Kathmandu Holdings Limited Annual Report 2020

KATHMANDU HOLDINGS LIMITED
Annual
Report
2020

Who we are
Kathmandu Holdings Limited (KHL) is a global outdoor,
lifestyle and sports company, consisting of three iconic
brands: Kathmandu, Rip Curl and Oboz, bringing to market
technical products with a focus on sustainability.
The Kathmandu brand was born in 1987. Kathmandu Holdings
formed in 2009 as a publicly listed company. Together with
the acquisition of Oboz (2018) and Rip Curl (2019), Kathmandu
Holdings has transformed from a leading Australasian
retailer to a brand-led global multi-channel business.

Global reach
EuropeAsia
Owned Regions Licensed Regions
RC Rip Curl KMD Kathmandu Oboz Oboz
RC KMD ObozTotal
Owned stores 160 165 - 325
Licensed stores 207 - - 207
JV stores 26 - - 26
Online sites 6 4 - 10
Wholesale doors 5,786 28 1 ,749 7,56 3
North America
RC KMD Oboz Total
Owned stores 30 - - 30
Licensed stores 10 - - 10
Online sites 1 1 - 2
Wholesale doors 1,206 - 1,500 2,706
South America
RC
Owned stores 3
Licensed stores 90
Online sites 1
Wholesale doors 815
RCKMDObozTotal
Owned stores 20 - - 20
Licensed stores 17 - - 17
Online sites 1 1 - 2
Wholesale doors 2,146 28 97 2,271
RC
Licensed stores 21
RC KMD Total
Owned stores 105 165 270
Licensed stores 15 - 15
JV stores 6- 6
Online sites 2 2 4
Wholesale doors 1,054 - 1,054
Australia and New Zealand
RC Oboz Total
Owned stores 2 - 2
Licensed stores 54 - 54
JV stores 20 - 20
Online sites 1 - 1
Wholesale doors 565 152 717
Africa / Middle East
TOTAL GROUP
3ANNUAL REPORT 2020KATHMANDU HOLDINGS LTD2INTRODUCTION

Performance
highlights
RIP CURL ACQUISITION WAS TRANSFORMATIONAL
Delivered diversification in geography, channel to market
and seasonality.
Strong cash generating brands with global reach.
Three iconic, inspirational brands with loyal customers.
RESPONSE TO COVID-19 WAS SWIFT AND STRONG
Decisive action to:
Raise capital and suspend dividends.
Reduce costs and accelerate synergies.
Balance sheet well positioned.
SALES AND PROFIT RESULTS REFLECT
COVID-19 IMPACT
COVID-19 revenue impact estimated at c. $135m.
Enhanced online capacity and capability to rapidly scale up
to meet demand.
1 Includes full financial years of Rip Curl sales for comparability, including $3.7m Rip Curl online sales for the three months pre-acquisition.
2 Sales from Rip Curl and Kathmandu retail stores and direct online sites and marketplaces.
3 Adjusted to remove stores that were not able to open for a comparable week because of COVID-19 lockdowns.
4 Excluding the impacts of IFRS 16 and one-off transaction and abnormal costs.
OPERATING CASH FLOW
adjusted for impacts of adopting IFRS 16
GROUP SALES
including 9 months of Rip Curl
up 48.7% to $801.5m
up 50.9% to $93.1m
CLOSING NET DEBT
with over $350m debt facility headroom
CAPITAL RAISED
in April 2020
$207m
$9.4m
GROUP ONLINE SALES
1
RETAIL SAME STORE SALES
3
15.7% of direct to consumer sales
2
Growth stronger post-lockdown
than pre-lockdown for both
Rip Curl and Kathmandu.
up 63% to $106.4m
UNDERLYING EBITDA
4
UNDERLYING EBIT
4
down 15.3% to $83.4mdown 32.5% to $56.2m
UNDERLYING NET PROFIT AFTER TAX
4
STATUTORY NET PROFIT AFTER TAX
includes $18.0m one-off transaction
costs, $4.6m restructuring costs, and
$2.6m impact from the implementation
of IFRS 16 leasing standard (in total
$22.6m impact net of tax).
down 44.5% to $31.5m$8.9m
5ANNUAL REPORT 2020KATHMANDU HOLDINGS LTD4INTRODUCTION

Notice of Annual Meeting 2020
11.00am Wednesday
25 November 2020
www.virtualmeeting.co.nz/kmd20
Contents
Chairman and
CEO’s letter
Chairman and CEO’s Letter
Sustainability highlights
Rip Curl
Kathmandu
Oboz
The Board
Management team
Financial statements
Corporate governance
Statutory information
Directory
7
10
12
16
19
20
21
23
78
88
94
This was a transformational year
for the business and our team,
with the successful acquisition
and integration of Rip Curl, the
Group’s swift and strong response
to COVID-19, and the strength of
our three brands clearly evident.
Sales and profit results for Rip Curl,
Kathmandu, and Oboz in FY20
reflect the global impact of the
COVID-19 pandemic. The Group
responded quickly by raising
capital to strengthen its balance
sheet, reduced costs and adjusted
its operating structure. As initial
lockdowns and social distancing
measures eased, strong sales
recovery and cash generation
allowed the Group to end the
financial year well placed both
financially and operationally.
Rip Curl acquisition
We are very pleased with the
successful acquisition and
integration of Rip Curl over the
last nine months. Rip Curl is an
iconic global surf brand and
action sports company, with a
vision to be regarded as “the
Ultimate Surfing Company”.
The Group now comprises three
iconic, inspirational brands with
loyal customers. The acquisition
of Rip Curl allowed the Group
to considerably diversify its
geographic footprint, channels
to market and seasonality profile.
We are now a truly global outdoor,
lifestyle and sports company.
Kathmandu, Oboz, and Rip
Curl are very culturally aligned
with a shared focus on brand
differentiation, technical
innovation, quality, customer
engagement and sustainability.
COVID-19 response
The Group acted quickly and
decisively in reponse to COVID-19.
Protecting the safety and wellbeing
of employees and customers has
always been paramount, and
even more so throughout our
COVID-19 response. In accordance
with Government directives,
all of the Group’s global retail
stores were closed for varying
lengths of time from late March.
At the beginning of April, the
Group moved quickly, raising
$207 million of equity to provide
balance sheet strength and
enabling investment for the future.
We also took decisive action early
to reduce costs, adjusting the
operating structure of the business
and accelerating synergies
following the Rip Curl acquisition.
Consumer preference for
online increased during the
initial lockdowns. The Group’s
onmi-channel capability and
infrastructure capacity allowed
both Kathmandu and Rip Curl
to rapidly scale up to meet the
surge in online demand.
As retail stores reopened following
the initial lockdowns, sales
rebounded strongly, reducing
inventory significantly, and
generating strong cashflow.
As a result, the Group finished
the financial year with a robust
balance sheet and healthy
inventory level, positioning the
Group well for the future.
Growth strategy
We are a global outdoor,
lifestyle and sports company,
underpinned by iconic brands
and technical products, with
David Kirk
Chairman
Xavier Simonet
Managing Director and
Chief Executive Officer
7ANNUAL REPORT 2020KATHMANDU HOLDINGS LTD6CONTENTS

a focus on sustainability and
customer engagement . The
Group’s long-term strategy has
not changed throughout this
challenging period and, in fact,
it has been further reinforced.
The Group has now built a
portfolio of brands that provide
diversification across geography,
channel, product and seasonality.
These brands allow us to meet
global year-round needs of
customers in the outdoor, sports
and lifestyle categories.
We are now starting to leverage
this portfolio of brands, with plans
to deliver operational excellence in
sourcing, supply chain and systems.
We will continue accelerating
digital transformation and driving
margin expansion through
synergies, and leveraging the
complementary expertise and
core capabilities of our brands.
We plan to grow each brand by
maintaining a relentless focus
on core customers, delivering
solutions to their needs, and
enhancing customer loyalty. Each
brand will continue to bring to
market technical, differentiated
and sustainable products, and
accelerate expansion of the
direct-to-consumer business.
Throughout this journey, we
will remain true to our values.
Sustainability is ingrained in
everything we do. We also
embrace diversity and inclusion
in the workplace and build strong
ties with local communities.
Sustainability highlights
A key priority for the Group is to
provide industry leadership in
sustainability, particularly on
circular economy principles across
all aspects of our business. An
ongoing goal for the Kathmandu
brand is to achieve net zero
environmental harm by 2025, and
we are tracking well to achieve this.
In addition, we aim for all direct
suppliers to meet our minimum
expectations on social and
environmental impacts. Rip Curl
has scored a B+ in the Ethical
Fashion Report for the second
year running, and will continue
to strive towards improvement
along with Kathmandu and Oboz.
We have focused on using recycled
materials across our brands.
Kathmandu uses 100% sustainable
cotton, recycles plastic bottles
through the Repreve product
ranges, and has moved to solution
dyed fabrics to save water. Rip
Curl uses 30% recycled plastic
in packaging, and uses Forest
Stewardship Council certified
recycled paper swing tags. Oboz
launched the Sypes and Bozeman
collections containing recycled
materials and algae bloom insoles.
People
The Board would like to thank
management and their worldwide
teams for outstanding resilience,
flexibility, commitment and passion
over the past year. The teams
met the significant unexpected
challenges of COVID-19, and the
Group ended the financial year
well positioned for the future.
Outlook
The Group’s brands are well
positioned to capitalise on
increased participation in
outdoor, beach and surfing
activities following the end of
COVID-19 lockdowns. Omni
channel capabilities also allow
us to quickly respond to shifts
in consumer habits and strong
growth in online demand.
Risk to consumer sentiment
remains, given the potential
economic impact of COVID-19.
However, the Group is well
positioned with a robust
balance sheet, low net
debt, healthy inventory, and
strong cash generation.
In Kathmandu, Oboz, and Rip
Curl, the Group has authentic
and inspirational brands that
will continue to attract loyal
consumers for the long-term.
David Kirk
Chairman
Xavier Simonet
Managing Director and
Chief Executive Officer
9ANNUAL REPORT 2020KATHMANDU HOLDINGS LTD8INTRODUCTION

Sustainability
highlights
As our family of brands has grown, we
have new opportunities and face new
challenges. We can leverage each
of our strengths to work together for
an even greater positive impact.
We are excited to launch our first
combined sustainability report with
all three brands. Here are some of
our highlights from the last year.
Scored a B+ in the
Ethical Fashion Report
two years running
20th
year anniversary of
Rip Curl Planet Day
Collaborated with
Kathmandu on
developing our
sustainability journey
Recycled plastic
in our polybags
Recycled paper
swing tags
on products
Bottles worth of fresh
water saved by moving
to solution dyed
fabrics (2017 - 2020)
Obtained the
Rainbow Tick Certification in
New Zealand for embracing
diversity and inclusion
First solar panel
store in Australia
Plastic bottles
recycled through
our Repreve product
ranges (2015 - 2020)
100%
Sustainable Cotton
in our range
Launched the Sypes
and Bozeman
collections
containing recycled
materials and algae
bloom insoles
Trees
planted
since the
company
started
Improved
gender
diversity
in our team
now with
11ANNUAL REPORT 2020KATHMANDU HOLDINGS LTD10SUSTAINABILITY

CHANNELS
160 owned stores
207 licensed stores
26 JV stores
6 direct to consumer websites
5,786 wholesale doors
TOTAL SALESONLINE SALES
NZD$25.5m
NZD
$315.7m
(in the last 12 months, including $3.7m
for the three months pre-acquisition)
• 52% growth year on year
• 10.6% of direct to consumer sales9 months since acquisition
Founded in 1969 by Brian “Sing Ding”
Singer and Doug “Claw” Warbrick, Rip
Curl is one of the world’s most recognised
and respected brands. It has been at the
forefront of the surf and snow scenes since
its creation. Made by surfers for surfers,
Rip Curl’s vision is to be regarded as the
Ultimate Surfing Company in all that we do.
Rip Curl is a company for, and about, the crew on
The Search. The Search is the driving force that
led to the creation of Rip Curl, and it lives in the
spirit of everything the Rip Curl crew do. It's what
makes Rip Curl unique. It defines who we are. The
products we make, the events we run, the riders
we support and the people we reach globally,
are all a part of that Search that Rip Curl is on.
RIP CURL SALES MIX (LAST 12 MONTHS)
BY CHANNELBY REGION
BY REGION
Retail Stores
50%
Online
6%
Wholesale
43%
North America
23%
Europe
16%
ROW*
13%
AUS & NZ
48%
RIP CURL GROSS PROFIT $ MIX (LAST 12 MONTHS)
BY CHANNEL
Retail Stores
55%
Online
8%
Wholesale
36%
Other
1%
Other
1%
North America
21%
Europe
15%
ROW*
14%
AUS & NZ
50%
*Rest of the World
13ANNUAL REPORT 2020KATHMANDU HOLDINGS LTD12RIP CURL

Rip Curl launched the Limited Edition E-Bomb E7 Wetsuit in July 2020. This product is the
latest in a long line of world’s first wetsuit technology for Rip Curl and was the culmination
of a 3 year project from the Rip Curl wetsuit development team involving the expertise
of Rip Curl World Champion surfers Tyler Wright, Mick Fanning and Gabriel Medina.
The E-Bomb was designed for ultimate performance
and features Rip Curl’s latest breakthrough in
high stretch neoprene in the upper body. This
single one-piece panel stretches from wrist to
wrist and with no seams provides the full stretch
performance benefits of E7. The body of the suit
features E6 neoprene and the entire suit has internal
Thermo Lining for stretch, comfort and warmth.
The success of the E-Bomb has been incredible with the
limited edition wetsuit selling strongly in core markets.
The E-Bomb demonstrates Rip Curl’s dedication to
delivering leading-edge innovation and technical
performance across its product range.
Rip Curl continues to connect with surf, snow and
beach going customers across the world through
content based on its world class pro surf team, World
Surf League and grassroots events programs and its
range of core and fashionable surfing products which
can be found in use at every beach on the planet.
E-Bomb E7
limited edition
MICK FANNING - 3X WORLD SURFING CHAMPION
MADE BY WORLD CHAMPIONS
15ANNUAL REPORT 2020KATHMANDU HOLDINGS LTD14RIP CURL

Kathmandu opened its first store along
Melbourne’s iconic Hardware Lane in 1987.
With a focus on producing original, adaptive,
sustainable and expertly engineered
gear and apparel, Kathmandu has been
inspiring adventure for over 30 years to
become Australia and New Zealand’s
largest outdoor adventure brand.
Kathmandu has 165 retail stores in Australia, New
Zealand, and an online and a wholesale presence the
United Kingdom, and the United States of America.
Sustainability lies at the heart of everything Kathmandu
does, and in 2019 it became the first outdoor apparel
and equipment brand in Australasia to become
a certified B Corp, meeting the highest standards
of social and environmental performance.
TOTAL SALESONLINE SALES
NZD$80.9m
NZD
$426.4m
• 67% growth year on year
• 18.5% of direct to consumer sales
CHANNELS
165 retail stores
4 direct to consumer websites
28 wholesale doors
KATHMANDU SALES MIX FY20KATHMANDU GROSS PROFIT $ MIX FY20
BY CHANNELBY CHANNEL
Retail Stores
81%
Retail Stores
82%
Online
19%
Online
18%
17ANNUAL REPORT 2020KATHMANDU HOLDINGS LTD16KATHMANDU

