Check the appropriate box below if the Form 8-K
filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the
Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
Business Performance
This section highlights key financial performance measures
of the Group, as well as Group financial metrics incorporating revenue, earnings, taxation and dividends.
The geographic information below analyses the Group’s
revenue by region. In presenting the following information, segment revenue has been based on the geographic location of customers.
Consolidated ($000s)
|
|
2021
|
|
Sale of Goods
|
|
|
|
|
Australia
|
|
|
63,408
|
|
United Kingdom
|
|
|
8,774
|
|
Americas (United States of America)
|
|
|
21,838
|
|
Sales revenue
|
|
|
94,020
|
|
Other revenue
|
|
|
|
|
Interest
|
|
|
-
|
|
Other revenue
|
|
|
-
|
|
Total revenue
|
|
|
94,020
|
|
a.
|
Revenue recognition and measurement
|
Revenue is recognised when the customer obtains control
of the goods, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably,
there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. Revenue is measured
net of returns.
The following specific recognition criteria must also be
met before revenue is recognised:
Revenue from the sale of lingerie and bedroom accessories
is recognised when the customer obtains control of the goods. A right of return provision has been recognised in line with the Group’s
returns policy in line with the requirements of IFRS 15.
The Company recognises a contractual liability upon the
sale of gift cards and subsequently derecognises the liability when gift cards are redeemed. Gift card redemption is estimated and recognised
as revenue in proportion to the pattern of rights exercised by customers. On expiry of the gift card, any unused funds are recognised
in full as income.
Consolidated ($000s)
|
|
2021
|
|
Recovery from income written off
|
|
|
-
|
|
Gift card breakage
|
|
|
252
|
|
Total other income
|
|
|
252
|
|
The Group has benefited from various financial support
measures offered by federal, state and local governments to provide financial relief to businesses during the COVID-19 pandemic.
These measures include JobKeeper Payment, Job Retention
(Furlough) and ATO Cash Flow boast. The Group has not obtained any relief whereby its GST, VAT, income tax, employee withholding payments
and payroll tax obligations. Unpaid deferred balances carried over from 28 June 2020 were settled in August 2021.
A business rates exemption has been granted to our UK stores
for the year from 1 April 2020 to 31 March 2021, related to property rates and taxes. This waiver of business rates is recognised as income
in the 2021 period.
The Group qualified for, and complied with the conditions
to receive, wage subsidy grants in two of the territories in which it operates, namely Australia and United Kingdom. The payments received
have been recognised as a government grant because the wage subsidy has been provided with the objective of keeping our employees connected
to the Group during the COVID-19 crisis period. The grant income has been presented net of the related salaries and wages expense. During
2021 the Group has recognised $2,041,000 of wage subsidy grants in “employee benefits expense”, which for some employees includes
a component of “top-up pay” as a result of certain wage subsidies being higher than their ordinary weekly pay.
Dependent on the rateable value of the property, some of
our UK stores qualified for local business council grants. These grants amounted to $261,000 and were unconditional and so were included
as a reduction in “Other expenses” when they became receivable.
Consolidated ($000s)
|
|
2021
|
|
a. Expenses
|
|
|
|
|
Cost of sales
|
|
|
14,488
|
|
Write-off of obsolete inventory
|
|
|
(109
|
)
|
Change in inventory on hand
|
|
|
5,283
|
|
Total Cost of Goods Sold
|
|
|
19,662
|
|
|
|
|
|
|
Employee benefits expenses:
|
|
|
|
|
• Wages & salaries
|
|
|
17,167
|
|
• Compulsory social security contributions
|
|
|
1,109
|
|
• Increase / (Decrease) in liability for long-service leave
|
|
|
(12
|
)
|
• Government grant
|
|
|
(2,041
|
)
|
Total Employee benefits expenses
|
|
|
16,223
|
|
|
|
|
|
|
Property expense on operating leases:
|
|
|
|
|
· variable lease expenses
|
|
|
769
|
|
· Outgoings
|
|
|
1,012
|
|
Total property expenses
|
|
|
1,781
|
|
|
|
|
|
|
Other expenses:
|
|
|
|
|
Selling expenses
|
|
|
9,295
|
|
Administration expenses
|
|
|
4,420
|
|
Total Other expenses
|
|
|
13,715
|
|
|
|
|
|
|
b. Finance costs
|
|
|
|
|
Interest expense for financial liabilities:
|
|
|
|
|
· interest and finance charges
|
|
|
44
|
|
· interest applied under IFRS 16
|
|
|
742
|
|
Total Finance costs
|
|
|
786
|
|
During the year ended 27 June 2021, no impairment charges
were recognised within the consolidated statement of profit or loss and other comprehensive income.
The Board may pay any interim and final dividends that,
in its judgement, the financial position of the Company justifies.
The following dividends were declared and paid by the Company
for the year.
Consolidated ($000s)
|
|
2021
|
|
26,500 dollars per qualifying ordinary share
|
|
|
26,500
|
|
After the reporting date, no dividends were proposed by
the Board of Directors.
All dividends paid during the year were fully franked interim
dividends of 26,500 dollars per fully paid share.
Consolidated ($000s)
|
|
2021
|
|
Dividend Franking account
|
|
|
26,500
|
|
Franking credits available for subsequent reporting periods based on a tax rate of 30.0%
|
|
|
82
|
|
Recognition and measurement
Income tax on the profit or loss for the years presented
comprises current and deferred tax. Income tax is recognised in the statement of profit or loss except to the extent that it relates to
items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable
income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in
respect of previous years.
Deferred tax is provided using the balance sheet liability
method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for taxation purposes.
The amount of deferred tax provided is based on the expected
manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted
at the balance sheet date.
A deferred tax asset is recognised only to the extent that
it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced
to the extent that it is no longer probable that the related tax benefit will be realised.
Additional income taxes that arise from the distribution
of dividends are recognised at the same time as the liability to pay the related dividend is recognised.
a.
|
Amounts recognised in profit or loss
|
Consolidated ($000s)
|
|
2021
|
|
Current tax expense
|
|
|
|
|
Current period
|
|
|
8,721
|
|
Changes in estimates related to prior years
|
|
|
(417
|
)
|
|
|
|
8,364
|
|
Deferred tax (benefit)/expense
|
|
|
|
|
Origination and reversal of temporary differences
|
|
|
283
|
|
Changes in temporary differences related to prior years
|
|
|
266
|
|
|
|
|
549
|
|
Total income tax expense
|
|
|
8,853
|
|
b.
|
Reconciliation of effective tax rate
|
Consolidated ($000s)
|
|
2021
|
|
Profit before tax from continuing operations
|
|
|
32,301
|
|
Tax at the Australian tax rate of 30%
|
|
|
9,691
|
|
Effect of tax rates in foreign jurisdictions
|
|
|
(595
|
)
|
Non-deductible expenses
|
|
|
20
|
|
Utilisation of carried-forward tax losses not previously recognised
|
|
|
(112
|
)
|
Changes in estimate related to prior years
|
|
|
(151
|
)
|
Total non-temporary differences
|
|
|
8,853
|
|
Temporary differences
|
|
|
|
|
Amounts recognised in OCI
|
|
|
-
|
|
Net movement in deferred tax balances
|
|
|
(549
|
)
|
Total temporary differences
|
|
|
(549
|
)
|
|
|
|
|
|
Income taxes payable for the current financial year
|
|
|
8,209
|
|
Income taxes payable at the beginning of the year
|
|
|
1,527
|
|
Less: tax paid during the year
|
|
|
(7,490
|
)
|
Income taxes payable as at year end
|
|
|
2,246
|
|
Represented in the Statement of financial position by:
|
|
|
|
|
Current tax liabilities
|
|
|
2,246
|
|
Current tax assets
|
|
|
-
|
|
Effective tax rates (ETR)
Bases of calculation of each ETR
Global operations – Total consolidated tax expense
ETR: IFRS calculated total consolidated company income tax expense divided by total consolidated accounting profit on continuing operations.
Australian operations – Australian company income
tax expense ETR: IFRS calculated company income tax expense for all Australian companies and Australian operations of overseas companies
included in these consolidated financial statements, divided by accounting profit derived by all Australian companies included in these
consolidated financial statements.
Percentage
|
|
2021
|
|
ETR
|
|
|
|
|
Global operations – Total consolidated tax expense
|
|
|
27.00
|
%
|
Australian operations – Australian company income tax expense
|
|
|
29.27
|
%
|
Higher profits from USA and UK being derived, both regions
have lower effective tax rates compared to the Australia operations.
Deferred tax assets and liabilities reconciliation
|
|
Statement of
financial position
|
|
|
Statement of
profit or loss
|
|
Consolidated ($000s)
|
|
2021
|
|
|
2021
|
|
Property, plant and equipment
|
|
|
(777
|
)
|
|
|
383
|
|
Employee benefits
|
|
|
247
|
|
|
|
(45
|
)
|
Provisions
|
|
|
473
|
|
|
|
(112
|
)
|
Other items
|
|
|
290
|
|
|
|
323
|
|
Deferred tax expense
|
|
|
|
|
|
|
549
|
|
Net deferred tax assets
|
|
|
233
|
|
|
|
|
|
Presented in the Statement of financial position as follows:
|
|
|
|
|
|
|
|
|
Deferred tax assets
|
|
|
233
|
|
|
|
|
|
Unused tax losses for which no deferred tax asset has been
recognised total $598,138
Expected settlement of deferred tax balances
Consolidated ($000s)
|
|
2021
|
|
Deferred tax assets expected to be settled within 12 months
|
|
|
513
|
|
Deferred tax assets expected to be settled after 12 months
|
|
|
290
|
|
|
|
|
803
|
|
Deferred tax liabilities expected to be settled within 12 months
|
|
|
-
|
|
Deferred tax liabilities expected to be settled after 12 months
|
|
|
(570
|
)
|
|
|
|
(570
|
)
|
Net deferred tax assets
|
|
|
233
|
|
Asset Platform
This section outlines the key operating assets owned and
liabilities incurred by the Group.
9.
|
Trade and other Receivables
|
Trade and other receivables are initially recognised at
fair value and subsequently stated at their amortised cost using the effective interest method, less impairment losses.
Consolidated ($000s)
|
|
2021
|
|
Fitout contribution receivable
|
|
|
663
|
|
Drawdowns related to COVID negotiation
|
|
|
134
|
|
COVID abatement
|
|
|
261
|
|
Funds held in Escrow for Fitout
|
|
|
705
|
|
Total Trade and other Receivables
|
|
|
1,763
|
|
Impairment of receivables
Recoverability of receivables is assessed annually to determine
whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
An impairment loss is recognised in profit or loss if the carrying amount of an asset exceeds its recoverable amount. The Group’s
calculated allowance for expected credit loss at 27 June 2021 under IFRS 9 was not material.
