified by shareholders at the annual general meeting�
Fees
The Non-Executive Directors’ base fee is set at $100,000 per
annum and the Chairman’s fee is set at $185,000 per annum�
During the financial year ended 28 June 2020 the Group held
a total of 24 formal meetings, including committee, Board and
shareholder meetings�
Equity participation
Non-Executive Directors may receive rights, options or shares
as part of their remuneration, subject only to shareholder
approval� As referenced below, no rights, options or shares have
been issued to any of the Non-Executive Directors during the
financial year�
Retiring Allowance
No retiring allowances are paid to Non-Executive Directors�
Superannuation
Mosaic Brand’s pays management fees to the related party of the
Non-Executive Directors (note 26)� Therefore, no contribution is
made to their respective superannuation fund�
Executive Directors and Senior Executives
Mosaic Brand’s overall Group remuneration policy is set by the
Board’s Remuneration and Nomination Committee� The policy is
reviewed on a regular basis to ensure it remains contemporary
and competitive�
For the specified Executives, the policy is intended to be
consistent with the remuneration recommendations and
guidelines set down in Principle 8 of the Australian Security
Exchange’s “best practice” corporate governance guidelines�
Broadly, Mosaic Brand’s policy is intended to ensure:
● for each role, that the balance between fixed and variable
(performance) components is appropriate having regard to
both internal and external factors;
● that individual set objectives will result in sustainable
beneficial outcomes;
● that all performance remuneration components are
appropriately linked to measurable personal, business unit or
Group performance; and
● that total remuneration (that is the sum of fixed plus variable
components of the remuneration) for each Executive is fair,
reasonable and market competitive�
Mosaic Brand’s achievement of these objectives is
checked on a regular basis using independent external
remuneration consultants�
Components of Executive remuneration
Generally, Mosaic Brand’s provides selected Senior Executives
with three components of remuneration, as follows:
● fixed remuneration is made up of basic salary, benefits,
superannuation and other salary sacrifices� This is reflective
of their roles, experience and level of responsibility and
is reviewed annually against market data for comparable
positions� Benefits may include car allowances;
● short term incentives (STI) – paid in cash / options, directly
earned upon the successful achievement of specific financial
and operational targets� A portion of this STI may be
provided in Mosaic Brand’s shares subject to service and/
or performance conditions� All STI awards are based on
performance measures which are set and reviewed by the
Remuneration and Nomination Committee annually;
● long term incentives (LTI) – provides selected and invited
Senior Executives with the right to acquire shares, only where
specific future service requirements and future financial and
operational targets that improve shareholder returns have
been exceeded� Performance measures are set and reviewed
by the Remuneration and Nomination Committee annually�
The objective of the reward schemes (STI and LTI) is to both
reinforce the key financial goals of the Group and to provide a
common interest between management and shareholders�
The fair value at grant date of share plan and performance
share rights are independently determined using a Binomial
Approximation Option Valuation Model and the Black Scholes
Valuation Model that takes into account the exercise price, the
term of the rights over shares, the share price at grant date and
expected price volatility of the underlying share, the expected
dividend yield and the risk free interest rate for the term of the
rights over shares�
Details of rights over ordinary shares in the Group provided as
remuneration to each of the key management personnel of the
Company and the Group are set out below�
30 “We put the customer at the heart of everything we do.”
DIRECTORS' REPORT Offer for performance share rights
Performance Share Rights
These have a variety of market conditions (volume weighted average price) and non-market conditions being qualifying and
non-qualifying leaver provisions�
Richard Facioni
Grant date
Expiry date
19/08/2016
18/08/2021
19/08/2016
18/08/2021
19/08/2016
18/08/2021
Luke Softa
Fair value at
grant date
Share price at
grant date
Exercise price
Volatility
Risk free
interest rate
$ 0�47
$ 0�39
$ 0�32
$ 1�33
$ 1�33
$ 1�33
$ 1�25
$ 1�50
$ 1�75
35%
35%
35%
1�54%
1�54%
1�54%
Number
of rights
available
1,200,000
300,000
300,000
Number of
rights vested
940,000
235,000
235,000
Grant date
Expiry date
Fair value at
grant date
Share price at
grant date
Exercise price
Volatility
Risk free
interest rate
Number
of rights
available
Number of
rights vested
19/08/2016
18/08/2021
$ 0�47
$ 1�33
$ 1�25
35%
1�54%
250,000
195,833
Tranche 1 Performance Rights – these shares are issued to Scott Evans only
Grant date
Expiry date
Fair value at
grant date
Share price at
grant date
Exercise price
Volatility
Risk free
interest rate
Number
of rights
available
Number of
rights vested
26/06/2015
01/07/2020
$ 0�36
$ 0�70
$ 0�51
43�8%
2�78%
882,479
882,479
Tranche 2 Performance Rights – these shares are issued to Scott Evans only
Grant date
Expiry date
Fair value at
grant date
Share price at
grant date
Exercise price
Volatility
Risk free
interest rate
Number
of rights
available
Number of
rights vested
26/06/2015
01/07/2020
$ 0�37
$ 0�70
$ 0�51
43�8%
2�78%
882,479
882,479
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors
Richard Facioni
David Wilshire
Sue Morphet
Jacqueline Frank
Executive Directors
Scott Evans
Other key management personnel
Luke Softa
Stephen Gosney
Fixed remuneration
Short term incentive
Long term incentive
2020
2019
2020
2019
2020
2019
60%
100%
100%
100%
100%
96%
92%
55%
100%
100%
100%
72%
70%
–
–
–
–
–
–
–
–
–
–
–
–
14%
14%
–
40%
45%
–
–
–
–
4%
8%
–
–
–
14%
16%
–
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 31
The portion of the cash bonus paid/payable is as follows:
Name
Executive Directors
Scott Evans
Other key management personnel
Luke Softa
Stephen Gosney
2020
2019
–
–
–
100%
100%
–
3. SERVICE AGREEMENTS
Remuneration and other terms of employment for key management personnel are formalised in service agreements�
Details of these agreements are as follows:
Name:
Title:
Scott Evans
Chief Executive Officer
Duration of agreement:
Employment agreement for Chief Executive Officer operative until terminated by either party�
Termination payment:
Maximum payment to be made to Chief Executive Officer on termination is 3 months'� Total
Remuneration (being Total Fixed Remuneration plus Short Term Incentives, Long Term Incentives
and benefits)� To be paid in the following circumstances:
1) Redundancy; or
2) Fundamental Change�
Notice of termination:
On termination by Mosaic Brand or the Executive – 3 months’ notice�
Payment in lieu of notice can be made by Mosaic Brand in all circumstances, if Mosaic Brand
so chooses�
Restraint Conditions:
Restraint period of 6 months
Name:
Title:
Luke Softa
Chief Financial Officer and Company Secretary
Duration of agreement:
Employment agreement for Chief Financial Officer operative until terminated by either party�
Termination payment:
Maximum payment to be made to the Chief Financial Officer on termination is 3 months'� Total
Remuneration (being Total Fixed Remuneration plus Short Term Incentives, Long Term Incentives
and benefits)� To be paid in the following circumstances:
1) Redundancy; or
2) Fundamental Change�
Notice of termination:
On termination by Mosaic Brand or the Executive – 3 months’ notice�
Payment in lieu of notice can be made by Mosaic Brand in all circumstances, if Mosaic Brand
so chooses�
Restraint Conditions:
Restraint period of 6 months
32 “We put the customer at the heart of everything we do.”
DIRECTORS' REPORT Name:
Title:
Stephen Gosney
Chief Executive Officer (EziBuy)
Duration of agreement:
Employment agreement for Chief Executive Officer operative until terminated by either party�
Termination payment:
Maximum payment to be made to the Chief Executive Officer on termination is 3 months'� Total
Remuneration (being Total Fixed Remuneration plus Short Term Incentives, Long Term Incentives
and benefits)� To be paid in the following circumstances:
1) Redundancy; or
2) Fundamental Change�
Notice of termination:
On termination by EziBuy or the Executive – 3 months’ notice�
Payment in lieu of notice can be made by EziBuy in all circumstances, if EziBuy so chooses�
Restraint Conditions:
Restraint period of 6 months
4. ADDITIONAL INFORMATION
The earnings of the Group for the five years to 28 June 2020 are summarised below:
Revenue
(Loss) / Profit after income tax
2020
$'000
736,777
(170,485)
2019
$'000
2018
$'000
2017
$'000
881,920
372,426
316,756
8,130
17,293
3,253
2016
$'000
110,478
2,210
The factors that are considered to affect total shareholders return (‘TSR’) are summarised below:
Share price at financial year end ($)
Basic (loss) / earnings per share (cents per share)
Total dividends (cents)
2020
2019
2018
2017
2016
$0.71
(176.0)
5.5
$2�72
8�4
13�0
$2�94
21�3
13�0
$1�75
$1�00
4�6
–
6�1
–
Options held by Directors and key management personnel
There are options outstanding at end of the financial year ended 28 June 2020�
Relevant interest in shares by Directors and key management personnel
The number of shares in the parent entity held during the financial year by each Director and other members of key management
personnel of the consolidated entity, including their personally related parties, is set out below�
Directors and key management personnel
Shareholding at
30 June 2019
No�
Shares purchased or
(sold) ordinary
No�
Shares acquired
under performance
rights plan ordinary
No�
Shareholding at
28 June 2020
No.
Richard Facioni
Scott Evans
David Wilshire
Sue Morphet
Jacqueline Frank
Luke Softa
Stephen Gosney
TOTAL
1,800,000
4,745,314
–
2,460,784
–
919,813
315,396
10,241,307
–
–
–
–
–
–
–
–
–
43,555
–
–
–
25,216
18,339
87,110
1,800,000
4,788,869
–
2,460,784
–
945,029
333,735
10,328,417
This concludes the remuneration report which has been audited�
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 33
SHARES UNDER OPTION AND ISSUED ON THE
EXERCISE OF OPTIONS
Details of the shares issued under the exercise of options and
unissued ordinary shares under option at the date of this report
can be found in note 20 and 33 respectively�
INDEMNITY AND INSURANCE OF DIRECTORS
AND OFFICERS
The Group has indemnified the Directors and Executives of
the Group for costs incurred, in their capacity as a Director or
Executive, for which they may be held personally liable, except
where there is a lack of good faith�
During the financial year, the Group paid a premium in respect of
a contract to insure the Directors and Executives of the Group
against a liability to the extent permitted by the Corporations Act
2001� The contract of insurance prohibits disclosure of the nature
of the liability and the amount of the premium�
INDEMNITY AND INSURANCE OF AUDITOR
The Group has not, during or since the end of the financial year,
indemnified or agreed to indemnify the auditor of the Group or
any related entity against a liability incurred by the auditor�
During the financial year, the Group has not paid a premium in
respect of a contract to insure the auditor of the Group or any
related entity�
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the
Corporations Act 2001 for leave to bring proceedings on behalf of
the Group, or to intervene in any proceedings to which the Group
is a party for the purpose of taking responsibility on behalf of the
Group for all or part of those proceedings�
● none of the services undermine the general principles relating
to auditor independence as set out in APES 110 Code of
Ethics for Professional Accountants issued by the Accounting
Professional & Ethical Standards Board, including reviewing or
auditing the auditors own work, acting in a management or
decision-making capacity for the Group, acting as advocate
for the Group or jointly sharing economic risks and rewards�
AUDITOR
BDO continues in office in accordance with section 327 of the
Corporations Act 2001� The BDO entity performing the audit of
the Group transitioned from BDO East Coast Partnership to BDO
Audit Pty Limited on 26 June 2020�
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration as required
under section 307C of the Corporations Act 2001 is set out
immediately after this Director’s report�
ROUNDING OF AMOUNTS
The Company is of a kind referred to in Corporations Instrument
2016/191, issued by the Australian Securities and Investments
Commission, relating to 'rounding-off'� Amounts in this report
have been rounded off in accordance with that Corporations
Instrument to the nearest thousand dollars, or in certain cases,
the nearest dollar�
This report is made in accordance with a resolution of Directors,
pursuant to section 298(2) (a) of the Corporations Act 2001�
On behalf of the Directors
NON-AUDIT SERVICES
The details of amounts paid or payable to the auditor for
non-audit services provided during the financial year by the
auditor are outlined in note 25 to the financial statements�
Richard Facioni
Chairman
Sydney 25 August 2020
The Directors are satisfied that the provision of non-audit services
during the financial year by the auditor is compatible with the
general standard of independence for auditors imposed by the
Corporations Act 2001�
The Directors are of the opinion that the services as disclosed
in note 25 to the financial statements do not compromise the
external auditor’s independence requirements of the Corporations
Act 2001 for the following reasons:
● all non-audit services have been reviewed and approved to
ensure that they do not impact the integrity and objectivity of
the auditor, and
Scott Evans
Managing Director
Sydney 25 August 2020
34 “We put the customer at the heart of everything we do.”
DIRECTORS' REPORT MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 35
AUDITOR'S INDEPENDENCE DECLARATION Level 11, 1 Margaret St Sydney NSW 2000 Australia Tel: +61 2 9251 4100 Fax: +61 2 9240 9821 www.bdo.com.au BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. DECLARATION OF INDEPENDENCE BY GILLIAN SHEA TO THE DIRECTORS OF MOSAIC BRANDS LIMITED As lead auditor of Mosaic Brands Limited for the year ended 28 June 2020, I declare that, to the best of my knowledge and belief, there have been: 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and 2. No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Mosaic Brands Limited and the entities it controlled during the period. Gillian Shea Director BDO Audit Pty Ltd Sydney 25 August 2020 CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 28 JUNE 2020
Continuing Operations
Revenue
Other income
Cost of goods sold
Expenses (excluding finance costs)
Transaction and restructuring costs
Finance costs
Impairment of brand names
Impairment of goodwill
(Loss) / profit before income tax
Income tax benefit / (expense)
(Loss) / profit attributed to members of the parent entity
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income, net of tax
Total comprehensive income for the year attributed to members of the
parent entity, net of tax
(Loss) / earnings per share
Basic (loss) / earnings per share (cents)
Diluted (loss) / earnings per share (cents)
Consolidated Group
Note
2020
$’000
2019
$’000
3
3
4
4
12
12
5
713,580
23,197
864,493
17,427
(384,253)
(382,783)
(450,216)
(476,001)
(3,657)
(13,435)
(33,364)
(64,022)
(212,170)
41,685
(170,485)
123
123
(9,139)
(2,124)
–
–
11,873
(3,743)
8,130
31
31
(170,362)
8,161
32
32
(176.0)
(176.0)
8�4
8�4
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes. The Group has initially applied AASB 16 at 1 July 2019. Under the transition method chosen comparative
information is not restated.
�
36 “We put the customer at the heart of everything we do.”
CONSOLIDATED STATEMENT OF FINANCIAL POSTION
AS AT 28 JUNE 2020
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Other receivables
Inventories
Income tax receivable
Other current assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Plant and equipment
Right-of-use assets
Intangible assets
Deferred tax assets
Other non-current assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Borrowings
Provisions
Derivative financial instruments
Lease liabilities
Income tax payable
Other current liabilities
Deferred consideration
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
Lease liabilities
Provisions
Deferred tax liabilities
Other non-current liabilities
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Consolidated Group
Note
2020
$’000
2019
$’000
6
7
8
5
9
10
11
12
5
13
14
15
16
17
5
18
19
14
17
15
5
18
20
21
86,928
23,140
102,329
–
5,812
218,209
31,045
140,793
42,943
117,866
24
332,671
550,880
36,684
5,484
166,951
4,846
347
214,312
41,101
–
123,970
32,386
91
197,548
411,860
247,081
198,602
41,502
29,112
534
87,544
145
95
9,580
415,593
44,989
111,013
2,828
56,656
110
215,596
631,189
(80,309)
108,034
17,868
(206,211)
(80,309)
–
29,089
570
–
–
8,908
–
237,169
29,482
–
4,427
19,171
15,489
68,569
305,738
106,122
107,605
9,421
(10,904)
106,122
The above consolidated statement of financial position should be read in conjunction with the accompanying notes. The Group has
initially applied AASB 16 at 1 July 2019. Under the transition method chosen comparative information is not restated.