Inspired by our customer-centric approach and innovative thinking, Kathmandu
teamed up with Uber to launch same-day delivery in Sydney and Melbourne in response
to COVID-19 postage delays. This made it possible for customers to place an order
online by 3pm and receive delivery of goods to their doorstep the very same day.
The Australian-first partnership drove significant
media coverage for Kathmandu, with the brand
front and centre across print and news outlets
nationwide. After a successful trial, the service was
rolled out across a wider area including addresses
within a 10km radius of key stores in Adelaide,
Canberra, Perth, Hobart and Queensland.
With the resurgence of cases in some Australian
states, and increased restrictions, same-day
delivery has become an important additional
offering which has proved popular with customers.
Whilst bricks-and-mortar stores continue to
offer personalised experiences and expertise,
same-day delivery via Uber gives customers
increased flexibility during uncertain times.
For Kathmandu, it was important to provide an
alternative method to get product to customers as
quickly as possible using contactless delivery.
As pressure increased on traditional transport networks,
we welcomed the opportunity to partner with Uber’s
ride-sharing platform to utilise their large pool of drivers.
The flexibility provided by the Uber delivery
service also enabled Kathmandu to make use of
its bricks and mortar store teams to help relieve
some of the pressure placed on our hard-working
Distribution Centre as online orders surged.
This partnership is also a long-term strategy,
addressing the predicted changes in consumer
behaviour following COVID-19, including potentially
less foot fall in stores, expectations around
contactless service and a boom in online sales.
Moving forward, Kathmandu hopes to continue
to work with Uber to expand the service
across further parts of our store network.
Kathmandu
partners with Uber
Oboz began in 2007 in the small town of
Bozeman, Montana (Outside + Bozeman
= Oboz) and has quickly grown to be a
leading North American brand of handmade
outdoor footwear. Oboz continues to
differentiate itself by pairing a focus on
expertly designed and constructed footwear
with strong corporate responsibility.
Bozeman, Montana. It's where it all started. It's what
inspired the Oboz name. And it's what motivates us
to lace up daily and explore the 18 million acres of
Greater Yellowstone Ecosystem that surround us. A
vast and breathtaking landscape of peaks, valleys
and rivers just waiting to be explored on two feet.
A vision that began over ten years ago in Bozeman,
Montana now has roots around the world. Our “True
To The Trail®” philosophy is the compass heading
that guides everything we do. From building
great fitting footwear to how we give back to our
community and the way we treat each other
and our planet. It's a mindset that grounds us in
what's most important - doing things the right way,
having fun, and exploring our path in life. Because
any other way, just wouldn't be true to the trail.
TOTAL SALES
NZD
$59.4m
1 ,749 wholesale doors
Direct to Consumer online trading
site to be launched during FY21
CHANNELS
X
18KATHMANDU19ANNUAL REPORT 2020KATHMANDU HOLDINGS LTD

4 Philip Bowman
Non-executive Director
Philip has extensive experience in in retail,
brands and international, including 15 years
as a director of Burberry. Other past roles
include CFO of Bass, CEO of Bass Taverns,
Executive Chairman of Liberty PLC, CEO of
Allied Domecq, CEO of Scottish Power, CEO of
Smiths Group and Chairman of Coral Eurobet
and Miller Group. He has also held office as
an independent director of BSkyB, Scottish
& Newcastle Group and Berry Bros. & Rudd.
He currently sits on the boards of Ferrovial
SA, Better Capital PCC and is Chairman of
Sky Network Television, Majid al Futtaim
Properties and Tegel Group Holdings.
5 John Harvey
Non-executive Director
John is a professional Director with a
background in accounting and professional
services. He has over 35 years professional
experience, including 23 years as a partner of
PricewaterhouseCoopers where he also held
a number of leadership and governance roles.
John retired from PwC in 2009. John has
extensive experience in financial reporting,
governance, information systems and
processes, initial public offerings, business
evaluation, acquisitions and mergers.
John is currently a non-Executive Director of
Stride Property, Investore Property, Heartland
Bank and Napier Port Holdings. Former non-
Executive director roles include HT&E (formerly
APN News & Media), Port Otago, Ballance
Agri-Nutrients and New Zealand Opera.
6 Andrea Martens
Non-executive Director
(appointed 1 August 2019)
Andrea has extensive executive leadership
experience having spent over 20 years
working with some of the world’s best known-
brands and organisations. She is currently
the CEO of ADMA and has previously held
roles as the Global Chief Marketing Officer for
Jurlique International, and Managing Director
and VP Marketing, Home and Personal Care
for Unilever Australia and New Zealand.
Andrea is also a member of the Australian
Institute of Company Directors and
named as one of the top 50 CMOs
in Australia by CMO Magazine.
5
3
6
1
2
4
The Board
1 David Kirk
Chairman
David is the Co-founder and Managing
Partner of Bailador Investment Management
and is Chairman of Bailador Technology
Investments, Forsyth Barr Group, and the
NZ Rugby Players Association. He sits on the
Board of various Bailador portfolio companies
and charitable organisations including
KiwiHarvest and the Sydney Festival.
David’s Executive Management career
included roles as the CEO of Fairfax Media
and CEO and Managing Director of PMP.
David was Chief Policy Advisor to the Prime
Minister of New Zealand from 1992 to 1994
and was a management consultant with
McKinsey & Company in London prior to that.
David’s past roles include the Chairman
of Trade Me Group. David is a Rhodes
Scholar with degrees in Medicine from
Otago University and Philosophy, Politics
and Economics from Oxford University.
2 Xavier Simonet
Managing Director and
Group Chief Executive Officer
Xavier joined Kathmandu in July 2015 with
over 20 years international experience in
building brands and developing successful
retail businesses in fashion, apparel,
accessories and related products.
Prior roles include CEO of Radley (London),
VP & GM International of DB Apparel, 11
years at LVMH (primarily Asia-Pacific)
and International Director of Seafolly.
3 Brent Scrimshaw
Non-executive Director
Brent has extensive experience leading and
growing consumer brands around the world
including an 18-year career with Nike Inc
across Marketing, Commerce and General
Management in three continents. He led
Brand marketing for Nike Pacific, was the
Regional GM for Nike North America in New
York, was also the Chief Marketing Officer for
Nike EMEA. Brent also served as Vice President
and Chief Executive of Nike Western Europe
leading Nike's European operations from
Amsterdam. Brent subsequently founded
Unscriptd, a sports technology and media
business sold to The Players’ Tribune (a
large USA media company) in 2019. He
was previously a director of action sports
company Fox Head Inc in Irvine California.
Brent currently holds Non-Executive Director
roles with ASX listed Rhinomed (RNO)
and Catapult International (CAT). Brent is
currently the CEO of Enero Group (EGG).
Management team
Xavier Simonet
Group
Chief Executive Officer
Reuben Casey
Kathmandu
Chief Executive Officer
Chris Kinraid
Group
Chief Financial Officer
Michael Daly
Rip Curl
Chief Executive Officer
Jolann Van Dyk
Group
Chief Information Officer
Tony Roberts
Group
Legal Counsel
Amy Beck
President Oboz
21ANNUAL REPORT 2020KATHMANDU HOLDINGS LTD20THE BOARD AND MANAGEMENT TEAM

Financial
statements
For the Year Ended 31 July 2020
Table of Contents
Directors’ Approval of
Consolidated Financial Statements
...........................................24
Consolidated Statement of Comprehensive Income
...25
Consolidated Statement of Changes in Equity
..................26
Consolidated Balance Sheet
...........................................................27
Consolidated Statement of Cash Flows
..................................28
Notes to the Consolidated Financial Statements
Section 1: Basis of Preparation
........................................................30
Section 2: Results for the Year
.........................................................33
Section 3: Operating Assets and Liabilities
..........................40
Section 4: Capital Structure and Financing Costs
............51
Section 5: Group Structure
.................................................................61
Section 6: Other Notes
.........................................................................66
Auditors’ Report
..........................................................................................71
In this section...
The consolidated financial statements have been presented in a style which attempts to make them
less complex and more relevant to shareholders. We have grouped the note disclosures into six sections:
‘Basis of Preparation’, ‘Results for the Year’, ‘Operating Assets and Liabilities’, ‘Capital Structure and
Financing Costs’, ‘Group Structure’ and ‘Other Notes’. Each section sets out the accounting policies
applied in producing the relevant notes. The purpose of this format is to provide readers with a clearer
understanding of what drives financial performance of the Group. The aim of the text boxes is to provide
commentary on each section or note, in plain English.
Keeping it simple...
Notes to the consolidated financial statements provide information required by accounting standards
or Listing Rules to explain a particular feature of the financial statements. The notes which follow will also
provide explanations and additional disclosures to assist readers’ understanding and interpretation of the
annual report and the financial statements.
23ANNUAL REPORT 2020KATHMANDU HOLDINGS LTD22FINANCIAL STATEMENTS

2524FINANCIAL STATEMENTSANNUAL REPORT 2020KATHMANDU HOLDINGS LTD
Authorisation for Issue
The Board of Directors authorised the issue of these Consolidated Financial Statements on 23 September 2020.
Approval by Directors
The Directors are pleased to present the Consolidated Financial Statements of Kathmandu Holdings Limited for
the year ended 31 July 2020 on pages 25 to 77.
23 September 2020
David Kirk Date
23 September 2020
Xavier Simonet Date
For and on behalf of the Board of Directors
Directors’ Approval of
Consolidated Financial Statements
For the Year Ended 31 July 2020
Consolidated Statement
of Comprehensive Income
For the Year Ended 31 July 2020
Section2020
NZ$’000
2019
NZ$’000
Sales
2.2801,524538,855
Cost of sales
(334,493)(206,362)
Gross profit
4 67, 0 3 1332,493)
Other income
2.22 7, 3 6 91,130)
Selling expenses
2.2(16 9,272)(160,581)
Administration and general expenses
2.2(176,237)(73,477)
(318,140)(232,928)
Earnings before interest, tax, depreciation and amortisation
148,8919 9,565)
Depreciation and amortisation
3.2-3.4(103,027)(15,272)
Earnings before interest and tax
45,86484,293
Finance income
44937)
Finance expenses
(23,803)(2,952)
Finance costs - net
4.1.1(23,354)(2,915)
Profit before income tax
22,51081,378)
Income tax expense
2.3(13,631)(23,745)
Profit after income tax
8,8795 7, 6 3 3)
Profit for the period attributable to:
Shareholders of the company
8,1455 7, 6 3 3)
Non-controlling interest
734-)
Other comprehensive income/(expense) that may be recycled through profit or loss:
Movement in cash flow hedge reserve
4.3.2(9,259)620)
Movement in foreign currency translation reserve
4.3.2259(3,297)
Movement in other reserves
4.3.2(61)-)
Other comprehensive expense for the year, net of tax
(9,0 61)(2,677)
Total comprehensive income/(expense) for the year
(182)5 4,95 6)
Total comprehensive income/(expense) for the period attributable to:
Shareholders of the company
(920)5 4,95 6)
Non-controlling interest
738-)
Basic earnings per share
2.41.7c p s16.0cps)
Diluted earnings per share
2.41.6cps15.9c p s)
Weighted average basic ordinary shares outstanding (‘000)
2.4493,347359,600)
Weighted average diluted ordinary shares outstanding (‘000)
2.4494,582361,566

2726FINANCIAL STATEMENTSANNUAL REPORT 2020KATHMANDU HOLDINGS LTD
Consolidated Statement
of Changes in Equity
For the Year Ended 31 July 2020
Share
Capital
NZ$’000
Cash
Flow
Hedge
Reserve
NZ$’000
Foreign
Currency
Translation
Reserve
NZ$’000
Share
Based
Payments
Reserve
NZ$’000
Other
Reserves
NZ$’000
Retained
Earnings
NZ$’000
Non-
controlling
Interest
NZ$’000
Total
Equity
NZ$’000
Balance as at 31 July 2018
249,8 823,498(8,975)2,76 0-173,356-420,521
Profit after tax
-----5 7, 6 3 3-5 7, 6 3 3
Other comprehensive income
-620(3,297)----(2,677)
Dividends paid
-----(33,883)-(33,883)
Issue of share capital
1,231--(1,231)----
Share based payment expense
---721---721
Lapsed share options
---(14)-14--
Deferred tax on share-based
payment transactions
---(253)---(253)
Balance as at 31 July 2019
251,1134,118(12,272)1 ,98 3-19 7, 1 2 0-442,062
Profit after tax
-----8,1457348,879
Other comprehensive income
-(9,259)255-(61)-4(9,0 61)
Dividends paid
-----( 2 7, 2 0 9 )-( 2 7, 2 0 9 )
Issue of share capital
375,267--(1,666)---373,601
Share based payment expense
---378---378
Deferred tax on share-based
payment transactions
---(87)---(87)
Non-controlling interest on
acquisition
------3,3353,335
Disposal of non-controlling
interest
------(66)(66)
Transition to NZ IFRS 16
-----(12,630)-(12,630)
Balance as at 31 July 2020
626,380(5,141)(12,017)608(61)165,4264,007779,202
Consolidated Balance Sheet
As at 31 July 2020
Section2020
NZ$’000
2019
NZ$’000
ASSETS
Current assets
Cash and cash equivalents
3.1.2231,8856,230
Trade and other receivables
3.1.373,66814,206
Inventories
3.1.1228,793122,773
Derivative financial instruments
4.2534,96 4
Current tax asset
3,790-
Total current assets
538,189148,173
Non-current assets
Trade and other receivables
3.1.33,945-
Property, plant and equipment
3.290,72260,319
Intangible assets
3.3682,578386,061
Right-of-use assets
3.4.12 5 7,9 9 8-
Total non-current assets
1,035,243446,380
Total assets
1,573,432594,553
LIABILITIES
Current liabilities
Trade and other payables
3.1.5143,69874,5 6 0
Interest bearing liabilities
4.1--
Derivative financial instruments
4.27, 4 1 4113
Current tax liabilities
8,0606,458
Current lease liabilities
3.4.277,579-
Total current liabilities
236,75181,131
Non-current liabilities
Derivative financial instruments
4.2-9
Non-current trade and other payables
3.1.514,413-
Interest bearing liabilities
4.1241,27025,500
Deferred tax
2.381,45245,851
Non-current lease liabilities
3.4.2220,344-
Total non-current liabilities
5 5 7, 4 7 971,360
Total liabilities
794,230152,491
Net assets
779,202442,062
EQUITY
Contributed equity - ordinary shares
4.3.1626,380251,113
Reserves
4.3.2(16,611)(6,171)
Retained earnings
165,42619 7, 1 2 0
Non-controlling interest
4,007-
Total equity
779,202442,062