The recoverable amount of the Group’s receivables
carried at amortised cost is calculated as the present value of estimated future cash flows, discounted at the original effective interest
rate (i.e. the effective interest rate computed at initial recognition of these financial assets). Significant receivables are individually
assessed for impairment. Receivables with a short duration are not discounted.
Information about the Group’s exposure to credit
and market risks, and impairment losses for Trade and other Receivables is disclosed in Note 23.
Recognition and measurement
Inventories are stated at the lower of cost and net realisable
value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion
and selling expenses. Cost includes the product purchase cost, import freight and duties together with other costs incurred in bringing
inventory to its present location and condition using the weighted average cost method. All stock on hand relates to finished goods.
Costs of goods sold comprises purchase price from the supplier,
cost of shipping product from supplier to warehouse, shrinkage and obsolescence. Warehouse and outbound freight costs are reported as
Other expenses. Inventories recognised as expenses during 2021 and included in Cost of sales, amount to $19,661,000.
Consolidated ($000s)
|
|
2021
|
|
In warehouse and stores
|
|
|
6,873
|
|
Stock in Transit
|
|
|
3,845
|
|
Provision for obsolete stock
|
|
|
(216
|
)
|
Shrinkage
|
|
|
(21
|
)
|
Total Inventories
|
|
|
10,481
|
|
A policy for obsolete inventory is determined based on
forecast future demand compared to inventory levels on hand, taking into account the age of the inventory and superseded lines.
In addition, an inventory shrinkage provision policy is
applied to the value of net sales generated by each store and distribution centre since the date that each respective store or distribution
centre was subject to a stock take. No other inventory or stock provisions are recognised.
Consolidated ($000s)
|
|
2021
|
|
Prepayments
|
|
|
2,674
|
|
Security deposits
|
|
|
234
|
|
Total Other current assets
|
|
|
2,908
|
|
Prepayments arise mostly from Chinese vendors requiring
deposits before production can occur. Settlement generally occurs upon completion of production and before finished goods are dispatched
from China.
12.
|
Property, Plant and Equipment
|
Recognition and measurement
Owned Assets
Items of property, plant and equipment are stated at cost
less accumulated depreciation less accumulated impairment. Cost includes expenditures that are directly attributable to the acquisition
of the assets. The cost of acquired assets excludes estimates of the costs of dismantling and removing the items and restoring the site
on which they are located where it is probable that such costs will be incurred.
Subsequent costs
The Group recognises in the carrying amount of an item
of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future
economic benefits embodied within the item will flow to the entity and the cost of the item can be measured reliably. All other costs
are recognised in the profit or loss as an expense as incurred.
Depreciation and amortisation
Depreciation is recognised in profit or loss on a straight-line
basis over the estimated useful life on all property, plant and equipment. The residual value, the useful life and the depreciation method
applied to an asset are re-assessed at least annually.
The depreciation rates used for each class of depreciable
assets are:
Class of fixed asset
|
|
Depreciation rate
|
|
Leasehold improvements
|
|
|
10-50
|
%
|
Capital work in progress
|
|
|
0
|
%
|
Computer Equipment
|
|
|
33
|
%
|
Plant & Equipment
|
|
|
15-20
|
%
|
Derecognition
An item of property, plant and equipment is derecognised
upon disposal or when no future economic benefits are expected from its use. Gains and losses on disposals are determined by comparing
disposal proceeds with the carrying amount of the disposed asset and are recognised in the profit or loss in the year the disposal occurs.
Consolidated ($000s)
|
|
Leasehold
Improvements
|
|
|
Capital
work in
progress
|
|
|
Computer
Equipment
|
|
|
Plant &
Equipment
|
|
|
Total
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 29 June 2020
|
|
|
13,039
|
|
|
|
1,329
|
|
|
|
924
|
|
|
|
64
|
|
|
|
15,356
|
|
Additions
|
|
|
2,565
|
|
|
|
-
|
|
|
|
365
|
|
|
|
-
|
|
|
|
2,930
|
|
Disposals
|
|
|
(197
|
)
|
|
|
(455
|
)
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
(653
|
)
|
Effect of movement in exchange rates
|
|
|
(306
|
)
|
|
|
2
|
|
|
|
(17
|
)
|
|
|
-
|
|
|
|
(321
|
)
|
Balance at 27 June 2021
|
|
|
15,101
|
|
|
|
876
|
|
|
|
1,271
|
|
|
|
64
|
|
|
|
17,312
|
|
Accumulated Depreciation and Impairment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 29 June 2020
|
|
|
7,829
|
|
|
|
-
|
|
|
|
541
|
|
|
|
38
|
|
|
|
8,408
|
|
Depreciation and Impairment for the year
|
|
|
1,885
|
|
|
|
-
|
|
|
|
252
|
|
|
|
9
|
|
|
|
2,146
|
|
Disposals
|
|
|
(197
|
)
|
|
|
-
|
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
(198
|
)
|
Effect of movement in exchange rates
|
|
|
(56
|
)
|
|
|
-
|
|
|
|
(9
|
)
|
|
|
(1
|
)
|
|
|
(66
|
)
|
Balance at 27 June 2021
|
|
|
9,461
|
|
|
|
-
|
|
|
|
783
|
|
|
|
46
|
|
|
|
10,290
|
|
Carrying amounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 29 June 2020
|
|
|
5,210
|
|
|
|
1,329
|
|
|
|
383
|
|
|
|
26
|
|
|
|
6,948
|
|
At 27 June 2021
|
|
|
5,640
|
|
|
|
876
|
|
|
|
488
|
|
|
|
18
|
|
|
|
7,022
|
|
Consolidated ($000s)
|
|
Total
|
|
Cost
|
|
|
|
|
Balance at 29 June 2020
|
|
|
22,686
|
|
Additions
|
|
|
3,196
|
|
Modifications
|
|
|
-
|
|
Effect of movement in exchange rates
|
|
|
(530
|
)
|
Balance at 27 June 2021
|
|
|
25,352
|
|
Accumulated Depreciation and Impairment
|
|
|
|
|
Balance at 29 June 2020
|
|
|
6,353
|
|
Depreciation and Impairment for the year
|
|
|
5,136
|
|
Effect of movement in exchange rates
|
|
|
(28
|
)
|
Balance at 27 June 2021
|
|
|
11,461
|
|
Carrying amounts
|
|
|
|
|
At 29 June 2020
|
|
|
16,333
|
|
At 27 June 2021
|
|
|
13,891
|
|
The right-of-use assets are depreciated on a straight-line
basis over the period of the lease term.
Additions to right-of-use assets represent leases for new
stores and new leases for existing stores. Right-of-use assets have been adjusted for the re-measurement of lease liabilities due to changes
to existing lease terms, including extensions to existing lease terms.
The Group has applied the
IFRIC agenda decision, released in November 2019, clarifying how the lease term should be determined for arrangements that
automatically renew until one of the parties gives notice to terminate. If a lease renewal is being actively sought and the lease
renewal terms are reasonably known, the lease term has been adjusted to include the expected renewal term. If a lease renewal is not
being sought, for example because the store will be relocated to a new location, the lease term has not been adjusted and the lease
has not been recognised on the balance sheet.
The Group has elected to apply the practical expedient
issued by the International Accounting Standards Board whereby it has not accounted for rent concessions that are a direct consequence
of the COVID-19 pandemic as lease modifications. Rent concessions occur as a direct consequence of the COVID-19 pandemic if all the following
conditions are met:
|
·
|
The change in lease payments results in revised consideration for the lease
that is substantially the same as, or less than, the consideration for the lease immediately preceding the change;
|
|
·
|
Any reduction in lease payments affects only payments originally due on or
before 27 June 2021; and
|
|
·
|
There is no substantive change to other terms and conditions of the lease.
|
The Group has recognised rent concessions as a credit to
the variable lease expense, that are a direct consequence of the COVID-19 pandemic of $261,000 in the statement of profit or loss and
other comprehensive income for the year ended 27 June 2021.
Expenses relating to variable lease payments not included
in lease liabilities of $769,000 have been recognised in the statement of profit or loss and other comprehensive income for the year ended
27 June 2021.
Recognition and measurement
Software
Significant costs associated with software are deferred
and amortised on a straight-line basis over the period of their expected benefit, being their finite life of three years.
Consolidated ($000s)
|
|
Computer Software
|
|
|
Total
|
|
Cost
|
|
|
|
|
|
|
|
|
Balance at 29 June 2020
|
|
|
222
|
|
|
|
222
|
|
Additions
|
|
|
32
|
|
|
|
32
|
|
Disposals
|
|
|
-
|
|
|
|
-
|
|
Effect of movement in exchange rates
|
|
|
(2
|
)
|
|
|
(2
|
)
|
Balance at 27 June 2021
|
|
|
252
|
|
|
|
252
|
|
Accumulated Amortisation and Impairment
|
|
|
|
|
|
|
|
|
Balance at 29 June 2020
|
|
|
140
|
|
|
|
140
|
|
Amortisation for the year
|
|
|
59
|
|
|
|
59
|
|
Impairment for the year
|
|
|
-
|
|
|
|
-
|
|
Disposals
|
|
|
-
|
|
|
|
-
|
|
Effect of movement in exchange rates
|
|
|
(1
|
)
|
|
|
(1
|
)
|
Balance at 27 June 2021
|
|
|
198
|
|
|
|
198
|
|
Carrying amounts
|
|
|
|
|
|
|
|
|
At 29 June 2020
|
|
|
82
|
|
|
|
82
|
|
At 27 June 2021
|
|
|
54
|
|
|
|
54
|
|
An IFRIC agenda decision (cloud computing cost), released
in April 2021, issuing guidance on whether configuration and customisation costs are required to be expensed upfront or capitalised. Exiting
software would in fact be treated as a change in accounting policy, whereby the carrying amounts as at 27 June 2021 should be reversed
out to opening Retained Earnings.
The Group has assessed and applied the agenda decision
with no material impact.
15.
|
Impairment of Property, Plant and Equipment and Intangible Assets
|
Recognition and measurement
Impairment
Property, plant and equipment is reviewed at each reporting
date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount
is estimated in line with the calculation methodology listed below.
Cash-generating units
An impairment loss is recognised if the carrying amount
of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group
that generates cash flows that largely are independent from other assets and groups.
Calculation of recoverable amount
The recoverable amount of an asset or cash-generating unit
is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and
the risks specific to the asset or CGU.
Cash flow forecasts
Cash flow forecasts are based on the Group’s most
recent plans. EBITDA for the purposes of impairment testing was based on expectations of future outcomes having regard to market demand
and past experience. For store level tests, cash flow forecasts are modelled for the length of the lease, identified as the essential
asset for store CGUs.