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 37
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 28 JUNE 2020
Foreign
currency
translation
reserve
$'000
–
–
–
31
31
–
–
–
31
–
–
–
123
123
–
–
–
Dividend
profit reserve
$'000
Accumulated
losses
$'000
Total
$'000
10,112
(10,904)
110,018
–
8,130
8,130
8,130
(8,130)
–
8,130
–
–
(12,575)
–
–
–
–
–
–
31
8,161
(46)
365
(12,376)
5,667
(10,904)
106,122
–
–
(11,521)
(11,521)
(170,485)
(170,485)
13,301
(13,301)
–
–
–
123
13,301
(195,307)
(181,883)
–
–
(5,331)
–
–
–
429
266
(5,243)
Issued capital
$’000
Equity reserve
$'000
Note
107,651
3,159
–
–
–
–
–
–
–
–
(46)
–
–
–
365
199
107,605
3,723
–
–
–
–
–
429
–
–
–
–
–
–
–
–
266
88
21
20
33
21,22
20,21
1
21
20
33
21,22
20,21
108,034
4,077
154
13,637
(206,211)
(80,309)
Balance at 1 July 2018
Profit after income tax for
the year
Transfer to dividend
profit reserve
Other comprehensive income
for the year, net of tax
Total comprehensive income
for the year
Transactions with owners in
their capacity as owners:
Shares cancelled during
the year
Share based payment expense
Dividends paid or provided for
Balance at 30 June 2019
Adjustment for changes in
accounting policy – AASB 16
Loss after income tax for
the year
Transfer profit after income
tax for the half-year**
Other comprehensive income
for the year, net of tax
Total comprehensive income
for the year
Transactions with owners in
their capacity as owners:
Shares issued during the year
Share based payment expense
Dividends paid or provided for
Balance at 28 June 2020
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
*The Group has initially applied AASB 16 at 1 July 2019. Under the transition method chosen comparative information is not restated.
**The transfer into the dividend profit reserve was recorded based on the profit recognised for the half-year ended 29 December 2019.
No dividend has been declared or paid since 29 December 2019.
38 “We put the customer at the heart of everything we do.”
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 28 JUNE 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Receips from Government grants
Transaction and restructuring costs paid
Interest received
Interest and other finance costs paid
Income taxes received / (paid)
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for the purchase of business, net of cash acquired
Payment for plant and equipment
Payment for software assets
Proceeds from the sale of plant and equipment
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Payment for buy-back of shares
Proceeds from borrowings
Repayment of borrowings
Payment of borrowing costs
Payment of lease liabilities
Dividends paid
Consolidated Group
Note
2020
$’000
2019
$’000
811,837
967,944
(724,079)
(918,839)
31,056
(5,656)
94
(13,160)
5,906
31
105,998
2,460
(4,790)
(4,378)
51
–
(9,139)
293
(1,264)
(15,512)
23,483
(32,082)
(8,239)
(1,562)
52
(6,657)
(41,831)
–
93,797
(43,483)
–
(94,168)
(5,243)
(49,097)
50,244
36,684
86,928
(46)
32,000
(22,950)
(365)
–
(12,376)
(3,737)
(22,085)
58,697
36,684
Net cash used in financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at the end of the financial year
6
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. The Group has initially
applied AASB 16 at 1 July 2019. Under the transition method chosen comparative information is not restated.
�
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 39
Note �. SIGNIFICANT
ACCOUNTING POLICIES
The financial report of Mosaic Brands Limited for the 52 weeks
ended 28 June 2020 was authorised for issue in accordance with
a resolution of the Directors on 25 August 2020�
Mosaic Brands is a for profit company limited by shares
incorporated in Australia whose shares are publicly traded on
the Australian Securities Exchange� The Consolidated Entity
is primarily involved in the retailing of women’s apparel and
accessories and has acquired 50�1% with an option to acquire the
remaining 49�9% interest in a multi-category Omni channel New
Zealand based entity (EziBuy)� The nature of the operations and
principal activities are described in the Directors’ Report�
(a) Basis of Preparation
These general purpose financial statements have been prepared
in accordance with the Corporations Act 2001, Australian
Accounting Standards and Interpretations of the Australian
Accounting Standards Board and International Financial Reporting
Standards as issued by the International Accounting Standards
Board� Material accounting policies adopted in the preparation of
these financial statements are presented below and have been
consistently applied unless stated otherwise�
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�
The financial report has been prepared on a going concern basis
which contemplates continuity of normal business activities
and the realisation of assets and settlement of liabilities in the
ordinary course of business� During the 2020 financial year the
Group was impacted by the global COVID-19 pandemic which
resulted in operational changes in order to manage the effect
on the Group and its environment� The impact and management
of the effects of the COVID-19 pandemic resulted in the Group
ending with a net current liability position of $197,384,000 as at
28 June 2020� Current liabilities included $87,544,000 in current
lease liabilities as a result of the adoption of AASB 16� Current
liabilities also included $8,690,000 in employee benefit provisions
which may not be settled in cash over the next twelve months�
The Directors believe it is appropriate to prepare the financial
report on a going concern basis after considering the
following factors:
● Subsequent to year end, management has successfully
negotiated an extension of the Group’s working capital facility
with ANZ� Management expect to be able to renegotiate the
loan facility disclosed in note 14, currently due on 6 July 2021,
if required�
● Management were able to manage working capital during the
nationwide shutdown in end March to June and will continue
to do so through:
● cancelling or delaying inventory orders
● continuing to pursue operating efficiencies
● re-negotiating and extending payment terms with
key suppliers
● negotiating rental concessions and modified rental
agreements with landlords
● accessing JobKeeper extensions where eligible
● The Group has as disclosed in note 27 proceedings which are
in early stages� Management are confident of a successful
outcome, and as such potential legal costs have not been
included in the Company’s cash flow forecasts�
● The EziBuy acquisition is still in its review period with the
call/put option timeline being 31 December 2020� Any
financing requirements needed to exercise the call option and
repay related party loans as disclosed in note 19 if the Group
chooses to purchase EziBuy at that date or earlier�
The underlying uncertainty linked to what impacts COVID-19 will
have on the national economy, the unknown timelines to a cure
and any other actions or assistance the Government may take
can have an impact on the Group� These aforementioned events
and conditions give rise to an existence of a material uncertainty
which may cast significant doubt on the Group’s ability to
continue as a going concern� The Group retains the ability to
take alternative measures, which may include capital raisings,
additional debt financing and further cost curtailment, which
the Group has a history of achieving� The financial statements
do not include any adjustment relating to the recoverability
and classification of assets carrying amounts or the amount
of liabilities that might result should the Group be unable to
continue as a going concern and meet its debts as and when they
fall due�
The Directors have therefore concluded that there are reasonable
grounds to believe that the Group will be able to pay its debts
as and when they fall due� On this basis the financial report has
been prepared on a going concern basis� Should the Group be
unable to continue as a going concern, it may be required to
realise its assets and discharge its liabilities at amounts different
to those stated in the financial statements�
(b) New or amended Accounting Standards and
Interpretations adopted
The consolidated entity has adopted all of the new or
amended Accounting Standards and Interpretations issued by
the Australian Accounting Standards Board ('AASB') that are
mandatory for the current reporting period�
Any new or amended Accounting Standards or Interpretations
that are not yet mandatory have not been early adopted�
The following Accounting Standards and Interpretations are most
relevant to the consolidated entity:
AASB16 Leases
The Consolidated Entity has adopted AASB 16 from 1 July 2019�
The standard replaces AASB 117 'Leases' and for lessees
40 “We put the customer at the heart of everything we do.”
NOTES TO THE FINANCIAL STATEMENTS eliminates the classifications of operating leases and finance
leases� Except for some short-term leases and leases of low-value
assets, right-of-use assets and corresponding lease liabilities
are recognised in the statement of financial position� Straight-
line operating lease expense recognition is replaced with a
depreciation charge for the right-of-use assets (included in
operating costs) and an interest expense on the recognised lease
liabilities (included in finance costs)� In the earlier periods of the
lease, the expenses associated with the lease under AASB 16
will be higher when compared to lease expenses under AASB
117� However, EBITDA (Earnings Before Interest, Tax, Depreciation
and Amortisation) results improve as the operating expense is
now replaced by interest expense and depreciation in profit
or loss� For classification within the statement of cash flows,
the interest portion is disclosed in operating activities and the
principal portion of the lease payments are separately disclosed
in financing activities� For lessor accounting, the standard does
not substantially change how a lessor accounts for leases� The
Group has applied AASB 16 using the modified retrospective
method, under which the cumulative effect of initial application
is recognised in retained earnings at 1 July 2019� Accordingly,
the comparative information presented for 2019 has not been
restated – i�e� it is presented, as previously recorded, under AASB
117 Leases and related interpretations� Details of the changes in
the accounting policies are disclosed below�
Right-of-use assets
A right-of-use asset is recognised at the commencement date
of a lease� The right-of-use asset is measured at cost, which
comprises the initial amount of the lease liability, adjusted
for, as applicable, any lease payments made at or before the
commencement date net of any lease incentives received, any
initial direct costs incurred, and, except where included in the
cost of inventories, an estimate of costs expected to be incurred
for dismantling and removing the underlying asset, and restoring
the site or asset�
Right-of-use assets are depreciated on a straight-line basis over
the unexpired period of the lease or the estimated useful life
of the asset, whichever is the shorter� Where the Consolidated
Entity expects to obtain ownership of the leased asset at the end
of the lease term, the depreciation is over its estimated useful
life� Right-of-use assets are subject to impairment or adjusted for
any re-measurements of lease liabilities�
The Consolidated Entity has elected not to recognise a
right-of-use asset and corresponding lease liability for short-term
leases with terms of 12 months or less and leases of low-value
assets� Lease payments on these assets are expensed to profit or
loss as incurred�
Lease liabilities
A lease liability is recognised at the commencement date of a
lease� The lease liability is initially recognised at the present value
of the lease payments to be made over the term of the lease,
discounted using the interest rate implicit in the lease or, if that
rate cannot be readily determined, and the Consolidated Entity's
incremental borrowing rate� Lease payments comprise of fixed
payments less any lease incentives receivable, variable lease
payments that depend on an index or a rate, amounts expected
to be paid under residual value guarantees, exercise price of a
purchase option when the exercise of the option is reasonably
certain to occur, and any anticipated termination penalties� The
variable lease payments that do not depend on an index or a
rate are expensed in the period in which they are incurred� Lease
liabilities are measured at amortised cost using the effective
interest method� The carrying amounts are remeasured if there is
a change in the following: future lease payments arising from a
change in an index or a rate used; residual guarantee; lease term;
certainty of a purchase option and termination penalties� When
a lease liability is remeasured, an adjustment is made to the
corresponding right-of-use asset, or to profit or loss if the carrying
amount of the right-of-use asset is fully written down�
Key estimates and judgements
Lease term
The lease term is a significant component in the measurement
of both the right-of-use asset and lease liability� Judgement is
exercised in determining whether there is reasonable certainty
that an option to extend the lease or purchase the underlying
asset will be exercised, or an option to terminate the lease will
not be exercised, when ascertaining the periods to be included
in the lease term� In determining the lease term, all facts and
circumstances that create an economical incentive to exercise
an extension option, or not to exercise a termination option,
are considered at the lease commencement date� Factors
considered may include the importance of the asset to the
consolidated entity's operations; comparison of terms and
conditions to prevailing market rates; incurrence of significant
penalties; existence of significant leasehold improvements; and
the costs and disruption to replace the asset� The consolidated
entity reassesses whether it is reasonably certain to exercise an
extension option, or not exercise a termination option, if there is a
significant event or significant change in circumstances�
Incremental borrowing rate
Where the interest rate implicit in a lease cannot be readily
determined, an incremental borrowing rate is estimated to
discount future lease payments to measure the present value of
the lease liability at the lease commencement date� Such a rate
is based on what the consolidated entity estimates it would have
to pay a third party to borrow the funds necessary to obtain
an asset of a similar value to the right-of-use asset, with similar
terms, security and economic environment�
Nature of the effect of adoption of AASB 16
The Group leases buildings for its offices and retail outlets�
Before the adoption of AASB 16, the Group classified each of
its leases (as lessee) at the inception date as operating lease�
In an operating lease, the leased property was not capitalised
and the lease payments were recognised as rent expense in the
statement of profit or loss on a cash flow basis over the lease
term� Upon adoption of AASB 16, the Group applied a single
recognition and measurement approach for the leases that it
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 41
Note �. SIGNIFICANT ACCOUNTING POLICIES (continued)
is the lessee, where leases have expired and are currently on
holdover are treated as variable factors which were excluded
from the AASB 16 adoption� The Group recognised lease liabilities
to make lease payments and right-of-use assets representing
the right to use the underlying assets� In accordance with the
modified retrospective method of adoption, the Group applied
AASB 16 as at 1 July 2019 with the initial application adjusted to
the retained earnings�
● The exclusion of initial direct costs for the measure of the
ROU asset at the date of initial application; and
● The use of hindsight, in determining the lease term, if the
contract contains options to extend or terminate the lease
As at 1 July 2019:
● Right-of-use assets of $195,612,000 were recognised and
presented separately in the statement of financial position
The Group has elected to apply practical expedients in AASB 16
C10 which includes the following:
● The use of a single discount rate to portfolio of leases with
● Lease liabilities of $241,348,000 were recognised and
presented separately as either current or non-current
measured using an incremental borrowing rate of 4�58%
reasonably similar characteristics
● Lease incentives of $24,325,000 were derecognised from
● Reliance on previous assessments on whether leases
other liabilities to right-of-use assets
are onerous
● Not to recognise ROU assets and leases liabilities for leases
of low-value assets� The lease payments associated with
these lease is recognised as an expense on a straight-line
basis over the lease term
● Provisions of $5,743,000 were derecognised as onerous leases
to right-of-use assets and retained earnings
● Deferred tax asset increased by $4,147,000 because of the
deferred tax impact of the changes in assets
● The net effect of these adjustments had been adjusted to
Retained earnings $11,521,000
Reconciliation of operating lease commitments and lease liability
The reconciliation between the operating lease commitments disclosed in applying AASB 117 at 30 June 2019 discounted using the
Company’s weighted incremental borrowing rate and the lease liability recognised as at 1 July 2019 is as follows:
Operating lease commitments, 30 June 2019
Adjustments:
Effect of discounting using the weighted average incremental borrowing rate of 4�58%
Short term lease payments
Lease liability, 1 July 2019
Increase
(Decrease)
$’000
262,883
(3,948)
(17,587)
241,348
For the twelve months ended 28 June 2020:
● Depreciation expense increased by $103,040,000 relating
to the depreciation of additional assets recognised (i�e�,
increased in the right-of-use assets, net of decrease in
property, plant and equipment)
● Finance costs increases by $10,841,000 relating to the
interest expense on additional lease liabilities recognised
● Income tax expense decreased by $528,000 relating to the
tax effect of these changes in expenses
● Net cash flow from financing activities increased
● Impairment expense increased by $16,109,000 relating to
by $94,168,000
expected leases which will not be renewed
● Rent expense decreased by $111,511,000 relating to previous
operating leases as these expenditures are now included
within depreciation and interest expense
● Occupancy expenses only includes the base rent for the
leases that are currently on holdover being $19,750,000
● Variable lease payments are included in the occupancy
expenses disclosed in note 4
● There are an additional $62,014,000 of new leases including
$25,543,000 from the acquisition of EziBuy
IFRIC Interpretation 23 Uncertainty over Income
Tax Treatments
The Group does not consider that IFRIC Interpretation 23
Uncertainty over Income Tax Treatments has a material impact to
the Group�
Principles of Consolidation
The consolidated financial statements incorporate the assets
and liabilities of all subsidiaries of Mosaic Brands Limited as
at 28 June 2020 and the results of all subsidiaries for the year
then ended, including the results of EziBuy from 28 October
42 “We put the customer at the heart of everything we do.”