2928FINANCIAL STATEMENTSANNUAL REPORT 2020KATHMANDU HOLDINGS LTD
Consolidated Statement
of Cash Flows
For the Year Ended 31 July 2020
Section2020
NZ$’000
2019
NZ$’000
Cash flows from operating activities
Cash was provided from:
Receipts from customers
823,951546,499
Government grants received
21,266-
Interest received
449621
Income tax received
1,379207
8 4 7, 0 4 5547,327
Cash was applied to:
Payments to suppliers and employees
638,393455,74 3
Income tax paid
16,89726,673
Interest paid
21,96 03,237
67 7, 2 5 0485,653
Net cash inflow from operating activities
169,79561,674
Cash flows from investing activities
Cash was provided from:
Proceeds from sale of property, plant and equipment
611
Proceeds from sale of non-controlling interest
141-
Proceeds from investment in other financial assets
-22,321
20222,322
Cash was applied to:
Purchase of property, plant and equipment
3.215,39911,345
Purchase of intangibles
3.34,4634,351
Acquisition of subsidiaries
5.1376,12122,321
395,98 338,017
Net cash (outflow) from investing activities
(395,781)(15,695)
Cash flows from financing activities
Cash was provided from:
Proceeds of loan advances
5 0 6,74 692,606
Proceeds from share issues
340,646-
8 4 7, 3 9 292,606
Cash was applied to:
Dividends paid
2 7, 2 0 933,883
Repayment of loan advances
293,757106,606
Repayment of lease liabilities
76,74 4-
3 9 7,7 1 0140,489
Net cash inflow / (outflow) from financing activities
4 49,6 82(47,883)
Net increase / (decrease) in cash and cash equivalents held
223,696(1 ,9 0 4)
Opening cash and cash equivalents
6,2308,146
Effect of foreign exchange rates
1,959(12)
Closing cash and cash equivalents
3.1.2231,8856,230
Reconciliation of net profit after taxation with
cash inflow from operating activities
Section2020
NZ$’000
2019
NZ$’000
Profit after taxation
8,8795 7, 6 3 3
Movement in working capital:
(Increase) / decrease in trade and other receivables
24,027(379)
(Increase) / decrease in inventories
20,305 (13,042)
Increase / (decrease) in trade and other payables
9,7 323,662
Increase / (decrease) in current tax liability
1,526(3,260)
55,590(13,019)
Add non-cash items:
Depreciation of property, plant and equipment
3.219,6 5 311,920
Amortisation of intangibles
3.37, 5 3 93,352
Depreciation of right-of-use assets
3.4.175,835-
Impairment of right-of-use assets
3.4.12,050-
Foreign currency translation of working capital balances
215 (286)
Increase / (decrease) in deferred taxation
(3,413)539
Employee share based remuneration
6.3378721
Loss on sale of property, plant and equipment and intangibles
3.2, 3.33,069814
105,3261 7, 0 6 0
Cash inflow from operating activities
169,79561,674

3130FINANCIAL STATEMENTSANNUAL REPORT 2020KATHMANDU HOLDINGS LTD
Section 1 Basis of Preparation
In this section
This section sets out the Group’s accounting policies that relate to the consolidated financial
statements as a whole. Where an accounting policy is specific to one note, the policy is described
in the note to which it relates.
Notes to the Consolidated Financial Statements
1.1 General information
Kathmandu Holdings Limited (the Company) and
its subsidiaries (together the Group) is a designer,
marketer, retailer and wholesaler of apparel,
footwear and equipment for surfing and the
outdoors. It operates in New Zealand, Australia,
North America, Europe, South East Asia and Brazil.
The Company is a limited liability company
incorporated and domiciled in New Zealand.
Kathmandu Holdings Limited is a company registered
under the Companies Act 1993 and is a FMC reporting
entity under Part 7 of the Financial Markets Conduct
Act 2013. The address of its registered office is 223
Tuam Street, Central Christchurch, Christchurch.
The Company is listed on the NZX and ASX.
The consolidated financial statements of the
Group have been prepared in accordance with
the requirements of Part 7 of the Financial Markets
Conduct Act 2013 and the NZX Listing Rules.
These audited consolidated financial statements
have been approved for issue by the Board
of Directors on 23 September 2020.
1.2 Summary of significant
accounting policies
These consolidated financial statements have
been prepared in accordance with Generally
Accepted Accounting Practice. They comply with
the New Zealand Equivalents to International
Financial Reporting Standards (NZ IFRS) and other
applicable Financial Reporting Standards, as
appropriate for for-profit entities. The consolidated
financial statements also comply with International
Financial Reporting Standards (IFRS).
The consolidated financial statements are
presented in New Zealand dollars, which
is the Group’s presentation currency.
1.2.1 Basis of preparation
The principal accounting policies adopted in the
preparation of the consolidated financial statements
are set out below. These policies have been
consistently applied to all periods presented,
unless otherwise stated.
Basis of consolidation
The consolidated financial statements reported are
for the consolidated “Group” which is the economic
entity comprising Kathmandu Holdings Limited and
its subsidiaries.
The Group is designated as a for-profit entity for
financial reporting purposes.
Subsidiaries are consolidated from the date on which
control is obtained to the date on which control is lost.
Non-controlling interests are measured at their
proportionate share of the acquiree’s identified net
assets at the acquisition date. Changes in the Group’s
interests in a subsidiary that do not result in a loss of
control are accounted for as equity transactions.
In preparing the consolidated financial statements,
all material intra-group transactions, balances
and unrealised gains on transactions between
Group companies are eliminated. Unrealised losses
are also eliminated. When necessary, amounts
reported by subsidiaries have been adjusted to
conform to the Group’s accounting policies.
Historical cost convention
These consolidated financial statements have
been prepared under the historical cost convention,
as modified by the revaluation of certain assets as
identified in the specific accounting policies
provided below.
Critical accounting estimates
The Group makes estimates and assumptions
concerning the future. The resulting accounting
estimates will, by definition, seldom equal the related
actual results. The estimates and assumptions that
have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities
within the next financial year are discussed below.
Estimates and judgements are continually evaluated
and are based on historical experience as adjusted
for current market conditions and other factors,
including expectations of future events that are
believed to be reasonable under the circumstances.
Further explanation as to estimates and assumptions
made by the Group can be found in the following
notes to the consolidated financial statements:
Area of EstimationSection
Business Combinations –
purchase price allocation5.1
Goodwill and Brand – assumptions
underlying recoverable value3.3
Inventory – estimates of obsolescence3.1.1
Leases – judgment applied to lease term3.4
Taxation – provision for tax payable
2.3
Foreign currency translation
The results and financial position of all the Group
entities (none of which has the currency of a hyper-
inflationary economy) that have a functional
currency different from the presentation currency are
translated into the presentation currency as follows:
• Assets and liabilities for each balance sheet
presented are translated at the closing
rate at the date of that balance sheet;
• Income and expenses for each statement of
comprehensive income are translated at average
exchange rates (unless this average is not a
reasonable approximation of the cumulative effect
of the rates prevailing on the transaction dates, in
which case income and expenses are translated
at the rate on the dates of the transactions); and
• All resulting exchange differences are
recognised in other comprehensive income.
On consolidation, exchange differences arising
from the translation of the net investment in
foreign operations, and of borrowings and other
currency instruments designated as hedges of such
investments, are taken to shareholders’ equity.
Changes in accounting policies
Details about changes in accounting policies applied
during the period are included in the following notes to
the financial statements:
Section
Operating segments2.1
Earnings per share restatement2.4
New standards and interpretations
first applied in the period
6.8

3332FINANCIAL STATEMENTSANNUAL REPORT 2020KATHMANDU HOLDINGS LTD
1.3 Going Concern and the
impact of COVID-19
On 11 March 2020 the World Health Organisation
declared a global pandemic as a result of the
outbreak and spread of COVID-19. Global restrictions
on movement, travel and gatherings resulted in
significant footfall reduction and the closure of
our entire store network in late March with gradual
reopening commencing in early May in most markets.
As a result, the Group took decisive action to
manage its liquidity and profitability specifically:
• Reduced operating expenditure;
• Deferred non-essential capital projects;
• Suspended dividend payments;
• Raised capital; and
• Accessed government subsidies.
In addition, the Group obtained support from
its bank syndicate in the form of a waiver
of the current covenant measurements
until 31 July 2021 measurement point.
In April 2020 the Group completed a successful
$207 million equity raising to strengthen its balance
sheet and liquidity position in response to the
COVID-19 pandemic. The capital raise, strong trading
performance and cash generation in key markets
has reduced net debt to $9.4 million (excluding lease
liabilities) at balance date. There remains continued
uncertainty over future economic conditions and
further COVID-19 outbreaks however the Group has
$377 million of liquidity to manage this uncertainty.
Based on the additional capital secured, including
an earlier reopening and a significantly stronger
trading performance above our COVID-19 forecasts
made in April, the Board considers that compliance
with financial covenants will continue to be met for
at least the next 12 months from approving these
consolidated financial statements (refer note 4.1).
The ongoing uncertainties discussed, and other
economic effects of the pandemic have been
considered in the Group’s key estimates and
judgements as disclosed in the following notes:
• Intangible assets - the ability to achieve future
forecasts and the consequential impacts
on the carrying value of goodwill and other
finite life intangibles (refer note 3.3).
• Receivables - the ability of wholesale
customers to pay (refer note 3.1.3.)
• Leases – certain landlords have provided the
Group with rent concessions (refer note 2.2).
Considering the above, the Board has reviewed the
operating and cash flow forecasts for the three-year
period to 2023. The Board is satisfied based on their
review of these financial forecasts that during the
period to at least 12 months from the approving of
the consolidated financial statements there will be
adequate cash flows generated from operating and
financing activities to meet the obligations of the Group.
Section 2 Results for the Year
In this section
This section focuses on the results and performance of the Group. On the following pages you will
find disclosures explaining the Group’s results for the year, segmental information, taxation and
earnings per share.
2.1 Segment information
An operating segment is a component of an entity that
engages in business activities which earns revenue
and incurs expenses and where the chief decision
maker reviews the operating results on a regular
basis and makes decisions on resource allocation.
Following the acquisition of Rip Curl Group Pty
Limited in October 2019 the Group has three
operating segments. These operating segments
have been determined based on the reports
reviewed by the Group Chief Executive Officer
and Group Executive Management team.
Outdoor – including the Kathmandu and
Oboz brands. This segment designs, markets,
retails and wholesales apparel, footwear and
equipment for outdoor travel and adventure.
Surf – including the Rip Curl brand. This
segment designs, manufactures, wholesales
and retails surfing equipment and apparel.
The Corporate segment represents group costs,
holding companies and consolidation eliminations
and constitutes other business activities that
do not fall within outdoor or surf segments.
31 July 2020Outdoor
NZ$’000
Surf
NZ$’000
Corporate
NZ$’000
Total
NZ$’000
Sales from external customers
485,785315,739-801,524
EBITDA
128,19235,202(14,503)148,891
Depreciation and amortisation
63,29135,8043,932103,027
EBIT
6 4,9 01(602)(18,435)45,864
Income tax expense
16,9622,543(5,874)13,631
Total segment assets
750,026388,222435,1841,573,432
Total assets includes:
Non-current assets
503,162135,390396,6911,035,243
Additions to non-current assets
43,44614,279-57,725
Total segment liabilities
30 9,539243,655241,036794,230
31 July 2019Outdoor
NZ$’000
Surf
NZ$’000
Corporate
NZ$’000
Total
NZ$’000
Sales from external customers
538,855--538,855
EBITDA
102,542-(2,977)9 9,565
Depreciation and amortisation
15,088-18415,272
EBIT
8 7, 4 5 4-(3,161)84,293
Income tax expense
24,188-(4 43)23,745
Total segment assets
483,038-111,515594,553
Total assets includes:
Non-current assets
3 3 7, 4 4 1-108,939446,380
Additions to non-current assets
15,696--15,696
Total segment liabilities
152,006-485152,491

3534FINANCIAL STATEMENTSANNUAL REPORT 2020KATHMANDU HOLDINGS LTD
EBITDA represents earnings before income taxes
(a non-GAAP measure), excluding interest income,
interest expense, depreciation and amortisation, as
reported in the financial statements. EBIT represents
EBITDA less depreciation and amortisation. EBITDA and
EBIT are key measurement criteria on which operating
segments are reviewed by the Group Chief Executive
Officer and Group Executive Management team.
Costs recharged between Group companies
are calculated on an arms-length basis. The
default basis of allocation is % of revenue with
other bases being used where appropriate.
Sales from external customers by geographical area
2020
NZ$’000
2019
NZ$’000
Australia
4 49,93 0334,532
New Zealand
133,696136,95 0
North America
131,24 463,840
UK and Europe
53,3863,533
Asia
25,653-
Rest of World
7, 6 1 5-
801,524538,855
Non-current assets by geographical area
2020
NZ$’000
2019
NZ$’000
Australia
695,389230,827
New Zealand
171,075105,523
North America
143,618110,024
UK and Europe
16,4256
Asia
7, 0 5 7-
Rest of World
1,679-
1,035,243446,380
2.2 Profit before tax
Revenue recognition
The Group recognises revenue from the sale of
footwear, clothing and equipment for surfing and the
outdoors and brand licencing arrangements. Revenue
comprises the fair value of the consideration received
or receivable for the sale of goods and brand licences,
excluding Goods and Services Tax and discounts,
and after eliminating sales within the Group.
Retail Sales
For sales of goods to retail customers, revenue is
recognised when control of the goods has transferred,
being at the point the customer purchases the goods
at a retail outlet. Payment of the transaction price is
due immediately at the point the customer purchases
the goods.
Online Sales
For online sales, revenue is recognised when control
of the goods has transferred to the customer,
being at the point the goods are delivered to the
customer. Delivery occurs when the goods have
been shipped to the customer’s specific location.
When the customer initially purchases the goods
online, the transaction price received by the
Group is recognised as a contract liability until the
goods have been delivered to the customer.
Wholesale Sales
For sales to the wholesale market, revenue is recognised
when control of the goods has transferred, being when
the goods have been shipped to the wholesaler’s
specific location (delivery). Following delivery, the
wholesaler has full discretion over the manner of
distribution and price to sell the goods, has the
primary responsibility when onselling the goods and
bears the risks of obsolescence and loss in relation to
the goods. A receivable is recognised by the Group
when the goods are delivered to the wholesaler as
this represents the point in time at which the right to
consideration becomes unconditional, as only the
passage of time is required before payment is due.
Sales Returns
Under the Group’s standard contract terms, customers
have a right of return within 30 days. At the point of sale,
a refund liability and a corresponding adjustment to
revenue is recognised for those products expected to
be returned. The Group uses its accumulated historical
experience to estimate the number of returns on a
portfolio level using the expected value method. It is
considered highly probable that a significant reversal
in the cumulative revenue recognised will not occur
given the consistent level of returns over previous years.
2020
NZ$’000
2019
NZ$’000
Sale of goods
797,410538,855
Royalty revenue
3,848-
Commission revenue
266-
801,524538,855
Note 2.1 provides a breakdown of revenue by operating
segment and geographical area.
Other Income
2020
NZ$’000
2019
NZ$’000
Government grants
26,781-
GST refund
-1,107
Other
58823
2 7, 3 6 91,130
Royalty Revenue
Royalty revenue from brand license arrangements
is recognised based on a right to access the
license. Revenue is recognised over the contract
period based on a fixed amount or reliable
estimate of sales made by a licensee.
Government grants that compensate the Group
for expenses incurred are recognised as revenue
in the statement of comprehensive income on a
systematic basis in the same period in which the
expenses are recognised. In the current period
Government grants relate to wage and other subsidies
received in response to the impact of COVID-19.
Government grants of $5,615,016 relating to the current
year are receivable at balance date and have been
included in other receivables and prepayments in
Note 3.1.3.
GST refund relates to a refund received resulting
from the treatment of GST on reward vouchers.
Employee entitlements
2020
NZ$’000
2019
NZ$’000
Wages, salaries and other
short term benefits
167,16186,325
Post-employment benefits
8,6294,989
Employee share based
remuneration
378721
176,16892,035
Lease expense
The Group is a lessee. Refer to section 3.4 for further
details around the group’s leases and lease
accounting policies.
Lease amounts recognised in the consolidated
statement of comprehensive income:
2020
NZ$’000
2019
NZ$’000
Rent expenses
-6 9,187
Short-term lease expense
3,872-
Low-value lease expense
1,277211
Variable lease expense
532-
Lease outgoings
16,480-
Depreciation right-of-use
asset
75,835-
Interest expense related to
lease liabilities
8,855-
106,85169,398
Some of the property leases in which the Group is
the lessee contain variable lease payment terms
that are linked to sales generated from the leased
stores. Variable payment terms are used to link rental
payments to store cash flows and reduce fixed cost.
Overall the variable payments constitute up to 0.5%
of the Group's entire lease payments. The variable
payments depend on sales and consequently on
the overall economic development over the next
few years. Taking into account the development of
sales expected over the next 3 years, variable rent
expenses are expected to continue to present a
similar proportion of store sales in future years.
The Group has adopted the practical expedient
in paragraph 46A of NZ IFRS 16 and elected not to
account for any rent concessions granted as result of
the COVID-19 pandemic as a lease modification. The
amount recognised in profit or loss due to changes
in lease payments arising from such concessions
was $5 million which has been recognised within the
selling, administration and general expenses in the
consolidated statement of comprehensive income.
The total cash outflow for leases amounts to
NZ$95,892,000 (2019 NZ$68,986,000).