Discount rates
The Group applies a pre-tax discount rate to pre-tax cash
flows. The pre-tax discount rates incorporate a risk-adjustment relative to the risks associated with the specific CGU (geographic position
or otherwise).
Key assumptions at the Group level were as follows:
|
·
|
Discount rate 15%
|
|
·
|
Growth rate based on expected post-COVID recovery sales profile by market,
with longer term growth rate assumption 3%
|
Reversals of impairment
Impairment losses recognised in previous years are assessed
at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has
been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s
carrying amount does not exceed the carrying amount that would have been determined, net of depreciation, if no impairment loss had been
recognised.
Impairment reversals in the current year is $705,000.
16.
|
Trade and other Payables
|
Recognition and measurement
Liabilities for trade payables and other amounts are carried
at their amortised cost.
Payables to related parties are carried at the principal
amount. Interest, when charged by the lender, is recognised as an expense on an accrual basis.
Consolidated ($000s)
|
|
2021
|
|
Trade payables
|
|
|
3,498
|
|
Accrued expenses (including stock in transit accruals)
|
|
|
6,826
|
|
Gift card liability
|
|
|
1,191
|
|
Other Payables
|
|
|
3,371
|
|
Total Trade and other Payables
|
|
|
14,886
|
|
Trade payables are unsecured and are usually paid within
30 days of recognition. Information about the Group’s exposure to currency and liquidity risk is included in Note 23.
Recognition and measurement
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.
Provisions are determined by discounting the expected future
cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.
The unwinding of the discount is recognised as a finance cost.
A provision for dividends is not recognised as a liability
unless the dividends are declared, determined or publicly recommended on or before the reporting date.
Consolidated ($000s)
|
|
Income received
in advance
|
|
|
Site
restoration
|
|
|
Return
provision
|
|
|
Total
|
|
Balance as at 29 June 2020
|
|
|
531
|
|
|
|
515
|
|
|
|
-
|
|
|
|
1,046
|
|
Provisions made during the year
|
|
|
801
|
|
|
|
106
|
|
|
|
79
|
|
|
|
986
|
|
Provisions used during the year
|
|
|
(531
|
)
|
|
|
(14
|
)
|
|
|
-
|
|
|
|
(545
|
)
|
Effect of movement in exchange rates
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
|
-
|
|
|
|
(4
|
)
|
Balance as at 27 June 2021
|
|
|
799
|
|
|
|
605
|
|
|
|
79
|
|
|
|
1,483
|
|
Current
|
|
|
799
|
|
|
|
242
|
|
|
|
79
|
|
|
|
1,120
|
|
Non-current
|
|
|
-
|
|
|
|
363
|
|
|
|
-
|
|
|
|
363
|
|
|
|
|
799
|
|
|
|
605
|
|
|
|
79
|
|
|
|
1,483
|
|
Income received in advance consists of cash received from
customers when revenue has been deferred. See Revenue recognition Note 2a.
See Note 2b. for Return provision.
Site restoration
Description
|
|
Key Estimates
|
In accordance with the Group’s legal requirements, a provision
for site restoration in respect of make good of leased premises is recognised when the premises are occupied.
The provision is the best estimate of the present value of the
expenditure required to settle the restoration obligation at the reporting date, based on current legal requirements and technology.
Future restoration costs are reviewed annually, and any changes are reflected in the present value of the restoration provision at the
end of the reporting period.
|
|
Expenditure to settle the restoration obligation at the end
of the lease term is based on the Group’s best estimate.
|
Recognition and measurement
Long-term service benefits
The Group’s net obligation in respect of long-term
service benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods.
The obligation is calculated using expected future increases in wage and salary rates including related on-costs and expected settlement
dates and is discounted using high quality Australian corporate bond rates at the balance sheet date which have maturity dates approximating
to the terms of the Group’s obligations.
Short-term benefits
Liabilities for employee benefits for wages, salaries and
annual leave that are expected to be settled within 12 months of the reporting date represent present obligations resulting from employees’
services provided to reporting date, are calculated at undiscounted amounts based on remuneration wage and salary rates that the Group
expects to pay as at reporting date including related on-costs, such as workers compensation insurance and payroll tax.
Consolidated ($000s)
|
|
2021
|
|
Current
|
|
|
|
|
Liability for annual leave
|
|
|
537
|
|
Liability for long-service leave
|
|
|
140
|
|
Non-current
|
|
|
|
|
Liability for long-service leave
|
|
|
39
|
|
Total Employee Benefits
|
|
|
716
|
|
For details on the related employee benefit expenses, see
Note 5a.
Defined contribution plans
A defined contribution plan is a post-employment benefit
plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further
amounts. Obligations for contributions to defined contribution plans are expensed as the related service is provided. Prepaid contributions
are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.
Recognition and measurement
Consolidated ($000s)
|
|
2021
|
|
Balance as at 29 June 2020
|
|
|
18,152
|
|
Liabilities recognised during the year
|
|
|
1,495
|
|
Re-measurement of lease liabilities
|
|
|
1,571
|
|
Lease payments
|
|
|
(6,060
|
)
|
Interest
|
|
|
742
|
|
Effect of movement in exchange rates
|
|
|
(399
|
)
|
Balance as at 27 June 2021
|
|
|
15,501
|
|
Current
|
|
|
5,242
|
|
Non-current
|
|
|
10,259
|
|
|
|
|
15,501
|
|
Additions to lease liabilities represent leases for new
stores. Lease liabilities have been re-measured due to changes to existing lease terms, including extensions to existing lease terms.
The Group has applied the practical expedient whereby lease
liabilities have not been re-measured for rent concessions that are a direct consequence of the COVID-19 pandemic, refer to note 13. The
timing of the contractual cash flows for the lease liabilities are disclosed in note 23.
Risk and Capital Management
This section discusses the Group’s capital management
practices, as well as the instruments and strategies utilised by the Group in minimising exposures to and impact of various financial
risks on the financial position and performance of the Group.
Recognition and measurement
Ordinary shares
Initially, share capital is recognised at the fair value
of the consideration received by the Company.
Share Capital
|
|
No. of
ordinary shares
|
|
|
Value of
ordinary shares
|
|
|
|
2021
|
|
|
2021
|
|
Share Capital
|
|
|
‘000’s
|
|
|
|
‘000’s
|
|
On issue at beginning of year
|
|
|
1
|
|
|
|
1
|
|
Issued during the year
|
|
|
-
|
|
|
|
-
|
|
On issue at end of year
|
|
|
1
|
|
|
|
1
|
|
All ordinary shares rank equally with regard to the Company’s
residual assets.
Ordinary shares
The Company does not have authorised capital or par value
in respect of its issued shares. All issued shares are fully paid.
The holders of these shares are entitled to receive dividends
as declared from time to time, and are entitled to one vote per share at general meetings of the Company.
Nature and purpose of reserves
Translation reserve
The translation reserve reflects all foreign currency differences
of the international entities upon translation to the Group’s functional currency.
Recognition and measurement
The Group’s policy is to maintain a low capital base
so as to maximise return on investment. The Board of Directors seeks to ensure dividends are distributed monthly, without compromising
the working capital required to maintain operations.
Recognition and measurement
Loans and borrowings are initially recognised at fair value
less any directly attributable transaction costs. Subsequent to initial recognition, these liabilities are measured at amortised cost
using the effective interest method. In the closing balance of the 2021 period, the Bank overdraft was not in a drawdown position.
The Group has no loans or borrowings at 27 June 2021. The
available $4.0 million revolving overdraft and Payaway facility remains undrawn at 27 June 2021.
Information about the Group’s exposure to interest
rate, foreign currency and liquidity risk is included in Note 23.
23.
|
Financial Instruments – Fair Values and Risk Management
|
Fair Values
Recognition and measurement
The Group does not have any assets or liabilities that
are required to be reported at fair value at 27 June 2021. The Group does not have any derivatives at 27 June 2021. Certain disclosures
refer to fair value. All fair values disclosed are assessed for appropriateness by the Board in approving the financial report.
When measuring the fair value of an asset or a liability,
the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy
based on the inputs used in the valuation techniques as follows.
|
·
|
Level 1: quoted prices (unadjusted) in active markets for identical assets
or liabilities.
|
|
·
|
Level 2: inputs other than quoted prices included in Level 1 that are observable
for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
|
|
·
|
Level 3: inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
|
If the inputs used to measure the fair value of an asset
or a liability might be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in
its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
27 June 2021
|
|
Carrying amount
|
|
|
Fair Value
|
|
Consolidated ($000s)
|
|
Note
|
|
|
Loans and
receivables
|
|
|
Other financial
assets/ liabilities
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Financial assets measured at fair value
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets not measured at fair value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other receivables
|
|
|
9
|
|
|
|
1,763
|
|
|
|
-
|
|
|
|
1,763
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Cash and cash equivalents
|
|
|
24
|
|
|
|
5,211
|
|
|
|
-
|
|
|
|
5,211
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
6,974
|
|
|
|
-
|
|
|
|
6,974
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Financial liabilities not measured at fair value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank overdrafts
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Trade and other payables
|
|
|
16
|
|
|
|
14,886
|
|
|
|
-
|
|
|
|
14,886
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
14,886
|
|
|
|
-
|
|
|
|
14,886
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Financial risk management
The Group has exposure to the following risks arising from
financial instruments:
|
·
|
credit risk
|
|
·
|
liquidity risk
|
|
·
|
market risk
|
Risk Management framework
The Group’s Board of Directors (“Board”)
has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Board of Directors
are responsible for developing and monitoring the Group’s risk management policies.
The Group’s risk management policies are established
to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls and to monitor risks and adherence to
limits. Risk management policies and systems are reviewed to reflect changes in market conditions and the Group’s activities. The
Group, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment
in which all employees understand their roles and obligations.
The Board oversees how management monitors compliance with
the Group’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the
risks faced by the Group.
The Board specific function with respect to risk management
is to review and report to the Board that:
|
a.
|
the Group’s ongoing risk management program effectively identifies all areas of potential risk;
|
|
b.
|
adequate policies and procedures have been designed and implemented to manage identified risks;
|
|
c.
|
audits may be undertaken at the direction of the Board to test the adequacy of and compliance with prescribed policies; and
|
|
d.
|
proper remedial action is undertaken to redress areas of weakness.
|
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, and arises principally from the Group’s
receivables from customers and deposits placed for leased outlets.
The Group’s credit risk on its receivables is recognised
on the consolidated statement of financial position at the carrying amount of those receivable assets, net of any provisions for doubtful
debts. Receivable balances and deposit balances are monitored on a monthly basis with the result that the Group’s exposure to bad
debts is not considered to be material.
Credit risk also arises from cash and cash equivalents
with banks. For banks, only independently rated parties with a minimum rating of ‘A’ are accepted by the Group.