NOTES TO THE FINANCIAL STATEMENTS 2019 (refer Note 30)� Mosaic Brands Limited and its subsidiaries
together are referred to in these financial statements as the
‘Consolidated Entity’�
Subsidiaries are all those entities over which the consolidated
entity has control� The consolidated entity controls an entity
when the consolidated entity is exposed to, or has rights to,
variable returns from its involvement with the entity and has the
ability to affect those returns through its power to direct the
activities of the entity� Subsidiaries are fully consolidated from the
date on which control is transferred to the consolidated entity�
They are de-consolidated from the date that control ceases�
Intercompany transactions, balances and unrealised gains on
transactions between entities in the consolidated entity are
eliminated� Unrealised losses are also eliminated unless the
transaction provides evidence of the impairment of the asset
transferred� Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies
adopted by the consolidated entity�
(c)
Fair value measurement
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 Standard�
Fair value is the price the Group would receive to sell an asset
or would have to pay to transfer a liability in an orderly (i�e�
unforced) transaction between independent, knowledgeable and
willing market participants at the measurement date�
As fair value is a market-based measure, the closest equivalent
observable market pricing information is used to determine fair
value� Adjustments to market values may be made having regard
to the characteristics of the specific asset or liability� 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�
To the extent possible, market information is extracted from
either the principal market for the asset or liability (i�e� the
market with the greatest volume and level of activity for the
asset or liability) or, in the absence of such a market, the most
advantageous market available to the entity at the end of the
reporting period (i�e� the market that maximises the receipts from
the sale of the asset or minimises the payments made to transfer
the liability, after taking into account transaction costs and
transport costs)�
For non-financial assets, the fair value measurement also takes
into account a market participant’s ability to use the asset in its
highest and best use or to sell it to another market participant
that would use the asset in its highest and best use�
The fair value of liabilities and the entity’s own equity instruments
(excluding those related to share-based payment arrangements)
may be valued, where there is no observable market price in
relation to the transfer of such financial instruments, by reference
to observable market information where such instruments are
held as assets� Where this information is not available, other
valuation techniques are adopted and, where significant, are
detailed in the respective note to the financial statements�
(d) Financial instruments
Financial assets and financial liabilities are initially measured at
fair value� Transaction costs are included as part of the initial
measurement, except for financial instruments at fair value
through profit or loss�
Financial assets are subsequently measured at either amortised
cost or fair value depending on their classification� Classification
is determined based on both the business model within which
such assets are held and the contractual cash flow characteristics
of the financial asset� The consolidated entity’s cash and
cash equivalents and other receivables are classified as at
amortised cost�
Certain investments qualify to be recognised and measured
subsequently at fair value through other comprehensive income
(‘OCI’) on exercise of an irrevocable election at the time of initial
recognition, otherwise they are recognised at fair value through
profit or loss�
Financial liabilities are subsequently measured at amortised cost�
Derivatives are recognised at fair value through profit or loss�
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 consolidated entity recognises a loss allowance for expected
credit losses on debt instruments which are either measured
at amortised cost or fair value through other comprehensive
income� The measurement of the loss allowance depends
upon the consolidated entity's assessment at the end of each
reporting period as to whether the financial instrument's credit
risk has increased significantly since initial recognition, based on
reasonable and supportable information that is available, without
undue cost or effort to obtain� For financial assets measured
at fair value through other comprehensive income, the loss
allowance is recognised within other comprehensive income� In
all other cases, the loss allowance is recognised in profit or loss�
When there is no reasonable expectation of recovering part or all
of a financial asset, its carrying value is written off�
(e) Foreign currency translation
The financial statements are presented in Australian dollars,
which is the functional and presentation currency for Mosaic
Brands Limited�
Foreign currency transactions
Foreign currency transactions are translated into Australian
dollars using the exchange rates prevailing at the dates of the
transactions� Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation
at financial year-end exchange rates of monetary assets and
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 43
Note �. SIGNIFICANT ACCOUNTING POLICIES (continued)
liabilities denominated in foreign currencies are recognised in
profit or loss�
reporting period is from 2 July 2018 to 30 June 2019 which
represents 52 weeks�
Foreign operations
The assets and liabilities of foreign operations are translated into
Australian dollars using the exchange rates at the reporting date�
The revenues and expenses of foreign operations are translated
into Australian dollars using the average exchange rates, which
approximate the rates at the dates of the transactions, for the
period� All resulting foreign exchange differences are recognised
in other comprehensive income through the foreign currency
reserve in equity�
The foreign currency reserve is recognised in profit or loss when
the foreign operation or net investment is disposed of�
(f) Employee benefits
Employees of the Group receive defined contribution
superannuation entitlements for which the Group pays the
fixed superannuation guarantee contribution (currently 9�5%
of the employee’s average ordinary salary) to the employee’s
superannuation fund of choice� All contributions in respect of
employees’ defined contribution entitlements are recognised as
an expense when they become payable� The Group’s obligation
with respect to employees’ defined contribution entitlements is
limited to its obligation for any unpaid superannuation guarantee
contributions at the end of the reporting period� All obligations
for unpaid superannuation guarantee contributions are measured
at the (undiscounted) amounts expected to be paid when the
obligation is settled and are presented as current liabilities in the
Group’s statement of financial position�
(g) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount
of goods and services tax (GST) except where the amount of
GST incurred is not recoverable from the Australian Taxation
Office (ATO)�
Receivables and payables are stated inclusive of the amount
of GST receivable or payable� The net amount of GST
recoverable from, or payable to, the tax authority is included
in Trade and other receivables or payables in the statement of
financial position�
Cash flows are presented on a gross basis� The GST components
of cash flows arising from investing or financing activities
which are recoverable from, or payable to, the tax authority are
presented as operating cash flows included in receipts from
customers or payments to suppliers�
Commitments and contingencies are disclosed net of the amount
of GST recoverable from, or payable to, the taxation authority�
(h) Period
When required by Accounting Standards, comparative figures
have been adjusted to conform to changes in presentation for the
current financial year� The current reporting period, 1 July 2019
to 28 June 2020, represents 52 weeks and the comparative
(i) Rounding of amounts
The company is of a kind referred to in Corporations Instrument
2016/191, issued by the Australian Securities and Investments
Commission, relating to 'rounding-off'� Amounts in this report
have been rounded off in accordance with that Corporations
Instrument to the nearest thousand dollars, or in certain cases,
the nearest dollar�
(j) Critical accounting estimates and judgements
The Directors evaluate estimates and judgements incorporated
into the financial statements based on historical knowledge and
best available current information� Estimates assume a reasonable
expectation of future events and are based on current trends and
economic data, obtained both externally and within the Group�
The key estimates and judgements have been included within the
notes to the financial report�
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that
the Coronavirus (COVID-19) pandemic has had, or may have,
on the consolidated entity based on known information� This
consideration extends to the nature of the products offered,
customers, supply chain, staffing and geographic regions in which
the consolidated entity operates, and the resulting financial
impacts and disclosures�
(k) Parent entity information
In accordance with the Corporations Act 2001, these financial
statements present the results of the consolidated entity only�
Supplementary information about the parent entity is disclosed in
note 27�
(l) New Accounting Standards and Interpretations not yet
mandatory or early adopted
Australian Accounting Standards and Interpretations that have
recently been issued or amended but are not yet mandatory, have
not been early adopted by the consolidated entity for the annual
reporting period ended 28 June 2020� The consolidated entity's
assessment of the impact of these new or amended Accounting
Standards and Interpretations, most relevant to the consolidated
entity, are set out below�
Conceptual Framework for Financial Reporting
(Conceptual Framework)
The revised Conceptual Framework is applicable to annual
reporting periods beginning on or after 1 January 2020 and early
adoption is permitted� The Conceptual Framework contains new
definition and recognition criteria as well as new guidance on
measurement that affects several Accounting Standards� Where
the consolidated entity has relied on the existing framework
in determining its accounting policies for transactions, events
or conditions that are not otherwise dealt with under the
Australian Accounting Standards, the consolidated entity may
44 “We put the customer at the heart of everything we do.”
NOTES TO THE FINANCIAL STATEMENTS need to review such policies under the revised framework� At
this time, the application of the Conceptual Framework is not
expected to have a material impact on the consolidated entity's
financial statements�
settled within 12 months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at
least 12 months after the reporting period� All other liabilities are
classified as non-current�
(m) Current and non-current classification
Assets and liabilities are presented in the statement of financial
position based on current and non-current classification�
An asset is classified as current when: it is either expected to be
realised or intended to be sold or consumed in the consolidated
entity's normal operating cycle; it is held primarily for the purpose
of trading; it is expected to be realised within 12 months after the
reporting period; or the asset is cash or cash equivalent unless
restricted from being exchanged or used to settle a liability for
at least 12 months after the reporting period� All other assets are
classified as non-current�
A liability is classified as current when: it is either expected to
be settled in the consolidated entity's normal operating cycle;
it is held primarily for the purpose of trading; it is due to be
Deferred tax assets and liabilities are always classified as
non-current�
(n) Government grants
Government Grants are recognised on the Consolidated
Statement of Profit or Loss and Other Comprehensive Income
when there is reasonable assurance that the entity will comply
with the conditions attaching to them, and the grant will be
received� Such grants are presented on a net basis on the
Statement of Profit or Loss and Other Comprehensive Income
within employee benefits expense�
(o) Reclassification
Certain amounts in the financial report have been reclassified to
conform to current year presentation�
Note 2. OPERATING SEGMENT
Management has determined the operating segments based on internal reports reviewed and used by the Chief Executive Officer
(CEO) in assessing performance and in determining the allocation of resources� The Group operates predominately in Australia and also
within New Zealand and is organised into two operating segments�
Fashion retail (Mosaic Brands Australia and New Zealand)
The fashion retail segment shares similarities in its offering (fashion clothing) with the same customer demographic across different
brands and are supported by one integrated support function� The integrated support functions include finance, information technology,
marketing (both in the processes and the target customer) as well as the production and distribution processes�
Multi-channel retail (EziBuy New Zealand)
The multi-channel retail segment consists of EziBuy Limited which is based in New Zealand and services customers across both
Australia and New Zealand (the Group gained control of the ordinary shares in EziBuy Limited on 23 December 2019)� The multi-channel
retail segment sells various products targeting a variety of customers and operates with its own separate support functions for areas
including finance, information technology, marketing and distribution�
The information reported to the CEO is on at least a monthly basis, including weekly reporting on key revenue metrics� The accounting
policies adopted for internal reporting to the CEO are consistent with those adopted in the financial statements�
At the end of the reporting period the Groups geographic areas of operation consisted of Australia and New Zealand:
GEOGRAPHIC SEGMENTS
Fashion retail
Australia
New Zealand
Multi-channel
New Zealand
Total
2020
$'000
2019
$’000
2020
$'000
2019
$’000
2020
$'000
2019
$’000
2020
$'000
2019
$’000
Revenue and other income:
Revenue
Other income
Total revenue and
other income
630,109
849,824
17,259
17,088
9,158
183
14,669
74,313*
339
5,755
647,368
866,912
9,341
15,008
80,068
Total revenue and other income per the statement of profit or loss and other comprehensive income
-
-
-
713,580
864,493
23,197
17,427
736,777
736,777
881,920
881,920
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 45
Note 2. OPERATING SEGMENTS (continued)
Fashion retail
Australia
New Zealand
Multi-channel
New Zealand
Total
2020
$'000
2019
$’000
2020
$'000
2019
$’000
2020
$'000
2019
$’000
2020
$'000
2019
$’000
Results:
Cost of sales
339,183
375,544
Employee benefits expense
144,874
202,552
Depreciation
Amortisation
Impairment of brand names
Impairment of goodwill
Impairment of right-of-use
assets and PPE
Interest
(Loss) / profit before
tax expense
Tax (benefit) / expense
115,464
21,389
6,740
33,364
64,022
14,944
11,401
(205,680)
(41,161)
899
–
–
–
2,120
10,130
3,246
4,752
1,803
1,030
–
–
–
44
46
106
18
7,239
2,862
20
–
–
–
–
4
40,318
12,004
3,945
2,141
–
–
1,121
1,988
1,743
497
(6,596)
(542)
–
–
–
–
–
–
–
–
–
–
384,253
382,783
158,681
205,414
120,439
21,409
8,881
33,364
64,022
16,109
13,435
(212,170)
(41,685)
899
–
–
–
2,124
11,873
3,743
* Revenue includes $39,300,000 which was derived in Australia� Revenue is the only indicator that is measured by management at a geographical segment
GEOGRAPHIC SEGMENTS
Fashion retail
Australia
New Zealand
Multi-channel
New Zealand
Total
2020
$'000
2019
$’000
2020
$'000
2019
$’000
2020
$'000
2019
$’000
2020
$'000
2019
$’000
Assets and liabilities:
Segment assets
Segment liabilities
476,375
409,150
550,922
304,305
2,452
2,375
2,710
1,433
72,053
77,892
–
–
550,880
411,860
631,189
305,738
46 “We put the customer at the heart of everything we do.”