3736FINANCIAL STATEMENTSANNUAL REPORT 2020KATHMANDU HOLDINGS LTD
2 .3 Taxation
Keeping it simple
This section lays out the tax accounting policies, the current and deferred tax charges or credits in
the year (which together make up the total tax charge or credit in the consolidated statement of
comprehensive income), a reconciliation of profit before tax to the tax charge and the movements in
deferred tax assets and liabilities. The Group is subject to income taxes in multiple jurisdictions. As result
there is complexity and judgement involved in determining the worldwide provision for income taxes.
Accounting policies
Current and deferred income tax
The tax expense for the period comprises current and
deferred tax. Tax is recognised in the consolidated
statement of comprehensive income, except to the
extent that it relates to items recognised in other
comprehensive income or directly in equity. In this
case, the tax is recognised in other comprehensive
income or directly in equity, respectively.
The current income tax charge is calculated on
the basis of the tax laws enacted or substantively
enacted at the balance sheet date in the countries
where the Company and Company’s subsidiaries
operate and generate taxable income. Management
periodically evaluates positions taken in tax returns
with respect to situations in which applicable
tax regulations are subject to interpretation and
establishes provisions where appropriate on the basis
of amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the
liability method, on temporary differences arising
between tax bases of assets and liabilities and their
carrying amounts in the consolidated financial
statements. However, the deferred income tax is not
accounted for if it arises from initial recognition of an
asset or liability in a transaction other than a business
combination that at the time of the transaction
affects neither accounting nor taxable profit or loss.
Deferred income tax liability is not recognised if it
arises from the initial recognition of goodwill. Deferred
income tax is determined using tax rates (and laws)
that have been enacted or substantially enacted
by the balance sheet date and are expected to
apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised
to the extent that it is probable that future
taxable profit will be available against which
the temporary differences can be utilised.
Deferred income tax is provided on temporary
differences arising on investments in subsidiaries,
except where the timing of the reversal of the
temporary difference is controlled by the Group
and it is probable that the temporary difference
will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset
when there is a legally enforceable right to offset
current tax assets against current tax liabilities
and when the deferred income taxes assets and
liabilities relate to income taxes levied by the same
taxation authority on either the same taxable
entity or different taxable entities where there is an
intention to settle the balances on a net basis.
Goods and Services Tax (GST)
The consolidated statement of comprehensive income
and the consolidated statement of cash flows have
been prepared so that all components are stated
exclusive of GST. All items in the consolidated balance
sheet are stated net of GST, with the exception of
receivables and payables, which include GST invoiced.
Taxation – Consolidated statement
of comprehensive income
The total taxation charge in the consolidated statement
of comprehensive income is analysed as follows:
2020
NZ$’000
2019
NZ$’000
Current income tax charge
1 7, 0 4 923,206
Deferred income tax charge /
(credit)
(3,418)539
Income tax charge reported in
the consolidated statement of
comprehensive income
13,63123,745
In order to understand how, in the consolidated statement of comprehensive income, a tax charge of $13,630,851
(2019: $23,744,580) arises on profit before income tax of $22,509,690 (2019: $81,377,631), the taxation charge that
would arise at the standard rate of New Zealand corporate tax is reconciled to the actual tax charge as follows:
Adjustments for prior periods primarily arise where an outcome is obtained on certain tax matters which differs from
expectations held when the related provision was made. Where the outcome is more favourable than the provision
made, the difference is released, lowering the current year tax charge. Where the outcome is less favourable than
the provision, an additional charge to the current year tax will occur.
The tax charge / (credit) relating to components of other comprehensive income is as follows:
2020
NZ$’000
2019
NZ$’000
Profit before income tax
22,51081,378
Income tax calculated at 28%
6,30322,786
Adjustments to taxation:
Adjustments due to different rate in different jurisdictions
(91)741
Non-taxable income
(1,015)(327)
Expenses not deductible for tax purposes
4,5601,152
Tax legislation enacted for employee share schemes
-(506)
Utilisation of tax losses by group companies
(38)-
Tax expense transferred to foreign currency translation reserve
(13)2
Adjustments in respect of prior years
274(130)
Tax losses not recognised
3,65127
Income tax charge reported in the consolidated statement of comprehensive income
13,63123,745
2020
NZ$’000
2019
NZ$’000
Movement in cash flow hedge reserve before tax
(13,162)13
Tax impact relating to cash flow hedge reserve
3,9 03607
Movement in cash flow hedge reserve after tax
(9,259)620
Foreign currency translation reserve before tax
259(3,297)
Tax credit / (charge) relating to foreign currency translation reserve
--
Movement in foreign currency translation reserve after tax
259(3,297)
Other reserves before tax
(61)-
Tax credit / (charge) relating to other reserves
--
Movement in other reserves after tax
(61)-
Total other comprehensive income/(expense) before tax
(12,96 4)(3,284)
Total tax credit / (charge) on other comprehensive income
3,9 03607
Total other comprehensive income/(expense) after tax
(9,0 61)(2,677)
Current tax
--
Deferred tax
3,9 03607
Total tax credit / (charge) on other comprehensive income
3,9 03607

3938FINANCIAL STATEMENTSANNUAL REPORT 2020KATHMANDU HOLDINGS LTD
Taxation – Balance sheet
The following are the major deferred taxation liabilities and assets recognised by the Group and movements thereon
during the current and prior year:
Tax
depreciation
NZ$’000
Employee
obligations
NZ$’000
Intangibles
NZ$’000
Leases
NZ$’000
Other
temporary
differences
NZ$’000
Reserves
NZ$’000
Total
NZ$’000
As at 31 July 2018
2053,123(54,923)-6,965(1,603)(46,233)
Recognised in the consolidated
statement of comprehensive income
16(523)51-(83)-(539)
Recognised in other comprehensive
income
-----607607
Recognised directly in equity
-(253)----(253)
Exchange differences
(2)(68)868-(231)-567
As at 31 July 2019
2192,279(54,004)-6,651(996)(45,851)
Recognised in the consolidated
statement of comprehensive income
(2,356)(695)1,4024224,645-3,418
Recognised in other comprehensive
income
-----3,9 033,9 03
Recognised directly in equity
-(87)----(87)
Deferred tax on transition to NZ IFRS 16
---10,813--10,813
Deferred tax on business
combinations (Note 5.1)
4,0531,96 3(62,598)-3,337-(53,245)
Exchange differences
(33)33(687)13271-(4 03)
As at 31 July 2020
1,8833,493(115,887)11,2481 4,9 0 42,9 07(81,452)
The deferred tax balance relates to:
• Property, plant and equipment temporary differences arising on differences in accounting and
tax depreciation rates
• Employee benefit accruals
• Brands and customer relationships
• Unrealised foreign exchange gain/loss on intercompany loans
• Realised gain/loss on foreign exchange contracts not yet charged in the consolidated statement
of comprehensive income
• Lease accounting
• Inventory provisioning
• Temporary differences on the unrealised gain/loss in hedge reserve
• Employee share schemes
• Other temporary differences on miscellaneous items
Unrecognised deferred tax assets
Deferred tax assets have not been recognised
in respect of the following items;
2020
NZ$’000
2019
NZ$’000
Deductible temporary
differences
2,060-
Tax losses
18,3703,609
20,4303,609
The deductible temporary differences do not expire
under current tax legislation. Deferred tax assets have
not been recognised in respect of overseas subsidiaries
where it is not yet probable that future taxable profit will
be generated in those territories to utilise these benefits.
Imputation credits
2020
NZ$’000
2019
NZ$’000
Imputation credits available
for use in subsequent
reporting periods based
on a tax rate of 28%
(6,74 3)1,615
The above amounts represent the balance of the
imputation account as at the end of July 2020,
adjusted for:
• Imputation credits that will arise from the payment
of the amount of the provision for income tax;
• Imputation debits that will arise from the
payment of dividends recognised as a
liability at the reporting date; and
• Imputation credits that will arise from
the receipt of dividends recognised as
receivables at the reporting date.
Tax payments of $6,808,421 have been financed at
year end which once transferred to the Inland Revenue
Department will result in a positive imputation balance.
The balance of Australian franking credits able to
be used by the Group in subsequent periods as
at 31 July 2020 is A$2,691,472 (2019: A$6,513,756).
2.4 Earnings per share
Keeping it simple
Earnings per share (‘EPS’) is the amount of
post-tax profit attributable to each share.
Basic EPS is calculated by dividing the profit
after tax attributable to equity holders
of the Company of NZ$8,144,784 (2019:
NZ$57,633,052) by the weighted average
number of ordinary shares in issue during the
year of 493,346,733 (2019: 359,600,086).
Diluted EPS reflects any commitments the
Group has to issue shares in the future that
would decrease EPS. In 2020, these are in the
form of share options / performance rights.
To calculate the impact it is assumed that all
share options are exercised / performance
rights taken, and therefore, adjusting the
weighted average number of shares.
2020
’000
Restated
2019
’000
Weighted average number of
basic ordinary shares in issue
493,347359,600
Adjustment for:
- Share options / performance
rights
1,2351,96 6
494,582361,566
The Group has restated the prior year basic and
diluted EPS to reflect the impact of the implied bonus
element on shares issued during the year (Note 4.3.1).
In October 2019 shares were issued as result of an
institutional and retail entitlement offer and share
placement at an issue price of NZ$2.55, representing
a 14.4% discount to the NZ$2.98 volume weighted
average price (ex-dividend) of Kathmandu’s shares
traded on the NZX for the last five trading days
prior to 1 October 2019, and a 13.6% discount to the
theoretical ex-entitlement price of NZ$2.95.
In April 2020 shares were issued as result of an
institutional and retail entitlement offer and share
placement at an issue price of NZ$0.50, representing
a 51.0% discount to the NZ$1.02 NZX closing price
on 30 March 2020, and a 30.6% discount to the
theoretical ex-entitlement price of NZ$0.72.

4140FINANCIAL STATEMENTSANNUAL REPORT 2020KATHMANDU HOLDINGS LTD
Keeping it simple
Working capital represents the assets and liabilities the Group generates through its trading activity. The
Group therefore defines working capital as inventory, cash, trade and other receivables, other financial
assets, trade and other payables and other financial liabilities.
Section 3 Operating Assets and Liabilities
In this section
This section shows the assets used to generate the Group’s trading performance and the liabilities
incurred as a result. Liabilities relating to the Group’s financing activities are addressed in Section 4.
Deferred tax assets and liabilities are shown in note 2.3.
3.1 Working capital
3.1.1 Inventory
Accounting policies
Inventories are stated at the lower of cost and net
realisable value. Cost is determined on a weighted
average cost method and includes expenditure
incurred in acquiring the inventories and bringing them
to their existing location and condition. In the case of
manufactured inventories and work in progress, cost
includes an appropriate share of production overheads
based on normal operating capacity. Net realisable
value is the estimated selling price in the ordinary
course of business, less applicable variable selling
expenses. Inventory is considered in transit when the risk
and rewards of ownership have transferred to the Group.
The Group assesses the likely residual value of
inventory. Stock provisions are recognised for
inventory which is expected to sell for less than
cost and also for the value of inventory likely to
have been lost to the business through shrinkage
between the date of the last applicable stocktake
and balance sheet date. In recognising the provision
for inventory, judgement has been applied by
considering a range of factors including historical
results, stock shrinkage trends and product lifecycle.
Inventory is broken down into trading stock and goods
in transit below:
2020
NZ$’000
2019
NZ$’000
Raw materials and
consumables
2,528-
Work in progress
2,397-
Trading stock
2 0 9,95 8105,161
Goods in transit
13,9101 7, 6 1 2
228,793122,773
Inventory has been reviewed for obsolescence and
a provision of $4,579,854 (2019: $294,742) has been
made. The acquired inventory obsolescence provision
recognised on acquisition of the Rip Curl entities
was $1,997,523.
3.1.2 Cash and cash equivalents
2020
NZ$’000
2019
NZ$’000
Cash on hand
482192
Cash at bank
230,4296,038
Short term investments
convertible to cash
974-
231,8856,230
NZD
32,330738
AUD
163,5032,832
USD
22,2752,238
EUR
6,108116
THB
3,371-
IDR
1,706-
BRL
1,126-
Other currencies
1,466306
231,8856,230
The carrying amount of the Group's cash and cash
equivalents are denominated in the following
currencies:
3.1.3 Trade and other receivables
Accounting policies
Trade and other receivables are recognised initially
at the value of the invoice sent to the customer (fair
value) and subsequently at the amounts considered
recoverable (amortised cost). The collectability of trade
and other receivables is reviewed on an on-going basis.
An allowance for lifetime expected credit losses is
recognised for trade and other receivables based on
the Group’s historical credit loss experience, adjusted
for factors that are specific to the debtors, general
economic conditions and an assessment of both the
current as well as the forecast direction of conditions at
the reporting date, including time value of money where
appropriate. The expected credit loss is estimated as
the difference between all contractual cash flows that
are due to the Group in accordance with the contract
and all the cash flows that the Group expects to receive,
discounted at the original effective interest rate.
2020
NZ$’000
2019
NZ$’000
Current
Trade receivables
62,1439,7 3 4
Allowance for expected
credit losses
(10,329)(115)
Other receivables
and prepayments
21,8544,587
73,66814,206
Non-current
Other debtors
3,945-
3,945-
The acquired allowance for expected credit losses
recognised on acquisition of the Rip Curl entities
was $5,638,857.
Other non-current debtors includes debtors on
extended credit terms and security deposits paid in
relation to store leases.
The carrying amount of the Group’s trade and other
receivables are denominated in the
following currencies:
2020
NZ$’000
2019
NZ$’000
NZD
5,1012,097
AUD
20,8531,935
USD
22,4669, 326
EUR
13,258-
GBP
1,650140
CAD
2,326708
BRL
2,9 91-
THB
4,406-
IDR
1,9 97-
JPY
2,24 6-
Other currencies
319-
7 7, 6 1 314,206
3.1.4 Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument
fails to meet its contractual obligations.
RiskExposure
arising from
MonitoringManagement
Credit
risk
Cash
and cash
equivalents
Trade
and other
receivables
Derivative
financial
instruments
Credit ratings,
aging analysis
and review of
exposure within
regular terms of
trade
Credit is given
to customers
following
obtaining
credit rating
information,
confirming
references
and setting
appropriate
credit limits
Exposure to credit risk
The below balances are recorded at their carrying
amount after any allowance for expected credit loss
on these financial instruments. The maximum exposure
to credit risk at reporting date was (carrying amount):
2020
NZ$’000
2019
NZ$’000
Cash and cash equivalents
231,4036,038
Trade receivables
51,8149,619
Other receivables
12,8661,741
Derivative financial
instruments
( 7, 3 6 1 )4,842
288,72222,240