At the reporting date, the carrying amount of financial
assets recorded in the financial statements, net of any allowances for impairment losses, represents the Group’s maximum exposure
to credit risk. There were no significant concentrations of credit risk.
As at 27 June 2021, $1,058,000 of trade receivables were
past due but not impaired.
Liquidity risk
Liquidity risk is the risk that the Group will encounter
difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial
asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet
its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage
to the Group’s reputation. Cash flow forecasts are updated and monitored weekly.
In addition, the Group maintains the following lines of
credit secured by security interests granted by Honey Birdette (Aust.) Pty Ltd over all of the Group’s assets in favour of the Australia
and New Zealand Bank (ANZ):
|
·
|
$4.0 million revolving overdraft and Payaway facility;
|
|
·
|
$1.3 million commercial card facility and for global letters of credit and
bank guarantees.
|
Exposure to liquidity risk
The following are the remaining contractual maturities
of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include estimated interest payments and exclude
the impact of netting agreements.
27 June 2021
|
|
Contractual cash flows
|
|
Consolidated ($000s)
|
|
Carrying
amount
|
|
|
Total
|
|
|
2 mths or less
|
|
|
2-12 mths or less
|
|
|
1-2 years
|
|
|
2-5 years
|
|
|
More than 5 years
|
|
Non-derivative financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables
|
|
|
14,886
|
|
|
|
14,886
|
|
|
|
14,886
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Lease liabilities
|
|
|
15,501
|
|
|
|
17,928
|
|
|
|
1,006
|
|
|
|
4,237
|
|
|
|
3,849
|
|
|
|
6,250
|
|
|
|
2,586
|
|
Bank overdrafts
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
30,387
|
|
|
|
32,814
|
|
|
|
15,892
|
|
|
|
4,237
|
|
|
|
3,849
|
|
|
|
6,250
|
|
|
|
2,586
|
|
The Group does not hold derivative instruments.
The future cash flows on trade payables may be different
from the amount in the above table as exchange rates change. Except for these financial liabilities, it is not expected that the cash
flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.
Market risk
Market risk is the risk that changes in market prices –
such as foreign exchange rates – will affect the Group’s income or the value of its holdings of financial instruments. The
objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the
return.
The Group does not use derivatives to manage market risks.
Currency risk
The Group is exposed to currency risk to the extent that
there is a mismatch between the currencies in which sales, purchases and borrowings are denominated and the respective functional currencies
of Group companies. The presentation currency of the Group is the Australian dollar (AUD) which is the functional currency of the Group.
The currencies in which transactions are primarily denominated are Australian dollars, US dollars and British pounds.
Exposure to currency risk
The summary quantitative data about the Group’s exposure
to currency risk as reported to the management of the Group is as follows:
|
|
27 June 2021
|
|
In thousands of
|
|
GBP
|
|
|
USD
|
|
Non-derivative financial liabilities
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
818
|
|
|
|
1,464
|
|
Trade receivables
|
|
|
-
|
|
|
|
504
|
|
Trade payables
|
|
|
(573
|
)
|
|
|
(752
|
)
|
Net statement of financial position exposure
|
|
|
245
|
|
|
|
1,216
|
|
Sensitivity analysis
A reasonably possible strengthening (weakening) of the
GBP or USD, against all other currencies would have affected the measurement of financial instruments denominated in a foreign currency
and affected profit or loss by the amounts shown below. The analysis assumes that all other variables, in particular interest rates, remain
constant and ignores any impact of forecast sales and purchases. The translation of the net assets in subsidiaries with a functional currency
other than the Australian dollar has not been included in the sensitivity analysis as part of the equity movement.
There is no impact on equity as the foreign currency denominated
assets and liabilities represent cash, receivables and payables.
|
|
Profit or loss
|
|
Effect in thousands of dollars
|
|
Strengthening
|
|
|
Weakening
|
|
27 June 2021
|
|
|
|
|
|
|
|
|
GBP (5 percent movement)
|
|
|
268
|
|
|
|
(223
|
)
|
USD (5 percent movement)
|
|
|
291
|
|
|
|
(254
|
)
|
Interest rate risk
The Group is no subject to interest rate risk as the Group
has no borrowings.
Recognition and measurement
Cash and cash equivalents comprise cash bank balances,
cash in transit and cash held in stores. Bank overdrafts that are repayable on demand and form an integral part of the entity’s
cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
Consolidated ($000s)
|
|
2021
|
|
Bank balances
|
|
|
|
|
Cash and cash equivalents in the statement of financial position
|
|
|
5,211
|
|
Bank overdrafts used for cash management purposes
|
|
|
-
|
|
Cash and cash equivalents in the statement of cash flows
|
|
|
5,211
|
|
Other information
This section includes mandatory disclosures to comply with
International Financial Reporting Standards.
Set out below is a list of subsidiaries of the Group. All
subsidiaries are wholly owned, unless otherwise stated.
Name
|
|
Principal place of business
|
Honey Birdette (UK) Limited
|
|
United Kingdom
|
Honey Birdette US Inc
|
|
United States of America
|
Honey Birdette (Singapore) PTE Limited
|
|
Singapore
|
Honey Birdette (Canada) Ltd
|
|
Canada
|
Honey Birdette (Singapore) PTE Limited and Honey Birdette
(Canada) Ltd are dormant entities.
26.
|
Commitments and Contingencies
|
Guarantees
The Group has guarantees outstanding to landlords and other
parties to the value of $460,000 at 27 June 2021. The guarantees are secured against the assets of the Group.
Capital commitments and contingent liabilities
The Group is committed to incur capital expenditure of
$570,000. There are no contingent liabilities that exist at 27 June 2021.
Parent and ultimate controlling party
Honey Birdette (Aust.) Pty Ltd is the parent entity. The
ultimate entity and controlling party is BBRC International Pte Limited, a Singaporean entity. Subsidiaries of the Group are listed in
note 25.
a.
|
Transactions with key management personnel
|
|
i.
|
Key management personnel compensation
|
The key management personnel compensation comprised the
following:
Consolidated ($000s)
|
|
2021
|
|
Short-term employee benefits
|
|
|
1,096
|
|
Compulsory social security contributions
|
|
|
104
|
|
|
|
|
1,200
|
|
Compensation of the Group’s key management personnel
includes salaries and non-cash benefits.
|
ii.
|
Key management personnel and Director transactions
|
Some of the Key management personnel, or their related
parties, hold positions in other companies that result in them having control or joint control over these companies. There were no transactions
or balances outstanding from these related parties during the period or at 27 June 2021.
b.
|
Other related party transactions
|
|
|
Transaction values for the year ended:
|
|
|
Balance
outstanding as at:
|
|
Consolidated ($000s)
|
|
27 June 2021
|
|
|
27 June 2021
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Expense recharges
|
|
|
10
|
|
|
|
-
|
|
Sales:
|
|
|
|
|
|
|
|
|
Recharges
|
|
|
-
|
|
|
|
-
|
|
Transactions between related parties are wholly due to
property and human resource services provided by Sanity Entertainment Pty Ltd (“Sanity”). Ray Itaoui, a significant shareholder
of the Group, is the sole shareholder of Sanity, therefore is in a position of holding significant influence in relation to both parties.
The Group has and will continue to benefit from the relationships that its management team and Sanity have developed over many years of
retail operating experience. All recharges are priced on at cost with no additional margin. The Group will continue to utilise Sanity’s
retail operating experience on an as needed basis.
All outstanding balances with other related parties are
priced at cost, and are to be settled in cash within two months post the end of the reporting year. None of the balances are secured.
No expense has been recognised in the current year for bad or doubtful debts in respect of amounts owed by related parties.
28.
|
New standards and Interpretations not yet adopted
|
A number of new standards are effective for annual periods
beginning after 1 July 2021 and earlier application is permitted; however, the Group has not early adopted the new or amended standards
in preparing these consolidated financial statements.
The following amended standards and interpretations are
not expected to have a significant impact on the Group’s consolidated financial statements.
|
·
|
IFRS 1:
|
Classification
of Liabilities as Current or Non-current;
|
|
·
|
IFRS 3:
|
Reference
to Conceptual Framework;
|
|
·
|
IFRS 16:
|
Property,
Plant and Equipment: Proceeds before Intended Use; and
|
|
·
|
IFRS 37:
|
Onerous
Contracts – Costs of Fulfilling a Contract;
|
|
·
|
IFRS 9:
|
Financial
Instruments: Fees in the ’10 per cent’ test for derecognition of financial liabilities
|
The above standards are not expected to have a significant
impact on the Group’s financial statements in the year of their initial application.
Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
INFORMATION
The following unaudited pro forma condensed combined balance sheet
as of June 30, 2021 and the unaudited pro forma condensed combined statements of operations for the six months ended June 30,
2021 and year ended December 31, 2020 are based on the historical financial statements of PLBY Group, Inc. (“PLBY”)
and Honey Birdette (Aust) Pty Limited (“Honey Birdette”) after giving effect to PLBY’s acquisition of Honey Birdette
using the acquisition method of accounting and applying the assumptions and adjustments described in the accompanying notes to the unaudited
pro forma condensed combined financial information.
The unaudited pro forma condensed combined balance sheet as of June 30,
2021 gives effect to the closing of the acquisition (the “Closing”) as if it took place on June 30, 2021 and combines
the historical balance sheets of PLBY as of June 30, 2021 and Honey Birdette as of June 27, 2021. The unaudited pro forma condensed
combined statements of operations for the six months ended June 30, 2021 and for the year ended December 31, 2020 give effect
to the Closing as if it took place as of January 1, 2020. As PLBY and Honey Birdette have different quarter and year ends, we have prepared
Honey Birdette’s statements of operations for the 52-week period ended December 27, 2020 and for the 26-week period ended June 27,
2021 for purposes of combining with the PLBY statements of operations for the year ended December 31, 2020 and for the six month
period ended June 30, 2021, respectively, and have used Honey Birdette’s balance sheet at June 27, 2021 to combine with
the historical balance sheet of PLBY at June 30, 2021 for purposes of preparing the unaudited pro forma condensed combined balance
sheet as of June 30, 2021.
The acquisition has been accounted for under the acquisition method
of accounting in accordance with Accounting Standard Codification (“ASC”) 805, Business Combinations (“ASC 805”).
Under the acquisition method of accounting, the total estimated purchase price, calculated as described in Note 1 to the unaudited pro
forma condensed combined financial information, is allocated to the net tangible and intangible assets of Honey Birdette acquired in
connection with the acquisition, based on their estimated fair values. Management has made a preliminary allocation of the estimated
purchase price to the net tangible and intangible assets acquired and liabilities assumed based on various preliminary estimates. These
preliminary estimates and assumptions are subject to change during the measurement period (up to the time it takes to gather the necessary
information and no longer than one year from the acquisition date). The final determination of the values of assets and liabilities and
integration costs may result in actual values, assets, liabilities and expenses that are different from those set forth in the unaudited
pro forma condensed combined financial information.