NOTES TO THE FINANCIAL STATEMENTS Note 3. REVENUE AND OTHER INCOME
Revenue:
Sale of goods
Other income:
Interest
Jewellery commission
Other
Total other income
Recognition and measurement
Consolidated Group
2020
$’000
2019
$’000
713,580
864,493
94
13,312
9,791
23,197
260
13,365
3,802
17,427
Revenue arising from sales of goods is recognised at the point in time when the customer has obtained control of the goods which
is considered to be fulfilment of the performance obligation� Revenue is measured with consideration to any trade discounts and
volume rebates�
i�
Retail sales revenue is recognised at the point of sale, which is where the customer has obtained control of the goods�
Refund liabilities are recognised where the Group receives consideration from a customer and expects to refund some, or all, of that
consideration to the customer� A refund liability is measured at the amount of consideration received or receivable for which the
Group does not expect to be entitled and is updated at the end of each reporting period for changes in circumstances� Historical
data is used to estimate such returns at the time of sale based on an expected value methodology�
ii�
Jewellery commission revenue is recognised at the point of sale when the customer has obtained control of the goods�
iii� Other income is mainly comprised of postage income which is in the ordinary course of our online business�
iv� Revenue from the sale of gift cards is recognised upon redemption of the gift card� The amount of gift cards which expire
unredeemed is not significant�
v� The Group operates a customer loyalty scheme which provides rebate vouchers to be issued to customers twice yearly, based
on customer’s purchases during the loyalty period� The vouchers have expiry dates six weeks after issue� The Group defers this
revenue until such point at which the sale of goods is made� The deferred portion is included in sundry payables as a contract
liability and is recognised as revenue only after all the rebate obligations have been fulfilled�
vi�
Interest revenue is recognised when it is earned�
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 47
Note 4. (LOSS) / PROFIT FOR THE YEAR
a) Expenses (excluding finance costs)
Marketing and selling expenses
Occupancy expenses*
Administrative expenses**
Other expenses
Total expenses (excluding finance costs)
* FY19 includes rental related occupancy costs which are excluded in FY20 on adoption of AASB 16�
** Administrative expenses includes $103,040,000 right-of-use assets depreciation costs as per AASB 16 adoption�
b) (Loss) / profit before income tax from continuing operations includes the following
specific expenses:
Expenses
Finance costs comprising interest attributed to:
– interest and borrowing expense
– interest expense on lease liabilities
Total finance costs
All finance costs are expensed in the period in which they are incurred�
Depreciation – plant and equipment
Depreciation – right-of-use assets
Amortisation
Impairment and write-off of non-current assets
Impairment – right-of-use assets
Impairment of Brand Names and Goodwill
Write-off and write down of obsolete stock and inventory
Operating lease rental expenses attributed to:
– low value assets
– variable lease payments – outgoings
– short term lease payments – other property costs
Total operating lease rental expenses
Employee benefits expenses*
Superannuation expenses
Share based payment expenses
Unrealised foreign exchange gain
Consolidated Group
2020
$’000
2019
$’000
208,366
86,904
149,224
5,722
237,172
188,338
49,340
1,151
450,216
476,001
2,594
10,841
13,435
17,399
103,040
8,881
1,991
16,109
97,386
32,151
55
21,984
12,580
34,619
158,681
15,140
266
(6,671)
2,124
2,124
21,409
899
79
–
–
2,335
55
21,845
130,067
151,967
205,414
18,325
365
(208)
* Employee benefits expense for the year is net of $48,564,000 in Government grants which was provided as a result of the COVID-19 pandemic�
48 “We put the customer at the heart of everything we do.”
NOTES TO THE FINANCIAL STATEMENTS Note 5. INCOME TAX
Major components of income tax (benefit) / expense
Deferred tax
Current tax
Income tax (benefit) / expense
Reconciliation between income tax (benefit) / expense and prima facie tax on accounting profit
Accounting (loss) / profit
Tax at 30% (2019-30%)
Tax effect on non-deductible expenses / (non-assessable items):
Share based payment expense
Impairment of goodwill
Permanent differences
Impact of AASB 16
Tax rate difference
Adjustment to opening deferred tax asset position
Tax losses not booked
Under / over from prior year
Forfeiture of withholding tax
Non-deductible items
Income tax (benefit) / expense
Income tax
Income tax (payable) / receivable
Applicable tax rate
The applicable tax rate is the national corporate tax rate in Australia of 30%
Analysis of deferred tax assets:
Employee entitlements
Lessors fit out contribution
Accruals
Inventory temporary differences
Depreciation temporary differences
Foreign currency balances
Provision for customer loyalty
Contract liabilities
Future tax benefit of tax losses
Business capital expenditure
Other provisions
Lease liabilities
Other temporary differences
Total deferred tax assets
Consolidated Group
2020
$’000
2019
$’000
(17,534)
(24,151)
(41,685)
(212,170)
(63,561)
80
19,207
1,255
(528)
129
554
1,305
(190)
36
118
(41,685)
(2,756)
6,499
3,743
11,873
3,562
109
–
–
–
(36)
–
–
–
–
108
3,743
(145)
4,846
7,888
62
4,606
10,041
6,139
160
379
1,667
25,442
289
1,688
59,113
392
117,866
7,292
7,312
2,059
4,920
3,997
171
656
–
1,261
486
2,749
–
1,483
32,386
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 49
Note 5. INCOME TAX (continued)
Analysis of deferred tax liabilities:
Depreciation and amortisation temporary differences
Brand names
Trademarks
Accrued wages
Foreign currency balances
Right-of-use assets
Lease incentive
Other temporary differences
Total deferred tax liabilities
Recognition and measurement
Consolidated Group
2020
$’000
2019
$’000
206
7,426
82
5,258
1,057
41,803
805
19
48
17,160
189
–
1,731
–
–
43
56,656
19,171
The income tax expense or benefit for the period is the tax payable on that period’s taxable income based on the income tax rate,
adjusted by changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment
recognised for prior periods, where applicable�
Deferred tax assets and liabilities are recognised for temporary differences at the tax rate expected to be applied when the assets are
recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
– When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction
that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit
or loss; and
– When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of
the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the
foreseeable future�
The carrying amount of recognised deferred tax assets are reviewed at each reporting date� Deferred tax assets recognised are
reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered�
Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits
available to recover the asset�
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current
tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same
taxable entity or different taxable entities which intend to settle simultaneously�
Deferred tax assets are recognised for deductible temporary differences and losses only if the Group considers it is probable that future
taxable amounts will be available to utilise those temporary differences and losses�
Recoverability of deferred tax assets
The Group has recorded a deferred tax asset relating to the future benefit of tax losses of $25,442,000 (2019: $1,261,000)� The Group
assesses the impairment of deferred tax assets by taking into account its projected profitability over the foreseeable future and hence
its ability to recover the value of the deferred tax asset by reducing future liabilities for income tax� Management’s forecasts project
that the deferred tax asset is fully recoverable based on the below:
● A growth in sales in the 2021 and future financial years
● Continuation of the tight cost management and inventory intake strategies which has proven to be successful over the past 6 years
Where actual results are lower than expectations as described above a proportion of the deferred tax asset may not be used, and a
write-off of the deferred tax asset may be required�
Tax consolidation
Mosaic Brands Limited (the ‘head entity’) and its wholly-owned Australian controlled entities formed an income tax consolidated group
under the tax consolidation regime as of 1 July 2005� The head entity and the controlled entities in the tax consolidated group continue
50 “We put the customer at the heart of everything we do.”
NOTES TO THE FINANCIAL STATEMENTS to account for their own current and deferred tax amounts� In addition to its own current and deferred amount, the head entity also
recognises the current tax assets/liabilities of each subsidiary in the tax consolidated group�
The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate Mosaic Brands
Limited for any current tax payable and are compensated by Mosaic Brands Limited for any current tax receivable and deferred tax
assets relating to unused tax losses or unused tax credits that are determined by reference to the amounts recognised in the wholly-
owned entities’ financial statements�
Note 6. CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Recognition and measurement
Consolidated Group
2020
$’000
2019
$’000
86,928
36,684
Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term highly liquid
investments with original maturities and bank overdrafts� Bank overdrafts are reported within borrowings in current liabilities on the
statement of financial position�
Note 7. OTHER RECEIVABLES
CURRENT
Sundry debtors
Government grants
Recognition and measurement
Consolidated Group
2020
$’000
2019
$’000
5,633
17,507
23,140
5,484
–
5,484
Sundry debtors include amounts due from repeat customers, suppliers and landlord contributions� Government grants include amounts
payable to the Group as a result of the COVID-19 pandemic� Receivables expected to be collected within 12 months of the end of
the reporting period are classified as current assets� All other receivables are classified as non-current assets and are subsequently
measured at amortised cost which have not been discounted�
Note 8. INVENTORIES
CURRENT
Finished goods at cost, net of obsolescence and shrinkage
Consolidated Group
2020
$’000
2019
$’000
102,329
102,329
166,951
166,951
Recognition and measurement
Inventories are measured at the lower of cost and net realisable value� Costs are assigned on a first-in first-out basis� Cost comprises
all costs of purchase and conversion and an appropriate proportion of fixed and variable overheads, net of settlement discounts�
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the
estimated costs necessary to make the sale�
Stock in transit is stated at the lower of cost and net realisable value� Costs comprise of purchase and delivery costs, net of rebates
and discounts received or receivable�
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 51
Note 8. INVENTORIES (continued)
Key estimate and judgement
The provision for obsolescence and shrinkage of inventories assessment requires a significant degree of estimation and judgement� The
level of the provision is assessed by taking into account the recent sales experience, the classification and ageing of inventories and
other factors that affect inventory obsolescence� Due to the COVID-19 global pandemic, the Group announced a temporary closure
of its stores from end March to June� As a result of the temporary closure and significant change in customer sentiment, the Group
has assessed an increase in stock obsolescence after management’s assessment on the judgment of sales and the ageing profile of
seasonal inventories�
Note 9. OTHER CURRENT ASSETS
Prepayments
Right of return assets
Recognition and measurement
Consolidated Group
2020
$’000
2019
$’000
2,082
3,730
5,812
347
–
347
Right of return assets represents the right to recover inventory sold to customers and is based on an estimate of customers who may
exercise their right to return the goods and claim a refund� Such rights are measured at the value at which the inventory was previously
carried prior to sale, less expected recovery costs and any impairment�
Note 10. PLANT AND EQUIPMENT
a) Plant and Equipment
Plant and equipment:
At cost
Accumulated depreciation and impairment
b) Movements in carrying amounts
Consolidated Group:
Balance at 1 July 2018
Additions
Additions through business combination
Disposals
Depreciation expense
Balance at 30 June 2019
Additions
Additions through business combination (note 30)
Disposals
Depreciation and impairment expense
Balance at 28 June 2020
52 “We put the customer at the heart of everything we do.”
Consolidated Group
2020
$’000
2019
$’000
145,098
(114,053)
31,045
107,507
(66,406)
41,101
Plant and
equipment
$’000
Total
$’000
32,234
8,225
22,168
32,234
8,225
22,168
(117)
(117)
(21,409)
(21,409)
41,101
4,973
4,510
(317)
(19,222)
31,045
41,101
4,973
4,510
(317)
(19,222)
31,045
NOTES TO THE FINANCIAL STATEMENTS Recognition and measurement
Plant and equipment is stated at historical cost less accumulated depreciation and any accumulated impairment losses� Depreciation is
calculated on a straight-line basis over the estimated useful lives covering a period of three to six years�
The carrying values of plant and equipment are reviewed for impairment annually for events or changes in circumstances that may
indicate the carrying value may not be recoverable� If an indication of impairment exists, and where the carrying values exceeds the
estimated recoverable amount, the assets are written down to their recoverable amount� Impairment indicators are assessed at the
store level�
Key estimate and judgement
The Group determines the estimated useful lives and related depreciation and amortisation charges for its plant and equipment and
finite life intangible assets� The useful lives could change significantly as a result of technical innovations or some other event� The
depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete
or non-strategic assets that have been abandoned or sold or will be written off or written down�
Note ��. RIGHT-OF-USE ASSETS
Lease rights – property
Less: Accumulated depreciation and impairment
Total right-of-use assets
Consolidated
Group
2020
$’000
264,120
(123,327)
140,793
The Group leases buildings for its offices and retail outlets under agreements of between two to ten years with, in some cases, options
to extend� The leases have various escalation clauses� On renewal, the terms of the leases are renegotiated� During the year the Group
had an additional $62,014,000 of new leases including $25,543,000 from the acquisition of EziBuy�
Key estimate and judgement
Due to the COVID-19 global pandemic, the temporary closure and significant change in customer sentiment towards the Groups retail
outlets resulted in an impact to Group performance� Management has assessed its retail outlets for those that resulted in either loss-
making in nature and identified 235 stores with a highly probability of closure within the next 12 months based on current trading and
the current negotiations with landlords� Based on this information, the Group has recognised an impairment loss on right-of-use assets
of $16,109,000 for the period ended 28 June 2020�
Note ��. INTANGIBLE ASSETS
Goodwill – at cost
Less: accumulated impairment losses
Net carrying value
Brand names – at cost
Less: accumulated impairment losses
Net carrying value
Other intangible assets – at cost
Less: accumulated amortisation
Net carrying value
Total intangibles
Consolidated Group
2020
$’000
2019
$’000
74,786
(64,022)
10,764
58,090
(33,364)
24,726
16,334
(8,881)
7,453
64,022
–
64,022
57,200
–
57,200
4,094
(1,346)
2,748
42,943
123,970
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 53
Note ��. INTANGIBLE ASSETS (continued)
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
Consolidated Group
Goodwill
$’000
Brand
names
$'000
Other*
$'000
Total
$’000
38,625
36,300
–
–
25,397
20,900
–
–
64,022
57,200
–
10,764
–
–
890
–
(64,022)
(33,364)
10,764
24,726
1,054
820
1,773
(899)
2,748
8,408
5,178
(8,881)
–
7,453
75,979
820
48,070
(899)
123,970
8,408
16,832
(8,881)
(97,386)
42,943
Consolidated Group:
Balance at 1 July 2018
Additions
Additions from business combination
Amortisation expense
Balance at 30 June 2019
Additions
Additions from business combination (note 30)
Amortisation expense
Impairment
Balance at 28 June 2020
* Includes software, development costs and trademarks
Goodwill and Brand names
Recognition and measurement
Brand names and goodwill acquired in a business combination are initially measured at cost� Goodwill is the excess of the cost of
the business combination over the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent
liabilities� Goodwill on acquisition is included in intangible assets along with Brand names and is allocated to cash generating units
(CGUs) for the purposes of impairment testing� Goodwill and Brand names are assessed as having an indefinite useful life and are
tested annually for impairment or more frequently if events or changes in circumstances indicate that it might be impaired� Goodwill
and Brand names is carried at cost less accumulated impairment losses� Impairment losses are taken to the profit or loss and are, for
goodwill, not subsequently reversed�
Impairment of brand names is determined comparing the recoverable amount of brand calculated using the relief from royalty method
to the carrying value of the brand� The relief from royalty method is a calculation of the amount of the hypothetical royalty that would
be paid if the bands were licensed from an independent third party� When the recoverable amount of the brand is less than the carrying
amount, an impairment loss is recognised�
Impairment of goodwill is determined by assessing the recoverable amount of the CGUs to which it relates have been determined to
be the brand level� Each of the brands is a fashion and retail brand selling both in stores and online� When the recoverable amount of
the CGU is less than the carrying amount of the CGU (after any impairment of individual assets is recognised), an impairment loss is
recognised� The recoverable amount of the CGU has been determined based upon the value in use approach�
Trademarks were acquired through the acquisition of the Millers, Autograph, Katies, Crossroads and Rivers brands� These trademarks
are amortised on a straight-line basis over the period of their expected benefit, being their finite life of 3 years, and are tested annually
for impairment�
Costs associated with software and development cost are amortised on a straight-line basis over the period of their expected benefit
being their finite life of 2-5 years and is tested annually for impairment�
Key estimates and judgements to account for business combinations
On 5 September 2016, the Group acquired 100% of the shares of the Pretty Girl Fashion Group (PGFG)� The brands within the Pretty
Girl Fashion Group include Rockmans, W�Lane and beme� An independent valuation of the brand names acquired as part of the
transaction resulted in a total brand valuation of $36,364,000�
On 2 July 2018, the Group acquired the Millers, Autograph, Crossroads, Rivers and Katies brands from the Specialty Fashion Group
through a business combination (collectively known as MARCK)� An independent valuation of the brand names acquired as part of the
transaction resulted in a total brand valuation of $20,900,000 with value attributable to all brands except Crossroads�
54 “We put the customer at the heart of everything we do.”
NOTES TO THE FINANCIAL STATEMENTS The fair value of the acquired Brands was determined based upon the relief from royalty method at acquisition date� The royalty
rates used in the valuation were based on rates observed in the market� Brand names are assessed as having an indefinite useful life�
The indefinite useful life reflects management’s intention to continue to operate these brands to generate net cash inflows into the
foreseeable future�
The Group has recognised goodwill of $10,764,000 on the acquisition of EziBuy effective 28 October 2019 (refer Note 30)� Management
will test goodwill for impairment prior to 28 October 2020� Management has considered indicators of impairment at the end of the
reporting period and deemed that operational synergies have been achieved as planned�
Impairment indicators
At the beginning of the financial year the recoverable amount of the brands and goodwill were in excess of the carrying value� During
the course of the financial year the COVID-19 global pandemic has had broad reaching economic consequences which have created
market uncertainty and the retail industry has been impacted particularly hard� The impacts have included the closure of all stores for
safety reasons from the end of March and this has contributed to a downward trend in both Revenue and Gross Margin year on year
and financial performance below budget� A market capitalisation deficiency also existed at the end of the reporting period� On the basis
of these factors management determined that impairment losses should be recognised totalling $33,364,000 and $64,022,000 for
brand names and goodwill respectively (2019: nil)� More detail on the calculation of these impairment losses is included below�
Determination of key assumptions and inputs
EBITDA margin
Management has prepared cash flow forecasts for a four-year period derived from the approved budget for FY21� These forecasts
include assumptions around sales prices and volumes and operating costs� Management assesses the reasonableness of its forecasting
by reviewing historical cash flow and projections as well as future growth objectives�
Risk adjusted discount rates
The discount rates are derived from the Group’s weighted average cost of capital as adjusted for the specific risks related to each CGU�
Long-term growth rate
To forecast beyond the discrete cash flow forecast period into perpetuity, a long-term average growth rate is used� To establish an
appropriate rate, management considers long-term inflation and GDP forecasts and adjusts for industry specific impacts�
Royalty rate
Royalty rates have been reviewed by management with reference to the rates which were determined on initial recognition of the
brands� Where considered necessary these rates have been revised to factor in subsequent changes in the economic environment that
impact the ability of a market participant to derive the same level of royalties�
Sensitivity analysis
The results of the Group’s impairment tests are dependent upon estimates and judgements made by management, particularly in
relation to the key assumptions described above� A reasonably possible change in key assumptions could lead to a change of the
amount of impairment recognised by the Group� The Group has therefore conducted an analysis of the sensitivity of the impairment
test to changes in the key assumptions used to determine the recoverable amount for each brand name to which goodwill is allocated�
This is included below�
Impairment of brand names
The relief from royalty calculation is based on the cash flow projections as at June 2020 for a period of four years� The key assumptions
utilised within the model are:
● Cash flow projections based on the FY2021 budget approved by the board and projected for a further three years based on growth
rates estimated by management of 3�5% to 14�0% in FY2022 and 2�0% to 4�5% in FY2023 and FY2024 (2019: 1% to 1�5%)� The
variation across the range reflects different stages of brand growth� The growth rates between FY2020 and FY2021 are comprised
between 4�5% to 37�6% noting that Mosaic is operating in a highly dynamic environment� The growth rate range is significantly
higher than in the prior year to reflect that current year performance has been impacted the economic conditions resulting from
COVID-19 and reflects forecast growth as the business works back to levels more akin to those in FY19�
● A terminal growth rate of 1% (2019: 1%)
● A tax rate applied of 30% is based on the corporate tax rate in Australia (2019: 30%)
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 55
Note ��. INTANGIBLE ASSETS (continued)
Royalty rates and post-tax discount rates are included within the table below:
Rockmans
beme
W Lane
Millers
Autograph
Rivers
Katies
Royalty rate
Post-tax discount rate
2020
2019
2020
2019
1.0%
2.0%
1.5%
0.5%
1.0%
0.5%
0.5%
2�0%
3�0%
2�5%
0�5%
1�5%
1�0%
0�8%
17.0%
17.0%
17.0%
17.5%
17.5%
17.5%
17.5%
14�0%
16�0%
15�0%
16�5%
16�5%
16�5%
16�5%
The reconciliation of the carrying values of the brands at the beginning and end of the current and previous financial year is set
out below:
Rockmans
$’000
W Lane
$'000
beme
$'000
Millers
$’000
Autograph
$’000
Rivers
$'000
Katies
$'000
Total
$’000
Balance at 1 July 2018
19,400
10,000
6,900
Additions from business combinations
–
–
–
Balance at 30 June 2019
19,400
10,000
6,900
Impairment expense
(11,989)
(6,647)
(5,443)
–
4,700
4,700
(818)
Balance at 28 June 2020
7,411
3,353
1,457
3,882
–
4,200
4,200
(1,736)
2,464
–
8,600
8,600
–
36,300
3,400
20,900
3,400
57,200
(5,264)
(1,467)
(33,364)
3,336
1,933
23,836
Impact on recoverable amount of the following changes in assumptions:
– 1% increase in discount rate
– 1% decrease in discount rate
– 0�5% (PGFG)/ 0�25% (MARCK)
increase in royalty rate
– 0�5% (PGFG)/ 0�25% (MARCK)
(413)
468
(189)
214
(82)
93
(209)
236
(133)
150
(180)
203
(104)
118
3,706
1,118
364
1,941
616
1,668
966
decrease in royalty rate
(3,706)
(1,118)
(364)
(1,941)
(616)
(1,668)
(966)
Impairment of goodwill
The fair value calculation is based on the cash flow projections as at June 2020 for a period of four years� The cash flow projections are
based on the FY2021 budget that has been approved by the board and are projected for a further three years based on growth rates
estimated by management of 3�1% – 3�3% (2019: 0�2% to 2%) and a terminal growth rate of 1% (2019: 1%)� The tax rate applied in the
valuation model is based on the corporate tax rate in Australia of 30% (2019: 30%)�
The post-tax discount rates applied to the cash flow projections are within a range of 16�5% and 17�0% (2019:15�0% and 15�5%)�
The reconciliation of the carrying values of goodwill at the beginning and end of the current and previous financial year is set out below:
Rockmans
$’000
W Lane
$'000
beme
$'000
Millers
$’000
Autograph
$’000
Rivers
$'000
Katies
$'000
Total
$’000
Balance at 1 July 2018
20,643
10,640
7,342
Additions from business combinations
–
–
–
Balance at 30 June 2019
20,643
10,640
7,342
–
5,710
5,710
–
5,104
5,104
–
10,451
10,451
–
38,625
4,132
4,132
25,397
64,022
Impairment expense
(20,643)
(10,640)
(7,342)
(5,710)
(5,104)
(10,451)
(4,132)
(64,022)
Balance at 28 June 2020
–
–
–
–
–
–
–
–
No reasonably possible change in the key assumptions could result in an increase in the amount of impairment recognised in respect
of goodwill because it has been written down to zero for all CGUs� This table excludes Ezibuy� Management will test EziBuy goodwill
for impairment prior to 28 October 2020� Management has considered indicators of impairment at the end of the reporting period and
deemed that operational synergies have been achieved as planned�
56 “We put the customer at the heart of everything we do.”
NOTES TO THE FINANCIAL STATEMENTS Note �3. TRADE AND OTHER PAYABLES
Trade payable
Accruals
Stock in transit
Sundry payables
Contract and customer liabilities
Recognition and measurement
Consolidated Group
2020
$’000
141,889
35,506
17,176
43,170
9,340
2019
$’000
72,724
23,107
32,165
69,294
1,312
247,081
198,602
Trade and other payables represent the liabilities for goods and services received by the Group that remain unpaid at the end of the
reporting period� The balance is recognised as a current liability with the amounts normally paid within 30 – 90 days of recognition of
the liability� Due to the short-term nature they are measured at amortised cost and are not discounted�
As a result of the ongoing COVID-19 pandemic and its uncertainty, the Group re-negotiated and extended payment terms with its key
trade payable suppliers�
Contract liabilities represents managements’ best estimate of the future outflow of economic benefits in respect of products sold�
The refund liability is estimated based on historical sales claim information, sales levels and any recent trends that may suggest future
claims could differ from historical amounts�
Key estimate and judgement
Contract liabilities are calculated based on historical sales claim information, sales levels and any trends that may suggest future
liabilities could differ from historical amounts�
The Group operates a loyalty program where customers accumulate points for purchases made which entitles them to discounts on
future purchases� This is recognised as a customer loyalty provision within sundry payables and is based on (i) loyalty events and (ii) an
estimate of the loyalty redemption by the loyalty customers� The estimate considers historical experience and other factors relevant to
customer spending�
Note �4. BORROWINGS
CURRENT
Secured liabilities:
Commercial hire purchase liabilities
Bank loans
Loans from related parties
Total current borrowings
NON-CURRENT
Secured liabilities:
Bank loans
Total non-current borrowings
Consolidated Group
2020
$’000
2019
$’000
16
28,974
12,512
41,502
–
–
–
–
44,989
44,989
29,482
29,482
Bank loans are recognised at the fair value of the consideration less directly attributable transaction costs and are due in July
2021� Fees paid on establishment of loan facilities are amortised over the term of the facility� At 28 June 2020, the Group had total
outstanding loans and borrowings of $86,491,000 (2019: $20,000,000) of which $74,105,000 was from bank loans and $12,512,000
was provided as loans from related parties� At reporting date, bank loan facilities of $106,500,000 were available to the Group (2019:
$31,000,000)� Of this facility, $19,895,000 was unused (2019: $1,200,000)� Bank loans are secured by both the warehouse inventory
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 57
Note �4. BORROWINGS (continued)
and a general security deed which is a fixed and floating charge over the business� The related party loans are due in December 2020�
Interest of 0-9% is charged on the loans�
Recognition and measurement
Borrowing costs are directly attributable to the loan� They are subsequently measured at amortised costs using the effective
interest method�
Finance facilities
The following lines of credit were available at reporting date:
Amount of credit facilities available
Bank card
Market rate facility
Related party finance facilities (Note 26)
Bank guarantees and lines of credit
Total
Amount of credit facilities unused
Bank card
Market rate facility
Related party finance facilities (Note 26)
Bank guarantees and lines of credit
Total
Consolidated Group
2020
$’000
2019
$’000
500
88,000
18,500
6,835
113,835
329
13,895
6,000
4,835
25,059
400
31,000
–
2,235
33,635
210
1,200
–
235
1,645
The bank loans and finance facilities available contain specific financial covenants which the Group is required to meet� Due to the
impact of the COVID-19 pandemic, the Group was able to seek amendments and a non-test of its covenant compliance� This resulted
in the Group classifying bank loans as non-current for the period ending 28 June 2020� The bank loans have a maturity date of
6 July 2021�
Note �5. PROVISIONS
Current
Employee benefits
Other provisions
Total current provisions
Non-current
Employee benefits
Other provisions
Total non-current provisions
Consolidated Group
2020
$’000
2019
$’000
23,469
5,643
29,112
2,828
–
2,828
21,720
7,369
29,089
2,565
1,862
4,427
58 “We put the customer at the heart of everything we do.”
NOTES TO THE FINANCIAL STATEMENTS Movements in provisions during the current financial year, other than employee benefits, are set out below:
Consolidated Group:
Carrying amount at 1 July 2019
Additional provisions recognised
Amounts recognised as part of AASB 16 adoption adjustment
Amounts reversed
Amounts used
Carrying amount at the end of the year
Other long-term employee benefits
Recognition and measurement
Onerous
lease
$'000
Lease make
good
$’000
5,743
–
(5,743)
–
–
–
488
5,643
–
–
(488)
5,643
Bonus
$’000
3,000
–
–
(3,000)
–
–
Total
$'000
9,231
5,643
(5,743)
(3,000)
(488)
5,643
Provision for employee benefits represents amounts accrued for annual leave and long service leave�
The current portion for this provision includes the total amount accrued for annual leave entitlements and the amounts accrued for
long service leave entitlements that have vested due to employees having completed the required period of service� Based on past
experience, the Group does not expect the full amount of annual leave or long service leave balances classified as current liabilities to
be settled within the next 12 months� However, these amounts must be classified as current liabilities since the Group does not have an
unconditional right to defer the settlement of these amounts in the event employees wish to use their leave entitlement� The amount
that is not expected to be taken within the next twelve months including on costs is $8,690,000 (2019: $8,270,000)�
Long-term benefits are benefits (other than termination benefits) that are not expected to be settled wholly within 12 months after the
end of the annual reporting period in which the employees render the related service� Other long-term employee benefits are measured
at the present value of the expected future payments to be made to employees� Expected future payments incorporate anticipated
future wage and salary levels, durations of service and employee departures and are discounted at rates determined by reference to
market yields at the end of the reporting period on government bonds that have maturity dates that approximate the terms of the
obligations� Any remeasurements for changes in assumptions of obligations for other long-term employee benefits are recognised in
profit or loss in the periods in which the changes occur�
The non-current portion for this provision includes amounts accrued for long service leave entitlements that have not yet vested in
relation to those employees who have not yet completed the required period of service�
Key estimate and judgement
The liability for long service leave is recognised and measured at the present value of the estimated future cash flows to be made in
respect of all employees at the reporting date� In determining the present value of the liability, estimates of attrition rates and pay
increases through promotion and inflation have been taken into account�
Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that
an outflow of economic benefits will result and that outflow can be reliably measured�
Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period�
Other provisions include:
Onerous lease
The provision represents leases with unavoidable costs of meeting the lease for which the costs of meeting the obligations exceed the
economic benefits expected to be received�
Lease make good
The provision represents the present value of the estimated costs to make good the store closures for the premises leased by
the Group�
Bonus
The provision represents the estimated amount to be paid to team members� Due to the impact of the Coronavirus (COVID-19)
pandemic the Board has not approved and provisioned any bonus to be paid for the 2020 financial year�
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 59
Note �6. DERIVATIVE FINANCIAL INSTRUMENTS
Forward exchange contracts
Interest rate swaps
Refer to note 23 for further information on financial instruments�
Note �7. LEASE LIABILITIES
CURRENT
Lease liability
NON-CURRENT
Lease liability
Total lease liabilities
Note �8. OTHER LIABILITIES
CURRENT
Fitout contributions and lease incentives
NON-CURRENT
Fitout contributions and lease incentives
Deferred lease incentives
Consolidated Group
2020
$’000
2019
$’000
28
506
534
33
537
570
Consolidated
Group
2020
$’000
87,544
111,013
198,557
Consolidated Group
2020
$’000
2019
$’000
95
95
110
110
8,908
8,908
15,489
15,489
The liability represents operating lease incentives received� The incentives are allocated to the profit and loss on a straight-line basis
over the lease term�
60 “We put the customer at the heart of everything we do.”