4342FINANCIAL STATEMENTSANNUAL REPORT 2020KATHMANDU HOLDINGS LTD
As at balance sheet date the carrying amount is also
considered to approximate fair value for each of the
financial instruments.
The credit quality of cash and cash equivalents can
be assessed by reference to external credit ratings
(if available) or to historical information about
counterparty default rates:
2020
NZ$’000
2019
NZ$’000
Cash and cash equivalents;
Standard & Poors - AA-
2 0 7, 8 1 13,783
Standard & Poors - A+
14,008-
Standard & Poors - A
1,567-
Standard & Poors - A-
-1,861
Standard & Poors - BBB+
3,822394
Standard & Poors - BBB-
1,790-
Standard & Poors - BB
1,282-
Standard & Poors - BB-
1,123-
Total cash and cash equivalents
231,4036,038
Trade and other receivables consist of a large number
of customers spread across diverse geographical areas.
As at balance sheet date, trade and other receivables
of NZ$27,495,000 (2019: NZ$848,000) were past due.
A provision of NZ$10,329,000 (2019: NZ$115,000) is
held against these overdue amounts. Interest is
charged on overdue debtors in some instances.
The ageing analysis of these past due trade
receivables is:
2020
NZ$’000
2019
NZ$’000
0 to 30 days
4,825548
30 to 60 days
3,503217
60 to 90 days
7, 3 9 473
90 days and over
11,77310
2 7, 4 9 5848
Due to COVID-19 credit terms have been extended
for some customers which has impacted the aging
analysis above.
3.1.5 Trade and other payables
Accounting policies
Trade payables, sundry creditors and accruals
principally comprise amounts outstanding for trade
purchases and ongoing costs. Trade and other
2020
NZ$’000
2019
NZ$’000
Current
Trade payables
63,93930,504
Employee entitlements
21,3578,582
Sundry creditors and accruals
5 4,91234,397
Other Provisions
3,4901,077
143,69874,560
Non-Current
Employee entitlements
3,069-
Other Provisions
11,344-
14,413-
payables are initially measured at fair value and
subsequently measured at amortised cost, using
the effective interest method. The carrying value of
trade payables is considered to approximate fair
value as amounts are unsecured and are usually
paid by the 30th of the month following recognition.
Employee entitlements relates to benefits accruing to
employees in respect of wages and salaries, annual
leave, and long service leave when it is probable that
settlement will be required and they are capable of
being measured reliably. Provisions made in respect
of employee benefits expected to be settled within
12 months are measured at their nominal values
using the remuneration rate expected to apply at
the time of settlement. Provisions made in respect
of employee benefits which are not expected to
be settled within 12 months are measured as the
present value of the estimated future cash outflows
to be made by the Group in respect of services
provided by employees up to the reporting date.
The carrying amount of the Group's trade and other
payables are denominated in the following currencies:
2020
NZ$’000
2019
NZ$’000
NZD
19, 35111,227
AUD
8 3,9 9740,475
USD
30,04622,042
EUR
14,94 4137
BRL
3,041-
THB
3,523-
IDR
2,052-
Other currencies
1,156679
158,11074,560
Provisions
A provision is recognised if, as a result of a past
event, the Group has a present legal or constructive
obligation that can be estimated reliably, and it
is probable that an outflow of economic benefits
will be required to settle the obligation.
The warranties provision represents the present value
of the estimated future outflow of economic benefits
that will be required under the Group’s obligations for
warranties under local sale of goods legislation. The
provision relates to wetsuits, watches and footwear and
is based on estimates made from historical warranty
data associated with similar products and services.
Warranties
NZ$’000
Restructuring
NZ$’000
Lease restoration
NZ$’000
Other
NZ$’000
Total
NZ$’000
Balance at 31 July 2018
--6185351,153
Additional provisions recognised
--174-174
Provisions used during the year
---(129)(129)
Provisions re-measured during the year
--(97)-(97)
Foreign exchange
--(24)-(24)
Balance at 31 July 2019
--6714061,077
As at 31 July 2019
Current
--6714061,077
Non-current
-----
--6714061,077
Balance at 31 July 2019
--6714061,077
Provision recognised on acquisition
(Note 5.1)
1,1682,5415,453-9,162
Provisions recognised on adoption of NZ IFRS 16
--4,686-4,686
Additional provisions recognised
4781,3676333642,842
Provisions used during the year
(296)(2,303)(191)-(2,790)
Provisions re-measured during the year
(14)-(325)-(339)
Foreign exchange
1370121(8)196
Balance at 31 July 2020
1,3491,67511,04876214,834
As at 31 July 2020
Current
1,3491,6751932733,490
Non-current
--10,85548911,344
1,3491,67511,048
76214,834
A restructuring provision is recognised when the Group
has approved a detailed and formal restructuring
plan, and the restructuring has either commenced
or has been announced publicly at balance date.
Lease restoration provision represents the present
value of the estimated cost to restore leased properties
to their original condition upon expiry of the lease.
Other provisions relate to other miscellaneous
amounts that meet the definition of a provision
but do not fall into any of the other categories.

4544FINANCIAL STATEMENTSANNUAL REPORT 2020KATHMANDU HOLDINGS LTD
3.2 Property, plant and equipment
Keeping it simple
The following section shows the physical assets used by the Group to operate the business, generating
revenues and profits. These assets include store and office fit-out, as well as equipment used in sales
and support activities. Assets are recognised only when it is probable that future economic benefits
associated with the item will flow to the Group and the cost of the item can be measured reliably.
Accounting policies
Property, plant and equipment
All property, plant and equipment are stated at
historical cost less depreciation and impairment.
Historical cost includes expenditure that is directly
attributable to the acquisition of the items. Cost may
also include transfers from equity of any gains/losses
on qualifying cash flow hedges of foreign currency
purchases of property, plant and equipment.
The assets’ residual value and useful lives are reviewed
and adjusted if appropriate at each balance sheet date.
Capital work in progress is not depreciated until
available for use.
An asset’s carrying amount is written down immediately
to its recoverable amount if the asset’s carrying amount
is greater than its estimated recoverable amount.
Depreciation
Depreciation of property, plant and equipment is
calculated using straight line and diminishing value
methods so as to expense the cost of the assets
over their useful lives. The rates are as follows:
Buildings and leasehold improvements 5 – 50%
Office, plant and equipment 5 – 50%
Furniture and fittings 10 – 50%
Computer equipment 10 – 60%
Impairment of assets
Property, plant and equipment is reviewed for
impairment whenever events or changes in
circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is
recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s
fair value less costs of disposal and value in use.
Property, plant and equipment can be analysed
as follows:
Land
and Buildings
NZ$’000
Leasehold
improvement
NZ$’000
Office, plant
and equipment
NZ$’000
Furniture
and fittings
NZ$’000
Computer
equipment
NZ$’000
Total
NZ$’000
Year ended 31 July 2019
Opening net book value
-2 9,94912,33219,1012,13263,514
Additions
-5,6905544,44765411,345
Disposals
-(394)(7)(383)(18)(802)
Depreciation charge
-(6,962)(930)(3,394)(634)(11,920)
Exchange differences
-(776)(419)(597)(26)(1,818)
Closing net book value
-2 7, 5 0 711,53019,1742,10860,319
As at 31 July 2019
Cost
-67,9 741 7,9 3 641,7269,6 3 31 3 7, 2 6 9
Accumulated depreciation
-(40,467)(6,4 06)(22,552)( 7, 5 2 5 )(76,95 0)
Closing net book value
-2 7, 5 0 711,53019,1742,10860,319
Land and
Buildings
NZ$’000
Leasehold
improvement
NZ$’000
Office,
plant and
equipment
NZ$’000
Furniture
and fittings
NZ$’000
Computer
equipment
NZ$’000
Total
NZ$’000
Year ended 31 July 2020
Opening net book value
-2 7, 5 0 711,53019,1742,10860,319
Additions
156,4783,1085,05973915,399
Acquisition of businesses (Note 5.1)
6,4758,2863,60316,4402,7253 7, 5 2 9
Disposals
(305)(621)(474)(1,632)(96)(3,128)
Depreciation charge
(370)( 7, 8 0 2 )(2,581)( 7, 67 0 )(1,230)(19,6 5 3)
Transfers between categories
--(289)289--
Exchange differences
(188)182199123(60)256
Closing net book value
5,62734,03015,09631,7834,18690,722
As at 31 July 2020
Cost
9,72 29 7, 4 0 045,61299,85520,251272,840
Accumulated depreciation
(4,095)(63,370)(30,516)(68,072)(16,065)(182,118)
Closing net book value
5,62734,03015,09631,7834,18690,722
Depreciation
2020
NZ$’000
2019
NZ$’000
Land and buildings
370-
Leasehold improvement
7, 8 0 26,962
Office, plant and equipment
2,581930
Furniture and fittings
7, 67 03,394
Computer equipment
1,230634
Total property, plant and
equipment depreciation
19,6531 1 ,920
Depreciation expenditure is excluded from
administration and general expenses in the
consolidated statement of comprehensive income.
Sale of property, plant and equipment
Gains and losses on disposals are determined by
comparing proceeds with carrying amount. These
are included in the consolidated statement of
comprehensive income.
2020
NZ$’000
2019
NZ$’000
Loss on sale of property, plant
and equipment
3,069801
Capital commitments
Capital commitments contracted for at balance
sheet date include property, plant and equipment of
NZ$974,531 (2019: NZ$1,877,276).

4746FINANCIAL STATEMENTSANNUAL REPORT 2020KATHMANDU HOLDINGS LTD
3.3 Intangible assets
Keeping it simple
The following section shows the non-physical assets used by the Group to operate the business,
generating revenues and profits. These assets include brands, customer relationship, software
development and goodwill. This section explains the accounting policies applied and the specific
judgements and estimates made by the Directors in arriving at the net book value of these assets.
Accounting policies
Goodwill
Goodwill arises on the acquisition of subsidiaries.
Goodwill represents the excess of the cost of the
acquisition over the Group’s interest in the net fair
value of the assets and liabilities of the acquiree.
Separately recognised goodwill is tested annually for
impairment or more frequently if events or changes in
circumstances indicate that it might be impaired. It is
carried at cost less accumulated impairment losses.
Impairment losses on goodwill are not reversed.
Goodwill is allocated to cash-generating units for the
purpose of impairment testing. The allocation is made
to those cash-generating units or groups of cash-
generating units that are expected to benefit from the
business combination in which the goodwill arose.
Brand
Acquired brands are carried at original cost based
on independent valuation obtained at the date of
acquisition. The brand represents the price paid to
acquire the rights to use the Kathmandu, Oboz or
Rip Curl brand. The brand is not amortised. Instead
the brand is tested for impairment annually or more
frequently if events or changes in circumstances
indicate that it might be impaired and is carried
at cost less accumulated impairment losses.
Customer Relationship
Acquired customer relationships are carried at
original cost based on independent valuation
obtained at the date of acquisition less accumulated
amortisation. They are amortised on a straight line
basis over a useful life of 5-10 years. The estimated
useful life and amortisation period is reviewed
at the end of each annual reporting period.
Software costs
Software costs have a finite useful life. Software costs are
capitalised and written off over the useful economic life.
Costs associated with developing or maintaining
computer software programs are recognised as
an expense when incurred. Costs that are directly
associated with the production of identifiable
and unique software products controlled by the
Group, and that will probably generate economic
benefits exceeding costs beyond one year, are
recognised as intangible assets. Direct costs include
the costs of software development employees.
Software is amortised using straight line and
diminishing value methods at rates of 20-67%.
Other intangibles
Other intangibles relate to lease rights expenditure
associated with acquiring existing lease agreements
for stores where there is an active market for key money.
They are carried at original cost less accumulated
impairment losses. Other intangibles have an indefinite
useful life and are tested annually for impairment.
Impairment
Assets are reviewed for impairment whenever
events or changes in circumstances indicate that
the carrying amount may not be recoverable.
Intangible assets that have an indefinite useful life,
including goodwill, are not subject to amortisation
and are tested annually for impairment irrespective
of whether any circumstances identifying a possible
impairment have been identified. An impairment loss
is recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s
fair value less costs of disposal and value in use.
For the purposes of assessing impairment,
assets are grouped at the lowest levels
for which there are separately identifiable
cash flows e.g. cash generating units.
Intangible assets
Goodwill
NZ$’000
Brand
NZ$’000
Customer
Relationship
NZ$’000
Software
NZ$’000
Other
Intangibles
NZ$’000
Total
NZ$’000
Year ended 31 July 2019
Opening net book value
18 9, 3 0 81 8 7,9 2 81,7477,9 2 3-386,906
Additions
---4,351-4,351
Disposals
---(13)-(13)
Amortisation
--(184)(3,168)-(3,352)
Exchange differences
1,013(2,847)55(52)-(1,831)
Closing net book value
190,321185,0811,6189,0 4 1-386,061
As at 31 July 2019
Cost
191,592185,0811,86833,206-411,747
Accumulated amortisation/impairment
(1,271)-(250)(24,165)-(25,686)
Closing net book value
190,321185,0811,6189,0 4 1-386,061
Year ended 31 July 2020
Opening net book value
190,321185,0811,6189,0 41-386,061
Additions
---4,463-4,463
Acquisition of businesses (Note 5.1)
8 4,274169,68739,6 979172,8832 9 7, 4 5 8
Disposals
------
Amortisation
--(3,932)(3,607)-( 7, 5 3 9 )
Exchange differences
(193)2,355(101)17572,135
Closing net book value
274,4 023 5 7, 1 2 33 7, 2 8 210,8312,94 0682,578
As at 31 July 2020
Cost
275,6733 5 7, 1 2 341,4955 8,94 34,5527 3 7,7 8 6
Accumulated amortisation/impairment
(1,271)-(4,213)(4 8,112)(1,612)(55,208)
Closing net book value
274,4 023 5 7, 1 2 33 7, 2 8 210,8312,94 0682,578
Sale of intangibles
Gains and losses on disposals are determined by
comparing proceeds with carrying amount. These
are included in the consolidated statement of
comprehensive income.
2020
NZ$’000
2019
NZ$’000
Loss on sale of intangibles
-13
Impairment tests for goodwill and brand
The aggregate carrying amounts of goodwill and
brand allocated to each unit for impairment testing
are as follows:
GoodwillBrand
2020
NZ$’000
2019
NZ$’000
2020
NZ$’000
2019
NZ$’000
Kathmandu
New Zealand
45,48445,48451,00051,000
Kathmandu
Australia
76,49675,5649 9,14 096,034
Oboz
68,2396 9,27 337,47938,047
Rip Curl
84,183-16 9,5 0 4-
274,4 02190,3213 5 7, 1 2 3185,081