The unaudited pro forma condensed combined financial information has
been prepared by management for illustrative purposes only and is not necessarily indicative of the condensed consolidated financial position
or results of operations in future periods or the results that actually would have been realized had PLBY and Honey Birdette been a combined
company during the specified periods. The unaudited pro forma condensed combined financial information does not reflect any operating
efficiencies and/or cost savings that may be achieved with respect to the combined companies, or any liabilities that may result from
integration activities. The pro forma adjustments are based on the information available at the time of the preparation of this document.
The unaudited pro forma condensed combined financial information, including the notes thereto, is qualified in its entirety by reference
to, and should be read in conjunction with the audited financial statements of PLBY’s wholly-owned subsidiary and accounting predecessor,
Playboy Enterprises, Inc., included in the Current Report on Form 8-K/A as filed by PLBY with the Securities and Exchange Commission on
March 31, 2021, and PLBY’s Quarterly Report on Form 10-Q for the six months ended June 30, 2021, in addition to Honey Birdette’s
historical consolidated financial statements for the 52-week period ended June 27, 2021, which are included in Exhibit 99.1 to this
Current Report on Form 8-K/A.
Unaudited Pro Forma Condensed Combined Balance
Sheet
(in thousands)
|
|
PLBY
Historical
|
|
|
Honey
Birdette
Historical
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
30, 2021
|
|
|
June
27, 2021
|
|
|
Transaction
Accounting
Adjustments
|
|
|
Notes
|
|
Financing
|
|
|
Notes
|
|
Pro
Forma
Combined
|
|
|
|
Note (3a)
|
|
|
Note (3b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
255,529
|
|
|
$
|
3,956
|
|
|
$
|
(233,441
|
)
|
|
3(c)
|
|
$
|
66,243
|
|
|
3(c)
|
|
$
|
92,287
|
|
Receivables, net of allowance
for doubtful accounts
|
|
|
6,770
|
|
|
|
1,339
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
8,109
|
|
Inventories, net
|
|
|
18,263
|
|
|
|
7,959
|
|
|
|
6,233
|
|
|
3(j)
|
|
|
—
|
|
|
|
|
|
32,455
|
|
Prepaid
expenses and other current assets
|
|
|
14,215
|
|
|
|
2,208
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
16,423
|
|
Total current assets
|
|
|
294,777
|
|
|
|
15,462
|
|
|
|
(227,208
|
)
|
|
|
|
|
66,243
|
|
|
|
|
|
149,274
|
|
Restricted cash
|
|
|
2,130
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
2,130
|
|
Property and equipment, net
|
|
|
20,925
|
|
|
|
5,333
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
26,258
|
|
Intangible assets, net
|
|
|
342,812
|
|
|
|
41
|
|
|
|
77,236
|
|
|
3(d)
|
|
|
—
|
|
|
|
|
|
420,048
|
|
|
|
|
|
|
|
|
|
|
|
|
(41
|
)
|
|
3(n)
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
16,814
|
|
|
|
—
|
|
|
|
224,088
|
|
|
3(k)
|
|
|
—
|
|
|
|
|
|
240,575
|
|
|
|
|
|
|
|
|
|
|
|
|
(368
|
)
|
|
3(n)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41
|
|
|
3(n)
|
|
|
|
|
|
|
|
|
|
|
Contract assets, net of current portion
|
|
|
14,667
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
14,667
|
|
Other noncurrent assets
|
|
|
12,657
|
|
|
|
609
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
13,266
|
|
Total
assets
|
|
$
|
704,782
|
|
|
$
|
21,445
|
|
|
$
|
73,748
|
|
|
|
|
$
|
66,243
|
|
|
|
|
$
|
866,218
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
15,467
|
|
|
$
|
3,568
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
19,035
|
|
Accrued salaries, wages, and
employee benefits
|
|
|
2,377
|
|
|
|
1,191
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
3,568
|
|
Deferred revenues, current
portion
|
|
|
10,644
|
|
|
|
368
|
|
|
|
(368
|
)
|
|
3(n)
|
|
|
—
|
|
|
|
|
|
10,644
|
|
Long-term debt, current portion
|
|
|
2,093
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
700
|
|
|
3(f)
|
|
|
2,793
|
|
Contingent consideration
|
|
|
—
|
|
|
|
—
|
|
|
|
25,340
|
|
|
3(o)
|
|
|
—
|
|
|
|
|
|
25,340
|
|
Other current liabilities
and accrued expenses
|
|
|
19,359
|
|
|
|
9,635
|
|
|
|
8,186
|
|
|
3(h)
|
|
|
—
|
|
|
|
|
|
37,548
|
|
|
|
|
|
|
|
|
|
|
|
|
368
|
|
|
3(d)
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
49,940
|
|
|
|
14,762
|
|
|
|
33,526
|
|
|
|
|
|
700
|
|
|
|
|
|
98,928
|
|
Deferred revenues, net of current portion
|
|
|
42,891
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
42,891
|
|
Long-term debt, net of current portion
|
|
|
159,438
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
67,558
|
|
|
3(g)
|
|
|
226,996
|
|
Deferred tax liabilities, net
|
|
|
73,797
|
|
|
|
—
|
|
|
|
22,489
|
|
|
3(e)
|
|
|
—
|
|
|
|
|
|
96,286
|
|
Other noncurrent liabilities
|
|
|
5,160
|
|
|
|
1,122
|
|
|
|
1,471
|
|
|
3(d)
|
|
|
—
|
|
|
|
|
|
7,753
|
|
Total
liabilities
|
|
|
331,226
|
|
|
|
15,884
|
|
|
|
57,486
|
|
|
|
|
|
68,258
|
|
|
|
|
|
472,854
|
|
Commitments and contingencies (Note 13)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling interest
|
|
|
(208
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(208
|
)
|
Stockholders’ equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
4
|
|
|
|
—
|
|
|
|
216
|
|
|
3(l)
|
|
|
—
|
|
|
|
|
|
220
|
|
Treasury stock, at cost
|
|
|
(4,445
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(4,445
|
)
|
Additional paid-in capital
|
|
|
470,134
|
|
|
|
—
|
|
|
|
29,793
|
|
|
3(l)
|
|
|
—
|
|
|
|
|
|
499,927
|
|
Accumulated deficit
|
|
|
(91,929
|
)
|
|
|
5,561
|
|
|
|
(8,186
|
)
|
|
3(h)
|
|
|
(2,015
|
)
|
|
3(i)
|
|
|
(102,130
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(5,561
|
)
|
|
3(m)
|
|
|
|
|
|
|
|
|
|
|
Total
stockholders’ equity
|
|
|
373,764
|
|
|
|
5,561
|
|
|
|
16,262
|
|
|
|
|
|
(2,015
|
)
|
|
|
|
|
393,572
|
|
Total
liabilities, redeemable noncontrolling interest, and stockholders' equity
|
|
$
|
704,782
|
|
|
$
|
21,445
|
|
|
$
|
73,748
|
|
|
|
|
$
|
66,243
|
|
|
|
|
$
|
866,218
|
|
See accompanying notes to unaudited pro forma
combined financial information.
Unaudited Pro Forma Condensed Combined Statement
of Operations
(in thousands, except per share amounts)
|
|
PLBY Historical
|
|
|
Honey Birdette
Historical
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
Transaction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
|
June 27, 2021
|
|
|
Accounting
Adjustments
|
|
|
Notes
|
|
Financing
|
|
|
Notes
|
|
Pro Forma
Combined
|
|
|
|
Note (4a)
|
|
|
Note (4b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
92,531
|
|
|
$
|
37,900
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
130,431
|
|
Costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
(42,699
|
)
|
|
|
(7,921
|
)
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(50,620
|
)
|
Selling and administrative expenses
|
|
|
(57,561
|
)
|
|
|
(17,078
|
)
|
|
|
(3,182
|
)
|
|
4(c)
|
|
|
|
|
|
|
|
|
(77,821
|
)
|
Related party expenses
|
|
|
(250
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(250
|
)
|
Total costs and expenses
|
|
|
(100,510
|
)
|
|
|
(24,999
|
)
|
|
|
(3,182
|
)
|
|
|
|
|
—
|
|
|
|
|
|
(128,691
|
)
|
Operating (loss) income
|
|
|
(7,979
|
)
|
|
|
12,901
|
|
|
|
(3,182
|
)
|
|
|
|
|
—
|
|
|
|
|
|
1,740
|
|
Nonoperating income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(5,550
|
)
|
|
|
(3
|
)
|
|
|
—
|
|
|
|
|
|
(2,301
|
)
|
|
4(d)
|
|
|
(7,854
|
)
|
Loss on extinguishment of debt
|
|
|
(1,217
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(1,217
|
)
|
Other income, net
|
|
|
742
|
|
|
|
99
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
841
|
|
Total nonoperating (expense) income
|
|
|
(6,025
|
)
|
|
|
96
|
|
|
|
—
|
|
|
|
|
|
(2,301
|
)
|
|
|
|
|
(8,230
|
)
|
Income (loss) before income taxes
|
|
|
(14,004
|
)
|
|
|
12,997
|
|
|
|
(3,182
|
)
|
|
|
|
|
(2,301
|
)
|
|
|
|
|
(6,490
|
)
|
Benefit (expense) from income taxes
|
|
|
91
|
|
|
|
(2,978
|
)
|
|
|
877
|
|
|
4(g)
|
|
|
634
|
|
|
4(g)
|
|
|
(1,376
|
)
|
Net (loss) income
|
|
|
(13,913
|
)
|
|
|
10,019
|
|
|
|
(2,305
|
)
|
|
|
|
|
(1,667
|
)
|
|
|
|
|
(7,866
|
)
|
Net (loss) income attributable to redeemable noncontrolling interest
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
Net (loss) income attributable to PLBY
|
|
$
|
(13,913
|
)
|
|
$
|
10,019
|
|
|
$
|
(2,305
|
)
|
|
|
|
$
|
(1,667
|
)
|
|
|
|
$
|
(7,866
|
)
|
Net loss per share, basic and diluted
|
|
$
|
(0.42
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.23
|
)
|
Weighted-average shares used in computing net loss per share, basic and diluted
|
|
|
33,298,957
|
|
|
|
—
|
|
|
|
1,129,331
|
|
|
3(l)
|
|
|
|
|
|
|
|
|
34,428,288
|
|
See accompanying notes to unaudited pro forma
combined financial information.