NOTES TO THE FINANCIAL STATEMENTS Note �9. DEFERRED CONSIDERATION
Deferred consideration
Consolidated Group
2020
$’000
9,580
9,580
2019
$’000
–
–
As part of the purchase of EziBuy from Alceon Retail, it was agreed that as part of the nominal consideration of $1 for a 50�1% economic
interest, the buyer will be entitled to exercise an option over the remaining 49�9% equity interest at an exercise price of $11,000,000
on or prior to 31 December 2020� The 49�9% is considered by the Group as a present ownership interest and the option exercise price
included in the fair value of the deferred consideration recorded at the date of acquisition (refer Note 30)� The $11,000,000 exercise
price has been discounted and adjusted for cash acquired and related loans to arrive at the deferred consideration balance�
Note 20. ISSUED CAPITAL
Fully paid ordinary shares
Balance at the beginning of the financial year
Issue of shares
Less transaction costs
Ordinary shares
Balance at the beginning of the financial period
Issue of shares during the period (i)
Share buy-back (ii)
Balance at the end of the financial period
Consolidated Group
2020
$’000
2019
$’000
107,605
107,651
429
–
–
(46)
108,034
107,605
NO�
NO�
96,914,779
96,361,245
148,151
845,000
(250,000)
(291,466)
96,812,930
96,914,779
(i) a total of 148,151 performance shares were issued during the period from escrow�
(ii) 250,000 shares were issued to Senior Management however they were cancelled by the Company during the year�
Ordinary shares
Ordinary shares are classified as equity and entitle the holder to participate in dividends and the proceeds on the winding up of the
Group in proportion to the number of and amounts paid on the shares held� The fully paid ordinary shares have no par value and the
Group does not have a limited amount of authorised capital�
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall
have one vote� Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax,
from proceeds�
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 61
Note ��. RESERVE
Reserves comprise:
Equity reserve
Foreign currency translation reserve
Dividend profit reserve
Total reserves
Consolidated Group
2020
$’000
2019
$’000
4,077
154
13,637
17,868
3,723
31
5,667
9,421
Equity reserve
The equity reserve is used to record the value of the share based payments provided to employees� In accordance to the Rules of the
Director and Senior Management Share Plan, dividends paid on the Plan Shares will be applied to the value of shares� The dividend
amount which was applied to the Plan Shares during the 2020 Financial Year was $88,000 (2019: $199,000) and this amount was not
paid in cash�
Foreign currency translation reserve
The foreign currency translation reserve is used to record the exchange differences arising from translation of the financial statements
of foreign operations to Australian dollars�
Dividend profit reserve
To the extent that any current year profits are not distributed as dividends, the Group may set aside some or all of the undistributed
profits to a separate dividend profit reserve to facilitate the payment of future dividends, rather than maintaining these profits within
accumulated losses� During the year the Directors decided to transfer the profit for the period ended 29 December 2019 of $13,301,000
(2019: $8,130,000) to the dividend profit reserve which will enable the declaration of a future dividend� The transfer into the dividend
profit reserve was recorded based on the profit recognised for the period ended 29 December 2019� No dividend has been declared or
paid since 28 December 2019� The Directors consider the requirements of s254T of the Corporations Act in the declaration of dividends�
Note ��. DIVIDENDS PAID
Dividends
Current year interim
Prior year final
Cents per
share
2020
Date of
payment
–
–
5.5
24/10/2019
Consolidated Group
Total amount
$’000
Cents per
share
2019
Date of
payment
–
5,331
5,331
9�0
4�0
22/03/2019
12/10/2018
Total amount
$'000
8,722
3,853
12,575
All dividends are fully franked at a 30% tax rate�
Due to the impact and ongoing uncertainty caused by the COVID-19 pandemic the Board of Directors have decided to take a prudent
approach and not declare a final dividend to be paid from the dividend profit reserve�
62 “We put the customer at the heart of everything we do.”
NOTES TO THE FINANCIAL STATEMENTS Franking credits
Franking credits available for future financial years (tax paid basis, 30% tax rate)
Consolidated Group
2020
$’000
12,307
2019
$’000
15,060
The above amount represents the balance of the franking account as at the end of the financial year, adjusted for:
● Franking credits that will arise from the payment of the amount of the provision for income tax at the reporting date
● Franking debits that will arise from the payment of dividends recognised as a liability at the reporting date
● Franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date
Note �3. FINANCIAL RISK MANAGEMENT
Capital Risk 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� The
gearing ratios for the years ended 28 June 2020 and 30 June 2019 are as follows:
Total debt
Total equity
Total capital
Gearing ratio
Note
14
Consolidated Group
2020
$’000
86,491
(80,309)
6,182
1,399.1%
2019
$’000
29,482
106,122
135,604
21�7%
Total debt of $86,491,000 predominately consists of $14,155,000 for the JobKeeper bridging facility which is repaid monthly on receipt
of the Government grants, the working capital facility of $39,950,000 and the Groups $20,000,000 for the long-term facility� Total debt
for the year also includes loans from related parties of $12,512,000 for EziBuy see note 14�
Financial Risk Management Policies
The Board monitors the Group’s financial risk management policies and exposures and approves financial transactions within the scope
of its authority� It also reviews the effectiveness of internal controls relating to commodity price risk, counterparty credit risk, currency
risk, liquidity risk, and interest rate risk�
The Boards overall risk management strategy seeks to assist the Group in meeting its financial targets, while minimising potential
adverse effects on financial performance� Its functions include 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, foreign currency risk and other price risk (commodity and equity price 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
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group� Credit
risk arises from cash and cash equivalents, derivatives and deposits with banks� As sales to retail customers are settled in cash or
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 63
Note �3. FINANCIAL RISK MANAGEMENT (continued)
using major credit cards within 24 hours, the Group is mitigated from any material credit risk exposure to any single debtor or group of
debtors� Current trade account receivables are non-interest bearing loans and are generally on 45 day terms�
Market Risk
Foreign currency risk
The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through foreign
exchange rate fluctuations�
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities denominated in
a currency that is not the entity's functional currency� The risk is measured using sensitivity analysis and cash flow forecasting�
In order to protect against exchange rate movements, the Group has entered into forward foreign exchange contracts� These contracts
are hedging highly probable forecasted cash flows for the ensuing financial year�
The contracts are timed to mature when payments for certain shipments of inventory are scheduled to be made� The fair value of
forward exchange contracts is determined using forward exchange market rates at reporting date�
The maturity, settlement amounts and the average contractual exchange rates of the Group's outstanding forward foreign exchange
contracts at the reporting date was as follows:
Buy US dollars
Maturity:
Less than 1 year
Sell AUD dollars
Average exchange rate
2020
$’000
2019
$’000
2020
$
2019
$
47,829
158,851
0.6841
0�7028
The derivatives that are not effective accounting hedges are measured at fair value through profit or loss�
Price risk
The Group is not exposed to any significant price risk�
Interest Rate Risk
The Group’s main interest rate risk arises from loans and borrowings� Borrowings with variable rates expose the Group to interest rate
risk with borrowings issued at fixed rates exposing the Group to fair value interest risk� The Group currently has interest swaps in order
to reduce the exposure to interest rate risk�
As at the reporting date, the Group had the following interest rate borrowings outstanding:
Commercial hire purchase
Bank loans
Loans from related parties
Loan balance
Average interest rate
2020
$’000
16
73,963
12,512
2019
$’000
2020
%
2019
%
–
29,482
–
6.21%
3.12%
8.37%
–
4�23%
–
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 liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously monitoring
actual and forecast cash flows� At reporting date, bank loan facilities of $106,500,000 were available to the Group (2019: $31,000,000)�
Of this facility, $19,895,000 was unused (2019: $1,200,000)�
64 “We put the customer at the heart of everything we do.”
NOTES TO THE FINANCIAL STATEMENTS The following table reflects the Groups financial liabilities, net and gross settled derivative financial instruments into relevant maturity
groupings based on the remaining period at the reporting date to the contractual maturity date� The amounts disclosed in the table are
the contractual undiscounted cash flows� The tables include both principal and interest cash flows disclosed as remaining contractual
maturities and therefore the totals may differ from their carrying amount in the statement of financial position�
Maturity < 1 month
Maturity 1 – 3 months
Maturity 3 – 12 months
Maturity > 1 year
Consolidated Group
2020
$’000
134,078
94,539
151,826
161,955
2019
$’000
138,587
49,493
10,522
29,800
542,398
228,402
Financial liabilities above include undiscounted lease liabilities payable by the Group�
Fair Value of financial instruments
AASB 13, fair value measurement 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 – the fair value is calculated using quoted price in active markets for identical assets or liabilities�
Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset or
liability, either directly (as prices) or indirectly (derived from prices)�
Level 3 – the fair value is estimated using inputs for the asset or liability that are not based on observable market data�
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�
Valuation techniques
The Group selects a valuation technique that is appropriate for the circumstances� The valuation technique on the derivatives
is based on quoted mark to market data provided by the bank� There has been no movement between levels and no changes in
valuation techniques�
The following tables provide the fair values of the Group’s assets and liabilities measured and recognised on a recurring basis after
initial recognition and their categorisation within the fair value hierarchy:
Level 1
Level 2
Level 3
Total
2020
$’000
2019
$’000
2020
$’000
2019
$’000
2020
$’000
2019
$’000
2020
$’000
2019
$’000
Recurring fair value measurements
Derivatives (Liability) held for hedging:
– Forward exchange forward contracts
– Interest swaps
Total liabilities recognised at
fair value
–
–
–
–
–
–
(28)
(506)
(33)
(537)
(534)
(570)
–
–
–
–
–
–
(28)
(506)
(33)
(537)
(534)
(570)
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 65
Note �4. KEY MANAGEMENT PERSONNEL
Information regarding individual key management personnel (KMP), shareholdings of key management personnel, as well as other
transactions and balances with key management personnel and their related parties, as required by Regulation 2M�3�03 of the
Corporations Regulations 2001 is provided in the Remuneration Report section of the Directors’ Report�
Directors
The following persons were Directors of Mosaic Brands Limited during the financial year�
● Richard Facioni
Chairman
● Scott Evans
● Sue Morphet
Chief Executive Officer
Non-Executive Director
● David Wilshire
Non-Executive Director
● Jacqueline Frank
Non-Executive Director
Other key management personnel
The following persons also had the authority and responsibility for planning, directing and controlling the major activities of the Group
directly or indirectly, during the financial year:
● Luke Softa
Chief Financial Officer
● Stephen Gosney
Chief Executive Officer of EziBuy
Compensation
The aggregate remuneration of the Directors and other key management personnel of the Group are as follows:
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share based payments
Total benefits
Consolidated Group
2020
2019
2,509,740
2,613,498
60,346
30,726
49,851
54,934
202,957
551,803
2,803,769
3,270,086
Short-term employee benefits
These amounts include fees and benefits paid as well all salary, paid leave benefits, fringe benefits and cash bonuses�
Post-employment benefits
These amounts are the current-year’s estimated costs of providing for the Group’s defined benefits scheme post-retirement,
superannuation contributions made during the year and post-employment life insurance benefits�
Other long-term benefits
These amounts represent long service leave benefits accruing during the year, long-term disability benefits and deferred
bonus payments�
Share-based payments
These amounts represent the expense related to the participation of the key management personnel in equity-settled benefit schemes
as measured by the fair value of the options, rights and shares granted on grant date�
66 “We put the customer at the heart of everything we do.”
NOTES TO THE FINANCIAL STATEMENTS Note �5. AUDITORS’ REMUNERATION
During the financial year the following fees were paid or payable for services provided by BDO, the auditor of the Group and its
network firms�
Audit services – BDO
– Audit and review of the financial statements
Other services – BDO
– Tax compliance services including review of company income tax returns
– Other advisory services*
– Other assurance services
Consolidated Group
2020
$
2019
$
465,000
375,000
29,000
211,065
43,760
–
–
3,000
748,825
378,000
*2020 fee in relation to audit and other advisory services have increased from the prior year primarily due to the acquisition of EziBuy
The BDO entity performing the audit of the Group transitioned from BDO East Coast Partnership to BDO Audit Pty Limited on
26 June 2020� The disclosures include amounts received or due and receivable by BDO East Coast Partnership and BDO Audit
Pty Limited�
Note 26. RELATED PARTY TRANSACTIONS
Parent entity
Mosaic Brands Limited is the parent entity�
Subsidiaries
Interests in subsidiaries are set out in note 28�
Key management personnel
Disclosures relating to key management personnel are set out in note 24 and the Remuneration report is included in the
Directors’ report�
Transactions with related parties
On 23 December 2019 an extraordinary general meeting (EGM) was held to approve the purchase of 50�1% of EziBuy for a nominal price
of $1�00 effective from 28 October 2019 (date of acquisition)� The EGM also approved the grant and exercise of call and put options
to either acquire the remaining 49�9% equity interest on or prior to 31 December 2020 for a consideration of $11 million, or return the
current shareholding to Alceon Retail for $1�00� Should neither option be exercised by Mosaic Brands Limited, Alceon Retail has the
option to purchase the 50�1% back from Mosaic for $1�00�
The Group paid rent to four Alceon-owned property trusts amounting to $299,000 (2019: $336,000) in relation to stores in Caboolture,
Orange, Sale and Gladstone� The rental paid was at normal commercial terms and conditions�
A total of $120,000 was paid in management fees to related party of the Non-Executive Directors during the financial period
(2019: $120,000)�
Receivables from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous reporting date�
Loans to/from related parties
At 28 June 2020, a loan amount payable to a related party (Alceon Retail Bidco) of $12,512,000 was owed through EziBuy� There were
no other loans to or from related parties at the current and previous reporting date�
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 67
Note �7. PARENT ENTITY INFORMATION
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 profit or loss and other comprehensive income
Net (loss) / profit after income tax expense
Total comprehensive (loss) / income for the year
Statement of financial position
ASSETS
Current assets
Non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Non-current liabilities
TOTAL LIABILITIES
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Consolidated Group
2020
$’000
2019
$’000
(104,153)
(104,153)
23,398
23,398
52,907
107,398
160,305
165,028
100,623
265,651
108,035
17,897
(231,277)
(105,345)
153,334
197,283
350,617
184,825
59,670
244,495
107,605
9,421
(10,904)
106,122
As at 28 June 2020, the parent entity had an excess of current liabilities over current assets of $112,121,000 (2019 net current liability
position of $44,366,000)�
Contingent liabilities
Mosaic Brands Limited is a party to various legal proceedings incidental to its business� As is the case with other companies in
similar industries managing through the COVID-19 pandemic, the Company faces exposure from actual or potential claims and legal
proceedings� Although the ultimate result of the legal proceedings cannot be predicted due to the uncertainty, it is the opinion of
management that the outcome of any claim which is pending, either individually or on a combined basis, will not have a material effect
on the financial position of the Company, its cash flows and result of operations� Accordingly, no provision has been provided within
these financial statements�
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, except for the following:
● Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity�
Contractual commitments
As at 28 June 2020, the parent entity had no contractual commitments apart from lease liabilities (note 17)�
68 “We put the customer at the heart of everything we do.”