4948FINANCIAL STATEMENTSANNUAL REPORT 2020KATHMANDU HOLDINGS LTD
For the purposes of goodwill and brand impairment
testing, the Group operates as four groups of cash
generating units, Kathmandu New Zealand, Kathmandu
Australia, Rip Curl and Oboz. The recoverable amount of
each cash generating unit has been determined based
on the fair value less cost of disposal (FVLCOD). Five year
projected cash flows are used to determine the FVLCOD.
The discounted cash flow valuations were calculated
using post tax cash flow projections based on financial
budgets prepared by management and approved by
the Board for the year ended 31 July 2021. Cash flows
beyond July 2021 have been extrapolated based on
historical results and a return to pre COVID-19 levels of
sales and EBITDA margin over the near to medium term.
The Group engaged an external valuer to perform the
valuation of the Rip Curl CGU as at 31 July 2020 using
the post tax cash flow projections approved to the
Board for the year ending 31 July 2021 and the three year
plan that extrapolates cash flows based on historic
results and a return to pre-COVID-19 levels of sales
and EBITDA margin over the near to medium term.
The key assumption used:
• The FVLCOD model assumes an economic
downturn in the 2021 financial year and a return
to more normalised trading conditions previously
experienced in 2022 and beyond. The Group
believes the assumptions used in cash flows
reflect a combination of the Groups experience
and uncertainty associated with COVID-19.
• While temporary store and market closures may
impact short term results, these are not expected
to impact the long-term performance of each
CGU. Several scenarios have been assessed
where trading conditions do not normalise until
the 2024 financial year, in each scenario the fair
value for the CGU exceeds the carrying value.
Other assumptions used:
Pre tax
discount rate
Terminal
growth rate
2020201920202019
Kathmandu
New Zealand CGU
11.5%11.2%1.0%1.0%
Kathmandu
Australia CGU
11.4%10.5%1.0%1.0%
Rip Curl CGU
13.2%-1.5%-
Oboz CGU
11.8%12.7%1.0%1.0%
The terminal growth rate assumption is based on
a conservative estimate considering the current
inflation targets and do not exceed the historical
long-term average growth rate for each CGU. Pre-
tax discount rates are calculated based on a market
participant expected capital structure and cost of
debt to derive a weighted average cost of capital.
We note that while the sensitivity of key assumptions
provided above would not result in an impairment
in each case, it is possible that they could occur in a
combination. Furthermore, the CGU with the lowest
headroom is the Oboz CGU. Prior to COVID-19 the Oboz
CGU achieved year on year double digit revenue and
EBITDA growth percentages. For impairment testing
purposes cash flows for FY21 are lower than those
achieved in FY20 with an expected recovery in FY22 to
levels similar to FY19. Beyond FY22 it is assumed that
historical growth percentages resume. Oboz revenue is
forecast to grow at an annual compound growth rate of
approximately 15% through to the terminal year in FY25.
Prior to the impact of COVID-19 the CGU achieved an
annual compound growth rate of 29% from FY17-FY19.
The calculations confirmed that there was no
impairment of goodwill and brand during the year
(2019: nil). The Board believes that any reasonably
possible change in the key assumptions used in
the calculations would not cause the carrying
amount to exceed its recoverable amount.
The expected continued promotion and marketing of
the Kathmandu, Oboz and Rip Curl brands supports
the assumption that the brand has an indefinite life.
Capital commitments
Capital commitments contracted for at balance
sheet date include intangible assets of NZ$709,417
(2019: NZ$703,611).
3.4 Leases
Keeping it simple
The following section shows the assets leased by the Group to operate the business, generating revenues
and profits. These assets include the lease of retail stores.
This section explains the accounting policies applied and the specific judgements and estimates made
by the Directors in arriving at the carrying value of these assets and the corresponding lease liability.
Accounting policies
The Group assesses whether a contract is or contains
a lease, at inception of a contract. The Group
recognises a right-of-use asset and a corresponding
lease liability with respect to all lease arrangements
in which it is the lessee, except for short-term leases
(defined as leases with a term of 12 months or less)
and leases of low value assets. For these leases, the
Group recognises the lease payments as an operating
expense on a straight-line basis over the term of
the lease unless another systematic basis is more
representative of the time pattern in which economic
benefits from the leased asset are consumed.
Lease Liability
The lease liability is initially measured at the present
value of the lease payments that are not paid at
the commencement date, discounted by using
the rate implicit in the lease. If this rate cannot be
readily determined, the Group uses its incremental
borrowing rate. The Group's incremental borrowing
rate has been determined as the rate of interest that
the Group would have to pay to borrow over a similar
term and with a similar security the funds necessary
to obtain an asset of a similar value to the right-
of-use asset in a similar economic environment.
Lease payments included in the measurement
of the lease liability comprise:
• fixed lease payments (including in-substance
fixed payments), less any lease incentives; and
• variable lease payments that depend on an
index or rate, initially measured using the
index or rate at the commencement date.
The lease liability is subsequently measured
by increasing the carrying amount to reflect
interest on the lease liability (using the effective
interest method) and by reducing the carrying
amount to reflect the lease payments made.
The Group remeasures the lease liability (and
makes a corresponding adjustment to the
related right-of-use asset) whenever;
• the lease term has changed in which case the lease
liability is remeasured by discounting the revised
lease payments using a revised discount rate;
• the lease payments change due to changes in an
index or rate or a change in expected payment
under a guaranteed residual value, in which cases
the lease liability is remeasured by discounting
the revised lease payments using the initial
discount rate (unless the lease payments change
is due to a change in a floating interest rate, in
which case a revised discount rate is used);
• a lease contract is modified and the lease
modification is not accounted for as a separate
lease, in which case the lease liability is
remeasured by discounting the revised lease
payments using a revised discount rate.
Right of Use Asset
The right-of-use assets comprise the initial
measurement of the corresponding lease
liability, lease payments made at or before the
commencement day and any initial direct costs.
They are subsequently measured at cost less
accumulated depreciation and impairment losses.
Whenever the Group incurs an obligation for
costs to dismantle and remove a leased asset,
restore the site on which it is located or restore the
underlying asset to the condition required by the
terms and conditions of the lease, a provision is
recognised and measured under NZ IAS 37. The costs
are included in the related right-of-use asset.
Right-of-use assets are depreciated over the
shorter period of the lease term and useful
life of the underlying asset. The depreciation
starts at the commencement date.

5150FINANCIAL STATEMENTSANNUAL REPORT 2020KATHMANDU HOLDINGS LTD
The Group applies NZ IAS 36 Impairment of Assets to
determine whether a right-of-use asset is impaired and
accounts for any identified impairment loss.
Variable Rents
Variable rents that do not depend on an index or
rate are not included in the measurement of the
lease liability and the right-of-use asset. The related
payments are recognised as an expense in the
period in which the event or condition that triggers
those payments occurs and are included in the
selling expenses line in the consolidated statement of
comprehensive income.
Group as a lessee
The Group leases several assets including buildings
and motor vehicles. Some of the existing lease
arrangements have right of renewal options for varying
terms. Renewal options are included within the lease
liability if they are within 2 years and the Group is
reasonably certain to take up the option. The average
lease term including rights of renewal is 8 years.
3.4.1 Right-of-use assets
The movements in right of use assets for the year ended
31 July 2020 were as follows:
NZ$'000
Opening carrying amount 1 August 2019
-
Movements on transition
178,774
Additions
3 7, 8 6 3
Right-of-use assets recognised on acquisition
(Note 5.1)
1 1 7, 2 9 6
Depreciation for the period
(75,835)
Impairment of right-of-use assets
(2,050)
Exchange differences
1,95 0
Closing carrying amount 31 July 2020
257,998
Cost
335,692
Accumulated depreciation and impairment
( 7 7, 6 9 4 )
Closing carrying amount 31 July 2020
257,998
The weighted average incremental borrowing
rate applied to lease liabilities recognised in the
consolidated balance sheet at 1 August 2019 is 3.05%.
The movements in lease liabilities for the year ended 31
July 2020 were as follows:
NZ$'000
Opening lease liabilities 1 August 2019
-
Movements on transition
215,389
Additions
3 7, 8 1 1
Lease liabilities recognised on acquisition
(Note 5.1)
118,564
Interest expense related to lease liabilities
8,855
Repayment of lease liabilities
(including interest)
(85,545)
Exchange differences
2,849
Closing lease liabilities 31 July 2020
297,923
Lease liability maturity analysis
NZ$’000
Within one year
77,579
One to five years
172,340
Beyond five years
48,004
Total
297,923
Current
77,579
Non-current
220,344
Total
297,923
3.4.2 Lease liabilities
Reconciliation of operating lease commitments to
lease liabilities recognised on initial application;
NZ$'000
Operating lease commitment as at 31 July 2019
20 6,476
Above discounted using incremental borrowing
rate as of 1 August 2019
193,682
Recognition exemption for short term leases
(318)
Adjustments as result of different treatment of
renewal options
28,281
Lease contracts committed to but not yet
available for use
(6,256)
Lease liabilities as at 1 August 2019
215,389
Section 4 Capital Structure and Financing Costs
In this section
This section outlines how the Group manages its capital structure and related financing costs, including
its balance sheet liquidity and access to capital markets.
Capital structure is how a company finances its overall operations and growth by using different sources
of funds. The Directors determine and monitor the appropriate capital structure of the Group, specifically
how much is raised from shareholders (equity) and how much is borrowed from financial institutions
(debt) in order to finance the Group’s activities both now and in the future.
The Directors consider the Group’s capital structure and dividend policy at least twice a year ahead
of announcing results and do so in the context of its ability to continue as a going concern, to execute
strategy and to deliver its business plan.
4.1 Interest bearing liabilities
Accounting policies
Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between
the proceeds (net of transaction costs) and the
redemption amount is recognised in the consolidated
statement of comprehensive income over the period
of the borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the
Group has an unconditional right to defer settlement
of the liability for at least 12 months after the balance
sheet date.
The table below separates borrowings into current and
non-current liabilities:
2020
NZ$’000
2019
NZ$’000
Current portion
--
Non-current portion
241,27025,500
Total term loans
241,27025,500
Group Facility Agreement
The Group has a multi-option syndicated facility
agreement, with a term loan facility of A$220
million, a revolving cash advances facility of
NZ$58 million and A$37 million, a trade finance
sub-facility of A$30 million and NZ$10 million, and
instruments sub-facility of A$20 million. All facilities
are repayable in full on 30 November 2022.
Interest is payable based on the BKBM rate (NZD
borrowings), the BBSY rate (AUD borrowings),
or the applicable short term rate for interest
periods less than 30 days, plus a margin of up
to 1.05%. The debt is secured by the assets of
the guaranteeing group in accordance with the
Security Trust Deed dated 25 October 2019.
The covenants entered into by the Group require
specified calculations of Group earnings (excluding
one-off transaction costs) before interest, tax,
depreciation and amortisation (EBITDA) plus lease
rental costs to exceed total fixed charges (net interest
expense and lease rental costs) at the end of each half
during the financial year. Similarly EBITDA (excluding
one-off transaction costs) must be no less than a
specified proportion of total net debt at the end of
each six month interim period. The calculations of
these covenants are specified in the bank facility
agreement of 25 October 2019. The Group has obtained
a waiver from its banking syndicate of the current
covenants until the 31 July 2021 measurement point.
The current interest rates, prior to hedging, on the term
loans ranged between 1.00% - 1.25% (2019: 2.31% - 2.47%).
Paycheck Protection Program (PPP) loans
As part of the US government response to COVID-19
the Group’s US resident companies applied for
Paycheck Protection Program (PPP) loans of $4,200,632
(US $2,814,423). The Group believes that these entities
met the criteria to qualify for the loans at the date of
the application. The eligibility is subject to a possible
audit by the federal government at which time the
entities may be deemed not to be eligible. In the
event of an unfavourable outcome of the forgiveness
application the group would be required to repay the
PPP loan as well as 1% interest on that loan from the
period it was received until the date it was repaid. The
Group believes that the US resident entities meet the
criteria to qualify for the loan and future forgiveness.
The PPP loan was initially received as a loan and
once various criteria are met the Group can apply
for forgiveness of that loan. Once forgiveness of the
loan has been approved it will be recognised in the
consolidated statement of comprehensive income, until
that time it is recognised as a loan.

5352FINANCIAL STATEMENTSANNUAL REPORT 2020KATHMANDU HOLDINGS LTD
Reconciliation of movement in term loans
NZ$’000
Balance 31 July 2019
25,500
Net cash flow movement
212,989
Foreign exchange movement
2,781
Balance 31 July 2020
241,270
2020
NZ$’000
2019
NZ$’000
The principal of interest bearing liabilities is:
Payable within 1 year
--
Payable 1 to 2 years
4,201-
Payable 2 to 3 years
237,06915,000
Payable 3 to 4 years
-10,500
241,27025,500
4.1.1 Finance costs
2020
NZ$’000
2019
NZ$’000
Interest income
(4 49)(37)
Interest expense on term debt
4,7801,877
Interest on lease liabilities
8,855-
Other finance costs
9,24 6886
Net exchange loss/(gain) on foreign currency
922189
23,3542,91 5
Other finance costs relate to facility fees on banking arrangements and debt underwriting costs.
4.1.2 Cash flow and fair value interest rate risk
Interest rate risk is the risk that fluctuations in interest rates impact the Group’s financial performance.
RiskExposure arising fromMonitoringManagement
Interest rate riskInterest bearing liabilities
at floating rates
Cash flow forecasting
Sensitivity analysis
Interest rate swaps
Refer to section 4.2 for notional principal amounts and valuations of interest rate swaps outstanding at balance sheet
date. A sensitivity analysis of interest rate risk on the Group’s financial assets and liabilities is provided in the table below.
At the reporting date the interest rate profile of the Group's banking facilities was (carrying amount):
2020
NZ$’000
2019
NZ$’000
Total secured loans
241,27025,500
less Principal covered by interest rate swaps
(5,000)(23,263)
Net Principal subject to floating interest rates
236,2702,237
RiskExposure arising fromMonitoringManagement
Liquidity riskInterest bearing and
other liabilities
Forecast and
actual cash flows
Active working capital management
and flexibility in funding arrangements
Interest rate swaps have the economic effect of converting borrowings from floating to fixed rates. The cash flow
hedge loss on interest rate swaps at balance sheet date was NZ$54,106 (2019: NZ$111,252).
Summarised sensitivity analysis
The following table summarises the sensitivity of the Group’s financial assets and financial liabilities to interest rate risk.
A sensitivity of 1% (2019: 1%) has been selected for interest rate risk. The 1% is based on reasonably possible
changes over a financial year, using the observed range of historical data for the preceding five year period.
Amounts are shown net of income tax. All variables other than applicable interest rates are held constant. The
impact on equity is presented exclusive of the impact on retained earnings.
-1%+1%
31 July 2020
Carrying
amount
NZ$’000
Profit
NZ$’000
Equity
NZ$’000
Profit
NZ$’000
Equity
NZ$’000
Derivative financial instruments (asset) / liability
7, 3 6 1(50)3850(37)
Financial assets
Cash
231,885(1,670)-1,670-
(1,670)-1,670-
Financial liabilities
Borrowings
241,2702,413-(2,413)-
Lease liabilities
2 9 7,9 2 32,979-(2,979)-
5,392-(5,392)-
Total increase / (decrease)
3,67238(3,672)(37)
-1%+1%
31 July 2019
Carrying
amount
NZ$’000
Profit
NZ$’000
Equity
NZ$’000
Profit
NZ$’000
Equity
NZ$’000
Derivative financial instruments (asset) / liability
(4,842)(235)154235(151)
Financial assets
Cash
6,230(45)-45-
(45)-45-
Financial liabilities
Borrowings
25,500255-(255)-
255-(255)-
Total increase / (decrease)
(25)15425(151)
The Group has borrowing facilities of NZD $398,818,966 / AUD $370,104,000 (2019: NZD $140,729,053 AUD $132,060,000)
and operates well within this facility. This includes short term bank overdraft requirements, and at balance sheet
date no bank accounts were in overdraft.
4.1.3 Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.