Unaudited Pro Forma Condensed Combined Statement
of Operations
(in thousands, except per share amounts)
|
|
PLBY
Historical
|
|
|
Honey
Birdette Historical
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Months
Ended
|
|
|
Transaction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2020
|
|
|
December
27, 2020
|
|
|
Accounting
Adjustments
|
|
|
Notes
|
|
Financing
|
|
|
Notes
|
|
Pro
Forma Combined
|
|
|
|
Note (4a)
|
|
|
Note (4b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
147,662
|
|
|
$
|
53,862
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
201,524
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
(73,180
|
)
|
|
|
(14,774
|
)
|
|
|
(6,233
|
)
|
|
4(e)
|
|
|
—
|
|
|
|
|
|
(94,187
|
)
|
Selling and administrative
expenses
|
|
|
(59,863
|
)
|
|
|
(25,788
|
)
|
|
|
(8,186
|
)
|
|
4(f)
|
|
|
(2,015
|
)
|
|
3(j)
|
|
|
(101,547
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(5,695
|
)
|
|
4(c)
|
|
|
|
|
|
|
|
|
|
|
Related-party
expenses
|
|
|
(1,007
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(1,007
|
)
|
Total
costs and expenses
|
|
|
(134,050
|
)
|
|
|
(40,562
|
)
|
|
|
(20,114
|
)
|
|
|
|
|
(2,015
|
)
|
|
|
|
|
(196,741
|
)
|
Operating income (loss)
|
|
|
13,612
|
|
|
|
13,300
|
|
|
|
(20,114
|
)
|
|
|
|
|
(2,015
|
)
|
|
|
|
|
4,783
|
|
Nonoperating income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income
|
|
|
30
|
|
|
|
1
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
31
|
|
Interest expense
|
|
|
(13,463
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
(4,577
|
)
|
|
4(d)
|
|
|
(18,040
|
)
|
Gain from settlement of convertible
promissory note
|
|
|
1,454
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
1,454
|
|
Other
income, net
|
|
|
168
|
|
|
|
1,321
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
1,489
|
|
Total nonoperating (expense)
income
|
|
|
(11,811
|
)
|
|
|
1,322
|
|
|
|
—
|
|
|
|
|
|
(4,577
|
)
|
|
|
|
|
(15,066
|
)
|
Income (loss) before provision for income taxes
|
|
|
1,801
|
|
|
|
14,622
|
|
|
|
(20,114
|
)
|
|
|
|
|
(6,592
|
)
|
|
|
|
|
(10,283
|
)
|
Benefit (expense) from income taxes
|
|
|
(7,072
|
)
|
|
|
(4,671
|
)
|
|
|
3,286
|
|
|
4(g)
|
|
|
1,816
|
|
|
4(g)
|
|
|
(6,641
|
)
|
Net (loss) income
|
|
|
(5,271
|
)
|
|
|
9,951
|
|
|
|
(16,828
|
)
|
|
|
|
|
(4,776
|
)
|
|
|
|
|
(16,924
|
)
|
Net (loss) income attributable
to redeemable noncontrolling interest
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
Net (loss) income attributable
to PLBY
|
|
$
|
(5,271
|
)
|
|
$
|
9,951
|
|
|
$
|
(16,828
|
)
|
|
|
|
$
|
(4,776
|
)
|
|
|
|
$
|
(16,924
|
)
|
Net loss per share, basic
and diluted
|
|
$
|
(1.33
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
$
|
(3.32
|
)
|
Weighted-average shares
used in computing net loss per share, basic and diluted
|
|
|
3,961,996
|
|
|
|
—
|
|
|
|
1,129,331
|
|
|
3(l)
|
|
|
|
|
|
|
|
|
5,091,327
|
|
See accompanying notes to unaudited pro forma
combined financial information.
Notes to the Unaudited Pro Forma Condensed
Combined Financial Statements
|
1.
|
Basis
of Pro Forma Presentation
|
Description of the Acquisition
On June 28, 2021 (“Contract
Date”), PLBY entered into a Share Purchase Agreement (the “SPA”) to acquire Honey Birdette, a company
organized under the laws of Australia. Aggregate consideration of $327.7 million as of
the Contract Date consisted of approximately $235.0 million in cash based on an exchange rate of 0.7391 and 2,155,849 shares of
PLBY common stock, valued at $92.7 million as of the Contract Date, based on a Contract
Date per share price of $43.02. Pursuant to the SPA, on August 9, 2021 (“Closing
Date”), PLBY acquired all of the capital stock of Honey Birdette. PLBY’s Closing Date per share price of $26.57 resulted
in total consideration transferred of $288.7 million. As a result of the transaction, Honey Birdette became an indirect,
wholly-owned subsidiary of PLBY. On August 19, 2021, an additional 4,412 shares of PLBY common stock were issued to the Honey
Birdette sellers pursuant to the terms of a true-up under the SPA. For the proforma purposes these shares have been considered
issued at Closing.
In connection with the acquisition, on August
11, 2021, PLBY entered into an amendment (the “First Amendment”) to its Credit and Guaranty Agreement, dated May 25, 2021
(the “2021 Term Credit Agreement”) to (a) obtain a $70.0 million incremental term loan for the purpose of funding the
acquisition, thereby increasing the aggregate principal amount of term loan indebtedness outstanding under the 2021 Term Credit Agreement
to $230.0 million, and (b) amend the terms of the 2021 Term Credit Agreement to, among other things, permit Honey Birdette and certain
of its subsidiaries to guaranty the obligations under the 2021 Term Credit Agreement.
Basis of Pro Forma Preparation
The unaudited pro forma combined financial statements
are based on the historical consolidated financial statements of PLBY and the historical financial statements of Honey Birdette, after
giving effect to the acquisition using the acquisition method of accounting in accordance with ASC 805, and applying the assumptions
and adjustments described herein.
The unaudited pro forma condensed combined balance
sheet as of June 30, 2021 combines the historical consolidated balance sheets of PLBY and Honey Birdette, giving effect to the acquisition
as if it had been completed on June 30, 2021. The unaudited pro forma condensed combined statements of operations for the six months
ended June 30, 2021 and for the year ended December 31, 2020 combine the historical consolidated statements of operations of
PLBY and Honey Birdette, giving effect to the acquisition as if it had been completed on January 1, 2020.
The pro forma financial statements are presented
in United States dollars (“USD”) and prepared in accordance with accounting principles generally accepted in the United States
(“U.S. GAAP”). Since Honey Birdette’s historical consolidated financial statements are presented in Australian dollars
(“AUD”) and prepared in accordance with International Financial Reporting Standards (“IFRS”), the historical
financial information of Honey Birdette used in the pro forma financial statements has been reconciled to US GAAP and translated into
USD. For comparative purposes certain line items were renamed or reclassified to conform with the pro forma financial presentation.
PLBY and Honey Birdette have different fiscal
quarter and year ends. Honey Birdette follows a fiscal calendar widely used by the retail industry that results in a fiscal year consisting
of a 52- or 53-week period ending on the Sunday closest to June 30. Each fiscal year of Honey Birdette consists of four 13-week quarters,
with an extra week added to each fiscal year every five or six years. PLBY follows a monthly reporting calendar, with its fiscal year
ending on December 31. Accordingly, the unaudited pro forma condensed combined statement of operations for the fiscal year ended December 31,
2020 combines the historical results of (i) Honey Birdette for the 52-week period ended December 27, 2020 and (ii) PLBY for the 12-month
period ended December 31, 2020. The unaudited pro forma condensed combined statement of operations for the six months ended June 30,
2021 combines the historical results of (i) Honey Birdette for the 26-week period ended June 27, 2021 and (ii) PLBY for the six-month
period ended June 30, 2021. We have prepared Honey Birdette’s statements of operations for the 52-week period ended December 27,
2020 and for the 26-week period ended June 27, 2021 for purposes of combining with the PLBY statements of operations, and have used
Honey Birdette’s balance sheet at June 27, 2021 to combine with the historical balance sheet of PLBY at June 30, 2021
for purposes of preparing the unaudited pro forma condensed combined balance sheet as of June 30, 2021. The difference in fiscal
periods for Honey Birdette and PLBY is considered to be insignificant and no related adjustments have been made in the preparation of
this unaudited pro forma condensed combined financial information.
Accounting Policies
During preparation of the unaudited pro forma
condensed combined financial information, PLBY management performed a preliminary analysis to identify differences in accounting policies
and methodologies between PLBY and Honey Birdette. Such differences were considered immaterial, other than the lease adjustment discussed
in Note 4(b), and no other related adjustments have been made in the preparation of this unaudited pro forma condensed combined financial
information. PLBY management will continue to conduct reviews of Honey Birdette’s accounting policies and methodologies and may
identify differences that, when adjusted or reclassified, could have a material impact on the unaudited pro forma condensed combined
financial information.
|
2.
|
Preliminary Acquisition
Price Allocation
|
Consideration Transferred
The
following table presents the fair value of the consideration transferred in the acquisition of Honey Birdette (in thousands) at Closing.
The amounts initially reported in AUD, were translated into USD using an exchange rate of 0.73558 as of the Acquisition Date.
Cash consideration, net of transaction bonuses
(1)
|
|
$
|
233,441
|
|
Stock consideration:
|
|
|
|
|
Transferred shares (2)
|
|
|
29,889
|
|
Lock-up shares (3)
|
|
|
27,390
|
|
FY22 true-up (4)
|
|
|
(2,050
|
)
|
FY21 true-up (5)
|
|
|
120
|
|
Total consideration transferred
|
|
$
|
288,790
|
|
(1)
Net of transaction bonuses of $0.4 million awarded to Honey Birdette executives in connection with the acquisition.
(2) The
fair value of approximately 1,124,919 shares of common stock of PLBY transferred to the sellers based on a price of $26.57 per share
at Closing.
(3) The
fair value of approximately 1,030,930 shares of common stock of PLBY issued and held in a transfer agent account based on a price of
$26.57 per share at Closing.
The lock-up shares are subject to the following
post-closing true-up adjustments:
Following the Closing, the Honey Birdette sellers are entitled
to the issuance of additional shares of PLBY common stock in the event that Honey Birdette’s financial results for each of its
2021 and 2022 fiscal years exceed certain financial targets set forth in the SPA (each a “True-Up”). In the event that Honey
Birdette fails to achieve certain financial results for its 2021 and 2022 fiscal years as set forth in the SPA, a portion of the stock
consideration may be canceled in accordance with the terms of the SPA. On August 19, 2021, an additional 4,412 shares of PLBY common
stock were issued to the Honey Birdette sellers pursuant in satisfaction of the fiscal year 2021 True-Up.
(4) FY22
True-up adjustment represents a fair value of the settlement at Closing based on Honey Birdette’s fiscal year 2022 forecasted
revenue.
(5)
FY21 True-up adjustment represents a fair value of the settlement at Closing based on Honey Birdette’s fiscal year 2021 EBITDA
results and price per share of $26.57 at Closing, which resulted in 4,412 shares of common stock of PLBY being issued to the
sellers.
The following table presents the preliminary
estimates of fair values of the assets acquired and the liabilities assumed as if the acquisition had closed on June 30, 2021. The
allocation of assets and liabilities was performed in accordance with ASC 805, utilizing the definition of fair value as defined in ASC
820. The fair values of the below listed assets and liabilities were calculated as of August 9, 2021 (the “Acquisition Date”)
and adjusted to reflect the balances as of June 30, 2021 to be used in the preparation of this unaudited pro forma condensed combined
financial information. PLBY’s preliminary estimates are based on the information that was available as of the date of this filing.
The preliminary estimated allocation will be subject to further refinement and may result in material changes. These changes will primarily
relate to the allocation of consideration transferred and the fair value assigned to all tangible and intangible assets and liabilities
acquired and identified. The final purchase price and goodwill could differ significantly from the current estimate, which could materially
impact the pro forma financial statements. PLBY has one year from the Acquisition Date to finalize these amounts:
Net assets and liabilities (in thousands):
|
|
As of June
30, 2021
|
|
Inventory (1)
|
|
$
|
14,190
|
|
Property and equipment
|
|
|
5,333
|
|
Other tangible net assets (liabilities)
|
|
|
(11,685
|
)
|
Unfavorable leasehold interest, net
|
|
|
(1,839
|
)
|
Trade name
|
|
|
77,236
|
|
Deferred tax liability
|
|
|
(22,489
|
)
|
Total net assets acquired
|
|
|
60,746
|
|
Purchase consideration, net of $4 million cash acquired
|
|
|
284,834
|
|
Goodwill
|
|
$
|
224,088
|
|
(1) The
fair value of inventory includes inventory step-up adjustment of $6.23 million.
Property
and Equipment: The following table shows a breakdown of the preliminary fair value of property and equipment and their
estimated useful lives as of June 30, 2021:
|
|
Estimated
Useful Life
(in years)
|
|
|
Fair Value
(in thousands)
|
|
Furniture and fixtures
|
|
5
|
|
|
$
|
427
|
|
Leasehold improvements
|
|
5
|
|
|
|
4,906
|
|
|
|
|
|
|
$
|
5,333
|
|
Intangible
Assets (liabilities): The following table shows a breakdown of the preliminary fair value of identifiable intangible assets
acquired and liabilities assumed, including their estimated useful lives as of June 30, 2021:
|
|
Estimated
Useful Life
(in years)
|
|
|
Fair Value
(in thousands)
|
|
Trade name
|
|
12
|
|
|
$
|
77,236
|
|
Unfavorable leasehold interest, net
|
|
5
|
|
|
|
(1,839
|
)
|
|
|
|
|
|
$
|
75,397
|
|
|
3.
|
Adjustments to
the Unaudited Pro Forma Condensed Combined Balance Sheet
|
Refer to the items below for a reconciliation of the pro forma adjustments
reflected in the unaudited pro forma condensed combined balance sheet:
|
(a)
|
Represents the unaudited historical condensed consolidated balance sheet
of PLBY as of June 30, 2021.
|
|
(b)
|
Represents the unaudited historical condensed consolidated balance sheet
of Honey Birdette as of June 27, 2021.
|
The pro forma adjustments included in the unaudited pro forma condensed
combined balance sheet as of June 30, 2021 are as follows:
|
(c)
|
Represents the adjustment to cash and cash equivalents as follows (in
thousands):
|
Pro forma financing adjustment:
|
|
|
|
Net
proceeds from term loan facility (1)
|
|
$
|
66,243
|
|
Pro forma transaction accounting adjustment:
|
|
|
|
|
Consideration
transferred (2)
|
|
|
(233,441
|
)
|
Total pro
forma adjustment to cash
|
|
$
|
(167,198
|
)
|
(1)
Reflects the proceeds, net of $2.0 million in debt issuance costs, charged to operations, and $1.7 million of debt discount
capitalized, from the additional term loan facility discussed in Note 1.
(2)
Reflects total cash consideration transferred to Honey Birdette upon closing net of $0.4 million transaction bonuses to Honey Birdette
executives.
|
(d)
|
Represents the adjustment to intangible assets (liabilities) of Honey
Birdette based on the estimated fair value as discussed in Note 2.
|
|
(e)
|
The
pro forma tax adjustments are calculated using an estimated blended statutory rate of 27.55%
based on the predominant taxable jurisdictions of Honey Birdette.
|
|
(f)
|
The current portion of the
debt adjustment is comprised of the proceeds of the First Amendment that will be due to be
repaid within the first 12 months after issuance.
|
|
(g)
|
The non-current portion
of the debt adjustment is comprised of the proceeds of the First Amendment that will be due
to be repaid after the first 12 months after issuance, net of unamortized debt discount.
|
|
(h)
|
Represents the accrual of
additional transaction costs incurred subsequent to June 30, 2021. The remaining transaction
costs of $4.7 million are included in the historical income statement of PLBY for the six
months ended June 30, 2021. These costs will not affect PLBY’s income statement
beyond 12 months after the Acquisition Date.
|
|
(i)
|
Represents debt issuance
costs associated with the First Amendment that were expensed.
|
|
(j)
|
Represents
a step-up adjustment to inventory of Honey Birdette based on the estimated fair value as
discussed in Note 2.
|
|
(k)
|
Reflects the preliminary purchase price allocation and recognition of
goodwill based on the estimated fair value discussed in Note 2.
|
|
(l)
|
Reflects the issuance of 1,124,919 and 4,412 shares of common stock of PLBY (par value of $0.0001 per share) to Honey Birdette sellers at a price per share of $26.57 at Closing as discussed in Note 1.
|
|
(m)
|
Reflects the elimination of historical equity of Honey Birdette.
|
|
(n)
|
Represents an adjustment to derecognize certain assets and liabilities
to fair value.
|
|
(o)
|
Represents the fair value of contingent consideration in relation to
the Lock-up Shares and FY22 True-up as discussed in Note 2.
|
|
4.
|
Adjustments to
the Unaudited Pro Forma Condensed Combined Statements of Operations
|
Refer to the items below for a reconciliation of the pro forma adjustments
reflected in the unaudited pro forma condensed combined statements of operations:
|
(a)
|
Represents the unaudited historical condensed consolidated statements
of operations of PLBY for the year ended December 31, 2020 and the six months ended
June 30, 2021.
|
|
(b)
|
Represents the unaudited historical condensed consolidated statements
of operations of Honey Birdette for the 52-week period ended December 27, 2020 and the
26-week period ended June 27, 2021.
|
The pro forma adjustments included in the unaudited pro forma condensed
combined statements of operations for the year ended December 31, 2020 and the six months ended June 30, 2021 are as follows:
|
(c)
|
Represents the adjustments to record amortization expense related to
the increased basis of acquired intangible assets of Honey Birdette and unfavorable leasehold
interest liability, which have been recorded at estimated fair value on a pro forma basis
and will be amortized, on a straight-line basis, over their estimated useful lives as discussed
in Note 2.
|
|
(d)
|
Represents additional interest expense and amortization of related debt
discount associated with the borrowing of an additional $70.0 million under PLBY’s
2021 Term Credit Agreement used to partially finance the acquisition.
|
|
(e)
|
Represents the amortization
of the inventory fair value step-up adjustment.
|
|
(f)
|
Represents transaction costs
incurred subsequent to June 30, 2021 through the Acquisition Date.
|
|
(g)
|
The pro forma tax adjustments
are calculated using an estimated blended statutory rate of 27.55% based on the predominant
taxable jurisdictions of Honey Birdette.
|
|
5.
|
Adjustments to
Honey Birdette Historical Financial Statements to Conform to U.S. GAAP
|
During the preparation of these unaudited pro forma condensed combined
financial statements, management performed a preliminary analysis of Honey Birdette’s financial information to identify differences
in accounting policies as compared to those of PLBY and differences in financial statement presentation as compared to the presentation
of PLBY, including certain adjustments and reclassifications to conform the historical financial information of Honey Birdette from IFRS
to US GAAP and to translate the financial statements from AUD to USD.
Following the acquisition, PLBY will perform a detailed review of
Honey Birdette’s accounting policies. As a result of that review, PLBY may identify differences between the accounting policies
of PLBY and Honey Birdette that, when conformed, could have a material impact on the consolidated financial statements of the combined
company. At this time, PLBY is not aware of any significant accounting policy differences.
Honey Birdette Pro Forma Condensed Balance
Sheet
As of June 27, 2021
(in thousands)
|
|
Historical
Honey Birdette
(AUD)
|
|
|
IFRS to U.S.
GAAP and
Reclassification
Adjustments
(AUD)
|
|
|
Notes
|
|
Historical
Adjusted
Honey Birdette
(AUD)
|
|
|
Historical
Adjusted
Honey Birdette
(USD)
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
5,211
|
|
|
$
|
(2
|
)
|
|
5(e)
|
|
$
|
5,209
|
|
|
$
|
3,956
|
|
Trade and other receivables/Receivables, net of allowance for doubtful accounts
|
|
|
1,763
|
|
|
|
—
|
|
|
|
|
|
1,763
|
|
|
|
1,339
|
|
Inventories/Inventories, net
|
|
|
10,481
|
|
|
|
(1
|
)
|
|
5(e)
|
|
|
10,480
|
|
|
|
7,959
|
|
Other current assets/Prepaid expenses and other current assets
|
|
|
2,908
|
|
|
|
—
|
|
|
|
|
|
2,908
|
|
|
|
2,208
|
|
Total current assets
|
|
|
20,363
|
|
|
|
(3
|
)
|
|
|
|
|
20,360
|
|
|
|
15,462
|
|
Property, plant and equipment/Property and equipment, net
|
|
|
7,022
|
|
|
|
1
|
|
|
5(e)
|
|
|
7,023
|
|
|
|
5,333
|
|
Intangible assets/Intangible assets, net
|
|
|
54
|
|
|
|
—
|
|
|
|
|
|
54
|
|
|
|
41
|
|
Right-of-use asset
|
|
|
13,891
|
|
|
|
(13,891
|
)
|
|
5(b)i, 5(b)iv
|
|
|
—
|
|
|
|
—
|
|
Deferred tax assets
|
|
|
803
|
|
|
|
(803
|
)
|
|
5(d)
|
|
|
—
|
|
|
|
—
|
|
Other noncurrent assets
|
|
|
—
|
|
|
|
802
|
|
|
5(d)
|
|
|
802
|
|
|
|
609
|
|
Total assets
|
|
$
|
42,133
|
|
|
$
|
(13,894
|
)
|
|
|
|
$
|
28,239
|
|
|
$
|
21,445
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other payables/Accounts payable
|
|
$
|
14,886
|
|
|
$
|
(10,187
|
)
|
|
5(d)
|
|
$
|
4,699
|
|
|
$
|
3,568
|
|
Lease liabilities
|
|
|
5,242
|
|
|
|
(5,242
|
)
|
|
5(b)i
|
|
|
—
|
|
|
|
—
|
|
Current tax liabilities
|
|
|
2,246
|
|
|
|
(2,246
|
)
|
|
5(d)
|
|
|
—
|
|
|
|
—
|
|
Employee benefits/Accrued salaries, wages, and employee benefits
|
|
|
677
|
|
|
|
891
|
|
|
5(d)
|
|
|
1,568
|
|
|
|
1,191
|
|
Provisions
|
|
|
1,120
|
|
|
|
(1,120
|
)
|
|
5(d)
|
|
|
—
|
|
|
|
—
|
|
Deferred revenues, current portion
|
|
|
—
|
|
|
|
485
|
|
|
5(d)
|
|
|
485
|
|
|
|
368
|
|
Other current liabilities and accrued expenses
|
|
|
—
|
|
|
|
12,687
|
|
|
5(b)ii, 5(d)
|
|
|
12,687
|
|
|
|
9,635
|
|
Total current liabilities
|
|
|
24,171
|
|
|
|
(4,732
|
)
|
|
|
|
|
19,439
|
|
|
|
14,762
|
|
Lease liabilities
|
|
|
10,259
|
|
|
|
(10,259
|
)
|
|
5(b)i
|
|
|
—
|
|
|
|
—
|
|
Employee benefits
|
|
|
39
|
|
|
|
(39
|
)
|
|
5(d)
|
|
|
—
|
|
|
|
—
|
|
Provisions
|
|
|
363
|
|
|
|
(363
|
)
|
|
5(d)
|
|
|
—
|
|
|
|
—
|
|
Deferred tax liabilities, net
|
|
|
570
|
|
|
|
(570
|
)
|
|
5(d)
|
|
|
—
|
|
|
|
—
|
|
Other noncurrent liabilities
|
|
|
—
|
|
|
|
503
|
|
|
5(b)ii
|
|
|
1,477
|
|
|
|
1,122
|
|
|
|
|
—
|
|
|
|
974
|
|
|
5(d)
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
35,402
|
|
|
|
(14,486
|
)
|
|
|
|
|
20,916
|
|
|
|
15,884
|
|
Stockholders’ equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share Capital/Common stock
|
|
|
1
|
|
|
|
(1
|
)
|
|
5(d)
|
|
|
—
|
|
|
|
—
|
|
Retained Earnings/Accumulated deficit
|
|
|
7,192
|
|
|
|
131
|
|
|
5(b)i, 5(b)ii, 5(b)iv, 5(d)
|
|
|
7,323
|
|
|
|
5,561
|
|
Foreign currency translation reserve
|
|
|
(462
|
)
|
|
|
462
|
|
|
5(d)
|
|
|
—
|
|
|
|
—
|
|
Total stockholders’ equity
|
|
|
6,731
|
|
|
|
592
|
|
|
|
|
|
7,323
|
|
|
|
5,561
|
|
Total liabilities, redeemable noncontrolling interest, and stockholders’ equity
|
|
$
|
42,133
|
|
|
$
|
(13,894
|
)
|
|
|
|
$
|
28,239
|
|
|
$
|
21,445
|
|
Honey Birdette Pro Forma Condensed Income Statement
26-Week Period Ended June 27, 2021
(in thousands)
|
|
Historical
Honey
Birdette
(AUD)
|
|
|
IFRS to U.S.
GAAP and
Reclassification
Adjustments (AUD)
|
|
|
Notes
|
|
|
Historical
Adjusted
Honey Birdette
(AUD)
|
|
|
Historical
Adjusted
Honey Birdette
(USD)
|
|
Net revenues
|
|
$
|
49,132
|
|
|
|
|
|
|
|
|
|
|
$
|
49,132
|
|
|
$
|
37,900
|
|
Costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
(10,268
|
)
|
|
|
–
|
|
|
|
|
|
|
|
(10,268
|
)
|
|
|
(7,921
|
)
|
Selling and administrative expenses
|
|
|
(21,351
|
)
|
|
|
(788
|
)
|
|
|
5(b)ii, 5(b)iii, 5(b)iv, 5(b)vi
|
|
|
|
(22,139
|
)
|
|
|
(17,078
|
)
|
Total costs and expenses
|
|
|
(31,619
|
)
|
|
|
(788
|
)
|
|
|
|
|
|
|
(32,407
|
)
|
|
|
(24,999
|
)
|
Operating income (loss)
|
|
|
17,513
|
|
|
|
(788
|
)
|
|
|
|
|
|
|
16,725
|
|
|
|
12,901
|
|
Nonoperating income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(351
|
)
|
|
|
347
|
|
|
|
5(b)v
|
|
|
|
(4
|
)
|
|
|
(3
|
)
|
Loss on extinguishment of debt
|
|
|
–
|
|
|
|
–
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
Other (expense) income, net
|
|
|
128
|
|
|
|
–
|
|
|
|
|
|
|
|
128
|
|
|
|
99
|
|
Total nonoperating (expense) income
|
|
|
(223
|
)
|
|
|
347
|
|
|
|
|
|
|
|
124
|
|
|
|
96
|
|
Income before income taxes
|
|
|
17,290
|
|
|
|
(441
|
)
|
|
|
|
|
|
|
16,849
|
|
|
|
12,997
|
|
Benefit (expense) from income taxes
|
|
|
(3,868
|
)
|
|
|
7
|
|
|
|
5(c)
|
|
|
|
(3,861
|
)
|
|
|
(2,978
|
)
|
Net income
|
|
$
|
13,422
|
|
|
$
|
(434
|
)
|
|
|
|
|
|
$
|
12,988
|
|
|
$
|
10,019
|
|
Honey Birdette Pro Forma Condensed Income Statement
52-Week Period Ended December 27, 2020
(in thousands)
|
|
Historical
Honey
Birdette (AUD)
|
|
|
IFRS to U.S. GAAP
and Reclassification
Adjustments (AUD)
|
|
|
Notes
|
|
|
Historical Adjusted
Honey Birdette
(AUD)
|
|
|
Historical Adjusted
Honey Birdette
(USD)
|
|
Net revenues
|
|
$
|
78,024
|
|
|
|
|
|
|
|
|
|
|
$
|
78,024
|
|
|
$
|
53,862
|
|
Costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
–
|
|
|
|
–
|
|
Cost of sales
|
|
|
(21,401
|
)
|
|
|
–
|
|
|
|
|
|
|
|
(21,401
|
)
|
|
|
(14,774
|
)
|
Selling and administrative expenses
|
|
|
(36,982
|
)
|
|
|
(253
|
)
|
|
|
5(b)ii, 5(b)iii, 5(b)iv, 5(b)vi
|
|
|
|
(37,235
|
)
|
|
|
(25,704
|
)
|
Loss on disposals of assets
|
|
|
(121
|
)
|
|
|
–
|
|
|
|
|
|
|
|
(121
|
)
|
|
|
(84
|
)
|
Total costs and expenses
|
|
|
(58,504
|
)
|
|
|
(253
|
)
|
|
|
|
|
|
|
(58,757
|
)
|
|
|
(40,562
|
)
|
Operating income (loss)
|
|
|
19,520
|
|
|
|
(253
|
)
|
|
|
|
|
|
|
19,267
|
|
|
|
13,300
|
|
Nonoperating income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income
|
|
|
1
|
|
|
|
–
|
|
|
|
|
|
|
|
1
|
|
|
|
1
|
|
Interest expense
|
|
|
(1,253
|
)
|
|
|
1,253
|
|
|
|
5(b)v
|
|
|
|
–
|
|
|
|
–
|
|
Other income, net
|
|
|
1,913
|
|
|
|
–
|
|
|
|
|
|
|
|
1,913
|
|
|
|
1,321
|
|
Total nonoperating income
|
|
|
661
|
|
|
|
1,253
|
|
|
|
|
|
|
|
1,914
|
|
|
|
1,322
|
|
Income (loss) before provision for income taxes
|
|
|
20,181
|
|
|
|
1,000
|
|
|
|
|
|
|
|
21,181
|
|
|
|
14,622
|
|
Provision for income taxes
|
|
$
|
(6,756
|
)
|
|
$
|
(10
|
)
|
|
|
5(c)
|
|
|
$
|
(6,766
|
)
|
|
$
|
(4,671
|
)
|
Net income
|
|
|
13,425
|
|
|
|
990
|
|
|
|
|
|
|
|
14,415
|
|
|
|
9,951
|
|
|
(a)
|
The historical pro forma condensed balance sheet and condensed income
statements, each initially reported in AUD, were translated into USD using the following
historical foreign exchange rates:
|
|
|
AUD/USD
|
Period end exchange rate as of June 27, 2021
|
|
0.7594
|
Average exchange rate for the 52-week period ended December 27, 2020
|
|
0.6903
|
Average exchange rate for the 26-week period ended June 27, 2021
|
|
0.7714
|
|
(b)
|
Lease
accounting: Honey Birdette accounts for all leases as finance leases under IFRS 16 whereas
under U.S. GAAP, leases are classified as either finance or operating. Additionally, PLBY
currently accounts for its leases under ASC 840 whereby operating leases are not recognized
on the balance sheet. As a result, the following adjustments were made to convert Honey Birdette’s
consolidated balance sheet and income statements from IFRS to U.S. GAAP:
|
|
(i)
|
Noncurrent assets, current liabilities and other noncurrent liabilities were reduced by the carrying amount of the finance lease right of use assets and finance lease liabilities, respectively. The net difference between the right of use assets and liabilities was recorded as an adjustment to accumulated deficit.
|
|
(ii)
|
Deferred rent was recorded for operating leases within other current
and noncurrent liabilities under U.S. GAAP.
|
|
(iii)
|
Depreciation expense on the right of use assets was reversed due to
such assets being derecognized under U.S. GAAP.
|
|
(iv)
|
Previously recorded impairment on the right of use assets was reversed
due to such assets being derecognized under U.S. GAAP.
|
|
(v)
|
Interest expense related to the lease liability was reversed due to
the derecognition of the lease liability under U.S. GAAP.
|
|
(vi)
|
Straight-line rent expense was recorded for all operating leases under
U.S. GAAP.
|
|
(c)
|
Represents the tax impact of all U.S. GAAP conversion adjustments above.
|
|
(d)
|
Represents a reclassification to conform to PLBY’s presentation.
|
|
(e)
|
Represents adjustments due to differences in foreign currency translation
rates used between Honey Birdette and PLBY.
|