NOTES TO THE FINANCIAL STATEMENTS Note �8. INTERESTS IN SUBSIDIARIES
Information about the Principal Subsidiaries
The subsidiaries listed below have share capital consisting solely of ordinary shares which are held directly by the Group� The
proportion of ownership interests held equals the voting rights held by the Group� Each subsidiary’s principal place of business is also
its country of incorporation�
Name of Subsidiary
Noni B Holdings Pty Limited
Pretty Girl Fashion Group Holdings Pty Ltd
Pretty Girl Fashion Group Pty Ltd
W�Lane Pty Ltd
Noni B Holdings 2 Pty Ltd
Millers Retail Pty Ltd
Autograph Retail Pty Ltd
Rivers Retail Holdings Pty Ltd
Crossroads Retail Pty Ltd
Katies Retail Pty Ltd
Noni B Holdco Pty Ltd
EziBuy Pty Ltd
Noni B NZ Limited
Noni B Holdings NZ Limited
New EziBuy Ltd
EziBuy Holdings Ltd
EziBuy Ltd
EziBuy Operations Ltd
Sara Apparel Ltd
Last Stop Shop Ltd
EziBuy Custodian Ltd
Country of
Incorporation
Ownership Interest
2020
2019
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
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%
–
100%
100%
–
–
–
–
–
–
–
*
New EziBuy Limited was acquired at 50�1% with an option to acquire the remaining 49�9% which has been accounted for as a present ownership interest (refer
Note 30)�
Note �9. DEED OF CROSS GUARANTEE
The following entities are party to a deed of cross guarantee under which each party guarantees the debts of the others:
● Mosaic Brands Limited
● Noni B Holdings Pty Limited
● Noni B Holdings 2 Pty Ltd
● Noni B Holdings NZ Limited
● Millers Retail Pty Ltd
● Autograph Retail Pty Ltd
● Pretty Girl Fashion Group Holdings Pty Ltd
● Pretty Girl Fashion Group Pty Ltd
● Crossroads Retail Pty Ltd
● Katies Retail Pty Ltd
● Rivers Retail Holdings Pty Ltd
By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare financial statements and
Directors’ report under ASIC Legislative Instrument 2016/785�
The above companies (including Mosaic Brands Limited as parent entity) represent a ‘Closed Group’ for the purposes of the legislative
instrument� The financial information pertaining to the Closed Group is the consolidated financial information in the report less the
information of the parent entity as disclosed in note 27�
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 69
Note �9. DEED OF CROSS GUARANTEE (continued)
Consolidated statement of profit or loss and other comprehensive income
Continuing operations
Revenue
Other income
Cost of goods sold
Expenses (excluding finance costs)
Transaction and restructuring costs
Finance costs
Impairment of brand names
Impairment of goodwill
(Loss) / profit before income tax
Income tax benefit / (expense)
(Loss) / profit attributed to members of the parent entity
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income, net of tax
Closed Group
2020
$’000
2019
$'000
639,267
17,442
864,493
17,427
(343,935)
(382,783)
(405,856)
(476,001)
(3,657)
(11,449)
(33,364)
(64,022)
(205,574)
41,143
(164,431)
(93)
(93)
(9,139)
(2,124)
–
–
11,873
(3,743)
8,130
31
31
8,161
Total comprehensive income for the year attributed to members of the parent entity, net of tax
(164,524)
Consolidated statement of financial position
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Other receivables
Inventories
Income tax receivable
Other current assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Plant and equipment
Right-of-use assets
Intangible assets
Deferred tax assets
Other non-current assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
70 “We put the customer at the heart of everything we do.”
Closed Group
2020
$’000
2019
$'000
77,553
22,765
83,349
–
2,867
36,684
5,484
166,951
4,846
347
186,534
214,312
27,332
119,665
39,341
107,856
26
294,220
480,754
41,101
–
123,970
32,386
91
197,548
411,860
NOTES TO THE FINANCIAL STATEMENTS LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Borrowings
Provisions
Derivative financial instruments
Lease liabilities
Income tax payable
Other current liabilities
Deferred consideration
Intercompany payables
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
Lease liabilities
Provisions
Deferred tax liabilities
Other non-current liabilities
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Closed Group
2020
$’000
2019
$'000
213,156
28,974
27,783
534
83,546
154
95
9,580
1,928
198,602
–
29,089
570
–
–
8,908
–
–
365,751
237,169
44,989
91,611
2,828
49,935
110
189,473
555,224
(74,470)
108,034
18,694
(201,198)
(74,470)
29,482
–
4,427
19,171
15,489
68,569
305,738
106,122
107,605
9,421
(10,904)
106,122
Note 30. BUSINESS COMBINATIONS
On 23 December 2019 an extraordinary general meeting (EGM) was held to approve the purchase of 50�1% of EziBuy for a nominal price
of $1�00 effective from 28 October 2019 (date of acquisition)� The EGM also approved the grant and exercise of call and put options
to either acquire the remaining 49�9% equity interest on or prior to 31 December 2020 for a consideration of $11 million, or return the
current shareholding to Alceon Retail for $1�00� Should neither option be exercised by Mosaic Brands Limited, Alceon Retail has the
option to purchase the 50�1% back from Mosaic for $1�00�
EziBuy is a multi-channel retailing business which operates predominately in New Zealand and also Australia� It was acquired to increase
the Group’s online revenue share by gaining access to the customer portfolio which includes a high customer loyalty base� The acquired
business operates in New Zealand and transacts in New Zealand Dollars which has been translated to Australian Dollars (AUD) for the
purposes of these accounts�
The acquisition has been accounted for as a business combination under AASB 3 Business Combinations� The Group considers it has
a present ownership interest in the 49�9% shareholding currently held by related party Alceon Retail and has therefore accounted for
100% of EziBuy’s results� Consequently, there is no non-controlling interest to be recognised at acquisition�
The Group has recognised a financial liability for the present value of the exercise price of the call option� If the call option expires
unexercised, the Group will account for a disposal of its present ownership interest in the 49�9% shareholding, together with any
resulting implications under the acquisition agreement�
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 71
Note 30. BUSINESS COMBINATIONS (continued)
The fair value of the deferred consideration has been calculated based on the underlying Share Purchase Agreement, and includes the
fair value of the exercise price of the call option of $10,800,000, which includes the amount to settle related party loans payable to
the owners of the remaining 49�9% equity interest of $3,800,000 and the cash adjustment required to settle the cash acquired in the
business of $2,460,000�
The Share Purchase Agreement requires the payment of contingent consideration to Alceon Retail in the event that the Group sells
more than 50% of the equity interest in EziBuy within 12 months of exercising the call option�
Details of the acquisition are as follows:
Consideration
– Cash paid for purchase
– Fair value of deferred consideration
Total cash consideration to be paid
Net identifiable assets / (liabilities) acquired
– Inventories
– Other current assets
– Plant and equipment
– Right-of-use assets (AASB 16)
– Brand names
– Intangibles – software
– Deferred tax assets
– Cash acquired
– Trade and other payables
– Loans and borrowings
– Lease liabilities (AASB 16)
– Other provisions
Net identifiable assets / (liabilities) acquired
Goodwill on acquisition
Fair value
$’000
–
9,580
9,580
30,504
2,074
4,510
25,543
890
5,178
2,632
2,460
(38,766)
(6,520)
(25,543)
(4,146)
(1,184)
10,764
From the date of acquisition, the acquired brands contributed revenues of $80,068,000 to the Group (includes related party interest)
for the financial reporting period, of which $39,300,000 of sales were derived in Australia� The acquired company contributed an
operating loss of ($6,054,000) to the Group, this excludes operating loss attributed to related party interest�
Acquisition costs incurred during the financial period were $1,386,000�
Management has determined that disclosure of the profit and loss of the acquired entities as though the acquisition date had been as
of 1 July 2019 is impracticable due to the high degree of estimation required to normalise for the economic consequences of COVID-19�
Provisional goodwill of $10,764,000 includes the acquired workforce, future growth opportunities and operational synergies�
AASB 3 Business Combinations allows a measurement period of up to 12 months after a business combination to provide the acquirer a
reasonable time to obtain the information necessary to identify and measure all of the various components of the business combination
as of the acquisition date� The details of the acquisition above are determined provisionally, pending the finalisation of the valuation
information� Further adjustments may be made to the fair values assigned to the identifiable assets acquired and liabilities assumed�
Consequently, the resulting goodwill is provisional and has not been allocated to the Group’s cash generating units�
Management will test goodwill for impairment prior to 28 October 2020� Management has considered indicators of impairment at the
end of the reporting period and deemed that operational synergies have been achieved as planned�
The accounting treatment of the acquisition has been revised since the half year to reflect the commercial substance of the transaction�
72 “We put the customer at the heart of everything we do.”
NOTES TO THE FINANCIAL STATEMENTS Note 3�. CASH FLOW INFORMATION
Reconciliation of Cash Flows from Operating Activities with Profit after income tax
(Loss) / profit after income tax
Non-cash flows in (loss) / profit:
– depreciation
– amortisation
– write-off and write down of obsolete stock
– impairment and write-off of non-current assets
– sales return provision
– impairment of Brand Names and Goodwill
– net gain on disposal of plant and equipment
– unrealised foreign exchange gain
– share based payment expense
Change in assets and liabilities:
– (increase) / decrease in trade and other receivables
– decrease / (increase) in inventories
– increase in deferred tax assets
– increase in deferred tax liabilities
– (decrease) / increase in trade and other payables
– (decrease) / increase in financial instruments
– increase / (decrease) in tax liability
– (decrease) / increase in provisions
Net cash flow from operating activities
Consolidated Group
2020
$’000
2019
$’000
(170,485)
8,130
120,439
8,881
32,151
1,991
3,175
97,386
(51)
(6,671)
266
(958)
64,622
(85,480)
37,485
(132)
(36)
4,991
(1,576)
105,998
21,409
899
2,335
79
–
–
(52)
(208)
365
713
(77,089)
(363)
–
75,419
1,215
(10,901)
1,532
23,483
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 73
Note 3�. (LOSS) / EARNINGS PER SHARE
(Loss) / earnings per share
(Loss) / profit after income tax
(Loss) / profit after income tax attributable to the owners of Mosaic Brands Limited
Weighted average number of ordinary shares used in calculating:
– basic earnings per share
– diluted earnings per share
Basic (loss) / earnings per share (cents)
Diluted (loss) / earnings per share (cents)
Consolidated Group
2020
$’000
2019
$’000
(170,485)
(170,485)
8,130
8,130
Number
$’000
Number
$’000
96,858
96,858
(176.0)
(176.0)
96,824
96,824
8�4
8�4
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Mosaic Brands Limited, excluding any costs of
servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year,
adjusted for bonus elements in ordinary shares issued during the financial year�
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after
income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average
number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares�
Note 33. SHARE BASED PAYMENTS
The fair value at grant date is independently determined using a Binomial Approximation Option Valuation Model and the Black Scholes
Valuation model that takes into account the exercise price, the term of the rights over shares, the share price at grant date and
expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the rights
over shares� The volatility calculation is based on historical share prices� These have a variety of market and non-market conditions
based on the volume weighted average price (VWAP)� The accounting estimates and assumptions relating to equity-settled share-based
payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may
impact profit or loss and equity�
A summary of the movement of all rights over share grants during the year ended 28 June 2020 include:
Performance Share Rights
Performance share rights which were outstanding as at 28 June 2020 were as follows:
Grant date
08/08/2016
19/08/2016
19/08/2016
19/08/2016
17/02/2017
24/05/2017
12/01/2018
24/09/2018
21/12/2018
Expiry date
07/08/2021
18/08/2021
18/08/2021
18/08/2021
16/02/2022
23/05/2022
11/01/2023
23/09/2023
20/12/2023
Fair value at
grant date
Share price
at grant
date
Exercise
price
Volatility
Interest rate
$ 0�44
$ 0�47
$ 0�39
$ 0�32
$ 0�48
$ 0�54
$ 0�45
$ 1�31
$ 0�63
$ 1�33
$ 1�33
$ 1�33
$ 1�33
$ 1�46
$ 1�63
$ 2�09
$ 3�58
$ 2�68
$ 1�33
$ 1�25
$ 1�50
$ 1�75
$ 1�47
$ 1�64
$ 1�93
$ 3�42
$ 3�42
35%
35%
35%
35%
35%
35%
24%
54%
49%
1�54%
1�54%
1�54%
1�54%
1�54%
1�54%
1�55%
1�55%
1�55%
Number
of rights
available
100,000
1,450,000
300,000
300,000
100,000
100,000
25,000
550,000
20,000
74 “We put the customer at the heart of everything we do.”
NOTES TO THE FINANCIAL STATEMENTS The weighted average price for the above performance share rights was $1�78�
During the financial period the number of share rights that were exercised was nil (2019: 845,000)�
Performance share rights which were forfeited during the period 1 July 2019 to 28 June 2020 were as follows:
Grant date
10/05/2017
07/08/2017
25/08/2017
11/11/2017
12/01/2018
12/05/2018
24/09/2018
Expiry date
09/05/2022
06/08/2022
24/08/2022
10/11/2022
11/01/2023
11/05/2023
23/09/2023
Fair value at
grant date
Share price
at grant
date
Exercise
price
$ 0�55
$ 0�38
$ 0�38
$ 0�39
$ 0�45
$ 0�37
$ 1�31
$ 1�65
$ 1�96
$ 2�00
$ 2�02
$ 2�09
$ 2�35
$ 3�58
$ 1�63
$ 1�86
$ 1�95
$ 2�01
$ 1�93
$ 2�50
$ 3�42
Volatility
Interest rate
35%
15%
16%
25%
24%
28%
54%
1�54%
1�55%
1�55%
1�55%
1�55%
1�55%
1�55%
Number
of rights
available
25,000
100,000
25,000
25,000
50,000
50,000
125,000
The total charge arising from share based payment transactions during the year as part of employee benefit expense was $266,000
(2019: $365,000)�
Recognition and measurement
Share-based payments to employees are measured at the fair value of the instruments issued and amortised over the vesting periods�
Share-based payments to non-employees are measured at the fair value of goods or services received or the fair value of the equity
instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date
the goods or services are received� The corresponding amount is recorded to the equity reserve� The fair value is determined using the
Black-Scholes pricing model� The number of shares expected to vest is reviewed and adjusted at the end of each reporting period such
that the amount recognised for services received as consideration for the equity instruments granted is based on the number of equity
instruments that eventually vest�
Note 34. COMMITMENTS AND
CONTINGENT LIABILITIES
Contractual commitments
As at 28 June 2020, the Group had no contractual commitments apart from lease liabilities (note 17)�
Contingent liabilities
Mosaic Brands Limited is a party to various legal proceedings incidental to its business� As is the case with other companies in similar
industries managing through the COVID-19 pandemic, the Group faces exposure from actual or potential claims and legal proceedings�
Although the ultimate result of the legal proceedings cannot be predicted due to the uncertainty, it is the opinion of the Groups
management that the outcome of any claim which is pending, either individually or on a combined basis, will not have a material effect
on the financial position of the Group, its cash flows and result of operations� Accordingly, no provision has been provided within these
financial statements�
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 75
Note 35. EVENTS AFTER THE REPORTING DATE
The impact of the Coronavirus (COVID-19) pandemic is ongoing and as such it is not practicable to estimate the potential impact,
positive or negative, after the reporting date� The situation is rapidly developing and is dependent on measures imposed by the
Australian Government and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any
economic stimulus that may be provided�
In the interests of the health and safety of its customers and store teams, Mosaic Brands Limited closed all stores within Victoria
temporarily� In response to the state Government’s imposition of stage 3 and 4 restrictions, the Group closed 25 stores on 1 July with an
additional 135 stores on 8 July with the balance 89 regional stores closed on 5 August� All stores will remain closed until restrictions are
reduced�
Mosaic Brands announced on 20 August temporary closure of 129 stores in the Westfield centres� The financial contribution of these
stores are not of a material nature with all impacted team members being redeployed to other locations�
Apart from the above, no other matter or circumstances has arisen since 28 June 2020 that has significantly affected, or may
significantly affect the Groups operations, the results of those operations, or the state of affairs in future financial years�
76 “We put the customer at the heart of everything we do.”
NOTES TO THE FINANCIAL STATEMENTS In the Directors’ opinion:
● the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations
Regulations 2001 and other mandatory professional reporting requirements;
● the attached financial statements and notes comply with International Financial Reporting Standards as issued by the International
Accounting Standards Board as described in note 1 to the financial statements;
● the attached financial statements and notes give a true and fair view of the Consolidated Entity's financial position as at
28 June 2020 and of its performance for the financial year ended on that date;
● there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable; and
● at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group will be
able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee
described in note 29 to the financial statements�
The Directors have been given the declarations required by section 295A of the Corporations Act 2001�
Signed in accordance with a resolution of Directors made pursuant to section 295(5)(a) of the Corporations Act 2001�
On behalf of the Directors
Richard Facioni
Chairman
25 August 2020
Scott Evans
Managing Director
25 August 2020
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 77
DIRECTORS' DECLARATION INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF MOSAIC BRANDS LIMITED
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret St
Sydney NSW 2000
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Mosaic Brands Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Mosaic Brands Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 28 June 2020, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 28 June 2020 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of
BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member
firms. Liability limited by a scheme approved under Professional Standards Legislation.
78 “We put the customer at the heart of everything we do.”
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MOSAIC BRANDS LIMITED Material uncertainty related to going concern
We draw attention to Note 1 in the financial report which describes the events and conditions which
give rise to the existence of a material uncertainty that may cast significant doubt about the group’s
ability to continue as a going concern and therefore the group may be unable to realise its assets and
discharge its liabilities in the normal course of business. Our opinion is not modified in respect of this
matter.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters. In addition to the matter described in the Material uncertainty
related to going concern section, we have determined the matters described below to be the key audit
matters to be communicated in our report.
Carrying value of intangible assets
Key audit matter
How the matter was addressed in our audit
Australian Accounting Standards require intangibles
Our audit procedures included, amongst others:
with indefinite useful lives to be tested annually for
impairment, and to recognise an impairment charge if
the carrying value exceeds recoverable amount.
Evaluating whether management’s expert
had the necessary competence, capabilities
and objectivity. We obtained an
Prior to year end, the Group had identified indicators
understanding of the work of management’s
of impairment due to the market capitalisation of the
expert including an understanding of the
Group being lower than the net assets of the Group.
relevant field of expertise;
The Group has recognised an impairment of $64.02m in
relation to goodwill and $33.36m in relation to brand
names.
As discussed in Note 12 of the financial report, the
assessments of the impairment of the Group’s goodwill
and other intangible assets incorporates significant
judgements and estimates, specifically concerning
factors such as forecast cash flows, discount rates,
terminal growth rates and royalty rates. The
identification of, and allocation of assets to cash
generating units was also a key area of judgement.
The Group has engaged an expert to assist with the
impairment testing.
This was considered to be a key audit matter due to
the significance of the intangible assets, the material
amount of the impairment charge recorded and the
judgements and estimates exercised in the impairment
testing.
Assessing whether the cash generating units
were appropriate and consistent with our
knowledge of the Group’s operations and
internal reporting;
Assessing whether the impairment testing
methodology used by the Group met the
requirements of Australian Accounting
Standards;
Testing the mathematical accuracy of models
used;
Evaluating the Group’s assumptions and
estimates used in their cash flow forecasting,
and with our internal valuation experts,
assessing the growth rates (including
terminal growth rate), discount rates and
royalty rates used;
Considering how the Group allowed for any
deterioration in the market including the
economic effects of COVID-19 which would
impact the valuation of intangibles; and
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 79
Evaluated the adequacy of the impairment
disclosures in the financial report,
particularly those relating to intangible
assets and to judgements and estimates.
Valuation of inventory
Key audit matter
How the matter was addressed in our audit
The carrying value of inventory as at 28 June 2020 is
Our audit procedures included, amongst others:
$102.33m (2019: $166.95m) as disclosed in Note 8 of
the financial report.
Due to the industry in which the Group operates, the
items held in inventory have an inherent risk of
obsolescence. The carrying value of inventories was
reduced by $32.15m (2109: $6.79) for obsolescence
and shrinkage factors, which is judgemental in nature.
Significant management judgements include
categorisation of inventories, fragmentation and sell
through rates, and shrinkage, which form the basis of
management’s calculation to determine the net
realisable value of inventory. The valuation of
inventory is a key audit matter due to the judgements
and estimates required in calculating the provision for
obsolescence and shrinkage, the deterioration of
trading due to COVID-19, and the material nature of
the inventory balance.
Considering and testing the design and
operating effectiveness of key inventory
controls;
Discussing with management the Group’s
current performance and future strategies to
assist in evaluating the underlying
assumptions applied in the calculation of the
inventory obsolescence and shrinkage
provision, particularly due to the current
economic environment ;
Recalculating the arithmetical accuracy of
the provision for inventory obsolescence and
shrinkage calculation;
Challenging management’s assumptions by
testing the classifications of the underlying
data used within the calculation, performing
inventory turnover analysis; and analysing
the accuracy of historical obsolescence
provisions; and
Agreeing a sample of inventory on hand to
initial purchase invoices and subsequent
sales invoices and comparing the carrying
amount to the net realisable value.
80 “We put the customer at the heart of everything we do.”
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MOSAIC BRANDS LIMITED Accounting for the acquisition of EziBuy
Key audit matter
How the matter was addressed in our audit
As disclosed in Note 30 of the financial report, the
Our audit procedures included, amongst others:
Group acquired 50.1% of New EziBuy Limited (EziBuy)
with the option to acquire the remaining 49.9%.
Reviewing the business sale agreement to
understand the terms and conditions of the
Accounting for this transaction is complex, requiring
acquisition and evaluating management’s
the Group to exercise judgement in how the structure
accounting thereof and application of the
and substance of the transaction is treated under
relevant accounting standards;
Australian Accounting Standards, and identifying and
Comparing the assets and liabilities
determining the fair value of the assets and liabilities
recognised on acquisition against the
acquired.
The audit of the accounting for this acquisition is a key
audit matter due to the magnitude of the transaction
and the significant judgement and complexity involved
in accounting for the transaction.
executed agreements and the historical
financial information of the acquired entity;
Evaluating and challenging the assumptions
made and methodology used in
management’s determination of the fair
value of assets and liabilities acquired;
Assessing the impact of the derivative
instruments on the transaction structure and
the application of accounting standards in
their recognition; and
Considering the adequacy of the business
combination disclosures in light of the
requirement of Australian Accounting
Standards.
Adoption of AASB16 - Leases
Key audit matter
How the matter was addressed in our audit
The Group has adopted AASB 16 Leases effective 1 July
Our audit procedures included, amongst others:
2019.
As disclosed in note 1, the Group has a significant
number of lease arrangements due to its vast store
network. Certain judgements were required to be
Assessing whether the Group’s accounting
policy for leases is in line with the
requirements of AASB 16;
Testing the accuracy of key data inputs to
made on adoption of AASB16 Leases on 1 July 2019.
the lease liability and right of use asset
The adoption of AASB16 Leases is a key audit matter
due to the magnitude of lease liabilities ($241.35m)
and right of use assets ($195.61m) recorded on the
Group’s balance sheet and significant judgement
applied in determining key assumptions, including
calculations by comparing to underlying
lease agreements and subsequent variations
on a sample basis;
Testing the accuracy of the lease liability
and right of use asset by re-performing the
calculations on a sample basis;
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 81
incremental borrowing rates, exercise of option periods
Assessing the reasonableness of key
and lease terms.
Management has assessed the right-of-use assets for
impairment which was also subject to judgement,
including the impact of COVID-19.
judgements used in the calculations
including the incremental borrowing rate,
option periods, lease terms and
appropriateness of the practical expedients
applied by the Group in computing the lease
liability and right of use asset on
implementation date;
Evaluating the methodology applied in the
impairment assessment over right of use
assets; and
Considering the adequacy of the disclosures
in light of the requirements of Australian
Accounting Standards.
Other information
The directors are responsible for the other information. The other information comprises the
information contained in the Directors’ report, Corporate Governance Statement and additional
securities exchange information for the year ended 28 June 2020, but does not include the financial
report and our auditor’s report thereon, which we obtained prior to the date of this auditor’s report,
and the annual report, which is expected to be made available to us after that date.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent
with the financial report or our knowledge obtained in the audit or otherwise appears to be materially
misstated.
If, based on the work we have performed on the other information that we obtained prior to the date
of this auditor’s report, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.
When we read the annual report, if we conclude that there is a material misstatement therein, we are
required to communicate the matter to the directors and will request that it is corrected. If it is not
corrected, we will seek to have the matter appropriately brought to the attention of users for whom
our report is prepared.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
82 “We put the customer at the heart of everything we do.”
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MOSAIC BRANDS LIMITED MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 83
In preparing the financial report, the directors are responsible for assessing the ability of the group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf This description forms part of our auditor’s report. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration report included in the Directors’ report for the year ended 28 June 2020. In our opinion, the Remuneration report of Mosaic Brands Limited, for the year ended 28 June 2020, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration report, based on our audit conducted in accordance with Australian Auditing Standards. BDO Audit Pty Ltd Gillian Shea Director Sydney, 25 August 2020 ADDITIONAL INFORMATION
In accordance with ASX Listing Rule 4�10, the Company provides the following information to shareholders not elsewhere disclosed in
this Annual Report� The information provided is current as at 31 July 2020 (Reporting date)�
CORPORATE GOVERNANCE STATEMENT
The Company’s Directors and management are committed to conducting the business of the Group’s business in an ethical manner and
in accordance with the highest standards of corporate governance� The Company has adopted and substantially complies with the ASX
Corporate Governance Principles and Recommendations (Third Edition) (Recommendations) to the extent appropriate to the size and
nature of the Group’s operations�
The Company has prepared a statement which sets out the corporate governance practices that were in operation throughout the
financial year for the Company, identifies any Recommendations that have not been followed, and provides reasons for not following
such Recommendations (Corporate Governance Statement)�
In accordance with ASX Listing Rules 4�10�3 and 4�7�4, the Corporate Governance Statement will be available for review on the
Company’s website (https://mosaicbrandslimited�com�au), and will be lodged together with an Appendix 4G with ASX at the same time
that this Annual Report is lodged with ASX�
The Appendix 4G will particularise each Recommendation that needs to be reported against by the Company and will provide
shareholders with information as to where relevant governance disclosures can be found�
The Company’s corporate governance policies and charters are all available on its website https://mosaicbrandslimited�com�au�
NUMBER OF HOLDERS
As at the Reporting Date, the number of holders in each class of equity securities:
Class of equity securities
Fully paid ordinary shares
Number of
holders
Number of
shares on issue
2,098
96,812,930
VOTING RIGHTS OR EQUITY SECURITIES
The only class of equity securities on issue in the Company are ordinary shares�
At a general meeting of the Company, every holder of ordinary shares present in person or by proxy, attorney or representative has one
vote on a show of hands and, on a poll, one vote for each ordinary share held� On a poll, every member (or his or her proxy, attorney or
representative) is entitled to vote for each fully paid share held and, in respect of each partly paid share, is entitled to a fraction of a
vote equivalent to the proportion which the amount paid up (not credited) on that partly paid share bears to the total amounts paid
and payable (excluding amounts credited) on that share� Amounts paid in advance of a call are ignored when calculating the proportion�
DISTRIBUTION OF HOLDERS OF EQUITY SECURITIES
The distribution of holders of equity securities on issue in the Company as at the Reporting date is as follows:
Distribution of ordinary shareholdings
Holders
Total units
%
Size of Holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total number of shares
467
767
378
424
62
247,929
2,119,612
2,910,691
11,238,373
80,296,325
2,098
96,812,930
0�26
2�18
3�01
11�61
82�94
100.00
LESS THAN MARKETABLE PARCELS OF ORDINARY SHARES (UMP SHARES)
The number of holders of less than a marketable parcel of ordinary shares based on the closing market price at the Reporting date is
as follows:
Total shares
96,812,930
UMP shares
UMP holders
% of issued
shares held by
UMP holders
159,210
378
0�1644512
84 “We put the customer at the heart of everything we do.”
ADDITIONAL INFORMATION SUBSTANTIAL HOLDERS
As at the Reporting Date, the names of the substantial holders of the Company and the number of equity securities in which those
substantial holders and their associates have a relevant interest, as disclosed in substantial holding notices given to the Company, are
as follows:
Holder of equity securities
Alceon Group Pty Limited
Perpetual Limited
LHC Capital Partners Pty Ltd
Number of equity
securities held
% of total issued
securities
34,821,570
14,140,606
11,210,000
35�97
14�61
11�58
TWENTY LARGEST SHAREHOLDERS
The Company only has one class of quoted securities, being ordinary shares� The names of the 20 largest holders of ordinary shares,
and the number of ordinary shares and percentage of capital held by each holder is as follows:
Ordinary shares
Holder name
HSBC Custody Nominees (Australia) Limited
Alceon Group Pty Ltd
Alceon Group Pty Limited
Alceon Group Pty Ltd
UBS Nominees Pty Ltd
HBSC Custody Nominees (Australia) Limited – A/C 2
Scott Graham Evans
Alceon Group Pty Ltd
Vacuna Nominees Pty Ltd
Morphet Investments Pty Ltd
Simone Robyn Evans
J P Morgan Nominees Australia Pty Limited
Fitzroy Super Pty Ltd
Luke Anthony Softa
BNP Paribas Nominees Pty Ltd
National Nominees Limited
Stephen Thomas Gosney
KI & A Mason Super Fund Pty Ltd
Mr Donald James Mackenzie
Ms Ellen Oi Wah So
Total
Number held
14,942,634
12,353,308
11,571,543
8,262,366
5,729,185
5,718,224
3,418,862
2,487,255
1,800,000
1,448,392
1,184,313
1,095,917
1,012,392
500,000
435,327
341,430
333,735
332,245
300,000
294,259
% of total
shares issued
15�43
12�76
11�95
8�53
5�92
5�91
3�53
2�57
1�86
1�50
1�22
1�13
1�05
0�52
0�45
0�35
0�34
0�34
0�31
0�30
73,561,387
75.97
OTHER INFORMATION
On 2 December 2019, the Company closed the on-market share buyback which commenced on 11 December 2018� On 6 February 2020
the Company announced that it had initiated a new on-market share buyback up to the maximum aggregate amount of $10�0 million
during the period 20 February 2020 to 19 February 2021� No shares have been purchased on-market under the new share buyback�
250,000 shares were purchased on-market during the reporting period under or for the purposes of an employee incentive scheme or to
satisfy the entitlements of the holders of options or other rights to acquire securities granted under an employee incentive scheme�
There are no issues of securities approved for the purposes of item 7 of section 611 of the Corporations Act which have not yet
been completed�
MOSAIC BRANDS LIMITED ANNUAL REPORT 2020 85
AUDITOR
BDO Audit Pty Limited
1 Margaret Street
Sydney NSW 2000
BANKERS
ANZ
242 Pitt Street
Sydney NSW 2000
STOCK EXCHANGE LISTING
Mosaic Brands Limited shares are listed on the Australian
Securities Exchange
ASX Code:
MOZ
WEBSITE
www�mosaicbrandslimited�com�au
CORPORATE GOVERNANCE STATEMENT
www�mosaicbrandslimited�com�au
DIRECTORS
Richard Facioni
Scott Evans
David Wilshire
Sue Morphet
Jacqueline Frank
COMPANY SECRETARY
Luke Softa
NOTICE OF ANNUAL GENERAL MEETING
Details of the Annual General Meeting of Mosaic Brands:
Virtual Annual General Meeting
Details: To be advised on the ASX
Time: 11:00am
Date: Thursday 29th October 2020
REGISTERED OFFICE
Mosaic Brands Limited
Ground Floor, 61 Dunning Avenue
Rosebery NSW 2018
Telephone:
Facsimile:
(02) 8577 7777
(02) 8577 7887
ABN:
96 003 321 579
SHARE REGISTER
Computershare Registry Services Pty Limited
Level 5, 115 Grenfell Street
Adelaide SA 5000
Telephone:
1300 556 161
86 “We put the customer at the heart of everything we do.”
CORPORATE DIRECTORY