5554FINANCIAL STATEMENTSANNUAL REPORT 2020KATHMANDU HOLDINGS LTD
Keeping it simple
The table below analyses the Group’s financial liabilities and net-settled derivative financial liabilities into
relevant maturity groupings based on the remaining period at the balance sheet date to the contractual
maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows, so will not
always reconcile with the amounts disclosed on the balance sheet.
Less than
1 year
NZ$’000
Between
1 and 2 years
NZ$’000
Between
2 and 5 years
NZ$’000
Over
5 years
NZ$’000
Group 2020
Trade and other payables
10 9,6 4 3---
Borrowings
3,0077, 19 7238,060-
112,6507, 19 7238,060-
Group 2019
Trade and other payables
62,075---
Borrowings
60059925,751-
62,67559925,751-
The Group enters into forward exchange contracts to manage the risks associated with the purchase of foreign
currency denominated products.
The table below analyses the Group’s derivative financial instruments that will be settled on a gross basis into
relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity
date. The amounts disclosed in the table are the contractual undiscounted cash flows. They are expected to
occur and affect the profit or loss at various dates between balance sheet dates and the following five years.
Less than
1 year
NZ$’000
Between
1 and 2 years
NZ$’000
Between
2 and 5 years
NZ$’000
At 31 July 2020
Forward foreign exchange contracts
- Inflow
17 9,8 57--
- Outflow
( 1 8 7, 1 6 4 )--
Net Inflow / (Outflow)
( 7, 3 0 7 )--
Net settled derivatives – interest rate swaps
Net Inflow / (Outflow)
(51)--
At 31 July 2019
Forward foreign exchange contracts
- Inflow
118,96 8--
- Outflow
(114,015)--
Net Inflow / (Outflow)
4,953--
Net settled derivatives – interest rate swaps
Net Inflow / (Outflow)
(4 6)9-
Keeping it simple
A derivative is a type of financial instrument typically used to manage risk. A derivative’s value changes
over time in response to underlying variables such as exchange rates or interest rates and is entered into
for a fixed period. A hedge is where a derivative is used to manage an underlying exposure.
The Group is exposed to changes in interest rates on its borrowings and to changes in foreign exchange
rates on its foreign currency (largely USD) purchases. The Group uses derivatives to hedge these
underlying exposures.
Derivative financial instruments are initially included in the balance sheet at their fair value, either as
assets or liabilities, and are subsequently re-measured at fair value at each reporting date.
An interest rate swap is an instrument to exchange a fixed rate of interest for a floating rate, or vice versa,
or one type of floating rate for another.
4.2 Derivative financial instruments
Accounting policies
Derivatives are initially recognised at fair value on
the date a derivative contract is entered into and
are subsequently re-measured to their fair value.
The method of recognising the resulting gain or loss
depends on whether the derivative is designated
as a hedging instrument, and if so, the nature of
the item being hedged. The Group designates
certain derivatives as hedges of highly probable
forecast transactions (cash flow hedges).
At inception of the hedging relationship, the Group
documents the economic relationship between
hedging instruments and hedged items, including
whether changes in the cash flows of the hedging
instruments are expected to offset changes in the
cash flows of the hedged items. The Group also
documents its risk management objectives and
strategy for undertaking its hedge transactions.
Cash flow hedge
The effective portion of changes in the fair value
of derivatives that are designated and qualify as
cash flow hedges is recognised in equity in the
hedging reserve. The gain or loss relating to the
ineffective portion is recognised immediately in the
consolidated statement of comprehensive income.
Amounts accumulated in equity are recycled in
the consolidated statement of comprehensive
income in the periods when the hedged item will
affect profit or loss. However, when the forecast
transaction that is hedged results in the recognition
of a non-financial asset (for example, inventory)
or a non-financial liability, the gains and losses
previously deferred in equity are transferred from
equity and included in the measurement of the initial
cost or carrying amount of the asset or liability.
When a hedging instrument expires or is sold or
terminated, or when a hedge no longer meets the
criteria for hedge accounting, any cumulative gain or
loss existing in equity at that time remains in equity
and is recognised when the forecast transaction is
ultimately recognised in the consolidated statement of
comprehensive income. When a forecast transaction is
no longer expected to occur, the cumulative gain or loss
that was reported in equity is immediately transferred to
the consolidated statement of comprehensive income.
Foreign currency transactions and balances
Foreign currency transactions are translated into
the functional currency using the exchange rates
prevailing at the dates of the transaction. Foreign
exchange gains and losses resulting from the
settlement of such transactions and from the
translation at year end exchange rates of monetary
assets and liabilities denominated in foreign currencies
are recognised in the consolidated statement of
comprehensive income, except when deferred in
other comprehensive income. Translation differences
on monetary financial assets and liabilities are
reported as part of the fair value gain or loss.

5756FINANCIAL STATEMENTSANNUAL REPORT 2020KATHMANDU HOLDINGS LTD
Derivative financial instruments
2020
NZ$’000
2019
NZ$’000
Foreign exchange contracts
Current asset
534,96 4
Current liability
( 7, 3 6 0 )(11)
Net foreign exchange contracts – cash flow hedge (asset / (liability))
( 7, 3 0 7 )4,953
Interest rate swaps
Current liability
(54)(102)
Non-current liability
-(9)
Net interest rate swaps – cash flow hedge (asset / (liability))
(54)(111)
Total derivative financial instruments
(7, 361)4,842
The above table shows the Group’s financial derivative holdings at year end.
Interest rate swaps - cash flow hedge
Interest rate swaps are to exchange a floating rate of interest for a fixed rate of interest. The objective of the transaction
is to hedge the core floating rate borrowings of the business to minimise the impact of interest rate volatility within
acceptable levels of risk thereby limiting the volatility on the Group's financial results. The notional amount of interest
rate swaps at balance sheet date was NZ$5,000,000 (2019: NZ$23,263,048). The fixed interest rate is 1.32% (2019: range
from 1.32% and 2.63%). Refer section 4.1.3 for timing of contractual cash flows relating to interest rate swaps.
Foreign exchange contracts - cash flow hedge
The objective of these contracts is to hedge highly probable anticipated foreign currency purchases against
currency fluctuations. These contracts are timed to mature when import purchases are scheduled for payment.
The notional amount of foreign exchange contracts amount to US$114,460,000 NZ$179,802,938 (2019: US$79,350,000,
NZ$115,606,572).
No material hedge ineffectiveness for interest rate swaps or foreign exchange contracts exists as at balance sheet
date (2019: nil).
Refer to section 4.2.1 for a sensitivity analysis of foreign exchange risk associated with derivative financial instruments.
4.2.1 Foreign exchange risk
Foreign exchange risk is the risk that fluctuations in exchange rates will impact the Group’s financial performance.
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures,
primarily with respect to the NZD, USD and EUR.
RiskExposure arising fromMonitoringManagement
Foreign exchange riskForeign currency purchases – over
90% of purchases are in USD
Forecast purchases
Reviewing exchange rate movements
USD foreign exchange
derivatives
The Group is exposed to currency risk on any cash remitted between entities in different jurisdictions. The Group
does not hedge for such remittances. Interest on borrowings is denominated in either New Zealand dollars or
Australian dollars and is paid for out of surplus operating cashflows generated in New Zealand or Australia.
Summarised sensitivity analysis
The following table summarises the sensitivity of the Group’s financial assets and financial liabilities to foreign
exchange risk.
A sensitivity of -10% / +10% (2019: -10% / +10%) for foreign exchange risk has been selected. While it is unlikely that an
equal movement of the New Zealand dollar would be observed against all currencies, an overall sensitivity of -10% /
+10% (2019: -10% / +10%) is reasonable given the exchange rate volatility observed on a historic basis for the preceding
five year period and market expectation for potential future movements.
Amounts are shown net of income tax. All variables other than applicable exchange rates are held constant. The
impact on equity is presented exclusive of the impact on retained earnings.
-10%+10%
31 July 2020
Carrying
amount
NZ$’000
Profit
NZ$’000
Equity
NZ$’000
Profit
NZ$’000
Equity
NZ$’000
Derivative financial instruments (asset) / liability
7, 3 6 1-(19,160)-15,676
Financial assets
Cash
231,88515,96 4-(13,062)-
Trade receivables and other receivables
64,680(5,063)-4,143-
10,9 01-(8,919)-
Financial liabilities
Trade and other payables
158,111(11,101)-9,0 82-
Borrowings
241,27019, 3 0 2-(15,792)-
8,201-(6,710)-
Total increase / (decrease)
19,102(19,16 0)(15,629)15,676
-10%+10%
31 July 2019
Carrying
amount
NZ$’000
Profit
NZ$’000
Equity
NZ$’000
Profit
NZ$’000
Equity
NZ$’000
Derivative financial instruments (asset) / liability
(4,842)-(13,339)-10,915
Financial assets
Cash
6,230439-(359)-
Trade receivables and other receivables
11,360(806)-706-
(367)-347-
Financial liabilities
Trade and other payables
74,5 6 0(5,067)-4,145-
Borrowings
25,500----
(5,067)-4,145-
Total increase / (decrease)
(5,434)(13,339)4,49210,91 5

5958FINANCIAL STATEMENTSANNUAL REPORT 2020KATHMANDU HOLDINGS LTD
Keeping it simple
This section explains material movements recorded in shareholders’ equity that are not explained
elsewhere in the financial statements. The movements in equity and the balance at 31 July 2020 are
presented in the consolidated statement of changes in equity.
4.3 Equity
Accounting policies
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown
in equity as a deduction, net of tax, from the proceeds.
Dividends
Dividends are recognised through equity following the approval by the Company’s directors.
4.3.1 Contributed equity - ordinary shares
2020
NZ$’000
2019
NZ$’000
Ordinary shares fully paid ($)
626,380251,113
Balance at beginning of year
251,113249,8 82
Issue of shares under Executive and Senior Management Long Term Incentive Plan
1,6661,231
Shares issued under share entitlement offers and share placement
340,646-
Shares issued as consideration on a business combination (Note 5.1)
32,955-
Balance at end of year
626,380251,113
Number of issued shares
20202019
Ordinary shares issued at beginning of the year
226,189225,315
Shares issued under Executive and Senior Management Long Term Incentive Plan
927874
Shares issued under share entitlement offers and share placement
470,612-
Shares issued as consideration on a business combination (Note 5.1)
11,273-
Ordinary shares issued at end of the year
70 9,0 01226,189
As at 31 July 2020 there were 709,001,384 ordinary issued shares in Kathmandu Holdings Limited and these are
classified as equity.
926,996 shares (2019: 873,712) were issued under the “Executive and Senior Management Long Term Incentive Plan
24 November 2010” during the year.
During the year 470,613,096 shares were issued in relation to a share placement and share entitlement offers.
Total capital raised of $351,510,652 is net of directly attributable share issue costs of $10,864,686.
All ordinary shares carry equal rights in respect of voting and the receipt of dividends. Ordinary shares do not have
a par value.
Refer to section 6.3 for Employee share-based remuneration plans.
4.3.2 Reserves and retained earnings
Cash flow hedging reserve
The hedging reserve is used to record gains or losses
on a hedging instrument in a cash flow hedge that are
recognised directly in other comprehensive income,
as described in the accounting policy in section 4.2.
The amounts are recognised in profit or loss when the
associated hedged transaction affects profit or loss.
Foreign currency translation reserve
The FCTR is used to record foreign currency
translation differences arising on the translation of
Reserves
2020
NZ$’000
2019
NZ$’000
Cash flow hedging reserve
Opening balance
4,1183,498
Revaluation - gross
(3,799)(9,7 72)
Deferred taxation on revaluation
2.33,9 03607
Transfer to hedged asset
(9,255 )9,579
Transfer to net profit - gross
(108)206
Closing balance
(5,141)4,118
Foreign currency translation reserve
Opening balance
(12,272)(8,975)
Currency translation differences – Gross
255(3,297)
Currency translation differences – Taxation
2.3--
Closing balance
(12,017)(12,272)
Share based payments reserve
Opening balance
1,98 32,76 0
Current year amortisation
378721
Deferred taxation on share options
2.3(87)(253)
Transfer to Share Capital on vesting of shares to Employees
(1,666)(1,231)
Share Options / Performance Rights lapsed
-(14)
Closing balance
6081,98 3
Other Reserves
Opening balance
--
Current year expense recognised in other comprehensive income
(61)-
Deferred taxation on other comprehensive income
2.3--
Closing balance
(61)-
Total Reserves
(16,611)(6,171)
the Group entities results and financial position. The
amounts are accumulated in other comprehensive
income and recognised in profit or loss when the
foreign operation is partially disposed of or sold.
Share based payments reserve
The share based payments reserve is used to
recognise the fair value of share options and
performance rights granted but not exercised
or lapsed. Amounts are transferred to share
capital when vested options are exercised by the
employee or performance rights are vested.

6160FINANCIAL STATEMENTSANNUAL REPORT 2020KATHMANDU HOLDINGS LTD
4.3.3 Dividends
2020
NZ$’000
2019
NZ$’000
Prior year final dividend paid
2 7, 2 0 924,836
Current year interim dividend paid
-9,0 47
Dividends paid (NZ$0.12 per share (2019: NZ$0.15))
2 7, 2 0 933,883
4.3.4 Capital risk management
The Group’s capital includes contributed equity, reserves and retained earnings.
The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern
in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital
structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt or draw down more debt.
Section 5 Group Structure
Keeping it simple
This section provides information about the entities that make up the Kathmandu Group and how they
affect the financial performance and position of the Group.
5.1 Acquisition of Rip Curl Group Pty Ltd
On 31 October 2019 Kathmandu Holdings Limited through
its wholly-owned subsidiary Barrel Wave Holdings Pty
Limited acquired 100% of the equity interests in Rip Curl
Group Pty Limited and its controlled entities based out
of Australia. The total purchase price was A$350,000,000.
The non-controlling interest on acquisition relates
to the interest acquired by the Group in Rip Curl joint
ventures in New Zealand, Thailand and Europe.
Rip Curl is a designer, wholesaler, manufacturer and
retailer of surfing equipment and apparel, and has
a global presence across Australia, New Zealand,
North America, Europe, South East Asia and Brazil.
The acquisition creates a global outdoor and action
sports company anchored by two iconic Australasian
brands and provides the opportunity for Kathmandu
to considerably diversify its geographic footprint,
channels to market and seasonality profile.
At the time the financial statements were authorised
for issue, the Group had not yet finalised the purchase
price allocation for the acquisition of Rip Curl. Fair
values of the assets and liabilities disclosed below
are determined provisionally as management is
in process of reviewing the details of independent
valuations. In segment information (Note 2.1),
management temporarily allocates related assets
and liabilities of the acquired business in the "Surf"
segment. The Group expects to finalise the purchase
price allocation in the next few months and will record
any allocation adjustments in next financial period.
Goodwill arising on acquisition
On completion of the purchase price allocation,
goodwill may be recognised on the acquisition of Rip
Curl because of the established workforce and control
premiums paid. This is not recognised separately from
goodwill as the expected future economic benefits
arising cannot be reliably measured and they do not
meet the definition of identifiable intangible assets.
Acquisition costs
Acquisition related costs of $11,895,000 have been
excluded from the consideration transferred and are
included in administration and general expenses in
the statement of comprehensive income and in
operating cash flows in the statement of cash flows
in the current year.
Impact of the acquisition on
the results of the Group
Group revenue for the year includes $315,739,000 in
respect of Rip Curl. Had the Rip Curl acquisition been
effective from 1 August 2019, the unaudited revenue
of the Group would have been $922,635,000 and
the unaudited profit for the year would have been
$14,910,000.

6362FINANCIAL STATEMENTSANNUAL REPORT 2020KATHMANDU HOLDINGS LTD
Provisional Purchase Price Allocation
NZ$’000
Purchase price
3 7 7, 5 6 2
Less net indebtedness adjustment
(78,147)
Plus working capital settlement adjustments
23,437
Total net consideration
322,852
Carrying amounts of identifiable assets acquired and liabilities assumed;
Current assets
Cash and cash equivalents
2 9,142
Trade and other receivables (net)
83,361
Inventories (net)
124,675
Derivative financial instruments
990
Current tax asset
6,216
Non-current assets
Other receivables
4,496
Property, plant and equipment
3 7, 5 2 9
Brand
169,687
Customer relationships
39,6 97
Other intangibles
3,800
Right-of-use assets
1 1 7, 2 9 6
Current liabilities
Trade and other payables
(78,006)
Current tax liability
(2,224)
Current lease liabilities
(33,167)
Non-current liabilities
Non-current trade and other payables
(7,571)
Non-current lease liabilities
(85,397)
Interest bearing liabilities
(115,366)
Deferred tax
(53,245)
Less non-controlling interest acquired
(3,335)
Net assets acquired
238,578
Goodwill on acquisition
8 4,274
Total net consideration
322,852
Less cash and cash equivalents acquired
(2 9,142)
Less consideration paid as shares
(32,955)
Plus indebtedness settled on acquisition
115,366
Net cash outflow on acquisition
376,121
5.2 Subsidiary Companies
Subsidiaries are all entities over which the Group has control. Control is achieved when the Group:
• has power over the entity;
• is exposed to, or has rights to, variable returns from its involvement with the entity; and
• can use its power to affect returns.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the
Group loses control of the subsidiary.
The following entities comprise the significant trading and holding companies of the Group;
CompaniesParties to Deed of
Cross Guarantee
Country of
Incorporation
Holding
20202019
Parent entity:
Kathmandu Holdings Limited
√New Zealand--
Subsidiaries:
Milford Group Holdings Limited
√New Zealand100%100%
Kathmandu Limited
New Zealand100%100%
Kathmandu Pty Limited
√Australia100%100%
Kathmandu (U.K.) Limited
United Kingdom100%100%
Kathmandu US Holdings LLC
United States of America100%100%
Oboz Footwear LLC
United States of America100%100%
Barrel Wave Holdings Pty Ltd
√Australia100%-
Rip Curl Group Pty Ltd
√Australia100%-
Rip Curl International Pty Ltd
√Australia100%-
PT Jarosite
Indonesia100%-
Rip Curl Pty Ltd
√Australia100%-
Onsmooth Thai Co Ltd
Thailand100%-
Rip Curl Investments Pty Ltd
Australia100%-
Blue Surf Pty Ltd
Australia100%-
RC Surf Pty Ltd
Australia100%-
Rip Curl Airport and Tourist Stores Pty Ltd
Australia100%-
JRRC Rundle Mall Pty Ltd
Australia100%-
Rip Curl (Thailand) Ltd
Thailand50%-
RC Airports Pty Ltd
Australia100%-
Ozmosis Pty Ltd
√Australia100%-
RC Chermside Pty Ltd
Australia100%-
Bondi Rip Pty Ltd
Australia100%-
Rip Curl Japan
Japan100%-
Curl Retail No 1. Pty Ltd
Australia100%-
RC Surf Sydney Pty Ltd
Australia100%-
RC Surf South Pty Ltd
Australia100%-
RC Surf NZ Limited
New Zealand50%-
Rip Curl Finance Pty Ltd
√Australia100%-
Rip Curl Europe S.A.S
France100%-
Rip Curl Spain S.A.U
Spain100%-
Rip Curl Suisse S.A.R.L
Switzerland100%-
Surf Odyssey S.A.R.L (70% share sold in July 2020)
France0%-
Rip Surf LDA
Portugal100%-
Rip Curl UK Ltd
United Kingdom100%-
Rip Curl Germany GMBH
Germany100%-
Rip Curl Italy SRL
Italy100%-
Rip Curl Nordic AB
Sweden100%-
Rip Curl Inc
United States of America100%-
Ultra Manufacturing Inc (in liquidation)
Mexico100%-
Rip Curl Canada IncCanada
100%
-
Rip Curl Brazil LTDABrazil
100%
-
All subsidiaries have a balance date of 31 July except for RC Surf NZ Limited which has a 31 March balance date.

6564FINANCIAL STATEMENTSANNUAL REPORT 2020KATHMANDU HOLDINGS LTD
5.3 Deed of Cross Guarantee
Pursuant to ASIC Corporations (Wholly-owned
Companies) Instrument 2016/785, the Australian-
incorporated wholly owned subsidiaries listed in Note
5.2 as parties to the Deed of Cross Guarantee are
relived from the Corporations Act 2001 requirements
for preparation, audit and lodgement of financial
reports and directors’ reports in Australia.
It is a condition of the ASIC Corporations Instrument
that the Company and each of the subsidiaries listed
enter a Deed of Cross Guarantee. The effect of the
Deed is that each party guarantees to each creditor
of each other party payment in full of any debt in the
event of winding up of the other party under certain
provisions of the Corporations Act 2001. If a winding up
occurs under other provisions of the Act, the guarantee
will only apply if after six months after a resolution or
order winding up any creditor has not been paid in full.
A consolidated statement of comprehensive income
and balance sheet, comprising the Company and
controlled entities which are parties to the Deed of
Cross Guarantee, after eliminating all transactions
between parties to the Deed of Cross Guarantee, at
31 July 2020, are set out as follows:
Consolidated Statement of Comprehensive Income and Retained Earnings for the year ended 31 July 2020
2020
NZ$’000
2019
NZ$’000
Sales
4 5 7, 8 8 43 39,671
Expenses
(425,853)(292,303)
Finance costs - net
(16,234)(279)
Profit before income tax
15,7974 7, 0 8 9
Income tax expense
( 7,9 0 3 )(14,141)
Profit after income tax
7, 8 9 432,94 8
Other comprehensive income
2,036(4,995)
Total comprehensive income for the year
9,93 02 7,9 5 3
Retained Earnings at beginning of the year
(34,571)(33,650)
Profit for the year after income tax
7, 8 9 432,94 8
Dividends paid
( 2 7, 2 0 9 )(33,883)
Lapsed share options
-14
Adoption of NZ IFRS 16
(6,855)-
Retained Earnings at the end of the year
(60,741)(34,571)
Consolidated Balance Sheet as at 31 July 2020
2020
NZ$’000
2019
NZ$’000
ASSETS
Current assets
Cash and cash equivalents
20 4,9183,206
Trade and other receivables
23,74 82,160
Inventories
106,82567, 4 0 7
Derivative financial instruments
43,373
Current tax asset
3,4902,344
Total current assets
33 8,98578,490
Non-current assets
Trade and other receivables
78,46038,277
Investments
3 49,91 1175,183
Property, plant and equipment
53,01041,389
Intangible assets
4 67, 1 3 8172,607
Right-of-use assets
156,400-
Total non-current assets
1 ,10 4,9194 2 7, 4 5 6
Total assets
1 ,4 4 3,9 0 45 05,94 6
LIABILITIES
Current liabilities
Trade and other payables
78,3164 6,790
Derivative financial instruments
5,36436
Current tax liabilities
7,9 2 36,378
Current lease liabilities
56,245-
Total current liabilities
1 4 7, 8 4 853,204
Non-current liabilities
Non-current trade and other payables
7,7 2 6-
Interest bearing liabilities
237,069-
Loans with related parties
295,614220,237
Deferred tax
65,65121,044
Non-current lease liabilities
128,777-
Total non-current liabilities
734,837241,281
Total liabilities
882,685294,485
Net assets
561,219211,461
EQUITY
Contributed equity - ordinary shares
626,380251,113
Reserves
(4,420)(5,081)
Retained earnings
(6 0,741)(34,571)
Total equity
561,219211,461

6766FINANCIAL STATEMENTSANNUAL REPORT 2020KATHMANDU HOLDINGS LTD
Section 6 Other Notes
6.1 Related parties
All transactions with related parties were in the normal
course of business and provided on commercial terms.
No amounts owed to related parties have been written
off or forgiven during the period.
Key Management Personnel
2020
NZ$’000
2019
NZ$’000
Salaries
3,1473,414
Other short-term
employee benefits
55457
Post-employment
benefits
58117
Employee performance
rights
378491
3,6384,479
6.2 Fair values
The following methods and assumptions were used
to estimate the fair values for each class of financial
instrument:
Trade debtors, trade creditors and bank balances
The carrying value of these items is equivalent to their
fair value.
Term liabilities
The fair value of the Group's term liabilities is estimated
based on current market rates available to the Group
for debt of similar maturity. The fair value of term
liabilities equates to their current carrying value.
Foreign exchange contracts and interest
rate swaps
The fair value of these instruments is determined using
valuation techniques (as they are not traded in an
active market). These valuation techniques maximise
the use of observable market data where it is available
and rely as little as possible on entity specific estimates.
Specific valuation techniques used to value financial
instruments include the fair value of interest rate
swaps. These are calculated at the present value of
the estimated future cash flows, based on observable
yield curves and the fair value of forward foreign
exchange contracts, as determined using forward
exchange rates at the balance sheet date, with the
resulting value discounted back to present value.
These derivatives have all been determined to be within
level 2 (for the purposes of NZ IFRS 13) of the fair value
hierarchy as all significant inputs required to ascertain
the fair value of these derivatives are observable.
Guarantees and overdraft facilities
The fair value of these instruments is estimated on
the basis that management do not expect settlement
at face value to arise. The carrying value and fair
value of these instruments are approximately
nil. All guarantees are payable on demand.
6.3 Employee share-based remuneration
Accounting policy
Equity settled long term incentive plan
The Executive and Senior Management Long Term
Incentive plan grants Group employee’s performance
rights subject to performance hurdles being met.
The fair value of rights granted is recognised as an
employee expense in the consolidated statement
of comprehensive income with a corresponding
increase in the employee share-based payments
reserve. The fair value is measured at grant date and
amortised over the vesting periods. The fair value of
the rights granted is measured using the Kathmandu
Holdings Limited share price as at the grant date
less the present value of the dividends forecast to be
paid prior to each vesting date. When performance
rights vest, the amount in the share-based payments
reserve relating to those rights are transferred to
share capital. When any vested performance rights
lapse upon employee termination, the amount
in the share-based payments reserve relating to
those rights is transferred to retained earnings.
Executive and Senior Management
Long Term Incentive Plan
On 20 November 2013, shareholders approved
at the Annual General Meeting the continuation
of an Employee Long Term Incentive Plan (LTI)
(previously established 24 November 2010) to
grant performance rights to Executive Directors,
Senior Managers, Other Key Management
Personnel and Wider Leadership Management.
Executive Directors and Senior Managers
Performance rights granted to Executive Directors and Senior Managers are summarised below:
Grant DateBalance at
start of year
number
Granted
during the year
number
Vested
during the year
number
Lapsed
during the year
number
Balance at
the end of year
number
9 Jul 2020
-5 9 7,7 3 1--5 9 7,7 3 1
20 Dec 2018
261,388---261,388
20 Dec 2017
374,437---374,437
19 Dec 2016
375,810-(375,810)--
1,011,6355 9 7,7 3 1(375,810)-1,233,556
The performance rights granted on 9 July 2020
are Long Term Incentive components only.
Long Term Incentive performance rights vest in equal
tranches. In each tranche the rights are subject
to a combination of a relative Total Shareholder
Return (TSR) hurdle and/or an EPS growth hurdle.
The relative weighting and number of tranches for
each grant date are shown in the table below:
Grant DateTranchesEPS
Weighting
TSR
Weighting
9 Jul 2020
10%100%
20 Dec 2018
150%50%
20 Dec 2017
150%50%
The proportion of rights subject to the relative TSR hurdle
is dependent on Kathmandu Holdings Limited’s TSR
performance relative to a defined comparable group of
companies in New Zealand and Australia listed on either
the ASX or NZX. The percentage of TSR related rights
vest according to the following performance criteria:
Kathmandu Holdings Limited
relative TSR ranking
% Vesting
Below the 50th percentile0%
50th percentile50%
51st – 74th percentile50% + 2% for each
percentile above the 50th
75th percentile or above100%
The TSR performance is calculated for the following
performance periods:
Tranche20202019
Tranche 136 months to 1
December 2022
36 months to 1
December 2021
The fair value of the TSR rights have been valued
under a Monte Carlo simulation approach predicting
Kathmandu Holdings Limited’s TSR relative to the
comparable group of companies at the respective
vesting dates for each tranche. The fair value of TSR
rights, along with the assumptions used to simulate the
future share prices using a random-walk process are
shown below:
20202019
Fair value of TSR rights
$1 19,5 4 6$205,190
Current price at grant date
$1.14$2.77
Risk free interest rate
0.34%1.76%
Expected life (years)
33
Expected share volatility
6 9. 5 %28.9%
The estimated fair value for each tranche of rights
issued is amortised over the vesting period from the
grant date.
The proportion of rights subject to the EPS growth
hurdle is dependent on the compound average
annual growth in Kathmandu Holdings Limited’s
EPS relative to the year ending 31 July 2020.
The applicable performance periods are: