20-F 1 form20-f.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark One)

[ ] | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
[X] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended January 31, 2019

OR

[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

[ ] | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report ____________

Commission File Number 001-38544

NAKED BRAND GROUP LIMITED

(Exact name of registrant as specified in its charter)

N/A

(Translation of Registrant’s name into English)

Australia

(Jurisdiction of incorporation or organization)

c/o Bendon Limited

Building 7B, Huntley Street

Alexandria

NSW 2015, Australia

+61 2 9384 2400

(Address of principal executive offices)

Justin Davis-Rice, Executive Chairman

c/o Bendon Limited

Building 7B, Huntley Street

Alexandria

NSW 2015, Australia

+61 2 9384 2400

(Name, telephone, e-mail and/or facsimile number and address of Company contact person)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class |  | Name of each exchange on which registered
Ordinary Shares |  | The Nasdaq Capital Market

Securities registered pursuant to Section 12(g) of the Act:

None

(Title of class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

(Title of class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: At June 12, 2019, 59,487,636 ordinary shares were issued and outstanding.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [ ] No [X]

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934.

Yes [ ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

| Large accelerated filer [ ] | Accelerated filer [ ] | Non-accelerated filer [X]
|  |  | Emerging growth company [X]

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, 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. [ ]

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

| U.S. GAAP [ ] | International Financial Reporting Standards as issued by the International Accounting Standards Board | [X] | Other [ ]

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 [ ] Item 18 [ ]

If this report is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [X]

NAKED BRAND GROUP LIMITED

TABLE OF CONTENTS

INTRODUCTION | 1
TRADEMARKS AND SERVICE MARKS | 1
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS | 1
NON-IFRS FINANCIAL MEASURES | 3
PART I | 4
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS | 4
ITEM 2. OFFER STATISTICS AND EXPECTED TIME TABLE | 4
ITEM 3. KEY INFORMATION | 4
ITEM 4. INFORMATION ON THE COMPANY | 17
ITEM 4A. UNRESOLVED STAFF COMMENTS | 27
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS | 27
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES | 54
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS | 57
ITEM 8. FINANCIAL INFORMATION | 61
ITEM 9. THE OFFER AND LISTING | 61
ITEM 10. ADDITIONAL INFORMATION | 62
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 73
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES | 74
PART II | 74
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES | 74
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS | 74
ITEM 15. CONTROLS AND PROCEDURES | 74
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT | 76
ITEM 16B. CODE OF ETHICS | 76
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES | 76
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES | 77
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS | 77
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT | 77
ITEM 16G. CORPORATE GOVERNANCE | 77
ITEM 16H. MINE SAFETY DISCLOSURE | 77
PART III | 78
ITEM 17. FINANCIAL STATEMENTS | 78
ITEM 18. FINANCIAL STATEMENTS | 78
ITEM 19. EXHIBITS | 78

| i |

INTRODUCTION

Unless otherwise indicated, all references in this Annual Report on Form 20-F to “we,” “our,” “us,” the “Company,” “Naked” or similar terms refer to Naked Brand Group Limited and its consolidated subsidiaries. We publish our consolidated financial statements in New Zealand dollars. In this Annual Report, unless otherwise specified, all monetary amounts are in New Zealand dollars, and all references to “$,” “NZD$,” and “dollars” mean New Zealand dollars, unless otherwise indicated.

This Annual Report on Form 20-F (this “Annual Report”) contains our audited consolidated financial statements and related notes for the years ended January 31, 2019 and 2018, the seven month period ended January 31, 2017 and the year ended June 30, 2016 (“Audited Consolidated Financial Statements”). Our Audited Annual Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”).

On June 19, 2018, we consummated the transactions contemplated by that certain Agreement and Plan of Reorganization, dated as of May 25, 2017 and amended on July 26, 2017, February 21, 2018, March 19, 2018 and April 23, 2018 (the “Merger Agreement”), by and among our company, Naked Brand Group Inc., a Nevada corporation (“Naked (NV)”), Bendon Limited, a New Zealand limited company (“Bendon Limited”), Naked Merger Sub Inc., a Nevada corporation and a wholly owned subsidiary of ours (“Merger Sub”) and Bendon Investments Ltd., a New Zealand company and at the time the owner of a majority of the outstanding shares of Bendon Limited (the “Principal Shareholder”).

Pursuant to the Merger Agreement, (i) we undertook a reorganization (the “Reorganization”) pursuant to which all of the shareholders of Bendon Limited exchanged all of the outstanding ordinary shares of Bendon Limited (the “Bendon Ordinary Shares”) for our ordinary shares (“Naked Ordinary Shares”), and (ii) immediately thereafter, the parties effectuated a merger of Merger Sub and Naked (NV), with Naked (NV) surviving as a wholly owned subsidiary of ours and the Naked (NV) stockholders receiving Naked Ordinary Shares in exchange for all of the outstanding shares of common stock of Naked (NV) (the “Merger” and together with the Reorganization, the “Transactions”).

As a result of the Transactions, Bendon Limited and Naked (NV) became our wholly owned subsidiaries and the shareholders of Bendon Limited and the stockholders of Naked (NV) became shareholders of ours.

TRADEMARKS AND SERVICE MARKS

This Annual Report contains references to a number of trademarks which are our registered trademarks or trademarks for which we have pending applications or common law rights. Our major trademarks include, among others, the “Naked” trademark, the Heidi Klum trademarks, Frederick’s of Hollywood trademarks and other related trademarks.

Solely for convenience, the trademarks, service marks and trade names referred to in this Annual Report are listed without the ®, (sm) and (TM) symbols, but we will assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks and trade names.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report contains forward-looking statements. Forward-looking statements include all statements that are not historical facts. Forward-looking statements can be identified by words such as “anticipate,” “believe,” “envision,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” “contemplate” and other similar expressions, although not all forward-looking statements contain these identifying words. They appear in a number of places throughout this Annual Report and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate. Forward-looking statements contained in this Annual Report include, among other things, statements relating to:

| ● | expectations regarding industry trends and the size and growth rates of addressable markets;

| 1 |

| ● | our business plan and our growth strategies, including plans for expansion to new markets and new products; and
| ● | expectations for seasonal trends.

These statements are not assurances of future performance. Instead, they are based on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, and other future conditions. Although we base the forward-looking statements contained in this Annual Report on assumptions that we believe are reasonable, we caution you that actual results and developments (including our results of operations, financial condition and liquidity, and the development of the industry in which we operate) may differ materially from those made in or suggested by the forward-looking statements contained in this Annual Report. In addition, even if results and developments are consistent with the forward-looking statements contained in this Annual Report, those results and developments may not be indicative of results or developments in subsequent periods. Certain assumptions made in preparing the forward-looking statements contained in this Annual Report include:

| ● | our ability to implement our growth strategies;
| ● | our ability to maintain good business relationships with our suppliers, wholesalers and distributors;
| ● | our ability to keep pace with changing consumer preferences;
| ● | our ability to protect our intellectual property; and
| ● | the absence of material adverse changes in our industry or the global economy.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We believe that these risks and uncertainties include, but are not limited to, those described in Item 3.D of this Annual Report, “Risk Factors,” which include, but are not limited to, the following risks:

| ● | we may be unable to raise any necessary capital;
| ● | we may be unable to maintain the strength of our brand or to expand our brand to new products and geographies;
| ● | we may be unable to protect or preserve our brand image and proprietary rights;
| ● | we may not be able to satisfy changing consumer preferences;
| ● | an economic downturn may affect discretionary consumer spending;
| ● | we may not be able to compete in our markets effectively;
| ● | we may not be able to manage our growth effectively;
| ● | poor performance during our peak season may affect our operating results for the full year;
| ● | our indebtedness may adversely affect our financial condition;
| ● | our ability to maintain relationships with our select number of suppliers;
| ● | our ability to manage our product distribution through our retail partners and international distributors;
| ● | the success of our marketing programs;

| 2 |

| ● | the risk our business is interrupted because of a disruption at our headquarters; and
| ● | fluctuations in raw materials costs or currency exchange rates.

Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. As a result, any, or all of our forward-looking statements in this Annual Report may turn out to be inaccurate. We have included important factors in the cautionary statements included in this Annual Report, particularly in Item 3.D of this Annual Report, “Risk Factors,” that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not rely on our forward-looking statements. Moreover, we operate in a highly competitive and rapidly changing environment in which new risks often emerge. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make.

You should read this Annual Report and the documents that we reference herein and have filed as exhibits hereto completely and with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements contained herein are made as of the date of this Annual Report, and we do not assume any obligation to update any forward-looking statements except as required by applicable law.

NON-IFRS FINANCIAL MEASURES

This document includes “non-IFRS financial measures,” that is, financial measures that either exclude or include amounts that are not excluded or included in the most directly comparable measure calculated and presented in accordance with IFRS. Specifically, we make use of the non-IFRS measures “EBITDA.”

EBITDA is defined as earnings before interest, taxes, depreciation, depletion, amortization and impairment. Our management uses EBITDA as a measure of our operating results and considers it to be a meaningful supplement to net income as a performance measurement, primarily because we incur significant depreciation and depletion and the exclusion of impairment losses in EBITDA eliminates the non-cash impact.

EBITDA is used by investors and analysts for the purpose of valuing an issuer. The intent of EBITDA is to provide additional useful information to investors and the measure does not have any standardized meaning under IFRS. Accordingly, this measure should not be considered in isolation or used in substitute for measures of performance prepared in accordance with IFRS. Other companies may calculate EBITDA differently. For a reconciliation of net income from continuing operations to EBITDA, please see Item 5 of this Annual Report, “Operating and Financial Review and Prospects – Results of Operations.”

| 3 |

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIME TABLE

Not applicable.

ITEM 3. KEY INFORMATION

A. | Selected Financial Data

The selected statement of operations data set forth below for the years ended January 31, 2019 and 2018, the seven month period ended January 31, 2017 and the year ended June 30, 2016, and the selected balance sheet data as at January 31, 2019, 2018 and 2017 and June 30, 2016, has been derived from our audited consolidated financial statements prepared and presented in accordance with IFRS, which are included in this Annual Report. The selected financial information set forth below for the year ended January 31, 2017 has been derived from unaudited consolidated financial information that is not included in this Annual Report.

The selected financial information below is only a summary and should be read in conjunction with our audited financial statements and notes thereto contained elsewhere herein. The financial results should not be construed as indicative of financial results for subsequent periods. See Item 5 of this Form 20-F and the financial statements and the accompanying notes thereto included under Item 18 of this Form 20-F for further information about our financial results and condition.

Naked Brand Group Limited Financial Information as prepared under IFRS and in New Zealand Dollars (NZ$)

Consolidated Statement of Operations Data:

|  |  |  |  |  |  |  | Unaudited |  |  |  |  |  |  |  |  |  |
|  | Jan. 31, |  |  | Jan. 31, |  |  | Jan. 31, |  |  | Jan. 31, |  |  | June 30, |  |  | June 30, |
|  | 2019 |  |  | 2018 |  |  | 2017 |  |  | 2017 |  |  | 2016 |  |  | 2015 |
|  | NZ$000 |  |  | NZ$000 |  |  | NZ$000 |  |  | NZ$000 |  |  | NZ$000 |  |  | NZ$000 |
|  | 12 months |  |  | 12 months |  |  | 12 months |  |  | 7 months |  |  | 12 months |  |  | 12 months |
Revenue |  |  | 111,920 |  |  |  | 131,388 |  |  |  | 152,144 |  |  |  | 96,284 |  |  |  | 151,000 |  |  |  | 138,838 |
Cost of goods sold |  |  | (74,480 | ) |  |  | (87,459 | ) |  |  | (84,358 | ) |  |  | (57,144 | ) |  |  | (83,525 | ) |  |  | (79,031 | )
Gross profit |  |  | 37,440 |  |  |  | 43,929 |  |  |  | 67,786 |  |  |  | 39,140 |  |  |  | 67,475 |  |  |  | 59,807 |
Brand management |  |  | (49,256 | ) |  |  | (53,653 | ) |  |  | (53,957 | ) |  |  | (32,040 | ) |  |  | (48,362 | ) |  |  | (42,203 | )
Administrative expenses |  |  | (3,432 | ) |  |  | (4,131 | ) |  |  | (3,712 | ) |  |  | (2,383 | ) |  |  | (4,090 | ) |  |  | (4,691 | )
Corporate expenses |  |  | (14,145 | ) |  |  | (12,851 | ) |  |  | (12,920 | ) |  |  | (8,082 | ) |  |  | (13,002 | ) |  |  | (13,940 | )
Finance expense |  |  | (4,041 | ) |  |  | (8,791 | ) |  |  | (11,214 | ) |  |  | (6,238 | ) |  |  | (10,409 | ) |  |  | (5,870 | )
Brand transition, restructure and transaction expenses |  |  | (10,075 | ) |  |  | (3,272 | ) |  |  | (2,430 | ) |  |  | (1,321 | ) |  |  | (2,232 | ) |  |  | (12,182 | )
Impairment expense |  |  | (8,173 | ) |  |  | (1,914 | ) |  |  | (2,865 | ) |  |  | (292 | ) |  |  | (2,157 | ) |  |  | 0 |
Other foreign currency gains/(losses) |  |  | 1,963 |  |  |  | 757 |  |  |  | (14,327 | ) |  |  | (3,306 | ) |  |  | (2,423 | ) |  |  | 4,700 |
Fair value gain/(loss) on convertible notes derivative |  |  | (775 | ) |  |  | 2,393 |  |  |  | (592 | ) |  |  | (592 | ) |  |  | 0 |  |  |  | 0 |
Loss before income tax |  |  | (50,494 | ) |  |  | (37,533 | ) |  |  | (34,230 | ) |  |  | (15,114 | ) |  |  | (15,200 | ) |  |  | (14,379 | )
Income tax benefit/(expense) |  |  | 1,274 |  |  |  | (60 | ) |  |  | (6,123 | ) |  |  | (865 | ) |  |  | (5,546 | ) |  |  | 1,274 |
Loss for the period |  |  | (49,220 | ) |  |  | (37,593 | ) |  |  | (40,352 | ) |  |  | (15,979 | ) |  |  | (20,746 | ) |  |  | (13,105 | )
Other comprehensive loss |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Exchange differences on translation of foreign operations |  |  | (7 | ) |  |  | 148 |  |  |  | 384 |  |  |  | (29 | ) |  |  | 31 |  |  |  | (93 | )
Total comprehensive loss for the period |  |  | (49,227 | ) |  |  | (37,445 | ) |  |  | (39,968 | ) |  |  | (16,008 | ) |  |  | (20,715 | ) |  |  | (13,198 | )
Loss per share for loss from continuing operations attributable to the ordinary equity holders of the company: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic loss per share (NZ$)* |  |  | (2.01 | ) |  |  | (1.79 | ) |  |  | (2.06 | ) |  |  | (0.82 | ) |  |  | (1.13 | ) |  |  | (0.72 | )
Diluted loss per share (NZ$)* |  |  | (2.01 | ) |  |  | (1.79 | ) |  |  | (2.06 | ) |  |  | (0.82 | ) |  |  | (1.13 | ) |  |  | (0.72 | )

| 4 |

*A stock reorganization occurred on June 19, 2018 upon completion of the merger between Naked (NV) and Bendon Limited. As a result, the calculation of basic and diluted earnings per share for 2018, 2017 and 2016 has been adjusted retrospectively. The number of ordinary shares outstanding has been adjusted to reflect the proportionate change in the number of shares. See note 23 of our audited consolidated financial statements for further information.

Consolidated Balance Sheet Data:

|  | January 31, |  |  | January 31, |  |  | January 31, |  |  | June 30, |  |  | June 30, |
|  | 2019 |  |  | 2018 |  |  | 2017 |  |  | 2016 |  |  | 2015 |
|  | NZ$000 |  |  | NZ$000 |  |  | NZ$000 |  |  | NZ$000 |  |  | NZ$000 |
Cash and cash equivalents |  |  | 1,962 |  |  |  | 10,739 |  |  |  | 2,645 |  |  |  | 4,193 |  |  |  | 1,246 |
Working capital |  |  | (29,426 | ) |  |  | (20,752 | ) |  |  | (19,644 | ) |  |  | (19,987 | ) |  |  | (24,067 | )
Total assets |  |  | 75,687 |  |  |  | 88,096 |  |  |  | 101,232 |  |  |  | 95,591 |  |  |  | 99,849 |
Borrowings |  |  | 20,967 |  |  |  | 52,121 |  |  |  | 68,998 |  |  |  | 77,593 |  |  |  | 56,273 |
Total shareholders’ equity |  |  | 10,519 |  |  |  | (5,710 | ) |  |  | (9,044 | ) |  |  | (17,876 | ) |  |  | 2,839 |

Unless otherwise noted, all translations from U.S. dollars to New Zealand dollars in this Form 20-F were made at the closing rate as at January 31, 2019 of NZ$1 = US$0.69. We make no representation that any New Zealand dollars or U.S. dollar amounts could have been, or could be, converted into U.S. dollar or New Zealand dollars, as the case may be, at any particular rate, at the rates stated below, or at all.

B. | Capitalization and Indebtedness

Not applicable.

C. | Reasons for the Offer and Use of Proceeds

Not applicable.

D. | Risk Factors

Risks Related to Our Business and Operations

We have a history of operating losses that may continue into the foreseeable future.

We have a history of operating losses and negative cash flow that may continue into the foreseeable future. If we fail to execute our strategy to achieve and maintain profitability in the future, investors could lose confidence in the value of our Ordinary Shares, which could cause our share price to decline and adversely affect our ability to raise additional capital. Investors should evaluate an investment in our company in light of this.

If we are unable to obtain additional financing on acceptable terms, we may have to curtail our growth or cease our development plans and operations.

The operation of our business and our growth efforts will require significant cash outlays. We are largely dependent on outside capital to implement our business plan and support our operations. We anticipate for the foreseeable future that cash on hand and cash generated from operations will not be sufficient to meet our cash requirements, and that we will need to raise additional capital through investments to fund our operations and growth. We cannot assure you that we will be able to raise additional capital as needed on terms acceptable to us, if at all. If we are unable to raise capital as needed, we may be required to reduce the scope of our growth efforts, which could harm our business plans, financial condition and operating results, or cease our operations entirely, in which case, you may lose all your investment. Financings, including future equity investments, if obtained, may be on terms that are dilutive to our stockholders, and the prices at which new investors would be willing to purchase our securities may be lower than the price at which you purchase your shares. Furthermore, the terms of securities issued in a financing, if obtained, may be more favorable for new investors.

| 5 |

Investors should be aware that the value of an investment in our company may go down as well as up. In addition, there can be no certainty that the market value of an investment in our company will fully reflect its underlying value.

The auditors’ report on our consolidated financial statements included an explanatory paragraph regarding there being substantial doubt about the ability to continue as a going concern.

For the financial year ended January 31, 2019, we experienced a loss after income tax from continuing operations of $49.2m and operating cash outflows of $9.4m. We also are in a net current liability position of $29.4m and a positive net asset position of $10.5m. We anticipate we will need to continue to fund losses through to the start of the fiscal year beginning February 1, 2021. We also have trade creditors that are trading beyond their original credit terms and have breached the loan covenants of our credit facility during our fiscal year ended January 31, 2019. The lender has extended our credit facility from being due on June 30, 2019 to August 31, 2019 to provide us and the lender time to consider a refinance of the facility to a longer term to assist us to continue as a going concern. Therefore, there is substantial doubt about our ability to continue operations in the future as a going concern, as noted by our auditors with respect to the consolidated financial statements for the periods ended January 31, 2019. Although our consolidated financial statements raise substantial doubt about our ability to continue as a going concern, they do not reflect any adjustments that might result if we are unable to continue our business. If we cannot continue as a viable entity, our shareholders may lose all of their investment in our company.

We have a concentration of sales to key customers and any substantial reduction in sales to these customers would have a material adverse effect on our business.

During the twelve month period ended January 31, 2019 sales were concentrated with Myer, Farmers, Woolworths and David Jones accounting for 9%, 5%, 1% and 1%, respectively. During the twelve month period ended January 31, 2018, sales were concentrated with Myer, Farmers and Woolworths accounting for 7%, 6% and 2% respectively. During the twelve month period ended January 31, 2017, sales were concentrated with Myer, Farmers and Woolworths accounting for 10%, 7%, 5% and 2%, respectively.

Our results of operations would be materially adversely affected if these relationships ceased. Although we have diversified our customers and continue to receive increasing sales orders from existing customers, these customers do not have any ongoing purchase commitment agreement with us; therefore, we cannot guarantee that the volume of sales will remain consistent going forward. Any substantial change in purchasing decisions by these customers, whether due to actions by our competitors, industry factors or otherwise, could have a material adverse effect on our business and our financial condition.

Our customers generally purchase our products on credit, and as a result, our results of operations and financial condition may be adversely affected if our customers experience financial difficulties.

During the past several years, various retailers, including some of our largest customers, have experienced significant difficulties, including restructurings, bankruptcies and liquidations. This could adversely affect us because our customers generally pay us after goods are delivered. Adverse changes in our customers’ financial position could cause us to limit or discontinue business with that customer, require us to assume more credit risk relating to that customer’s future purchases or limit our ability to collect accounts receivable relating to previous purchases by that customer, all of which could have a material adverse effect on our business, results of operations and financial condition.

We operate in a highly competitive market and the size and resources of some of our competitors may allow them to compete more effectively than we can, resulting in a loss of our market share and a decrease in our net revenue and profitability.

The market for intimate apparel products is highly competitive. Competition may result in pricing pressures, reduced profit margins or lost market share or a failure to grow our market share, any of which could substantially harm our business and results of operations. We compete directly against wholesalers and direct retailers of intimate apparel products, including large, diversified companies with substantial market share and strong worldwide brand recognition, such as L Brands Inc., Hanesbrands Inc. and PVH Corp., whose brands include Victoria’s Secrets, Calvin Klein, Maidenform, Bonds and others. Many of our competitors have significant competitive advantages, including longer operating histories, larger and broader customer bases, more established relationships with a broader set of suppliers, greater brand recognition and greater financial, research and development, marketing, distribution and other resources than we do. Our competitors may be able to achieve and maintain brand awareness and market share more quickly and effectively than we can. Many of our competitors promote their brands through traditional forms of advertising, such as print media and television commercials, and through celebrity endorsements, and have greater and substantial resources to devote to such efforts. Our competitors may also create and maintain brand awareness using traditional forms of advertising more quickly than we can. Our competitors may also be able to increase sales in their new and existing markets faster than we can by emphasizing different distribution channels than we do, such as catalog sales or an extensive franchise network, as opposed to distribution through retail stores, wholesale or internet, and many of our competitors have substantial resources to devote toward increasing sales in such ways.

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If we are unable to anticipate consumer preferences and successfully develop and introduce new, innovative and updated products, we may not be able to maintain or increase our sales and profitability.

Our success depends on our ability to identify and originate product trends as well as to anticipate and react to changing consumer demands in a timely manner. All of our products are subject to changing consumer preferences that cannot be predicted with certainty. We may be unable to introduce new products in a timely manner. Our customers may not accept our new products including our recently launched women’s products, or our competitors may introduce similar products in a more timely fashion. Failure to anticipate and respond in a timely manner to changing consumer preferences could lead to, among other things, lower sales and excess inventory levels. Even if we are successful in anticipating consumer preferences, our ability to adequately react to and address those preferences will in part depend upon our continued ability to develop and introduce innovative, high-quality products. Our failure to effectively introduce new products that are accepted by consumers could have a material adverse effect on our financial condition.

Our net sales, profit results and cash flows are sensitive to, and may be affected by, general economic conditions, consumer confidence, spending patterns, weather or other market disruptions.

Our net sales, profit, cash flows and future growth may be affected by negative local, regional, national or international political or economic trends or developments that reduce the consumers’ ability or willingness to spend on discretionary products, including the effects of general economic conditions, employment, consumer debt, changes in personal net worth based on changes in securities market price levels, residential real estate and mortgage markets, taxation, healthcare costs, fuel and energy prices, interest rates, credit availability, consumer confidence and other macroeconomic factors, and national and international security concerns such as war, terrorism or the threat thereof. In addition, market disruptions due to severe weather conditions, natural disasters, health hazards or other major events or the prospect of these events could also impact discretionary consumer spending and confidence levels.

The worldwide apparel industry is heavily influenced by general economic cycles. Apparel retailing is a cyclical industry that is heavily dependent upon the overall level of consumer spending. Purchases of specialty apparel and related goods tend to be highly correlated with the cycles of the levels of disposable income of consumers. As a result, purchases of women’s intimate and other apparel, beauty and personal care products and accessories often decline during periods when economic or market conditions are unsettled or weak. Downturns, or the expectation of a downturn, in general economic conditions could materially and adversely affect consumer spending patterns. Because apparel generally is a discretionary purchase, declines in consumer spending may have a more negative effect on apparel retailers than on other retailers. A decline in consumer spending may negatively affect our profitability, because, in such circumstances, our sales may decrease and we may increase the number of promotional sales, either of which could have a material adverse effect on our results of operations, financial condition and cash flows.

The decision by the United Kingdom to leave the European Union (“Brexit”) has increased the uncertainty in the economic and political environment in Europe. In particular, our business in the United Kingdom may be adversely impacted by fluctuations in currency exchange rates, changes in trade policies, or changes in labor, immigration, tax or other laws.

Extreme weather conditions in the areas in which our stores are located, particularly in markets where we have multiple stores, could adversely affect our business. For example, heavy snowfall, rainfall or other extreme weather conditions over a prolonged period might make it difficult for our customers to travel to our stores and thereby reduce our sales and profitability.

Our financial performance may be affected by general economic conditions and financial difficulties.

Future increases in interest rates or other tightening of the credit markets, or future turmoil in the financial markets, could make it more difficult for us to access funds, to refinance our indebtedness (if necessary), to enter into agreements for new indebtedness, or to obtain funding through the issuance of our securities. Any such adverse changes in the credit or financial markets could also impact the ability of our suppliers to access liquidity, or could result in the insolvency of suppliers, which in turn could lead to their failure to deliver our merchandise. Worsening economic conditions could also result in difficulties for financial institutions (including bank failures) and other parties that we may do business with, which could potentially impair our ability to access financing under existing arrangements or to otherwise recover amounts as they become due under our other contractual arrangements. Any such events could have a material adverse effect on our results of operations, financial condition and cash flows.

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Our net sales, operating income, cash and inventory levels fluctuate on a seasonal basis.

We experience major seasonal fluctuations in our net sales and operating income, with a significant portion of our operating income typically realized during the fourth quarter holiday season. Any decrease in sales or margins during this period could have a material adverse effect on our results of operations, financial condition and cash flows.

Seasonal fluctuations also affect our cash and inventory levels, since we usually order merchandise in advance of peak selling periods and sometimes before new fashion trends are confirmed by customer purchases. We must carry a significant amount of inventory, especially before the holiday season selling period. If we are not successful in selling inventory, we may have to sell the inventory at significantly reduced prices or may not be able to sell the inventory at all, which could have a material adverse effect on our results of operations, financial condition and cash flows.

We are subject to risks associated with leasing retail space, are generally subject to long-term non-cancelable leases and are required to make substantial lease payments under our operating leases. Any failure to make these lease payments when due may lead to the landlord terminating the lease, which would harm our business, profitability and results of operations.

We do not own any of our stores, but instead lease all of our retail stores under operating leases. Our leases generally have initial terms of 5 years. All of our leases require a fixed annual rent, and some of them require the payment of additional rent if store sales exceed a negotiated amount. Most of our leases are “net” leases, which require us to pay all of the cost of insurance, taxes, maintenance and utilities, and we generally cannot cancel these leases at our option.

Our net sales depend on a volume of traffic to our stores and the availability of suitable lease space.

Most of our stores are located in retail shopping areas including malls and other types of retail centers. Sales at these stores are derived, in part, from the volume of traffic in those retail areas. Our stores benefit from the ability of the retail center and other attractions in an area, including “destination” retail stores, to generate consumer traffic in the vicinity of our stores. Sales volume and retail traffic may be adversely affected by factors that we cannot control, such as economic downturns or changes in consumer demographics in a particular area, competition from internet and other retailers and other retail areas where we do not have stores, the closing or decline in popularity of other stores in the shopping areas where our stores are located and the deterioration in the financial condition of the operators of the shopping areas or developers in which our stores are located.

Our ability to grow depends in part on new store openings and existing store remodels and expansions.

Our continued growth and success will depend in part on our ability to open and operate new stores and expand and remodel existing stores on a timely and profitable basis. Accomplishing our new and existing store expansion goals will depend upon a number of factors, including the ability to partner with developers and landlords to obtain suitable sites for new and expanded stores at acceptable costs, the hiring and training of qualified personnel and the integration of new stores into existing operations. There can be no assurance we will be able to achieve our store expansion goals, manage our growth effectively, successfully integrate the planned new stores into our operations or operate our new, remodeled and expanded stores profitably. These risks could have a material adverse effect on our ability to grow and results of operations, financial condition and cash flows.

Our planned international expansion may adversely impact our results and reputation.

We intend to further expand into international markets through partner arrangements and/or company-owned stores. The risks associated with our expansion into international markets include difficulties in attracting customers due to a lack of customer familiarity with our brands, our lack of familiarity with local customer preferences and seasonal differences in the market. Such expansions will also have upfront investment costs. If the expansion is not accompanied by sufficient revenues to achieve typical or expected operational and financial performance, it may have a material adverse effect on our results of operations and our business reputation.

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We may not select suitable business partners for our international expansion, which could have a materially adverse effect on our results of operations.

In expanding into international markets through partner arrangements, we may be exposed to risks if we fail to identify suitable business partners. For example, these third parties may be unable to meet their projections regarding store openings and sales or they may fail to maintain compliance with federal and local law. Because these parties likely will be independent contractors, certain aspects of these arrangements will be outside of our direct control. These risks could have a material adverse effect on our results of operations, financial condition and cash flows.

Our operations in international markets are subject to additional political, economic, and other risks and uncertainties that could adversely affect our business, and our exposure to such risks will increase as we expand into additional international markets.

Our operations in international markets are subject to a number of risks inherent in any business operating in multiple countries.

As we continue our international expansion, our operations will continue to encounter the following risks, among others:

| ● | Competition with new competitors or with existing competitors with an established market presence.
| ● | General economic conditions in specific countries or markets.
| ● | Volatility in the geopolitical landscape.
| ● | Restrictions on the repatriation of funds held internationally
| ● | Disruptions or delays in shipments.
| ● | Changes in diplomatic and trade relationships.
| ● | Political instability.
| ● | Foreign governmental regulation.

If any of these or other similar events should occur, it could have a material adverse effect on our results of operations, financial condition and cash flows.

We may be impacted by our ability to service or refinance our debt.

We currently have substantial indebtedness. Some of our debt agreements contain covenants which require maintenance of certain financial ratios and also, under certain conditions, restrict our ability to pay dividends, repurchase common shares and make other restricted payments as defined in those agreements. Our cash flow from operations provides the primary source of funds for our debt service payments. If our cash flow from operations declines, we may be unable to service or refinance our current debt. If we are unable to service or refinance our current debt, we may not be able to continue as a viable entity, in which case you may lose your entire investment.

If we do not comply with the terms of our existing debt agreements, and such debt agreements cannot be amended or replaced with new indebtedness, we may be in default of our obligations under such debt agreements.

Our existing debt agreements (including our credit facility and our term loan agreement) contain a number of affirmative and negative covenants and representations and warranties. We have, in the past, been required to seek waivers of compliance with, or amendments of, certain of the financial covenants in the debt agreements, and we may be required to seek such waivers or amendments in the future. Our ability to meet these financial covenants may be affected by events beyond our control, and there can be no assurance that the lenders will grant any required waivers under, or amendments to, the debt agreements if for any reason we are unable to meet the requirements of such covenants.

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If we fail to comply with covenants, representations or warranties under our debt agreements and do not either receive a waiver or amendment from our lenders or refinance the indebtedness subject to such agreements, such failure could trigger a default under our debt agreements. If we default, the lenders under those debt agreements could declare all borrowings owed to them, including accrued interest and other fees, to be due and payable, which declaration could have an adverse impact on our business and results of operations.

Our business is exposed to foreign currency exchange rate fluctuations and control regulations.

Our business has substantial international components that expose us to significant foreign exchange risk. Changes in exchange rates can impact our financial results in two ways: a translation impact and a transaction impact. The translation impact refers to the impact that changes in exchange rates can have on our financial results, as our operating results in local foreign currencies are translated into New Zealand dollars using an average exchange rate over the representative period. Accordingly, during times of a strengthening New Zealand dollar, particularly against the Australian dollar, the Euro, the British pound sterling and the U . S . dollar, our results of operations will be negatively impacted, and during times of a weakening New Zealand dollar, our results of operations will be favorably impacted.

The transaction impact on financial results is common for apparel companies operating outside the United States that purchase goods in U.S. dollars, as is the case with most of our foreign operations. During times of a strengthening U.S. dollar, our results of operations will be negatively impacted from these transactions as the increased local currency value of inventory results in higher cost of goods sold in local currency when the goods are sold, and during times of a weakening U.S. dollar, our results of operations will be favorably impacted. We also have exposure to changes in foreign currency exchange rates related to certain intercompany transactions and, to a lesser extent, SG&A expenses that are denominated in currencies other than the functional currency of a particular entity. We currently use and plan to continue to use foreign currency forward exchange contracts or other derivative instruments to mitigate the cash flow or market value risks associated with these inventory and intercompany transactions, but we are unable to entirely eliminate these risks.

We are also exposed to market risk for changes in exchange rates for the U.S. dollar in connection with our business as a licensee. Most of our license agreements require us to pay in Unites States dollars based on the exchange rate as of the last day of the contractual selling period but the sales are reported in the relevant territories’ local currencies. Thus we are exposed to exchange rate changes during and up to the last day of the selling period. In addition, we are exposed to exchange rate changes up to the date we make payment in U.S. dollars. As a result, during times of a strengthening U.S. dollar, our royalty fees will be positively impacted, and during times of a weakening U.S. dollar, our royalty fees will be negatively impacted.

We conduct business, directly or through licensees and other partners, in countries that are or have been subject to exchange rate control regulations and have, as a result, experienced difficulties in receiving payments owed to us when due, with amounts left unpaid for extended periods of time. Although the amounts to date have been immaterial to our results, as our international businesses grow and if controls are enacted or enforced in additional countries, there can be no assurance that such controls would not have a material and adverse effect on our business, financial condition or results of operations.

Our reported financial results may be adversely affected by changes in accounting principles

Generally accepted accounting principles are subject to interpretation by the SEC and the Public Company Accounting Oversight Board and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported financial results, and could affect the reporting of transactions completed before the announcement of a change.

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Acquisitions may not be successful in achieving intended benefits, cost savings and synergies.

A component of our growth strategy has been to make acquisitions. Prior to completing any acquisition, our management team identifies expected synergies, cost savings and growth opportunities but, due to legal and business limitations, we may not have access to all necessary information. The integration process may be complex, costly and time-consuming. The potential difficulties of integrating the operations of an acquired business and realizing our expectations for an acquisition, including the benefits that may be realized, include, among other things:

| ● | failure to implement our business plan for the combined business;
| ● | delays or difficulties in completing the integration of acquired companies or assets;
| ● | higher than expected costs, lower than expected cost savings or a need to allocate resources to manage unexpected operating difficulties;
| ● | unanticipated issues in integrating manufacturing, logistics, information, communications and other systems;
| ● | unanticipated changes in applicable laws and regulations affecting the acquired business;
| ● | unanticipated changes in the combined business due to potential divestitures or other requirements imposed by antitrust regulators;
| ● | retaining key customers, suppliers and employees;
| ● | retaining and obtaining required regulatory approvals, licenses and permits;
| ● | operating risks inherent in the acquired business;
| ● | diversion of the attention and resources of management;
| ● | consumers’ failure to accept product offerings by us or our licensees;
| ● | assumption of liabilities not identified in due diligence;
| ● | the impact on our or an acquired business’ internal controls and compliance with the requirements under the Sarbanes-Oxley Act of 2002; and
| ● | other unanticipated issues, expenses and liabilities.

We have completed acquisitions that have not performed as well as initially expected and cannot assure you that any acquisition will not have a material adverse impact on our financial condition and results of operations.

The loss of the services of Justin Davis-Rice as Executive Chairman, Anna Johnson as Chief Executive Officer, other members of our executive management team, or other key personnel could have a material adverse effect on our business.

Justin Davis-Rice’s and Anna Johnson’s leadership in the design and marketing areas of our business has been a critical element of our success since our inception. The death or disability of Mr. Davis-Rice , Anna Johnson or other extended or permanent loss of his or her services, or any negative market or industry perception with respect to him or her or arising from his or her loss, could have a material adverse effect on our business, results of operations, and financial condition.

We also depend on the service and management experience of other key executive officers and other members of senior management who have substantial experience and expertise in our industry and our business and have made significant contributions to our growth and success. The loss of the services of any of our key executive officers or other members of senior management, or one or more of our other key personnel, or the concurrent loss of several of these individuals or any negative public perception with respect to these individuals, could also have a material adverse effect on our business, results of operations, and financial condition.

We are not protected by a material amount of key-man or similar life insurance covering our executive officers, including Mr. Davis-Rice or Ms. Johnson, or other members of senior management. We have entered into employment agreements with certain of our executive officers, but competition for experienced executives in our industry is intense and the non-compete period with respect to certain of our executive officers could, in some circumstances in the event of their termination of employment with our company, end prior to the employment term set forth in their employment agreements.

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We rely on third-party suppliers and manufacturers to provide fabrics for and to produce our products, and we have limited control over them and may not be able to obtain quality products on a timely basis or in sufficient quantity.

We do not manufacture our products or the raw materials for them and rely instead on third-party suppliers and manufacturers. Many of the specialty fabrics used in our products are technically advanced textile products developed and manufactured by third parties and may be available, in the short-term, from only one or a very limited number of sources. We may experience a significant disruption in the supply of fabrics or raw materials from current sources or, in the event of a disruption, we may be unable to locate alternative materials suppliers of comparable quality at an acceptable price, or at all. In addition, if we experience significant increased demand, or if we need to replace an existing supplier manufacturer, we may be unable to locate additional suppliers of fabrics or raw materials or additional manufacturing capacity on terms that are acceptable to us, or at all, or we may be unable to locate any supplier or manufacturer with sufficient capacity to meet our requirements or to fill our orders in a timely manner. Identifying a suitable supplier is an involved process that requires us to become satisfied with their quality control, responsiveness and service, financial stability and labor and other ethical practices. Even if we are able to expand existing or find new manufacturing or fabric sources, we may encounter delays in production and added costs as a result of the time it takes to train our suppliers and manufacturers in our methods, products and quality control standards. Delays related to supplier changes could also arise due to an increase in shipping times if new suppliers are located farther away from other participants in our supply chain. Any delays, interruption or increased costs in the supply of fabric or manufacture of our products could have an adverse effect on our ability to meet customer demand for our products and result in lower net revenue and income from operations both in the short and long term. We have occasionally received, and may in the future continue to receive, shipments of products that fail to comply with our technical specifications or that fail to conform to our quality control standards. In that event, unless we are able to obtain replacement products in a timely manner, we risk the loss of net revenue resulting from the inability to sell those products and related increased administrative and shipping costs. If defects in the manufacture of our products are not discovered until after our customers purchase such products, our customers could lose confidence in the technical attributes of our products and our results of operations could suffer and our business could be harmed.

The fluctuating cost of raw materials could increase our cost of goods sold and cause our results of operations and financial condition to suffer.

The fabrics used by our suppliers and manufacturers include synthetic fabrics whose raw materials include petroleum-based products. Our products also include natural fibers, including cotton. Our costs for raw materials are affected by, among other things, weather, consumer demand, speculation on the commodities market, the relative valuations and fluctuations of the currencies of producer versus consumer countries and other factors that are generally unpredictable and beyond our control. Increases in the cost of raw materials could have a material adverse effect on our cost of goods sold, results of operations, financial condition and cash flows.

We face challenges as consumers migrate to online shopping and we depend on our ability to compete in the e-commerce marketplace.

As consumers continue to migrate online, we face pressures to compete in the e-commerce marketplace. We continue to significantly invest in our online sales capabilities to provide a seamless shopping experience to our customers between our brick and mortar locations and our online environments. Insufficient, untimely or misguided investments in this area could significantly impact our profitability and growth and affect our ability to attract new customers, as well as maintain our existing ones. In addition, declining customer store traffic and migration of sales from brick and mortar stores to digital platforms could lead to store closures, restructuring and other costs that could adversely impact our results of operations and cash flows.

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A material disruption in our computer systems could adversely affect our business or results of operations.

We rely extensively on our computer systems to process transactions, summarize results and manage our business. Our computer systems are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, cyber-attack or other security breaches, catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes, acts of war or terrorism, and usage errors by our employees. If our computer systems are damaged or cease to function properly, including a material disruption in our ability to authorize and process transactions at our stores or on our online systems, we may have to make a significant investment to fix or replace them, and we may suffer loss of critical data and interruptions or delays in our operations. Any material interruption in our computer systems could negatively affect our business and results of operations.

If our technology-based e-commerce systems do not function properly, our operating results could be negatively affected.

Customers are increasingly using computers, tablets and smart phones to shop online and to do price and comparison shopping. We strive to anticipate and meet our customers’ changing expectations and are focused on building a seamless shopping experience across our omnichannel business. Any failure to provide user-friendly, secure e-commerce platforms that offer a variety of merchandise at competitive prices with low cost and quick delivery options that meet customers’ expectations could place us at a competitive disadvantage, result in the loss of e-commerce and other sales, harm our reputation with customers and have a material adverse impact on the growth of our business and our operating results.

If we are unable to safeguard against security breaches with respect to our information systems our business may be adversely affected.

In the course of our business, we gather, transmit and retain confidential information, including personal information about our customers, and process payment transactions through our information systems. Although we endeavor to protect confidential information and payment information through the implementation of security technologies, processes and procedures, it is possible that an individual or group could defeat security measures and access sensitive information about our customers, employees and other third parties. Any misappropriation, loss or other unauthorized disclosure of confidential or personally identifiable information gathered, stored or used by us could have a material impact on the operation of our business, including damaging our reputation with our customers, employees, third parties and investors. We could also incur significant costs implementing additional security measures to comply with applicable federal, state or international laws and regulations governing the unauthorized disclosure of confidential or personally identifiable information as well as increased costs such as organizational changes, implementing additional protection technologies, training employees or engaging consultants. In addition, we could incur lost revenues and face increased litigation as a result of any potential cyber-security breach. We are not aware of that we have experienced any material misappropriation, loss or other unauthorized disclosure of confidential or personally identifiable information as a result of a cyber-security breach or other act, however, a cyber-security breach or other act and/or disruption to our information technology systems could have a material adverse effect on our business, prospects, financial condition or results of operations.

Our fabrics and manufacturing technology are not patented and can be imitated by our competitors.

The intellectual property rights in the technology, fabrics and processes used to manufacture our products are owned or controlled by our suppliers and are generally not unique to us. Our ability to obtain intellectual property protection for our products is therefore limited and we currently own no patents or exclusive intellectual property rights in the technology, fabrics or processes underlying our products. As a result, our current and future competitors are able to manufacture and sell products with performance characteristics, fabrics and styling similar to our products. Because many of our competitors have significantly greater financial, distribution, marketing and other resources than we do, they may be able to manufacture and sell products based on our fabrics and manufacturing technology at lower prices than we can. If our competitors do sell similar products to ours at lower prices, our net revenue and profitability could suffer.

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Our failure or inability to protect our intellectual property rights could diminish the value of our brand and weaken our competitive position.

We currently rely on trademarks, as well as confidentiality procedures, to establish and protect our intellectual property rights. We cannot assure you that the steps taken by us to protect our intellectual property rights will be adequate to prevent infringement of such rights by others, including imitation of our products and misappropriation of our brand. In addition, intellectual property protection may be unavailable or limited in some foreign countries where laws or law enforcement practices may not protect our intellectual property rights as fully as in the United States, Canada or the European Union, and it may be more difficult for us to successfully challenge the use of our intellectual property rights by other parties in these countries. If we fail to protect and maintain our intellectual property rights, the value of our brand could be diminished and our competitive position may suffer.

We may be impacted by changes in taxation, trade and other regulatory requirements.

We are subject to income tax in local, national and international jurisdictions. In addition, our products are subject to import and excise duties and/or sales or value-added taxes in many jurisdictions. We are also subject to the examination of our tax returns and other tax matters by the Internal Revenue Service and other tax authorities and governmental bodies. We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of our provision for taxes. There can be no assurance as to the outcome of these examinations. Fluctuations in tax rates and duties, changes in tax legislation or regulation or adverse outcomes of these examinations could have a material adverse effect on our results of operations, financial condition and cash flows.

We have significant tax losses arising on historical trading losses. The availability to utilize these tax losses to offset future taxable profit is dependent on future performance and trade of the business. There can be no assurance as to the availability of these losses for utilization.

There is increased uncertainty with respect to tax policy and trade relations between the U.S. and other countries. Major developments in tax policy or trade relations, such as the disallowance of tax deductions for imported merchandise or the imposition of unilateral tariffs on imported products, could have a material adverse effect on our results of operations, financial condition and cash flows.

Our current operations in international markets and our efforts to expand into additional international markets, and any earnings in those markets, may be affected by legal and regulatory risks.

We are subject to the U.S. Foreign Corrupt Practices Act, in addition to the anti-corruption laws of the foreign countries in which we operate and manufacture our products. Although we implement policies and procedures designed to promote compliance with these laws, our employees, contractors and agents, as well as those companies to which we outsource certain of our business operations, may take actions in violation of our policies. Any such violation could result in sanctions or other penalties and have an adverse effect on our business, reputation and operating results.

We may be subject to loss and theft.

Our merchandise is subject to loss, including those caused by illegal or unethical conduct by associates, customers, vendors or unaffiliated third parties. We have experienced events such as inventory shrinkage in the past, and we cannot assure that incidences of loss and theft will decrease in the future or that the measures we are taking will effectively reduce these losses. Higher rates of loss or increased security costs to combat theft could have a material adverse effect on our results of operations, financial condition and cash flows.

A portion of our revenue is dependent on royalties and licensing.

License arrangements exist for Heidi Klum and Frederick’s of Hollywood, and previously existed for Stella McCartney through June 30, 2018. The license arrangements for Heidi Klum, Stella McCartney and Frederick’s of Hollywood contributed revenue of 21%, 5% and 35% of Company sales, respectively, in the twelve month period to January 31, 2019. The gross margin contribution during this period was 26%, 7%, and 30%, respectively, of total Company gross margin. The license arrangements for Heidi Klum, Stella McCartney and Frederick’s of Hollywood contributed revenue of 25%, 11% and 21% of Company sales, respectively, in the twelve month period to January 31, 2018. The gross margin contribution during this period was 19%, 12%, and 30%, respectively, of total Company gross margin. The license arrangements for Heidi Klum, Stella McCartney and Frederick’s of Hollywood contributed revenue of 32%, 9% and 11% of Company sales, respectively, in the twelve month period to January 31, 2017. The gross margin contribution during this period was 29%, 8%, and 16%, respectively, of total Company gross margin.

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The operating profit associated with our royalty, advertising and other revenue is significant because the operating expenses directly associated with administering and monitoring an individual licensing or similar agreement are minimal. Therefore, the loss of a significant licensing partner, whether due to the termination or expiration of the relationship, the cessation of the licensing partner’s operations or otherwise (including as a result of financial difficulties of the partner), without an equivalent replacement, could materially impact our profitability. For example, Bendon Limited’s license to use the Stella McCartney brand terminated effective June 30, 2018.

While we generally have significant control over our licensing partners’ products and advertising, we rely on our licensing partners for, among other things, operational and financial controls over their businesses. Our licensing partners’ failure to successfully market licensed products or our inability to replace our existing licensing partners could materially and adversely affect our revenue both directly from reduced royalty and advertising and other revenue received and indirectly from reduced sales of our other products. Risks are also associated with our licensing partners’ ability to obtain capital, execute their business plans, timely deliver quality products, manage their labor relations, maintain relationships with their suppliers, manage their credit risk effectively and maintain relationships with their customers.

A significant shift in the relative sources of our earnings, adverse decisions of tax authorities or changes in tax treaties, laws, rules or interpretations could have a material adverse effect on our results of operations and cash flow.

We have direct operations in many countries and the applicable tax rates vary by jurisdiction. As a result, our overall effective tax rate could be materially affected by the relative level of earnings in the various taxing jurisdictions to which our earnings are subject. In addition, the tax laws and regulations in the countries where we operate may be subject to change and there may be changes in interpretation and enforcement of tax law. As a result, we may pay additional taxes if tax rates increase or if tax laws, regulations or treaties in the jurisdictions where we operate are modified by the competent authorities in an adverse manner.

In addition, various national and local taxing authorities periodically examine us and our subsidiaries. The resolution of an examination or audit may result in us paying more than the amount that we may have reserved for a particular tax matter, which could have a material adverse effect on our cash flows, business, financial condition and results of operations for any affected reporting period.

We and our subsidiaries are engaged in a number of intercompany transactions. Although we believe that these transactions reflect arm’s length terms and that proper transfer pricing documentation is in place, which should be respected for tax purposes, the transfer prices and conditions may be scrutinized by local tax authorities, which could result in additional tax liabilities.

If we fail to implement and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud.

Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations.

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We previously have identified deficiencies in our internal controls that are deemed to be material weaknesses. A material weakness is a deficiency, or a combination of deficiencies in internal controls over financial reporting, such that if there is a material misstatement in our financial statements, they will not necessarily be prevented or detected on a timely basis. As of January 31, 2019, the matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were:

| 1) | The audit committee has been established, however is still operating under the first year exemptions as outlined in section 16 D in respect of independent members.
| 2) | Lack of skilled resources and lack of expertise with complex IFRS and SEC reporting matters.
| 3) | No formally implemented system of internal control over financial reporting and no associated written documentation of our internal control policies and procedures.
| 4) | We did not maintain an effective process for reviewing financial information and did not have a sufficient number of personnel with an appropriate level of accounting knowledge, experience and training in the application of International Financial Reporting Standards commensurate with management’s financial reporting requirements.

We believe that these material weaknesses primarily related to our lack of board oversight and appropriately skilled resources. While these material weaknesses have not resulted in errors that were material to our financial statements in the current year, it impacted our company’s ability to close financial reporting on a timely basis and resulted in numerous late amendments to draft financial statements. We believe the introduction of a properly constituted board with diverse skills and talent will assist in managing the risks across the business. We delayed implementing the appointment of an appropriately qualified personnel on the basis we were preparing to merge with Naked (NV). Upon completion of the merger and becoming public, Naked (NV)’s newly appointed independent non-executive director became a member of our board of directors. In addition, upon becoming public, we established an audit committee. In the future, we plan to provide improved support for our Chief Financial Officer and to take a number of other actions to correct these material weaknesses, including, but not limited to, appointing additional independent directors, adding experienced accounting and financial personnel and retaining third party consultants to review our internal controls and recommend improvements.

Our efforts to remediate these material weaknesses may not be effective. If our efforts to remediate these material weaknesses are not successful, the remediated material weaknesses may reoccur, or other material weaknesses could occur in the future. As a result of these material weaknesses, we may be unable to report our financial results accurately on a timely basis, which could cause our reported financial results to be materially misstated and result in the loss of investor confidence and could cause the stock price to decline. As a result of such failures, we could also become subject to investigation by the stock exchange on which our shares are listed, the SEC, or other regulatory authorities, and become subject to litigation from investors, which would harm our reputation, business, financial condition and results or operations, and divert financial and management recoveries from our core business.

In addition, any future testing by us conducted in connection with Section 404 of the Sarbanes-Oxley Act, or the subsequent testing by our independent registered public accounting firm, if and when required, may reveal additional deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our consolidated financial statements or identify other areas for further attention or improvement. If we are unable to remedy the existing material weaknesses in our internal control over financial reporting, if in the future we identify additional material weaknesses in our internal control over financial reporting, including at some of our acquired companies, if we are unable to comply with the requirements of Section 404 in a timely manner or assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm required to and is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected, and we could become subject to investigations by the stock exchange on which our securities are then listed, the SEC, or other regulatory authorities, which could require additional financial and management resources. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.

We incurred substantial transaction fees and costs in connection with the Transactions.

We incurred material non-recurring expenses in connection with the Merger Agreement and consummation of the Transactions contemplated by the Merger Agreement. Additional unanticipated costs may be incurred in the course of the integration of the businesses of Bendon Limited and Naked. We cannot be certain that the elimination of duplicative costs or the realization of other efficiencies related to the integration of the two businesses will offset the transaction and integration costs in the near term, or at all.

Nasdaq may delist the Naked Ordinary Shares from quotation on its exchange, which could limit investors’ ability to sell and purchase our securities and subject us to additional trading restrictions.

The Naked Ordinary Shares are currently listed on the Nasdaq Capital Market under the trading symbol “NAKD”. However, on February 5, 2019, we received a notice from the Listing Qualifications Department of Nasdaq stating that, for the last 30 consecutive business days, the closing bid price for the Naked Ordinary Shares had been below the minimum of US$1.00 per share required for continued inclusion on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2). We will be afforded 180 calendar days (until August 5, 2019) to regain compliance with the minimum bid price requirement. In order to regain compliance, the bid price for shares of the Naked Ordinary Shares must close at US$1.00 per share or more for a minimum of ten consecutive business days. The notification letter also states that in the event we do not regain compliance within the 180 day period, we will be eligible for additional time if we meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the bid price requirement, and notify Nasdaq of our intention to cure the deficiency during such second compliance period, including by effecting a reverse stock split, if necessary. There can be no assurance that we will regain compliance with the minimum bid price requirement within the allotted period, or that we will be able to maintain compliance with the other continued listing requirements under the Nasdaq Listing Rules.

If the Naked Ordinary Shares are not listed on Nasdaq at any time after this offering, we could face significant material adverse consequences, including:

| ● | a limited availability of market quotations for our securities;
| ● | reduced liquidity;
| ● | a determination that the Naked Ordinary Shares are a “penny stock” which will require brokers trading in our shares to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for the Naked Ordinary Shares;
| ● | a limited amount of news and analyst coverage for our company; and
| ● | a decreased ability to issue additional securities or obtain additional financing in the future.

As a foreign private issuer, we are permitted and expect to follow certain home country corporate governance practices (in our case Australian) in lieu of certain Nasdaq requirements applicable to domestic issuers and we are permitted to file less information with the Securities and Exchange Commission than a company that is not a foreign private issuer. This may afford less protection to holders of our securities.

As a foreign private issuer under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Nasdaq allows us to follow home country governance practices (in our case Australian) in lieu of the otherwise applicable Nasdaq corporate governance requirements. In accordance with this exception, we follow Australian corporate governance practices in lieu of certain of the Nasdaq corporate governance standards, as more fully described elsewhere herein. In particular, we will follow Australian law and corporate governance practices with respect to the composition of our board and quorum requirements applicable to shareholder meetings. These differences may result in a board that is more difficult to remove as well as less shareholder approvals required generally. We will also follow Australian law instead of the Nasdaq requirement to obtain shareholder approval prior to the issuance of securities in connection with a change of control, certain acquisitions, private placements of securities, or the establishment or amendment of certain stock option, purchase, or other equity compensation plans or arrangements. These differences may result in less shareholder oversight and requisite approvals for certain acquisition or financing related decisions or for certain company compensation related decisions. The Australian home country practices described above may afford less protection to holders of our securities than that provided under the Nasdaq Listing Rules.

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ITEM 4. INFORMATION ON THE COMPANY

A. | History and Development of the Company

Office Location

Our principal and registered office is located at Building 7B, Huntley Street, Alexandria, NSW 2015, Australia, and our telephone number is +61 2 9384 2400. Our agent for service of process in the United States is Graubard Miller, our U.S. counsel, located at The Chrysler Building, 405 Lexington Avenue, New York, New York 10174.

Principal Legal Advisers

Our principal legal adviser in the United States is Graubard Miller, located at The Chrysler Building, 405 Lexington Avenue, New York, New York 10174.

History and Development

We are an Australian public limited company formed on May 11, 2017 under the name “Bendon Group Holdings Limited.” We were formed to serve as a holding company for Bendon Limited and Naked (NV) after consummation of the Transactions. Bendon Limited was formed in 1947. Naked (NV) was incorporated in the State of Nevada on May 17, 2005, under the name “Search By Headlines.com Corp.” Prior to the completion of the Transactions, we had no assets and had not conducted any material activities other than those incidental to our formation.

On June 19, 2018, we consummated the Transactions contemplated by the Merger Agreement. Pursuant to the Merger Agreement, Bendon Limited and Naked (NV) completed a business combination transaction by means of (i) the Reorganization, pursuant to which all of the shareholders of Bendon Limited exchanged all of the outstanding Bendon Ordinary Shares for Naked Ordinary Shares, and (ii) immediately thereafter, Merger Sub merged with and into Naked (NV), with Naked (NV) surviving as a wholly owned subsidiary of ours and the Naked (NV) stockholders receiving Naked Ordinary Shares in exchange for all of the outstanding shares of common stock of Naked (NV). Effective on and from the closing of the Transactions, we changed our name from Bendon Group Holdings Limited to “Naked Brand Group Limited.”

On November 15, 2018, we and our wholly-owned subsidiary, Bendon, entered into a stock purchase agreement with the shareholders of FOH Online Corp. (“FOH”), including Cullen Investments Limited (“Cullen”), a significant shareholder of the Company and also a debtor to the Company. Pursuant to the agreement, on December 6, 2018, we purchased all of the issued and outstanding shares of FOH, in order to gain direct ownership of the Frederick’s of Hollywood license arrangement FOH had with Authentic Brands Group (“ABG”). We previously marketed merchandise under the Frederick’s of Hollywood brand through a sub-license arrangement with FOH. As a result of the acquisition of FOH, we now have a direct relationship with ABG in relation to the Frederick’s of Hollywood license. Under the terms of the stock purchase agreement, we paid a purchase price of approximately US$18.2 million, as follows (i) the Company forgave debt owed to it by FOH and Cullen, in the aggregate amount of approximately US$9.9 million, and (ii) the Company issued 3,765,087 of our Ordinary Shares to FOH’s shareholders, valued at a price per share of US$2.20. We also agreed to satisfy certain obligations with respect to certain claims involving the parties. A portion of the Ordinary Shares issued to FOH’s shareholders are held in trust and may be released to Cullen to the extent not applied in satisfaction of such claims.

Additional Information

The SEC maintains an internet site, www.sec.gov, that contains reports, proxy and information statements, and other information regarding issuers, like us, that file electronically with the SEC. We also maintain a website at www.nakedbrands.com, which contains information about our company. The information on our website shall not be deemed part of this Annual Report.

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Principal Capital Expenditures

Our capital expenditures for the twelve months ended January 31, 2019, 2018 and 2017 amounted to $0.2m, $2.2m and $0.7m, respectively. Our capital expenditures during those years consisted of investments in property, plant and equipment for new and existing stores. We anticipate our capital expenditures in fiscal year 2020 to include investments in property, plant and equipment for new and existing stores, which will be financed through cashflows from operations and from financing transactions.

B. | Business Overview

Overview

We operate in the highly competitive specialty retail business. We are a designer, distributor, wholesaler, and retailer of women’s and men’s intimate apparel, as well as women’s swimwear. Our merchandise is sold through company-owned retail stores in Australia and New Zealand; through online channels; and through wholesale partners in Australia, New Zealand, the United States and Europe (collectively, “partners”).

We have seven reportable segments:

| ● | Australia Retail: This segment covers retail and outlet stores located in Australia.
| ● | New Zealand Retail: This segment covers retail and outlet stores located in New Zealand.
| ● | Australia Wholesale: This segment covers the wholesale of intimates apparel to customers based in Australia.
| ● | New Zealand Wholesale: This segment covers the wholesale of intimates apparel to customers based in New Zealand.
| ● | U.S. Wholesale: This segment covers the wholesale of intimates apparel to customers based in the United States.
| ● | Europe Wholesale: This segment covers the wholesale of intimates apparel to customers based in Europe.
| ● | E-commerce: This segment covers the Company’s online retail activities.

In addition, we continually explore new ways to expand its business, including through the use of new technologies, such as blockchain technology. We are presently evaluating how these new technologies may be leveraged in the retail fashion industry. For instance, blockchain technology might be used in the future to create highly efficient end-to-end operations from suppliers to consumers and also to provide low cost trade finance for market participants through blockchain trading platforms. However, we have not yet established the feasibility of, or taken any steps to progress the use of, blockchain technology in our business.

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Revenues by Segment

Our revenues in each of our reportable segments for the twelve months ended January 31, 2019 and 2018 and the 7 months ended January 31, 2017 were as follows:

|  | 12 Months Ended January 31, |  |  | 7 months ended January 31, |  |  | 12 months ended January 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |  |  | 2016 |
|  |  |  |  |  |  |  | Unaudited |  |  |  |
Australia Retail |  | $ | 18.5 | m |  | $ | 18.2 | m |  | $ | 12.1 | m |  | $ | 20.6 | m
New Zealand Retail |  | $ | 31.8 | m |  | $ | 34.3 | m |  | $ | 22.0 | m |  | $ | 37.4 | m
Australia Wholesale |  | $ | 11.5 | m |  | $ | 15.5 | m |  | $ | 18.1 | m |  | $ | 28.0 | m
New Zealand Wholesale |  | $ | 7.2 | m |  | $ | 10.5 | m |  | $ | 7.5 | m |  | $ | 15.1 | m
U.S. Wholesale |  | $ | 5.8 | m |  | $ | 6.4 | m |  | $ | 9.0 | m |  | $ | 18.8 | m
Europe Wholesale |  | $ | 5.0 | m |  | $ | 14.1 | m |  | $ | 9.5 | m |  | $ | 16.5 | m
E-commerce |  | $ | 32.1 | m |  | $ | 32.2 | m |  | $ | 18.1 | m |  | $ | 6.7 | m

Recent Developments

On February 14, 2019, Carole Hochman resigned from the board of directors and as our Executive Chairman, and from all other positions she held with our subsidiaries. Ms. Hochman’s resignation was for personal reasons, and was not due to any disagreement with us or our management on any matter relating to our operations, policies or practices (financial or otherwise).

In March 2019, we issued 1,400,000 Naked Ordinary Shares and 1,400,000 warrants to purchase Naked Ordinary Shares to a service provider in exchange for services. The warrants have an exercise price of US$0.50 and expire two years from the date of issuance. The exercise price and the number of shares covered by the warrants are subject to adjustment for stock splits, stock combinations and certain other transactions affecting the share capital as a whole.

On the March 27, 2019, the Company closed on the following share issuances.

| (1) | NZ$6.60 million/US$4.50 million related to the issue of 11,248,415 Naked Ordinary Shares to trade creditors in satisfaction of trade payables due to them, at an effective per share price of US$0.40.
| (2) | NZ$1.25 million/US$0.85 million related to the issue of 2,119,178 Naked Ordinary Shares to the holder of one of our outstanding promissory notes in the amount of US$847,671, at an effective per share price of US$0.40 per share.
| (3) | NZ$1.69 million/US$1.15 million related to the issue of 4,510,588 Naked Ordinary Shares to investors in a private placement at a share price of US$0.255. The investors also received warrants to purchase 100% of the number of Naked Ordinary Shares for which they had subscribed. The warrants have an exercise price of US$0.306 and expire two years from the date of issuance. The exercise price and the number of shares covered by the warrants are subject to adjustment for stock splits, stock combinations and certain other transactions affecting the share capital as a whole.
| (4) | NZ$4.05 million/US$2.75 million relating to the issue of 10,784,313 Naked Ordinary Shares to certain accredited investors at an agreed per share price of US$0.255, except that, to the extent an investor would beneficially own more than 9.9% of our outstanding Naked Ordinary Shares after the closing, we agreed to issue the investor a “pre-funded” warrant (the “March Pre-Funded Warrants”) in lieu of such shares. Each investor also received an “investment” warrant (the “March Investment Warrants” and together with the March Pre-Funded Warrants, the “March Warrants”) to purchase 100% of the number of Naked Ordinary Shares for which it had agreed to subscribe. As a result, we issued 3,914,846 Naked Ordinary Shares, March Pre-Funded Warrants to purchase 6,869,467 Naked Ordinary Shares and March Investment Warrants to purchase 10,784,313 Naked Ordinary Shares to the investor at the closing. The March Investment Warrants have an exercise price of US$0.306 per share and expire five years from the date of issuance. The March Pre-Funded Warrants have an exercise price of US$0.01 per share and expire five years from the date of issuance. The exercise price and number of shares covered by the March Warrants are subject to adjustment for stock splits, stock combinations and certain other transactions affecting the share capital as a whole, as well as for subsequent equity issuances occurring prior to July 16, 2019, subject to certain exceptions. If the exercise price of the March Warrants is higher than the last closing bid price of the Naked Ordinary Shares, at any time starting on June 16, 2019, the March Warrants may be exercised on a cashless basis for a number of shares equal to the Black-Scholes value of the portion of the warrant being exercised (as calculated in accordance with the March Warrants), divided by the closing bid price as of two business days prior to the exercise date (but not less than US$0.10). The March Warrants may not be exercised to the extent the holder and its affiliates would beneficially own more than 9.9% of our outstanding Ordinary Shares after such exercise.

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On April 2, 2019, the board of directors appointed Anna Johnson as our Chief Executive Officer. Previously Ms Johnson was Chief Executive Officer of Bendon Limited, the main operating entity within the Company. In connection with Ms. Johnson’s appointment, Justin Davis-Rice was appointed as Executive Chairman and resigned as our Chief Executive Officer.

Effective on May 13, 2019, we completed a private placement of a Secured Convertible Promissory Note (the “Note”) to St. George Investments LLC (the “Noteholder”) for a purchase price of US$3,000,000, pursuant to a Securities Purchase Agreement (the “NSPA”) of even date. Pursuant to the NSPA, the Note was sold with an original issue discount of the US$300,000 and we paid US$20,000 of the Noteholder’s expenses, which amount was added to the principal balance of the Note. Accordingly, the Note had an initial principal balance of US$3,320,000. The NSPA includes certain customary representations and warranties and covenants. In addition, we agreed that, so long as the Note is outstanding, we will not issue any debt instrument or incur any debt, subject to certain exceptions, including an exception for any debt incurred from a bank. The Note accrues interest at a rate of 10% per annum, compounded daily, and matures on November 13, 2020. We have the right to prepay the Note, subject to a 15% premium. The Note is secured by a second priority security interest in all our assets and is subordinated to the Company’s existing senior secured credit facility with the Bank of New Zealand (the “Bank” or “BNZ”). The Noteholder has the right to convert the Note into Naked Ordinary Shares at a conversion price of US$0.90 per share, subject to adjustment for subdivisions or combinations of the ordinary shares. The Noteholder also has the right, beginning on December 13, 2019, to cause us to redeem any portion of the Note, up to a maximum of US$400,000 per month.

On the May 14, 2019, we closed on NZ$2.17 million/US$1.5million share issuance of 6,000,000 shares to an investor in a private placement at a share price of US$0.25. The investor also received warrants to purchase 1,000,000 Naked Ordinary Shares. The warrants have an exercise price of US$0.25, subject to adjustment, and expire two years from the date of issuance.

On May 16, 2019, we issued 653,595 ordinary shares in exchange for the cancellation of US$200,000 in debt held by a shareholder, or an effective purchase price of US$0.306 per share.

On June 11, 2019, we announced that we had appointed David Anderson to become our new Chief Financial Officer. Previously, Mr. Anderson served as Head of Finance for Goodman Fielder, one of the largest consumer goods companies in New Zealand, where he oversaw all financial aspects of the business and led numerous acquisitions. Mr. Anderson will succeed Howard Herman, our current Chief Financial Officer, after the filing with the SEC of certain amendments to our existing registration statements, but no later than June 20, 2019. In connection with the appointment of Mr. Anderson, Mr. Herman is resigning from all positions held by him with our company.

Our senior secured credit facility with the Bank matures on August 31, 2019 and discussions are continuing to extend the facility beyond that point. As at October 31, 2018, there was a breach in minimum gross EBITDA ratio. As at January 31, 2019, there was a breach of the minimum Gross EBITDA ratio and a breach of the inventory and receivables ratio. The Bank has advised that they are currently taking these breaches under review.

Brands

Heidi Klum

Heidi Klum is the face and Creative Director of our flagship brands, Heidi Klum Intimates, Heidi Klum Swim, Heidi Klum Man, and Heidi Klum Intimates Solutions. Our flagship brand, Heidi Klum Intimates collection exudes femininity, elegance and sophistication, each piece designed with the modern woman in mind. We sell our Heidi Klum products at 63 Bendon stores in Australia, New Zealand and Ireland and online at www.bendonlingerie.com and www.heidiklumintimates.com. Additionally, Heidi Klum products are sold in approximately 5,000 wholesale doors in 43 countries across regions in Australia, New Zealand, United States, Europe and United Kingdom under wholesale arrangements.

Frederick’s of Hollywood

Since 1946, Frederick’s of Hollywood has set the standard for innovative apparel, introducing the push-up bra, the padded bra, and black lingerie to the United States market. The brand’s rich history has led it to become one of the most recognized in the world. Through FOH, we are the exclusive licensee of the Frederick’s of Hollywood global online license, under which we sell Frederick’s of Hollywood intimates products, sleepwear and loungewear products, swimwear and swimwear accessories products, and costume products. We sell our Frederick’s of Hollwood products online at www.bendonlingerie.com and www.fredericks.com.

Naked

Naked is an apparel and lifestyle brand company that is currently focused on innerwear products for women and men. Under its flagship brand name and registered trademark “Naked®”, Naked designs, manufactures and sells men’s and women’s underwear, intimate apparel, loungewear and sleepwear through retail partners and direct to consumer through its online retail store www.wearnaked.com. Naked has a growing retail footprint for its innerwear products in premium department and specialty stores and internet retailers in North America, including accounts such as Nordstrom, Dillard’s, Bloomingdale’s, Amazon.com, and others.

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Other Brands

Our other brands are Bendon, Bendon Man, Davenport, Fayreform, Hickory, Lovable and Pleasure State. We sell our products at 63 Bendon stores in Australia and New Zealand and online at www.bendonlingerie.com. Additionally, our products are sold in approximately 3,293 wholesale stores in 43 countries across regions in Australia, New Zealand, United States, Europe and United Kingdom under wholesale arrangements.

Until June 30, 2018, we sold Stella McCartney Lingerie and Stella McCartney Swimwear products at Bendon stores in Australia and New Zealand and online at www.bendonlingerie.com. Additionally, Stella McCartney products were sold in wholesale doors in numerous countries across regions in Australia, New Zealand, United States, Europe and United Kingdom under wholesale arrangements.

Our Strengths

We believe the following competitive strengths contribute to our leading market position and differentiate us from our competition:

Distinct, Well-Recognized Brands

Our iconic brands, including Heidi Klum Intimates and Swimwear and Frederick’s of Hollywood Intimates and Swimwear, have come to represent a unique lifestyle across its targeted customers. Our brands allow us to target markets across the economic spectrum, across demographics and across the world. We believe our flagship brands and prominent, highly-recognized creative directors provide us with a competitive advantage.

In-Store Experience and Store Operations

We view our customers’ in-store experience as an important vehicle for communicating the image of each brand. We utilize visual presentation of merchandise, in-store marketing and our sales associates to reinforce the image represented by the brands. Our in-store marketing is designed to convey the principal elements and personality of each brand. The store design, furniture, fixtures and music are all carefully planned and coordinated to create a unique shopping experience. Every brand displays merchandise uniformly to ensure a consistent store experience, regardless of location. Store managers receive detailed plans designating fixture and merchandise placement to ensure coordinated execution of the company-wide merchandising strategy. Our sales associates and managers are a central element in creating the atmosphere of the stores by providing a high level of customer service.

Product Development, Sourcing and Logistics

We believe a large part of our success comes from frequent and innovative product launches, as well as launches of new collections from our existing brands. Our merchant, design and sourcing teams have a long history of bringing innovative products to our customers. Our key vendor partners are industry leaders in both innovation and social responsibility. We work closely together to form a world class supply chain that is dynamic and efficient.

Highly Experienced Leadership Team

Our management team is led by Justin Davis-Rice, Executive Chairman, who joined Bendon in 2011 and is responsible for leading our revenue growth. Prior to joining Bendon, Mr. Davis-Rice co-founded Pleasure State. Anna Johnson, Chief Executive Officer, brings to us a track record of over 25 years’ experience driving growth across a number of industries, including consumer electronics, outdoor adventure and intimate apparel. The rest of our senior management team has a wealth of retail and business experience at Gazal, Specialty Fashion Group, and Pleasure State. We have developed a strong and collaborative culture aligned around our goals to create the most sensual, functional and comfortable lingerie and underwear for women and men all over the world.

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Growth Strategy

Our growth strategy involves seeking to take advantage of the following opportunities across brands and channels:

Channel

| ● | Opportunity for an additional 50+ retail stores across Australia and New Zealand
| ● | Additional 25 Bendon outlet stores across Australia and New Zealand in the next 5 years
| ● | Leveraging e-commerce to attract and educate new and existing customers
| ● | Targeting e-commerce sales penetration of 40% over the medium term
| ● | Improving productivity in existing wholesale accounts by gaining additional floor space
| ● | Selectively adding new wholesale doors, with a focus on US markets
| ● | Enhancing margins by increasing the proportion of the business derived from direct-to-consumer channels

Brands

| ● | Expanding the brand and product offering via organic innovation and new license partnerships
| ● | Expanding brand reach by leveraging our brand portfolio to extend globally, particularly in the US and EU
| ● | Continuing to build our license portfolio and add new licenses in existing and tangential categories

Vision and Culture

We are passionate about making sure we have a great company culture that supports our vision, which is to be close to our customers for life. We value individual differences and diverse thought processes. We believe the quality of decision making is improved by people with varying backgrounds and perspectives working together by connecting and sharing ideas. If we get the culture right then we can deliver on our goal to be the leader in intimate apparel because great customer service, designing great products, passionate employees and customers will happen naturally. Our commitment to our customers has grown stronger over 70 years, evolving into the Bendon culture statement:

ONE COMPANY, ICONIC BRANDS, A MILLION IDEAS. COLLABORATE AND COMMUNICATE.

We believe this simple, resonant message reminds our people to actively participate, and inspire others, every day in making us a world leader in intimate apparel. At our company, our values underpin everything we do. They guide the way we work, the way we make decisions and how we interact with each other. They define what we can expect when we interact with work colleagues, stakeholders and what our customers can expect when they deal with us. Our message is defined by 5 core values:

People

Our success is built on the success of our people, as it is our people who help create a high-performing culture. Friendly, like-minded, innovative and passionate, we work together to achieve a common goal. Driven to be the best we can be, we celebrate our successes and push boundaries in everything we do.

Pride

We are a house of brands that has captured hearts and souls all around the world. We are inspired by our customers and aim to delight our consumers through designing and creating high quality, beautiful products that engage our customers in a lifetime relationship with us. We promote a positive, energizing, and optimistic environment and continuously strive to find ways to improve what we do every day.

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Collaboration

At our company, we believe that diverse minds are critical to our success and we drive innovation, creativity and problem-solving across all levels. We believe in building strong working relationships, always considering the views of others and most importantly letting people know when they’ve done a good job. A collaborative environment is encouraged with a flat structure and open door policy. Embracing our heritage as a family business means that we all work together as a unit to celebrate ideas enabling us to become stronger and more successful.

Business strength

We are determined to reach greater heights. By constantly raising the bar and aiming for ambitious goals, we commit to achieving superior financial results. Driven by targets, we push ourselves to win and increase our market share. We achieve this through our people and their drive to promote our brands positively at every opportunity and to operate with integrity, openness and honesty.

Responsibility

We are all committed to contributing to a sustainable global community, and supporting non-profit organizations that seek to make a positive difference in the world. We recognize the importance of providing social support to our global community. At our company, we look for opportunities to change lives and shape the future by giving our time, money, and unique expertise. Giving is an essential aspect of our culture and we have been able to deliver projects and contributions throughout the years. We aim to attract employees who understand this is a core part of who we are.

Real Estate

Executive Offices and Warehouse

Our principal executive offices are in a 497 m2 facility located at Building 7B, Huntley Street, Alexandria, NSW 2015, Australia. We have additional office space and a warehouse in a 9,163 m2 facility located at 8 Airpark Drive, Airport Oaks, Auckland 2022, New Zealand. We occupy the Alexandria facility pursuant to a five-year lease that expires on April 24, 2024 and we occupy the Auckland facility pursuant to a six-year lease that expires on May 31, 2022. We believe that these facilities are in good condition and are suitable to the conduct of our business.

Company-owned Retail Stores

Our company-owned retail stores are located in shopping malls and strips in Australia, New Zealand and Ireland. As a result of our strong brands and established retail presence, we have been able to lease high-traffic locations.

The following table provides the number of our company-owned retail stores in operation for each location as of January 1, 2019, 2018 and 2017.

Store Location (State/City) |  | Country |  | January 1, 2017 |  |  | January 1, 2018 |  |  | January 1, 2019 |
Australian Capital Territory |  | Australia |  |  | 1 |  |  |  | 1 |  |  |  | 1 |
New South Wales |  | Australia |  |  | 8 |  |  |  | 8 |  |  |  | 8 |
Queensland |  | Australia |  |  | 5 |  |  |  | 7 |  |  |  | 6 |
South Australia |  | Australia |  |  | 1 |  |  |  | 1 |  |  |  | 1 |
Victoria |  | Australia |  |  | 9 |  |  |  | 10 |  |  |  | 9 |
Western Australia |  | Australia |  |  | 1 |  |  |  | 0 |  |  |  | 2 |
North Island |  | New Zealand |  |  | 28 |  |  |  | 31 |  |  |  | 29 |
South Island |  | New Zealand |  |  | 5 |  |  |  | 5 |  |  |  | 7 |
Kildare |  | Ireland |  |  | 1 |  |  |  | 0 |  |  |  | 0 |

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The following table provides the changes in the number of our company-owned retail stores operated for the past five calendar years.

Calendar Year |  | Beginning of Year |  |  | Opened |  |  | Closed |  |  | End of Year |
2018 |  |  | 62 |  |  |  | 4 |  |  |  | (3 | ) |  |  | 63 |
2017 |  |  | 59 |  |  |  | 5 |  |  |  | (2 | ) |  |  | 62 |
2016 |  |  | 52 |  |  |  | 8 |  |  |  | (1 | ) |  |  | 59 |
2015 |  |  | 50 |  |  |  | 3 |  |  |  | (1 | ) |  |  | 52 |
2014 |  |  | 54 |  |  |  | 2 |  |  |  | (6 | ) |  |  | 50 |

Franchise, License and Wholesale Arrangements

In addition to our company-owned stores, our products are sold at many partner locations in 43 countries. Under these arrangements, third parties operate stores that sell our products under brand names. Revenue recognized under franchise and license arrangements generally consists of royalties earned and recognized upon sale of merchandise by franchise and license partners to retail customers. Revenue is generally recognized under wholesale arrangements at the time the title passes to the partner. We continue to increase the number of locations under these types of arrangements as part of our international expansion.

The following table provides the number of partner stores that sell our products as of January 1, 2019, 2018 and 2017.

Wholesale doors, excluding distributors |  | January 1, 2017 |  |  | January 1, 2018 |  |  | January 1, 2019 |
ANZ |  | Australia & New Zealand |  |  | 1,783 |  |  |  | 1,344 |  |  |  | 1,078 |
UK |  | United Kingdom |  |  | 166 |  |  |  | 137 |  |  |  | 2 |
INTL |  | International |  |  | 106 |  |  |  | 105 |  |  |  | 5 |
US |  | United States of America |  |  | 1,595 |  |  |  | 5,204 |  |  |  | 4,456 |
Total |  |  |  |  | 3,650 |  |  |  | 6,790 |  |  |  | 5,241 |

Additional Information

Merchandise Suppliers

During the twelve months ended January 31, 2019, 2018 and 2017, we purchased merchandise from approximately 59, 22 and 23 suppliers located primarily in China. We believe price volatility is low.

Distribution and Merchandise Inventory

Most of our merchandise is shipped from our suppliers to our distribution centers in New Zealand and Los Angeles. We use a variety of shipping terms that result in the transfer to us of title to the merchandise at either the point of origin or point of destination. From our distribution centers, our merchandise is transported to our wholesale customers, to our retail stores and directly to consumers who purchase online.

Our policy is to maintain sufficient quantities of inventories on hand in our retail stores and distribution centers to enable us to offer customers an appropriate selection of current merchandise. We emphasize rapid turnover and take markdowns as required to keep merchandise fresh and current.

Information Systems

Our management information systems consist of a full range of retail, financial and merchandising systems. The systems include applications related to point-of-sale, e-commerce, merchandising, planning, sourcing, logistics, inventory management, data security and support systems including human resources and finance.

Seasonal Business

Our operations are seasonal in nature and consist of two selling periods across the year, where the second selling season generates the most sales (the August to January period). This second selling period, which includes the holiday season, accounted for approximately 57%, 54% and 56% of our net sales for the twelve months ended January 31, 2019, 2018 and 2017, respectively, and is typically our most profitable period.

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Working Capital

We fund our business operations through a combination of available cash and cash equivalents, cash flows generated from operations and equity and debt financing transactions. In addition, our senior credit facilities are available for additional working capital needs and investment opportunities.

Regulation

We and our products are subject to regulation by various federal, state, local and foreign regulatory authorities. We are subject to a variety of customs regulations and international trade arrangements.

Legal Proceedings

From time to time, we are subject to certain legal proceedings and claims in the ordinary course of business. We are not presently party to any legal proceedings the resolution of which we believe would have a material adverse effect on our business, financial condition, operating results or cash flows. We establish reserves for specific legal matters when we determine that the likelihood of an unfavorable outcome is probable and the loss is reasonably estimable.

Trademarks and Patents

Our trademarks and patents, which constitute our primary intellectual property, have been registered or are the subject of pending applications in 20 countries and with the registries of many foreign countries and/or are protected by common law. All Heidi Klum and Frederick’s of Hollywood trademarks are licensed under license agreements, while all of our other trademarks are company-owned. We believe our products are identified by our intellectual property and, thus, our intellectual property is of significant value. Accordingly, we intend to maintain our intellectual property and related registrations and vigorously protect our intellectual property assets against infringement.

Competition

The sale of women’s intimate and other apparel, personal care and beauty products and accessories through retail stores is a highly competitive business. Our competitors are numerous and include individual and chain specialty stores, department stores and discount retailers. Brand image, marketing, design, price, service, assortment and quality are the principal competitive factors in retail store sales. Our online businesses compete with numerous online merchandisers. Image presentation, fulfillment and the factors affecting retail store sales discussed above are the principal competitive factors in online sales.

Employee Relations

As of January 31, 2019, we employed approximately 772 employees, 537 of whom were part-time or casual. The number of employees, by geography, is noted in the table below.

Region |  | Employees |
Australia |  |  | 332 |
New Zealand |  |  | 400 |
United Kingdom |  |  | 12 |
Hong Kong |  |  | 7 |
United States of America |  |  | 21 |

None of the employees are currently covered by a collective bargaining agreement. We have had no labor-related work stoppages and believes its relations with its employees are excellent.

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C. | Organizational Structure

The following chart illustrates the organizational structure of us and our subsidiaries as of the date of this Annual Report:

D. | Property, Plants and Equipment

The disclosure set forth under “Real Estate” on page 19 is incorporated herein by reference.

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ITEM 4A. UNRESOLVED STAFF COMMENTS

None.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion and analysis (this “MD&A”) for Bendon Limited provides information concerning our financial condition and results of operations for the year ended January 31, 2019, 2018 and 2017 and should be read in conjunction with our audited consolidation financial statements and the related notes included in Part III, Item 17, “Financial Statements.” Our selected financial information are reported for the fiscal years ended January 31, 2019 and 2018, for the seven month period ended January 31, 2017, and for the fiscal year ended June 30, 2016. In order to provide additional meaningful information to investors, we have included unaudited consolidated information for the 12 month period ended January 31, 2017, and for the seven month period ended January 31, 2016. This unaudited information is presented for comparative purposes to the corresponding fiscal year ended January 31, 2018 and for the seven month period ended January 31, 2017, and is derived from accounting records.

The following discussion contains forward-looking statements that reflect our future plans, estimates, belief, and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside our control. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include those discussed elsewhere in this Form 20-F, particularly in Part I, Item 3.D, “Risk Factors” and in “Cautionary Note Regarding Forward-Looking Statements.” In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur.

Basis of Presentation

The Audited Annual Consolidated Financial Statements of the Company have been prepared in accordance with IFRS as issued by the IASB, and are presented in thousands of New Zealand dollars, except where otherwise indicated. However, certain financial measures contained in this MD&A are non-IFRS measures and are discussed further under “Non-IFRS Measures” below. All references to “$” and “dollars” refer to New Zealand dollars, unless otherwise indicated. Certain totals, subtotals and percentages throughout this MD&A may not reconcile due to rounding.

Introduction

We are a designer, distributor, wholesaler and retailer of women’s and men’s intimates apparel and swimwear. Our merchandise is sold through retail and outlet stores located in New Zealand and Australia, wholesale operations in New Zealand, Australia, the United States of America and Europe, and through online channels. We operate licensed brands including Heidi Klum and Frederick’s of Hollywood, and owned brands including Pleasure State, Davenport, Lovable, Bendon, Fayreform, VaVoom, Evollove, and Hickory. We also operated the Stella McCartney brand until June 30, 2018, at which time Bendon Limited’s license to use the brand terminated. Key customers include Farmers, Myer, David Jones and Woolworths.

All dollar values discussed below are presented in New Zealand dollars.

In keeping with customary practice in New Zealand, our fiscal years end on June 30. Subsequent to registration, Bendon Limited changed its fiscal year end to January 31 and align with Naked’s fiscal year end.

Overview

Year ended January 31, 2019 and year ended January 31, 2018

During the 12- month period ended January 31, 2019 and 12-month period ended January 31, 2018 we incurred a net comprehensive loss of ($49.2m) and ($37.4m) respectively.

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Net sales in the 12-month period ended January 31, 2019 decreased by $19.5m, or 14.8%, to $111.9m when compared with $131.4m in the 12-month period ended January 31, 2018. The sales in the 12-month period ending January 31, 2019 were negatively impacted by a stock supply issue because of liquidity issues. In addition, we also ended our wholesale relationship with key major accounts in the U.S. market. Our strategic decision to exit the E.U./U.K. market as well as the loss of the Stella McCartney license also contributed to the reduction in sales for the Company.

Brand management expenses decreased by $4.4m, or 8.2% from $53.7m to $49.3m in the 12-month period ended January 31, 2019 as compared with the 12-month period ended January 31, 2018. This was largely due to cost savings in our store overheads and reduced marketing spend.

Corporate expenses increased by $1.3m, or 10.1%, from $12.8m to $14.1m in the 12-month period ended January 31, 2019 as compared with the 12-month period ended January 31, 2018, primarily driven by increased salary allocation and rental costs.

Finance expenses decreased by $4.8m, or 54.5% from $8.8m to $4.0m in the 12-month period ended January 31, 2019 as compared with the 12-month period ended January 31, 2018, due to a reduction in interest on both external borrowings and shareholder loans.

Brand transition, restructure and transaction expenses increased by $6.8m, or 212.5%, from $3.2m to $10.0m in the 12-month period ended January 31, 2019 as compared with the 12-month period ended January 31, 2018, which was driven by costs incurred in respect of the U.S. listing process.

Impairment expense increased by $6.3m, or 331.6%, from $1.9m to $8.2m in the 12-month period ended January 31, 2019 as compared with the 12-month period ended January 31, 2018, which was driven by stock supply issue because of liquidity issues.

Other foreign currency gains increased by $1.2m or 159.2% from $0.7m to $1.9m in the 12-month period ended January 31, 2019 as compared with the 12-month period ended January 31, 2018, due to positive movements in exchange rates on foreign exchange contracts.

Year ended January 31, 2018 and 12-month period ended January 31, 2017 (unaudited)

During the 12- month period ended January 31, 2018 and 12-month period ended January 31, 2017, we incurred a net comprehensive loss of ($37.4m) and ($39.9m) respectively.

Net sales in the 12-month period ended January 31, 2018 decreased by $20.75m, or 13.6%, to $131.4m when compared with $152.1m in the 12-month period ended January 31, 2017. The sales in the 12-month period ending January 31, 2018 were negatively impacted by a stock supply issue because of liquidity issues.

During the 12-month period ended January 31, 2018 and the 12-month period ended January 31, 2017, the gross margin was 33.4% and 44.6% respectively. The reduction in gross margin was caused by increased discounts provided to customers and sub-optimal stock mix because of the stock supply issue.

Finance expenses decreased by $2.4m, or 21.6% from $11.2m to $8.8m in the 12-month period ended January 31, 2018 as compared with the 12-month period ended January 31, 2017, due to a reduction in interest on the shareholder loan due to the principal amount of such loans being reduced, the majority of which was converted to equity in September 2016.

Brand transition, restructure and transaction expenses increased by $0.8m, or 34.7%, from $2.4m to $3.2m in the 12-month period ended January 31, 2018 as compared with the 12-month period ended January 31, 2017, which was driven by costs incurred in respect of the U.S. listing process.

Other foreign currency gains/(losses) reduced from a loss of $14.3m in 12-month period ended January 31, 2017 to a gain of $0.7m in the 12-month period ended Jan 31, 2018, due to positive movements in exchange rates on foreign exchange contracts.

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7-month period ended January 31, 2017, 7-month period ended January 31, 2016 (unaudited), the 12 month period ended June 30, 2016 and the 12 month period ended June 30, 2015

During the 7-months ended January 31, 2017 and 12-month period ended June 30, 2016 and 12-month period ended June 30, 2015, we incurred a net comprehensive loss of ($16.0m), ($20.7m) and ($13.2m) respectively.

Net sales in the 12 month period ended June 30, 2016 increased by $12.2m, or 8.8%, to $151.0m when compared with $138.8m in the 12 month period ended June 30, 2015. This was driven by extension of the business into providing advisory and management services to other intimates apparel businesses, favorable foreign exchange rate fluctuations between the New Zealand dollar and United States Dollar, growth in U.S. wholesale distribution through a new contract with Macy’s, growth in the online business and introduction of 8 new stores across Australia.

Net sales in the 7-month period ended January 31, 2017 increased by $1.6m, or 1.7%, to $96.2m when compared with $94.7m in the 7-month period ended January 31, 2016. Sales were negatively impacted by a stock supply issue, and less favorable foreign exchange rate fluctuations between the New Zealand dollar and U.S. Dollar, which was offset by the beneficial impact of a new licensing agreement with Frederick’s of Hollywood.

During the 7-month period ended January 31, 2017, the 7-month period ended January 31, 2016, the 12 month period ended June 30, 2016 and the 12 month period ended June 30, 2015, the gross margin was 40.7%, 45.1%, 44.7%, and 43.1%, respectively. The movement in gross margin has remained fairly consistent, but has improved due to changes in the sales mix including additional online revenue, as well as positive foreign exchange rate fluctuations.

Brand management expenses increased by $6.2m, or 14.6%, from $42.2m to $48.4m between the 12 month period ended June 30, 2015 and the 12 month period ended June 30, 2016. This was largely driven by growth in business and associated employee costs, as well as additional marketing expenditures to support the introduction of new swimwear ranges. The increase of $4.4m, or 15.9%, from $27.6m to $32.0m in the 7-month period to January 31, 2017 as compared with the 7-month period to January 31, 2016, was also driven by additional marketing expenditures.

Finance expenses increased by $4.5m, or 77.3%, between the 12 month period ended June 30, 2015 and the 12 month period ended June 30, 2016 from $5.9m to $10.4m, due to additional interest expense associated with an increase in debt. The finance expense in the 7-month period to January 31, 2016 and January 31, 2017 increased slightly due to additional interest on convertible loan notes being partially offset by a reduction in interest on the shareholder loan due to the principal amount of such loans being reduced, the majority of which was converted to equity in September 2016.

Brand transition, restructure and transaction expenses of $1.3m, $2.2m and $12.2m were incurred in the 7-month period ended January 31, 2017, the 12 month period ended June 30, 2016 and the 12 month period ended June 30, 2015, respectively. The biggest driver for this decrease was a reduction in brand transition expenses incurred in relation to the transition from the Elle MacPherson to Heidi Klum brand which decreased over time given the Elle MacPherson license was terminated in the fiscal year 2015.

An impairment expense of $2.2m was recognized in the 12 month period ended June 30, 2016 and 7-month period to January 31, 2016 in relation to a goodwill write-off. An impairment expense of $0.3m was recognised in 7-month period to January 31, 2017.

Other foreign currency gains/(losses) reduced from a gain of $4.7m the 12 month period ended June 30, 2015 to a loss of $2.4m in the 12 month period ended June 30, 2016 due to weakening of the New Zealand dollar and the impact of unfavorable hedge contracts entered into. Other foreign currency gains/(losses) reduced from a gain of $5.7m in the 7-month period to January 31, 2016 to a loss of $3.3m in the 7-month period to January 31, 2017 as a result of the same foreign exchange drivers.

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Application of Critical Accounting Policies, Estimates, and Judgements

Our accounting policies form the basis for preparation of our financial statements and our financial statements in tum are an essential factor in understanding our operations. Our accounting policies are in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and are fully described in the notes to our audited financial statements as of and for the year ended January 31, 2019, year ended January 31, 2018, 7-month period ended January 31, 2017 and the two years ended June 30, 2016 and June 30, 2015. The preparation of our financial statements required management to make judgments, estimates, assumptions and judgments that affect the reported amounts of revenue, assets, liabilities and expenses. Our management re-evaluates estimates on an on-going basis and such estimates are based on historical experience and on various other assumptions that management believes to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. Unless otherwise stated, all dollar amounts stated in our financial statements are expressed in the currency of the Commonwealth of Australia.

Critical accounting policies

Critical accounting policies that reflect our industry and activity specific accounting treatments used in preparing our financial statements as of the 12 month period ended January 31, 2019, 12 month period ended January 31, 2018, the 7- month period ended January 31, 2017, the 12 month period ended June 30, 2016 and the 12 month period ended June 30, 2015 or that have significant potential to result in a material adjustment to the carrying amounts of assets and liabilities during each of the years.

(a) Going concern

The financial statements have been prepared on the basis of going concern which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business.

For the financial year ended 31 January 2019 the Group experienced a loss after income tax from continuing operations of NZ$49.220million and operating cash outflows of NZ$9.434 million. It also is in a net current liability position of $NZ29.426 million and a positive net asset position of NZ$10.519 million.

The losses in the year ended 31 January 2019 were a result of reduced revenue from wholesale customers, increased rebates and discounts, and the plateauing of sales in retail outlets believed to be due to the stores and stockists not having new high margin inventory. The business is experiencing challenging trading conditions which have been impacted by the cancellation of the Stella McCartney licence held by the Group which expired on 30 June 2018, the lack of working capital to purchase sufficient levels of inventory required for trading, reduced customer foot traffic in retail stores and outlets, and a reduction of revenue from wholesale customers. The business also incurred NZ$10.075 million of non-trading costs in relation to brand transition, restructure, and transaction costs associated with listing the Group on the Nasdaq stock exchange. The Group also has trade creditors that are trading beyond their original credit terms.

The Group has also breached its Bank debt loan covenants during financial year, and the Bank has extended the facility from being due on 30 June 2019 to being due or subject to renewal on 31 August 2019. The extension of time in the term of the facility is to provide the Group and the Bank time to consider a refinance of the facility to a longer term to assist the group continue as a going concern.

In consequent to the challenging trading conditions and the negative working capital the business raised NZ$23.248 million of funds in the form of issued capital and convertible notes over the course of the financial year and generated further working capital by reducing inventory by NZ$9.993 million. The Group used the funds to reduce the bank debt from NZ$38.489 million to NZ$20.000 million, reduce long overdue trade creditors (both pre and post year end), fund operating losses, reduce costs, rebuild higher margin inventory, recruit new staff, and pay the costs of listing on the Nasdaq stock exchange.

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The funds raised and cash flow generated during the financial year ended 31 January 2019 have not been sufficient to provide the Group with adequate working capital, so subsequent to the end of the financial year management has taken steps to raise further capital to complete a program that will fund new inventory that will restock stores and supply wholesale customers, fund further losses, reduce out of term creditors, reduce costs, and provide funds to amortise the Bank debt. It is expected the group will need to continue to fund losses through to the start of the year beginning 1 February 2021. This capital raising/recapitalisation is continuing at the time of this report with management having set a target to raise a further NZ$31.587 million between March 2019 and 31 January 2020. At the date of this report management had raised NZ$12.179 million and was still planning on raising NZ$19.409 million, of which NZ$4.347 million is in the forecast for collection in June 2019, NZ$7.31 million in July 2019; and NZ$7.531 million in October 2019. The Group may need to raise further funds beyond these amounts to fund the period to 31 January 2022.

Management has also engaged in further restructuring of the businesses operations including reducing costs across distribution channels, renegotiating supplier contracts, resetting customer supply commitments, updating leadership roles including appointing a new CEO (which occurred in October 2018) at the Bendon Limited level and the Naked Brand Group Limited level in April 2019, for the operating business, and managing the opening of new stores. The impact from the proposed capital raising and the restructure will take time to generate positive cash flows from operations. The Group expects the business will trend to be cash flow positive by through the year ending 31 January 2021, but will not be fully cash flow positive until the beginning of the year ending 31 January 2022.

As part of the discussions to renegotiate the Bank facilities the Bank appointed an independent review accountant (Review Accountant) to review the cash flow and working capital history and forecasts. The Review Accountant issued a report which is consistent with the information in this note and the Bank has advised they will continue to monitor the Group’s performance during the Bank debt renegotiation process through a formal appointment of a Review Accountant. The Directors expect the Bank to offer a new one year facility with amortisation over the next twelve months by 31 August 2019. The offer of a new Bank facility is dependent on the Group achieving inventory covenants set by the Bank through to 31 August 2019 and the Bank being satisfied that the Group has progressed with securing the remaining capital planned of $NZD$19.409 million.

The directors have also considered the Loan Agreement from its previous major shareholder Cullen Investments Limited (“Cullen”) and has been advised by Cullen that due to some changes with Cullen’s financial circumstances Cullen is not likely to be a reliable source of funding and as a result the directors have decided to pursue new capital raising activities and not rely on Cullen.

Despite the ongoing losses, reduced cash flow and cash facilities, and the other negative financial conditions, the Directors are confident that the Group will continue as a going concern. However, while the Directors are confident of continuing as a going concern and meeting its debt obligation to its Bank and creditor commitments as they fall due, the going concern is dependent upon the Directors and Group being successful in:

| ● | Raising further capital in line with the Group’s cashflow forecast of at least NZ$19.409 million and collecting it between June 2019 and October 2019 (NZ$4.347 million in June 2019; NZ$7.531 million in July 2019; and NZ$7.531 million in October 2019) then raising follow on capital (the amount is yet to be determined) to fund the business through until it expects to become cash flow positive;
| ● | Generating sufficient sales and increasing gross margins and reducing overheads from trading in line with forecast;
| ● | Having sufficient funds from the capital raised to reduce costs, recruit new staff, rebuild higher margin inventory, increasing revenue across the wholesale and retail channels, increase gross margin percentages and contribution that leads to a reduction in the current cash outflow being incurred each month to reach a cash flow positive position, and to reduce bank debt;
| ● | Continue to receive support from creditors to delay payment of overdue amounts until the Group has adequate cash flow to commence a repayment arrangement or repay the debt in full;and
| ● | Renegotiating the current bank facilities of $20 million to a facility that is at least a 12 month facility, reviewed annually that commences before the current facilities mature on 31 August 2019; and

(b) Revenue recognition

Revenue is recognised when the amount of the revenue can be measured reliably, it is probable that economic benefits associated with the transaction will flow to the Company and specific criteria relating to the type of revenue as noted below, has been satisfied.

Revenue is measured at the fair value of the consideration received or receivable and is presented net of returns, discounts and rebates. The Company assess the expected customer returns and rebates according to the specific information in its possession and its past experience in similar cases.

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Sale of goods

Sales of goods through retail stores, e commerce and wholesale channels are recognised when control of the products have been transferred to the customer which is a point in time. For wholesale and e commerce sales, risks and rewards are transferred when goods are delivered to customers, and therefore reflects an estimate of shipments that have not been received at year end based on shipping terms and historical delivery times. The Company also provides a reserve for projected merchandise returns based on prior experience.

The Company sells gift cards to customers. The Company recognises revenue from gift cards when they are redeemed by the customers. In addition, the Company recognises revenue on all of its unredeemed gift cards when the gift cards have expired.

Significant Accounting Judgments, Estimates, and Assumptions

Significant accounting judgments, estimates, and assumptions that have been used in the preparation of our financial statements are set out below. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.

We make estimates and assumptions concerning the future in determining accounting treatments and quantifying amounts for transactions and balances in certain circumstances. 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.

Key estimates — inventory

Each item on inventory is reviewed on an annual basis to determine whether it is being carried at higher than its net realizable value. During the period, management have written down inventory based on best estimate of the net realizable value, although until the time that inventory is sold this is an estimate.

Key estimates — impairment of goodwill

In accordance with IAS 36 Impairment of Assets, the Company is required to estimate the recoverable amount of goodwill at each reporting period.

Impairment testing is an area involving management judgement, requiring assessment as to whether the carrying value of assets can be supported by the net present value of future cash flows derived from such assets using cash flow projections which have been discounted at an appropriate rate and using a terminal value to incorporate expectations of growth thereafter.

In calculating the net present value of the future cash flows, certain assumptions are required to be made in respect of highly uncertain matters including management’s expectations of:

| — | growth in EBITDA future cash flows;
| — | timing and quantum of future capital expenditure;
| — | long-term growth rates; and
| — | the selection of discount rates to reflect the risks involved.

Changing the assumptions selected by management, in particular the discount rate and growth rate assumptions used in the cash flow projections, could significantly affect the Company’s impairment evaluation and hence results.

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The Company’s review includes the key assumptions related to sensitivity in the cash flow projections. Further details are provided in note15(c) to the consolidated financial statements.

Key estimates — fair value of financial instruments

The Company has certain financial assets and liabilities which are measured at fair value. Where fair value has not been able to be determined based on quoted price, a valuation model has been used. The inputs to these models are observable, where possible, however these techniques involve significant estimates and therefore fair value of the instruments could be affected by changes in these assumptions and inputs.

Key estimates — impairment of brands

In accordance with IFRS 36 Impairment of Assets, the Company is required to estimate the recoverable amount of indefinite-lived brand assets at each reporting period.

Impairment testing is an area involving management judgement, requiring assessment as to whether the carrying value of assets can be supported by their value in use or fair value less cost to sell.

In calculating the fair value less costs to sell, certain assumptions are required to be made in respect of highly uncertain matters including management’s expectations of:

| — | growth in brand revenues
| — | market royalty rate
| — | the selection of discount rates to reflect the risks involved, and
| — | long-term growth rates

Changing the assumptions selected by management, in particular the growth rate, discount rate and market royalty rate assumption used, could significantly affect the Company’s impairment evaluation and hence results.

The Company’s review includes the key assumptions related to sensitivity in the model. Further details are provided in note 15 to the consolidated financial statements.

Key estimates — taxes

Determining income tax provisions and the recognition of deferred tax assets including carried forward income tax involves judgment on the tax treatment of certain transactions. Deferred tax is recognised on tax losses not yet used and on temporary differences where it is probable that there will be taxable revenue against which these can be offset. Management has made judgments as to the probability of future taxable income being generated against which tax losses will be available for offset based on budgets, current and future expected economic conditions.

Recent Accounting Pronouncements

New Accounting Standards and Interpretations

Certain new accounting standards and interpretations have been published that are not mandatory for January 31, 2019 reporting periods and have not been early adopted by the Company. The Company’s assessment of the impact of these new standards and interpretations is set out below.

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Title of Standard |  | Nature of change |  | Impact |  | Mandatory application date/Date of adoption by Company
IFRS 16 Leases |  | In February 2016 the IASB issued a new standard for leases. This AASB 16 replaces IAS 17. The main impact on lessees is that almost all leases go on balance sheet. This is because the balance sheet distinction between operating and finance leases is removed for lessees. Instead, under the new standard an asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only exemptions are short-term and low-value leases. |  | Management is currently assessing the impact of the new rules and believes the adoption of the provisions of this update will have a material impact on the Company’s consolidated financial statements. The new standard will require that we record a liability and a related asset on the balance sheet for our leased facilities. |  | Management is currently assessing the impact of the new rules and believes the adoption of the provisions of this update will have a material impact on the Company’s consolidated financial statements. Mandatory for financial years commencing on or after January 1, 2019. Expected date of adoption by the Company: February 1, 2019.
IFRC 23 Uncertainty over Income Tax Treatments (IFRIC 23) |  | On June 7, 2017, the IASB issued IFRIC 23, Uncertainty over Income Tax Treatments (“IFRIC 23”). IFRIC 23 clarifies the application of recognition and measurement requirements in IAS 12, Income Taxes, when there is uncertainty over income tax treatments. The IFRIC 23 interpretation specifically addresses whether an entity considers uncertain tax treatments separately; the assumptions an entity makes about the examination of tax treatments by taxation authorities; how an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates; and how an entity considers changes in facts and circumstances. |  | The Company is currently evaluating the impact of adopting this standard on the consolidated financial statements. |  | IFRIC 23 is effective for annual periods beginning on or after January 1, 2019, with earlier application permitted.

There are no other standards that are not yet effective and that would be expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

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Recent Developments

On February 14, 2019, Carole Hochman resigned from the board of directors and as our Executive Chairman, and from all other positions she held with our subsidiaries. Ms. Hochman’s resignation was for personal reasons, and was not due to any disagreement with us or our management on any matter relating to our operations, policies or practices (financial or otherwise).

In March 2019, we issued 1,400,000 Naked Ordinary Shares and 1,400,000 warrants to purchase Naked Ordinary Shares to a service provider in exchange for services. The warrants have an exercise price of US$0.50 and expire two years from the date of issuance. The exercise price and the number of shares covered by the warrants are subject to adjustment for stock splits, stock combinations and certain other transactions affecting the share capital as a whole.

On the March 27, 2019, the Company closed on the following share issuances.

| (1) | NZ$6.60 million/US$4.50 million related to the issue of 11,248,415 Naked Ordinary Shares to trade creditors in satisfaction of trade payables due to them, at an effective per share price of US$0.40.
| (2) | NZ$1.25 million/US$0.85 million related to the issue of 2,119,178 Naked Ordinary Shares to the holder of one of our outstanding promissory notes in the amount of US$847,671, at an effective per share price of US$0.40 per share.
| (3) | NZ$1.69 million/US$1.15 million related to the issue of 4,510,588 Naked Ordinary Shares to investors in a private placement at a share price of US$0.255. The investors also received warrants to purchase 100% of the number of Naked Ordinary Shares for which they had subscribed. The warrants have an exercise price of US$0.306 and expire two years from the date of issuance. The exercise price and the number of shares covered by the warrants are subject to adjustment for stock splits, stock combinations and certain other transactions affecting the share capital as a whole.
| (4) | NZ$4.05 million/US$2.75 million relating to the issue of 10,784,313 Naked Ordinary Shares to certain accredited investors at an agreed per share price of US$0.255, except that, to the extent an investor would beneficially own more than 9.9% of our outstanding Naked Ordinary Shares after the closing, we agreed to issue the investor a March Pre-Funded Warrant in lieu of such shares. Each investor also received a March Investment Warrant to purchase 100% of the number of Naked Ordinary Shares for which it had agreed to subscribe. As a result, we issued 3,914,846 Naked Ordinary Shares, March Pre-Funded Warrants to purchase 6,869,467 Naked Ordinary Shares and March Investment Warrants to purchase 10,784,313 Naked Ordinary Shares to the investor at the closing. The March Investment Warrants have an exercise price of US$0.306 per share and expire five years from the date of issuance. The March Pre-Funded Warrants have an exercise price of US$0.01 per share and expire five years from the date of issuance. The exercise price and number of shares covered by the March Warrants are subject to adjustment for stock splits, stock combinations and certain other transactions affecting the share capital as a whole, as well as for subsequent equity issuances occurring prior to July 16, 2019, subject to certain exceptions. If the exercise price of the March Warrants is higher than the last closing bid price of the Naked Ordinary Shares, at any time starting on June 16, 2019, the March Warrants may be exercised on a cashless basis for a number of shares equal to the Black-Scholes value of the portion of the warrant being exercised (as calculated in accordance with the March Warrants), divided by the closing bid price as of two business days prior to the exercise date (but not less than US$0.10). The March Warrants may not be exercised to the extent the holder and its affiliates would beneficially own more than 9.9% of our outstanding Ordinary Shares after such exercise.

On April 2, 2019, the board of directors appointed Anna Johnson as our Chief Executive Officer. Ms Johnson was previously Chief Executive Officer of Bendon Limited, the Company’s main operating entity. In connection with Ms. Johnson’s appointment, Justin Davis-Rice was appointed as Executive Chairman and resigned as our Chief Executive Officer.

Effective on May 13, 2019, we completed a private placement of a Secured Convertible Promissory Note (the “Note”) to St. George Investments LLC (the “Noteholder”) for a purchase price of US$3,000,000, pursuant to a Securities Purchase Agreement (the “NSPA”) of even date. Pursuant to the NSPA, the Note was sold with an original issue discount of the US$300,000 and we paid US$20,000 of the Noteholder’s expenses, which amount was added to the principal balance of the Note. Accordingly, the Note had an initial principal balance of US$3,320,000. The NSPA includes certain customary representations and warranties and covenants. In addition, we agreed that, so long as the Note is outstanding, we will not issue any debt instrument or incur any debt, subject to certain exceptions, including an exception for any debt incurred from a bank. The Note accrues interest at a rate of 10% per annum, compounded daily, and matures on November 13, 2020. We have the right to prepay the Note, subject to a 15% premium. The Note is secured by a second priority security interest in all our assets and is subordinated to the Company’s existing senior secured credit facility with BNZ. The Noteholder has the right to convert the Note into Naked Ordinary Shares at a conversion price of US$0.90 per share, subject to adjustment for subdivisions or combinations of the ordinary shares. The Noteholder also has the right, beginning on December 13, 2019, to cause us to redeem any portion of the Note, up to a maximum of US$400,000 per month.

| 35 |

On the May 14, 2019, we closed on NZ$2.17 million/US$1.5million share issuance of 6,000,000 shares to an investor in a private placement at a share price of US$0.25. The investor also received warrants to purchase 1,000,000 Naked Ordinary Shares. The warrants have an exercise price of US$0.25, subject to adjustment, and expire two years from the date of issuance.

On May 16, 2019, we issued 653,595 ordinary shares in exchange for the cancellation of US$200,000 in debt held by a shareholder, or an effective purchase price of US$0.306 per share.

On June 11, 2019, we announced that we had appointed David Anderson to become our new Chief Financial Officer. Previously, Mr. Anderson served as Head of Finance for Goodman Fielder, one of the largest consumer goods companies in New Zealand, where he oversaw all financial aspects of the business and led numerous acquisitions. Mr. Anderson will succeed Howard Herman, our current Chief Financial Officer, after the filing with the SEC of certain amendments to our existing registration statements, but no later than June 20, 2019. In connection with the appointment of Mr. Anderson, Mr. Herman is resigning from all positions held by him with our company.

Our senior secured credit facility with the Bank matures on August 31, 2019 and discussions are continuing to extend the facility beyond that point. As at October 31, 2018, there was a breach in minimum gross EBITDA ratio. As at January 31, 2019, there was a breach of the minimum Gross EBITDA ratio and a breach of the inventory and receivables ratio. The Bank has advised that they are currently taking these breaches under review.

A. | Operating Results

Year ended January 31, 2019 compared to year ended January 31, 2018

The following table sets forth certain selected operating results and other financial information for each of the years ended January 31, 2019, 2018 and 2017:

|  | Jan. 31, 2019 NZ$000 12 months |  |  | Jan. 31, 2018 NZ$000 12 months |  |  | % movement FY19 v FY18 |  |  | Unaudited Jan. 31, 2017 NZ$000 12 months |  |  | % movement FY18 v FY17 |
Revenue |  |  | 111,920 |  |  |  | 131,388 |  |  |  | -14.8 | % |  |  | 152,144 |  |  |  | -13.6 | %
Cost of goods sold |  |  | (74,480 | ) |  |  | (87,459 | ) |  |  | -14.8 | % |  |  | (84,358 | ) |  |  | 3.7 | %
Gross profit |  |  | 37,440 |  |  |  | 43,929 |  |  |  | -14.8 | % |  |  | 67,786 |  |  |  | -35.2 | %
Brand management |  |  | (49,256 | ) |  |  | (53,653 | ) |  |  | -8.2 | % |  |  | (53,957 | ) |  |  | -0.6 | %
Administrative expenses |  |  | (3,432 | ) |  |  | (4,131 | ) |  |  | -16.9 | % |  |  | (3,712 | ) |  |  | 11.3 | %
Corporate expenses |  |  | (14,145 | ) |  |  | (12,851 | ) |  |  | 10.1 | % |  |  | (12,920 | ) |  |  | -0.5 | %
Finance expense |  |  | (4,041 | ) |  |  | (8,791 | ) |  |  | -54.0 | % |  |  | (11,214 | ) |  |  | -21.6 | %
Brand transition, restructure and transaction expenses |  |  | (10,075 | ) |  |  | (3,272 | ) |  |  | 207.9 | % |  |  | (2,430 | ) |  |  | 34.7 | %
Impairment expense |  |  | (8,173 | ) |  |  | (1,914 | ) |  |  | 326.9 | % |  |  | (2,865 | ) |  |  | -33.2 | %
Other foreign currency gains/(losses) |  |  | 1,963 |  |  |  | 757 |  |  |  | 159.3 | % |  |  | (14,327 | ) |  |  | -105.3 | %
Fair value gain/(loss) on convertible notes derivative |  |  | (775 | ) |  |  | 2,393 |  |  |  | -132.4 | % |  |  | (592 | ) |  |  | -504.5 | %
Loss before income tax |  |  | (50,494 | ) |  |  | (37,533 | ) |  |  | 34.5 | % |  |  | (34,230 | ) |  |  | 9.7 | %
Income tax benefit/(expense) |  |  | 1,274 |  |  |  | (60 | ) |  |  | -2223.3 | % |  |  | (6,123 | ) |  |  | -99.0 | %
Loss for the period |  |  | (49,220 | ) |  |  | (37,593 | ) |  |  | 30.9 | % |  |  | (40,352 | ) |  |  | -6.8 | %
Other comprehensive loss |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Exchange differences on translation of foreign operations |  |  | (7 | ) |  |  | 148 |  |  |  | -104.7 | % |  |  | 384 |  |  |  | -61.5 | %
Total comprehensive loss for the period |  |  | (49,227 | ) |  |  | (37,445 | ) |  |  | 31.5 | % |  |  | (39,968 | ) |  |  | -6.3 | %

| 36 |

Year ended January 31, 2018 compared to 12-month period ended January 31, 2017 (unaudited)

The following table sets forth certain selected operating results and other financial information for each of the years ended January 31, 2018 and 2017:

|  |  |  |  | Unaudited |  |  |  |
|  | Jan. 31, |  |  | Jan. 31, |  |  |  |
|  | 2018 |  |  | 2017 |  |  |  |
|  | NZ$000 |  |  | NZ$000 |  |  | % |
|  | 12 months |  |  | 12 months |  |  | movement |
Revenue |  |  | 131,388 |  |  |  | 152,144 |  |  |  | -13.6 | %
Cost of goods sold |  |  | (87,459 | ) |  |  | (84,358 | ) |  |  | 3.7 | %
Gross profit |  |  | 43,929 |  |  |  | 67,786 |  |  |  | -35.2 | %
Brand management |  |  | (53,653 | ) |  |  | (53,957 | ) |  |  | -0.6 | %
Administrative expenses |  |  | (4,131 | ) |  |  | (3,712 | ) |  |  | 11.3 | %
Corporate expenses |  |  | (12,851 | ) |  |  | (12,920 | ) |  |  | -0.5 | %
Finance expense |  |  | (8,791 | ) |  |  | (11,214 | ) |  |  | -21.6 | %
Brand transition, restructure and transaction expenses |  |  | (3,272 | ) |  |  | (2,430 | ) |  |  | 34.7 | %
Impairment expense |  |  | (1,914 | ) |  |  | (2,865 | ) |  |  | -33.2 | %
Other foreign currency gains/(losses) |  |  | 757 |  |  |  | (14,327 | ) |  |  | -105.3 | %
Fair value gain/(loss) on convertible notes derivative |  |  | 2,393 |  |  |  | (592 | ) |  |  | -504.5 | %
Loss before income tax |  |  | (37,533 | ) |  |  | (34,230 | ) |  |  | 9.7 | %
Income tax benefit/(expense) |  |  | (60 | ) |  |  | (6,123 | ) |  |  | -99.0 | %
Loss for the period |  |  | (37,593 | ) |  |  | (40,352 | ) |  |  | -6.8 | %
Other comprehensive loss |  |  |  |  |  |  |  |  |  |  |  |
Exchange differences on translation of foreign operations |  |  | 148 |  |  |  | 384 |  |  |  | -61.5 | %
Total comprehensive loss for the period |  |  | (37,445 | ) |  |  | (39,968 | ) |  |  | -6.3 | %

* Note that January 31, 2017 is not an annual period, rather it has been derived from accounting records, to provide a 12 month comparative to the January 31, 2018 annual period.

7-month period ended January 31, 2017 compared to 7-month period ended January 31, 2016 and 12-month period ended June 30, 2016 compared to 12-month period ended June 30, 2015

The following table sets forth certain selected operating results and other financial information for each of the 7-month periods ended January 31, 2017 and 2016, and each of the years ended June 30, 2016 and 2015:

|  | Jan. 31, 2017 NZ$000 seven months |  |  | Unaudited Jan. 31, 2016 NZ$000 seven months |  |  | % movement |  |  | Jun. 30, 2016 NZ$000 12 months |  |  | Jun. 30, 2015 NZ000$ 12 months |  |  | % movement |
Revenue |  |  | 96,284 |  |  |  | 94,667 |  |  |  | 1.7 | % |  |  | 151,000 |  |  |  | 138,838 |  |  |  | 8.8 | %
Cost of goods Sold |  |  | (57,144 | ) |  |  | (51,998 | ) |  |  | 9.9 | % |  |  | (83,525 | ) |  |  | (79,031 | ) |  |  | 5.7 | %
Gross Profit |  |  | 39,140 |  |  |  | 42,669 |  |  |  | -8.3 | % |  |  | 67,475 |  |  |  | 59,807 |  |  |  | 12.8 | %
Brand Management |  |  | (32,040 | ) |  |  | (27,647 | ) |  |  | 15.9 | % |  |  | (48,362 | ) |  |  | (42,203 | ) |  |  | 14.6 | %
Administrative expenses |  |  | (2,383 | ) |  |  | (2,109 | ) |  |  | 13.0 | % |  |  | (4,090 | ) |  |  | (4,691 | ) |  |  | -12.8 | %
Corporate expenses |  |  | (8,082 | ) |  |  | (8,236 | ) |  |  | -1.9 | % |  |  | (13,002 | ) |  |  | (13,940 | ) |  |  | -6.7 | %
Finance expense |  |  | (6,238 | ) |  |  | (5,436 | ) |  |  | 14.8 | % |  |  | (10,409 | ) |  |  | (5,870 | ) |  |  | 77.3 | %
Brand transition, restructure and transaction expense |  |  | (1,321 | ) |  |  | (1,122 | ) |  |  | 17.7 | % |  |  | (2,232 | ) |  |  | (12,182 | ) |  |  | -81.7 | %
Impairment expense |  |  | (292 | ) |  |  | (2,157 | ) |  |  | -86.5 | % |  |  | (2,157 | ) |  |  | - |  |  |  | 100.0 | %
Other foreign currency gains/(losses) |  |  | (3,306 | ) |  |  | 5,685 |  |  |  | -158.2 | % |  |  | (2,423 | ) |  |  | 4,700 |  |  |  | -151.6 | %
Fair value gain/(loss) on convertible notes derivative |  |  | (592 | ) |  |  | - |  |  |  | 100.0 | % |  |  | - |  |  |  | - |  |  |  | 0 | %
Profit/(Loss) before income tax |  |  | (15,114 | ) |  |  | 1,647 |  |  |  | -1017.7 | % |  |  | (15,200 | ) |  |  | (14,379 | ) |  |  | 5.7 | %
Income tax benefit/(expense) |  |  | (865 | ) |  |  | (289 | ) |  |  | 199.3 | % |  |  | (5,546 | ) |  |  | 1,274 |  |  |  | -535.3 | %
Profit/(Loss) for the period |  |  | (15,979 | ) |  |  | 1,358 |  |  |  | -1276.7 | % |  |  | (20,746 | ) |  |  | (13,105 | ) |  |  | 58.3 | %
Other comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Exchange differences on translation of foreign operations |  |  | (29 | ) |  |  | (379 | ) |  |  | -92.3 | % |  |  | 31 |  |  |  | (93 | ) |  |  | -133.3 | %
Total comprehensive income/(loss) for the period |  |  | (16,008 | ) |  |  | 979 |  |  |  | -1735.2 | % |  |  | (20,715 | ) |  |  | (13,198 | ) |  |  | 57.0 | %

| 37 |

Revenue

Year ended January 31, 2019 compared to 12-month period ended January 31, 2018

During the 12-month period ended January 31, 2019 the net sales decreased by $19.5m or 14.8% when compared with $131.4m in the 12-month period ended January 31, 2018. The sales in the 12-month period ended January 31, 2019 continued to be negatively impacted by a stock supply issue because of liquidity issues. In addition, we also ended our wholesale relationship with key major accounts in the US market. Our strategic decision to exit the EU/UK market as well as the loss of the Stella McCartney license also contributed to the reduction in sales for the Company.

One new store was opened in Australia, as well as three new stores in New Zealand to continue to expand our brand presence across the Australasian market during the year ended January 31, 2019. During the current financial year, we also successfully acquired both the Naked and Fredricks of Hollywood entities.

Year ended January 31, 2018 compared to 12-month period ended January 31, 2017 (unaudited)

During the 12-month period ended January 31, 2018 the net sales decreased by $20.75m or 13.6% when compared with $152.1m in the 12-month period ended January 31, 2017. The sales in the 12-month period ended January 31, 2018 were negatively impacted by a stock supply issue because of liquidity issues. Three new stores were opened in Australia, as well as two new stores in New Zealand to continue to expand our brand presence across the Australasian market.

7-month period ended January 31, 2017 compared to the 7-month period ended January 31, 2016 (unaudited) and 12-month period ended June 30, 2016 compared to the 12-month period ended June 30, 2015

Net sales in the 7-month period ended January 31, 2017 increased by $1.6m, or 1.7%, to $96.2m when compared with $94.7m in the 7-month period ended January 31, 2016. Sales were negatively impacted by a stock supply issue, and less favorable foreign exchange rate fluctuations between the New Zealand dollar and U.S. Dollar, which was offset by the beneficial impact of a new licensing agreement with Frederick’s of Hollywood.

Net sales in the 12-month period ended June 30 2016 increased by $12.2m, or 8.8%, to $151.0m when compared with $138.8m in the 12-month period ended June 30 2015. This was driven by the extension of the business into providing advisory and management services to other intimate apparel businesses, favorable foreign exchange rate fluctuations between the New Zealand dollar and U.S. Dollar, growth in U.S. wholesale distribution through a new contract with Macy’s, growth in the online business and introduction of 8 new stores across Australia.

Gross margins

Year ended January 31, 2019 compared to 12-month period ended January 31, 2018

During the 12-month period ended January 31, 2019 and the 12-month period ended January 31, 2018, the gross margin was 33.5% and 33.4% respectively. The movement year on year is consistent, however the margin continues to be impacted by the sales mix, discounts provided to customers and a lack of current season stock because of the supply issue.

| 38 |

Year ended January 31, 2018 compared to 12-month period ended January 31, 2017 (unaudited)

During the 12-month period ended January 31, 2018 and the 12-month period ended January 31, 2017, the gross margin was 33.4% and 44.6% respectively. The reduction in gross margin was caused by increased discounts provided to customers and sub-optimal stock mix because of the stock supply issue.

7-month period ended January 31, 2017 compared to 7-month period ended January 31, 2016 and 12-month period ended June 30, 2016 compared to 12-month period ended June 30, 2015

During the 7-month period ended January 31, 2017, the 7-month period ended January 31, 2016, 12-month period ended June 30 2016 and 12-month period ended June 2015, the gross margin was 40.7%, 45.1%, 44.7%, and 43.1%, respectively. The movement in gross margin has remained fairly consistent, but has improved due to changes in the sales mix including additional online revenue, as well as positive foreign exchange rate fluctuations.

Operating expenses

Year ended January 31, 2019 compared to 12-month period ended January 31, 2018

|  | Jan. 31, 2019 NZ$000 12 months |  |  | Jan. 31, 2018 NZ$000 12 months |  |  | % movement FY19 v FY18 |  |  | Unaudited Jan. 31, 2017 NZ$000 12 months |  |  | % movement FY18 v FY17 |
Brand management |  |  | (49,256 | ) |  |  | (53,653 | ) |  |  | -8.2 | % |  |  | (53,957 | ) |  |  | -0.6 | %
Administrative expenses |  |  | (3,432 | ) |  |  | (4,131 | ) |  |  | -16.9 | % |  |  | (3,712 | ) |  |  | 11.3 | %
Corporate expenses |  |  | (14,145 | ) |  |  | (12,851 | ) |  |  | 10.1 | % |  |  | (12,920 | ) |  |  | -0.5 | %
Finance expense |  |  | (4,041 | ) |  |  | (8,791 | ) |  |  | -54.0 | % |  |  | (11,214 | ) |  |  | -21.6 | %
Brand transition, restructure and transaction expenses |  |  | (10,075 | ) |  |  | (3,272 | ) |  |  | 207.9 | % |  |  | (2,430 | ) |  |  | 34.7 | %
Impairment expense |  |  | (8,173 | ) |  |  | (1,914 | ) |  |  | 326.9 | % |  |  | (2,865 | ) |  |  | -33.2 | %
Other foreign currency gains/(losses) |  |  | 1,963 |  |  |  | 757 |  |  |  | 159.3 | % |  |  | (14,327 | ) |  |  | -105.3 | %
Fair value gain/(loss) on convertible notes derivative |  |  | (775 | ) |  |  | 2,393 |  |  |  | -132.4 | % |  |  | (592 | ) |  |  | -504.5 | %

Brand management decreased by $4.4m, or 8.2% from $53.6m to $49.2m in the 12-month period ended January 31, 2019 as compared with the 12-month period ended January 31, 2018. This was largely due to cost savings in our store overheads and reduced marketing spend.

Administrative expenses decreased by $0.7m, or 17% from $4.1m to $3.4m in the 12-month period ended January 31, 2019 as compared with the 12-month period ended January 31, 2018. This was due to cost saving initiatives implemented by our new CEO who joined us during the financial year ended January 31, 2019.

Corporate expenses increased by $1.3m, or 10.1%, from $12.8m to $14.1m in the 12-month period ended January 31, 2019 as compared with the 12-month period ended January 31, 2018, which was primarily driven by an increase in salary and rental costs.

Finance expenses decreased by $4.8m, or 54.5% from $8.8m to $4.0m in the 12-month period ended January 31, 2019 as compared with the 12-month period ended January 31, 2018, due to a reduction in interest on both external borrowings and shareholder loans.

| 39 |

Brand transition, restructure and transaction expenses increased by $6.4m, or 195.9%, from $3.2m to $9.6m in the 12-month period ended January 31, 2019 as compared with the 12-month period ended January 31, 2018, which was driven by costs incurred in respect of the US listing process.

Impairment expense increased by $6.3m, or 331.6%, from $1.9m to $8.2m in the 12-month period ended January 31, 2019 as compared with the 12-month period ended January 31, 2018, which was driven by stock supply issue due to liquidity issues.

Other foreign currency gains increased by $1.2m or 159.2% from $0.7m to $1.9m in the 12-month period ended January 31, 2019 as compared with the 12-month period ended January 31, 2018 due to gains on foreign exchange contracts.

Year ended January 31, 2018 compared to 12-month period ended January 31, 2017 (unaudited)

|  |  |  |  | Unaudited |  |  |  |
|  | Jan. 31, |  |  | Jan. 31, |  |  |  |
|  | 2018 |  |  | 2017 |  |  |  |
|  | NZ$000 |  |  | NZ$000 |  |  | % |
|  | 12 months |  |  | 12 months |  |  | movement |
Brand management |  |  | (53,653 | ) |  |  | (53,957 | ) |  |  | -0.6 | %
Administrative expenses |  |  | (4,131 | ) |  |  | (3,712 | ) |  |  | 11.3 | %
Corporate expenses |  |  | (12,851 | ) |  |  | (12,920 | ) |  |  | -0.5 | %
Finance expense |  |  | (8,791 | ) |  |  | (11,214 | ) |  |  | -21.6 | %
Brand transition, restructure and transaction expenses |  |  | (3,272 | ) |  |  | (2,430 | ) |  |  | 34.7 | %
Impairment expense |  |  | (1,914 | ) |  |  | (2,865 | ) |  |  | -33.2 | %
Other foreign currency gains/(losses) |  |  | 757 |  |  |  | (14,327 | ) |  |  | -105.3 | %
Fair value gain/(loss) on convertible notes derivative |  |  | 2,393 |  |  |  | (592 | ) |  |  | -504.5 | %

Brand management expenses decreased by $0.3m, or 0.6%, from $53.9m to $53.6m in the 12-month period to January 31, 2018 as compared with the 12-month period to January 31, 2017. This reduction was due to the increased focus on cost control in this area.

Administrative expenses increased by $0.4m or 11.3% from $3.7m to $4.1m in the 12-month period to January 21, 2018 as compared with the 12-month period to January 31, 2017. This increase was due to a higher spend on accounting and tax fees associated with the US listing process.

Corporate expenses are consistent with the prior 12-month period. The slight decrease of $69k, or 0.5% between the 12-month period ended to January 31, 2018 and 12- month period to January 31, 2017, from $12.92m to $12.85m is considered immaterial.

Finance expenses decreased by $2.4m, or 21.6% from $11.2m to $8.8m in the 12-month period ended January 31, 2018 as compared with the 12-month period ended January 31, 2017, due to a reduction in interest on the shareholder loan due to the principal amount of such loans being reduced, the majority of which was converted to equity in September 2016.

Brand transition, restructure and transaction expenses increased by $0.8m, or 34.7%, from $2.4m to $3.2m in the 12-month period ended January 31, 2018 as compared with the 12-month period ended January 31, 2017, which was driven by costs incurred in respect of the US listing process.

Impairment expense decreased by $0.95m or 33.2% from $2.8m to $1.9m in the 12-month period ended January 31, 2018 as compared with the 12-month period ended January 31, 2017. During the current financial year an impairment expense of $1.6m was incurred as management impaired the costs incurred on the ERP upgrade, as this software will need to be replaced and updated with a more advanced system. In the 12-month period ended January 31, 2017 an impairment expense of $2.2m was recognized in relation to a goodwill write-off.

| 40 |

Other foreign currency gains/(losses) reduced from a loss of $14.3m in 12-month period ended January 31, 2017 to a gain of $0.7m in the 12-month period ended Jan 31, 2018, due to gains on foreign exchange contracts.

Fair value gain/(loss) on convertible notes derivative was a gain of $2.4m in 12-month period ended January 31, 2018 compared to a loss of $0.6m the period ended January 31, 2017. This is because the derivative ended at conversion date.

7-month period ended January 31, 2017 compared to 7-month period ended January 31, 2016 and 12-month period ended June 30, 2016 compared to 12-month period ended June 30, 2015

|  | Jan. 31, 2017 NZ$000 seven months |  |  | Unaudited Jan. 31, 2016 NZ$000 seven months |  |  | % movement |  |  | Jun. 30, 2016 NZ$000 12 months |  |  | Jun. 30, 2015 NZ000$ 12 months |  |  | % movement |
Brand management |  |  | (32,040 | ) |  |  | (27,647 | ) |  |  | 15.9 | % |  |  | (48,362 | ) |  |  | (42,203 | ) |  |  | 14.6 | %
Administrative expenses |  |  | (2,383 | ) |  |  | (2,109 | ) |  |  | 13.0 | % |  |  | (4,090 | ) |  |  | (4,691 | ) |  |  | -12.8 | %
Corporate expenses |  |  | (8,082 | ) |  |  | (8,236 | ) |  |  | -1.9 | % |  |  | (13,002 | ) |  |  | (13,940 | ) |  |  | -6.7 | %
Finance expense |  |  | (6,238 | ) |  |  | (5,436 | ) |  |  | 14.8 | % |  |  | (10,409 | ) |  |  | (5,870 | ) |  |  | 77.3 | %
Brand transition, restructure, and transaction expenses |  |  | (1,321 | ) |  |  | (1,122 | ) |  |  | 17.7 | % |  |  | (2,232 | ) |  |  | (12,182 | ) |  |  | -81.7 | %
Impairment expense |  |  | (292 | ) |  |  | (2,157 | ) |  |  | -86.5 | % |  |  | (2,157 | ) |  |  | — |  |  |  | 100.0 | %
Other foreign currency gains/(losses) |  |  | (3,306 | ) |  |  | 5,685 |  |  |  | -158.2 | % |  |  | (2,423 | ) |  |  | 4,700 |  |  |  | -151.6 | %
Fair value gain/(loss) on convertible notes derivative |  |  | (592 | ) |  |  | - |  |  |  | 100.0 | % |  |  | - |  |  |  | - |  |  |  | 0 | %

Brand management expenses increased by $6.2m, or 14.6%, from $42.2m to $48.4m between the 12-month period ended June 30 2015 and 12-month period ended June 30 2016. This was largely driven by growth in business and associated employee costs, as well as additional marketing expenditures to support the introduction of new swimwear ranges. The increase of $4.4m, or 15.9%, from $27.6m to $32.0m in the 7-month period to January 31, 2017 as compared with the 7- month period to January 31, 2016, was also driven by additional marketing expenditures.

Finance expenses increased by $4.5m, or 77.3%, between the 12-month period ended June 30 2015 and 12-month period ended June 30 2016, from $5.9m to $10.4m, due to additional interest expense associated with an increase in debt. The finance expense in the 7- month period to January 31, 2016 and January 31, 2017 remained consistent due to additional interest on convertible loan notes being partially offset by a reduction in interest on the shareholder loan due to the principal amount of such loans being reduced, the majority of which was converted to equity in September 2016.

Brand transition, restructure and transaction expenses decreased by $10.0m from $12.2m in fiscal year 2015 to $2.2m in fiscal year 2016. This was largely driven by a reduction in brand transition expenses incurred in relation the transition from the Elle MacPherson to Heidi Klum brand of $9.2m, given the licence arrangement terminated in fiscal year 2015 and therefore majority of the associated costs were recognized in the same period.

Brand transition, restructure and transaction expenses decreased by $0.9m from $2.2m in the 12-month period ended June 30 2016 to $1.3m in the 7-month period ended January 31, 2017, largely due to a $0.9m decrease in Heidi Klum brand transition costs due to any non-recurring costs associated with the transition having been incurred prior to the 7-months ended January 31, 2017.

An impairment expense of $2.2m was recognized in the 12-month period ended June 30 2016 and 7-month period to January 31, 2016 in relation to a goodwill write-off. An impairment expense of $0.3m was recognised in the 7- month period to January 31, 2017.

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Other foreign currency gains/(losses) reduced a gain of $4.7m in the 12-month period ended June 30 2015 to a loss of $2.4m in the 12-month period ended June 30 2016, due to weakening of the New Zealand dollar and the impact of unfavorable hedge contracts.

Other foreign currency gains/(losses) reduced a gain of $5.7m in the 7-month period to January 31, 2016 to a loss of $3.3m in the 7-month period to January 31, 2017 as a result of the same foreign exchange drivers.

Taxation

Year ended January 31, 2019 compared to 12-month period ended January 31, 2018

The tax benefit of $1,274k in the 12 month period ended January 31, 2019 was an increase of $1,334k when compared to the tax expense of $60k for the 12 month period ended January 31, 2018. This year on year movement is due to increased tax benefits resulting from the increased losses and adjustments for current tax for prior periods.

Year ended January 31, 2018 compared to 12-month period ended January 31, 2017 (unaudited)

The tax expense of $60k in the 12month period ended January 31, 2018 decreased by $6.06m when compared to the 12-month period ended January 31, 2017. The variance was due to the write off of the carrying value of prior year tax losses and deferred tax in the due to the uncertainty over whether the deferred tax asset could be utilized.

7-month period ended January 31, 2017 compared to the 7-month period ended January 31, 2016 (unaudited) and 12-month period ended June 30, 2016 and the 12-month period ended June 30, 2015

The tax benefit of $1.3m in the 12-month period ended June 30 2015, increased by $6.8m, which resulted in a tax expense of $5.5m in the 12-month period ended June 30 2016. A tax expense of $0.9m was recognised in the 7- month period to January 31, 2017. The variances were caused by a write off of the carrying value of prior year tax losses and deferred tax temporary differences in the 12-month period ended June 30 2016 due to uncertainty over future profitability to ensure utilization of the deferred tax assets.

The effective tax rate for the 7-month period ended January 31, 2017, the 12-month period ended June 30 2016 and the 12-month period ended June 30 2015 was 5.7%, 36.5% and 8.9%, respectively. These effective tax rates can be explained by deferred tax credits not brought to accounts due to uncertainty over their availability for utilization.

Net loss and comprehensive loss

Year ended January 31, 2019 compared to 12-month period ended January 31, 2018

The net loss in the 12-month period ended January 31, 2019 increased by $11.2m, or 29.9%, to ($48.9m) when compared with ($37.4m) in the 12-month period ended January 31, 2018. This was due to both the decrease in gross profit of $6.5m and the increase in expenses of $6.4m in the 12-month period ended January 31, 2019 when compared with the 12-month period ended January 31, 2018.

Year ended January 31, 2018 compared to 12-month period ended January 31, 2017 (unaudited)

The net loss in the 12-month period ended January 31, 2018 decreased by $2.5m, or 6.3%, to ($37.4m) when compared with ($39.9m) in the 12-month period ended January 31, 2017. The decrease in gross profit of $23.9m in the 12-month period ended January 31, 2018 when compared with the 12-month period ended January 31, 2017 was significantly offset by the reduction in expenses of $20.5m when comparing the same 12 month periods. Tax expense also decreased by $6.06m when compared to the 12-month period ended January 31, 2017 to $60k in the 12month period ended January 31, 2018. The variance was due to the write off of the carrying value of prior year tax losses and deferred tax in the due to the uncertainty over whether the deferred tax asset could be utilized.

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7-month period ended January 31, 2017 compared to the 7-month period ended January 31, 2016 (unaudited) and 12-month period ended June 30, 2016 and the 12-month period ended June 30, 2015

For the seven months ended January 31, 2017 and fiscal years ended June 30, 2016 (fiscal year 2016) and June 30, 2015 (fiscal year 2015), we incurred a net comprehensive loss of ($16.0m), ($20.7m) and ($13.2m) respectively. Gross profit for the seven month period ended January 31, 2017, the seven month period ended January 31, 2016, fiscal year 2016 and fiscal year 2015 was 40.7%, 45.1%, 44.7%, and 43.1%, respectively. The movement in gross margin has remained fairly consistent, but improved due to changes in the sales mix including additional online revenue, as well as positive foreign exchange rate fluctuations. The tax benefit of $1.3m in fiscal year 2015, increased by $6.8m, which resulted in a tax expense of $5.5m in fiscal year 2016. A tax expense of $0.9m was recognised in the seven month period to January 31, 2017. The variances were caused by a write off of the carrying value of prior year tax losses and deferred tax temporary differences in fiscal year 2016 due to uncertainty over future profitability to ensure utilization of the deferred tax assets.

The net loss in the 6-month period ended July 31, 2017 increased by $4.8m, or 34.8%, to ($18.5m) when compared with ($13.7m) in the 12-month period ended July 31, 2016. This net loss was due to a reduction in gross profit, which decreased $13.6m in the 6-month period ended July 31, 2017 when compared with the 6-month period ended July 31, 2016, however this was partially offset by a reduction in expenses of $2.2m and a reduction in income tax expense of $5.9m for the 6-month period ended July 31, 2017 when compared with the 6-month period ended July 31, 2016.

Segmented Reporting

Bendon Limited has seven reportable segments: Australia retail, New Zealand retail, Australia wholesale, New Zealand wholesale, US wholesale, Europe wholesale and E-commerce.

| ● | Australia retail. This segment covers retail and outlet stores located in Australia.
| ● | New Zealand retail. This segment covers retail and outlet stores located in New Zealand.
| ● | Australia wholesale. This segment covers the wholesale of intimates apparel to customers based in Australia.
| ● | New Zealand wholesale. This segment covers the wholesale of intimates apparel to customers based in New Zealand.
| ● | US wholesale. This segment covers the wholesale of intimates apparel to customers based in the United States of America.
| ● | Europe wholesale. This segment covers the wholesale of intimates apparel to customers based in Europe.
| ● | E-commerce. This segment covers the Company’s online retail activities.

The following table provides our segment net sales, gross margin and EBITDA for the 12-month period to January 31, 2019, 2018 and 2017.

Year ending January 31, 2019

|  |  |  |  |  |  |  | NZ |  |  | AU |  |  | US |  |  | EU |  |  |  |  |  |  |  |  |  |
|  | NZ Retail |  |  | AU Retail |  |  | Wholesale |  |  | Wholesale |  |  | Wholesale |  |  | Wholesale |  |  | e-commerce |  |  | Unallocated |  |  |  |
|  | NZ$000’s |  |  | NZ$000’s |  |  | NZ$000’s |  |  | NZ$000’s |  |  | NZ$000’s |  |  | NZ$000’s |  |  | NZ$000’s |  |  | NZ$000’s |  |  | Total |
Revenue |  |  | 31,801 |  |  |  | 18,547 |  |  |  | 7,154 |  |  |  | 11,491 |  |  |  | 5,798 |  |  |  | 4,996 |  |  |  | 32,133 |  |  |  | - |  |  |  | 111,920 |
Gross margin |  |  | 16,377 |  |  |  | 9,355 |  |  |  | 782 |  |  |  | 2,993 |  |  |  | 576 |  |  |  | 506 |  |  |  | 10,885 |  |  |  | (4,034 | ) |  |  | 37,440 |
EBITDA |  |  | 3,373 |  |  |  | (1,337 | ) |  |  | (10 | ) |  |  | (1,309 | ) |  |  | (2.120 | ) |  |  | (1,006 | ) |  |  | (210 | ) |  |  | (22,983 | ) |  |  | (25,602 | )

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Year ending January 31, 2018

|  |  |  |  |  |  |  | NZ |  |  | AU |  |  | US |  |  | EU |  |  |  |  |  |  |  |  |  |
|  | NZ Retail |  |  | AU Retail |  |  | Wholesale |  |  | Wholesale |  |  | Wholesale |  |  | Wholesale |  |  | e-commerce |  |  | Unallocated |  |  |  |
|  | NZ$000’s |  |  | NZ$000’s |  |  | NZ$000’s |  |  | NZ$000’s |  |  | NZ$000’s |  |  | NZ$000’s |  |  | NZ$000’s |  |  | NZ$000’s |  |  | Total |
Revenue |  |  | 34,269 |  |  |  | 18,236 |  |  |  | 10,453 |  |  |  | 15,512 |  |  |  | 6,390 |  |  |  | 14,192 |  |  |  | 32,234 |  |  |  | 102 |  |  |  | 131,388 |
Gross margin |  |  | 17,781 |  |  |  | 8,779 |  |  |  | 2,240 |  |  |  | 2,967 |  |  |  | (48 | ) |  |  | 3,971 |  |  |  | 11,260 |  |  |  | (3,021 | ) |  |  | 43,929 |
EBITDA |  |  | 4,330 |  |  |  | (2,550 | ) |  |  | 1,172 |  |  |  | (814 | ) |  |  | (3,349 | ) |  |  | 1,067 |  |  |  | (260 | ) |  |  | (23,649 | ) |  |  | (24,053 | )

Year ending January 31, 2017 (Unaudited)

|  |  |  |  |  |  |  | NZ |  |  | AU |  |  | US |  |  | EU |  |  |  |  |  |  |  |  |  |
|  | NZ Retail |  |  | AU Retail |  |  | Wholesale |  |  | Wholesale |  |  | Wholesale |  |  | Wholesale |  |  | e-commerce |  |  | Unallocated |  |  |  |
|  | NZ$000’s |  |  | NZ$000’s |  |  | NZ$000’s |  |  | NZ$000’s |  |  | NZ$000’s |  |  | NZ$000’s |  |  | NZ$000’s |  |  | NZ$000’s |  |  | Total |
Revenue |  |  | 35,968 |  |  |  | 19,395 |  |  |  | 13,636 |  |  |  | 27,174 |  |  |  | 15,695 |  |  |  | 15,148 |  |  |  | 23,424 |  |  |  | 1,702 |  |  |  | 152,143 |
Gross margin |  |  | 20,761 |  |  |  | 10,958 |  |  |  | 4,072 |  |  |  | 9,764 |  |  |  | 4,979 |  |  |  | 5,013 |  |  |  | 10,879 |  |  |  | 1,358 |  |  |  | 67,785 |
EBITDA |  |  | 7,683 |  |  |  | 310 |  |  |  | 1,157 |  |  |  | 5,623 |  |  |  | 907 |  |  |  | 925 |  |  |  | 4,551 |  |  |  | (19,060 | ) |  |  | 2,098 |

For the 7-months ended January 31, 2017

|  | NZ Retail NZ$000’s |  |  | AU Retail NZ$000’s |  |  | NZ Wholesale NZ$000’s |  |  | AU Wholesale NZ$000’s |  |  | US Wholesale NZ$000’s |  |  | EU Wholesale NZ$000’s |  |  | e-commerce NZ$000’s |  |  | Unallocated NZ$000’s |  |  | Total |
Revenue |  |  | 21,953 |  |  |  | 12,053 |  |  |  | 7,484 |  |  |  | 18,091 |  |  |  | 9,015 |  |  |  | 9,548 |  |  |  | 18,140 |  |  |  | - |  |  |  | 96,284 |
Gross margin |  |  | 12,246 |  |  |  | 6,461 |  |  |  | 2,523 |  |  |  | 6,660 |  |  |  | 2,081 |  |  |  | 3,271 |  |  |  | 6,238 |  |  |  | (340 | ) |  |  | 39,140 |
EBITDA |  |  | 4,766 |  |  |  | 265 |  |  |  | 2,048 |  |  |  | 4,571 |  |  |  | 16 |  |  |  | 1,258 |  |  |  | 2,584 |  |  |  | (17,634 | ) |  |  | (2,126 | )

Year to June 30, 2016

|  | NZ Retail NZ$000’s |  |  | AU Retail NZ$000’s |  |  | NZ Wholesale NZ$ 000’s |  |  | AU Wholesale NZ$000’s |  |  | US Wholesale NZ$000’s |  |  | EU Wholesale NZ$000’s |  |  | e-commerce NZ$ 000’s |  |  | Unallocated NZ$000’s |  |  | Total |
Revenue |  |  | 37,389 |  |  |  | 20,680 |  |  |  | 15,071 |  |  |  | 28,021 |  |  |  | 18,876 |  |  |  | 16,531 |  |  |  | 6,722 |  |  |  | 7,710 |  |  |  | 151,000 |
Gross margin |  |  | 21,336 |  |  |  | 11,750 |  |  |  | 4,350 |  |  |  | 9,965 |  |  |  | 4,336 |  |  |  | 4,873 |  |  |  | 3,140 |  |  |  | 7,725 |  |  |  | 67,475 |
EBITDA |  |  | 9,073 |  |  |  | 1,915 |  |  |  | 3,641 |  |  |  | 6,445 |  |  |  | 1,519 |  |  |  | 1,669 |  |  |  | 1,101 |  |  |  | (14,893 | ) |  |  | 10,470 |

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Year to June 30, 2015

|  | NZ Retail NZ$000’s |  |  | AU Retail NZ$000’s |  |  | NZ Wholesale NZ$ 000’s |  |  | AU Wholesale NZ$000’s |  |  | US Wholesale NZ$000’s |  |  | EU Wholesale NZ$000’s |  |  | e-commerce NZ$ 000’s |  |  | Unallocated NZ$000’s |  |  | Total |
Revenue |  |  | 37,089 |  |  |  | 18,491 |  |  |  | 16,333 |  |  |  | 29,817 |  |  |  | 13,853 |  |  |  | 17,548 |  |  |  | 5,683 |  |  |  | 24 |  |  |  | 138,838 |
Gross margin |  |  | 20,819 |  |  |  | 10,425 |  |  |  | 5,355 |  |  |  | 11,356 |  |  |  | 2,924 |  |  |  | 6,290 |  |  |  | 2,611 |  |  |  | 27 |  |  |  | 59,807 |
EBITDA |  |  | 8,934 |  |  |  | 2,801 |  |  |  | 3,568 |  |  |  | 8,907 |  |  |  | 388 |  |  |  | 3,024 |  |  |  | 620 |  |  |  | (24,822 | ) |  |  | 3,420 |

(1) | Unallocated revenue, gross margin and EBITDA relates to revenue, gross margin and EBITDA that cannot be attributed directly to the other reportable segments above including various brand management and head office costs.

New Zealand and Australia Retail

In the 12-month period ended January 31, 2019 New Zealand retail EBITDA was $3.4m compared with $4.3m in the 12-month period to January 31, 2018. Australian Retail EBITDA for the 12-month period ended January 31, 2019 was a loss of $1.3m compared with a loss of $2.5m in the 12-month period to January 31, 2018. The retail environment continued to be challenging for our Bendon stores, and this along with a lack of current season stock supply were the key reasons for both the reduction in the New Zealand market EBITDA year on year as well as the continued operating loss in the Australian market.

In the 12-month period ended January 31, 2018 New Zealand retail EBITDA was $4.3m compared with $7.7m in the 12-month period to January 31, 2017. Australian Retail EBITDA for the 12-month period ended January 31, 2018 was a loss of $2.5m compared with a profit of $0.3m in the 12-month period to January 31, 2017. A challenging retail environment, seasonal product mix and vendor supply issues were the key reasons for this reduced EBITDA across both the New Zealand and Australian retail markets.

New Zealand Retail Gross margin reduced 5.8% between the 12-month period to January 31, 2018 and 12- month period to January 31, 2017 from 57.7% to 51.9%. Australia Retail Gross margin reduced 8.4% between the 12-month period to January 31, 2018 and 12- month period to January 31, 2017 from 56.5% to 48.1%. The reduction in the gross margin in both markets was caused by increased discounts provided to customers and sub-optimal stock mix because of the stock supply issue.

In the 7-month period ended January 31, 2017, the 12-month period ended June 30 2016, the 12-month period ended June 30 2015, New Zealand retail EBITDA was $4.8m, $9.1m, an d $8.9m respectively, as a result of similar trading conditions and consistent store numbers.

In the 12-month period ended June 30 2016, Australia retail recognized increased revenue and reduced EBITDA of $20.7m and $1.9m, respectively, as compared with $18.5m and $2.8m, respectively, in the 12-month period ended June 30 2015. The increase in revenue was due to the introduction of 8 new outlet stores, which due to early trading losses experienced reduced EBITDA. The revenue and EBITDA in the 7-month period to January 31, 2017 showed a consistent trend as compared with the 12-month period ended June 30 2016.

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NZ Wholesale, AU Wholesale, US Wholesale and EU wholesale

In the 12-month period ended January 31, 2019 the EBITDA loss decreased in the US market and increased in the NZ, AU and EU markets when compared with the 12-month period ended January 31, 2018. New Zealand wholesale EBITDA was a loss of $0.01m in the 12-months ended January 31, 2019 compared with an EBITDA profit of $1.1m in the 12-months ended January 31, 2018. AU wholesale EBITDA was a loss of $1.3m in the 12-months ended January 31, 2019 compared with an EBITDA loss of $0.8m in the 12-months ended January 31, 2018. US wholesale EBITDA was a loss of $2.1m in the 12-months ended January 31, 2019 compared with an EBITDA loss of $3.3m in the 12-months ended January 31, 2018. EU Wholesale EBITDA was a loss of $1.0m in the 12-months ended January 31, 2019 compared with a profit of $1.1m in the 12-months ended January 31, 2018.

In the 12-month period January 31, 2019, and 12-month period ended January 312, 2018 New Zealand wholesale revenue was $7.1m and $10.4m respectively. In the 12-month period ended January 31, 2019 New Zealand Wholesale EBITDA was a loss of $0.01m compared with a profit of $1.1m in the 12-month period to January 31, 2018. Both the reduction in sales, and EBITDA loss in the New Zealand market is attributed to a lack of order fulfillment due to the reduced stock supply, additional costs were also incurred as a result of unfulfilled orders.

In the 12-month period ended January 31, 2019 and 12-month period ended January 31, 2018, Australia wholesale revenue was $11.5m and $15.5m, respectively. In the 12-month period ended January 31, 2019 Australia Wholesale EBITDA was a loss of $1.3m compared with a loss of $0.8m in the 12-month period to January 31, 2018. The EBITDA loss for the Australian market was also due to a lack of fulfillment of orders because of the reduced stock supply.

US wholesale revenue dropped from $6.4m for the 12-month period ended January 31, 2018 to $5.8m for the 12-month period ended January 31, 2019. The EBITDA Loss for the period ended January 31, 2019 was $2.1m compared to the EBITDA loss of $3.3m for the year ended January 31,2018. The EBITDA loss incurred for the US Wholesale market was primarily due to our relationship ending with key major wholesale accounts.

In the 12-month period ended January 31, 2019, and the 12-month period ended January 31, 2018, EU wholesale revenue was $5.0m, and $14.2m respectively. The EBITDA Loss for the period ended January 31, 2019 was $1.0m compared to the EBITDA profit of $1.1m for the year ended January 31, 2018. A strategic decision was made by the business to exit the EU market and this is the key driver for reduction in sales and the loss for the current period.

In the 12-month period ended January 31, 2018 EBITDA increased in the NZ Wholesale and EU Wholesale markets and decreased in the AU Wholesale and US Wholesale markets when compared with the 12-month period ended January 31, 2017. New Zealand wholesale EBITDA was $1.17m in the 12-months ended January 31, 2018, compared with $1.15m in the 12-months ended January 31, 2017. AU wholesale EBITDA was a loss of $0.8m in the 12-months ended January 31, 2018, compared with an EBITDA profit of $5.6m in the 12-months ended January 31, 2017. US wholesale EBITDA was a loss of $3.3m in the 12-months ended January 31, 2018 compared with an EBITDA profit of $0.9m in the 12-months ended January 31, 2017. EU wholesale EBITDA was a profit of $1.1m in the 12-months ended January 31, 2018, compared with a profit of $0.9m in the 12-months ended January 31, 2017.

In the 12-month period ended January 31, 2018 and 12-month period ended January 31, 2017 New Zealand wholesale revenue was $10.4m and $13.6m, respectively. Cancellation of orders from our key account holders due to vendor supply issues were the key reasons for these reduced sales.

In the 12-month period ended January 31, 2018 and 12-month period ended January 31, 2017, Australia wholesale revenue was $15.5m and $27.1m, respectively. In the 12-month period ended January 31, 2018 Australia Wholesale EBITDA was a loss of $0.8m compared with a profit of $5.6m in the 12-month period to January 31, 2017. The EBITDA loss for the Australian market was due to the cancellation of multiple orders as a result of delayed supply, due to vendor delays and discounts offered to customers for delayed ranges.

US wholesale revenue dropped from $15.7m for the 12-month period ended January 31, 2017 to $6.4m for the 12-month period ended January 31, 2018. The EBITDA Loss for the period ended January 31, 2018 was $3.3m compared to the EBITDA profit of $0.9m for the year ended January 31,2017. The EBITDA loss incurred for the US Wholesale market was primarily due to our relationship ending with Macy’s

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In the 12-month period ended January 31, 2018, and the 12-month period ended January 31, 2017, EU wholesale revenue was $14.2m, and $15.1m respectively. EU Wholesale Gross margin decreased 5.1% between the 12-month period to January 31, 2018 and 12- month period to January 31, 2017 from 33.1% to 28%. These fluctuations were driven by changes in customer mix. EBITDA increased year on year, driven by a reduction in expenses.

In the 7-month period ended January 31, 2017, the 12-month period ended June 30 2016, and the 12-month period ended June 30 2015, New Zealand wholesale revenue was $7.5m, $15.1m, and $16.3m, respectively. In the 7-month period ended January 31, 2017, the 12-month period ended June 30 2016, and the 12-month period ended June 30 2015, Australia wholesale revenue was $18.1m, $28.0m and $29.8m, respectively. These fluctuations were driven by changes in customer mix and a general trend in the business to focus on its direct to consumer strategy. EBITDA for these respective segments was in line with sales movements.

US wholesale revenue grew from $13.9m in the 12-month period ended June 30 2015 to $18.9m in the 12-month period ended June 30 2016 as a result of a new Macy’s contract and favorable foreign exchange rate variances. U.S. wholesale revenue was $9.0m and EBITDA was $0.0m in the 7-month period to January 31, 2017 which was due to reduced business from Macy’s and less favorable foreign exchange movements than in the 12-month period ended June 30 2016. EBITDA for this segment was in line with sales movements.

In the 7-month period ended January 31, 2017, the 12-month period ended June 30 2016, and the 12-month period ended June 30 2015, EU wholesale revenue was $9.6m, $16.5m, and $17.5m respectively. These fluctuations were driven by changes in customer mix and general trend in the business to focus on its direct to consumer strategy. EBITDA for segments was in line with sales movements.

E-commerce

For the 12-months ended January 31, 2019 the e-commerce EBITDA was a loss of $0.2m compared with a loss of $0.3m for the 12-months ended January 31, 2018. The loss for this period was impacted by the reduction in gross margin between the 12-month period to January 31, 2019 and 12-month period to January 31, 2018 from 34.9% to 33.9%, sales are comparable year on year.

For the 12-months ended January 31, 2018 our e-commerce EBITDA was a loss of $0.3m compared with a profit of $4.5m for the 12-months ended January 31, 2017. The loss for this period is due to decrease in margin as a result of the new license fee under the license agreement with FOH and discounts offered to customers. E-commerce Gross margin reduced 11.5% between the 12-month period to January 31, 2018 and 12-month period to January 31, 2017 from 46.4% to 34.9%.

In the 12-month period ended June 30 2016, e-commerce Revenue grew to $6.7m from $5.7m in the 12-month period ended June 30 2015. This was as a result of changing consumer trends and a conscious shift in the business to focus on this revenue stream. EBIDA for this segment was in line with sales movements.

The e-commerce revenue and EBITDA increased significantly in the 7-month period to January 31, 2017, to $18.4m and $2.6m respectively. This was as a result of entering into a license agreement with Frederick’s of Hollywood. The previous management service arrangement with Frederick’s of Hollywood that existed in the 12-month period ended June 30 2016 was not allocated to this segment.

Non-IFRS Financial Measures

EBITDA is defined as earnings before interest, taxes, depreciation, depletion, amortization and impairment. Our management uses EBITDA as a measure of our operating results and considers it to be a meaningful supplement to net income as a performance measurement, primarily because we incur significant depreciation and depletion and impairment charges, and the exclusion of such amounts in EBITDA eliminates the non-cash impact.

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Reconciliations

Reconciliation of segment EBITDA to the consolidated statements of profit or loss and other comprehensive income follows:

Year ended January 31, 2019 compared to 12-month period ended January 31, 2018

|  | 12 months ended January 2019 NZ$000 |  |  | 12 months ended January 2018 NZ$000 |
Segment EBITDA |  |  | (25,602 | ) |  |  | (24,053 | )
Income tax (expense)/benefit |  |  | 1,274 |  |  |  | (60 | )
Any other reconciling items |  |  | (24,892 | ) |  |  | (13,480 | )
Total net loss after tax |  |  | (49,220 | ) |  |  | (37,593 | )

Year ended January 31, 2018 compared to 12-month period ended January 31, 2017 (unaudited)

|  | 12 months |  |  | Unaudited 12 months |
|  | ended |  |  | ended |
|  | January 2018 |  |  | January 2017 |
|  | NZ$000 |  |  | NZ$000 |
Segment EBITDA |  |  | (24,053 | ) |  |  | 2,098 |
Income tax (expense)/benefit |  |  | (60 | ) |  |  | (6,123 | )
Any other reconciling items |  |  | (13,480 | ) |  |  | (36,327 | )
Total net loss after tax |  |  | (37,593 | ) |  |  | (40,352 | )

7-month period ended January 31, 2017 compared to the 12-month period ended June 30, 2016 and the 12-month period ended June 30, 2015

|  | 7 months ended January 2017 NZ$000’s |  |  | 12 months ended June 2016 NZ$000’s |  |  | 12 months ended June 2015 NZ$000’s |
Segment EBITDA |  |  | (2,126 | ) |  |  | 10,470 |  |  |  | 3,420 |
Income tax (expense)/ benefit |  |  | (865 | ) |  |  | (5,546 | ) |  |  | 1,274 |
Other Revenue |  |  |  |  |  |  | 7,710 |  |  |  | 24 |
Any other reconciling items |  |  | (12,988 | ) |  |  | (33,380 | ) |  |  | (17,823 | )
Total net loss after tax |  |  | (15,979 | ) |  |  | (20,746 | ) |  |  | (13,105 | )

In each of the tables above, “other reconciling items” consist of brand transition, restructure and transaction expenses, finance expense, impairment expense, depreciation and amortization, fair value (gain)/loss on foreign exchange contracts, and unrealized foreign exchange (gain)/loss.

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B. | Liquidity, and Capital Resources

Liquidity

We finance our business through cash from operations and equity and debt financing. Our cash requirements have been principally to fund working capital needs, to support the growth of the business and to partially repay our bank loan.

Management intends to continue to raise funds from equity financing to fund our operations and objectives. There is no assurance the additional funding will be achieved. If we are unable to achieve the additional funding, we may not be able to conduct our operations and pursue our objectives as presently contemplated, which may adversely affect our results of operations and financial condition.

12-month period ended January 31, 2019 compared to 12-month period ended January 31, 2018

As at January 31, 2019 and January 31, 2018 the Company had cash totaling $1.9m and $10.7m respectively. During the 12-months ended January 31, 2019 and the 12-months ended January 31, 2018 insufficient cash availability directly contributed to a lack of stock.

During the year ended January 31, 2019, the Company has undertaken a number of financing activities and raised $23.6m. Of this amount, $18.5m was utilized to repay Bank debt and the balance was utilized as working capital in the operating business.

12-month period ended January 31, 2018 compared to 12-month period ended January 31, 2017

As of January 31, 2018, and January 31, 2017, the Company had cash totaling $10.7m and $2.6m respectively. During the 12-months ended January 31, 2018 and the 12-months ended January 31, 2017, insufficient cash liquidity contributed to a stock supply issue as described above.

During the year ended January 31, 2018, the Company issued an aggregate amount of USD $2,600,000 (NZ$3,544,649) of convertible notes.

Working capital

We have managed and continue to manage our working capital constraints through the deferral of creditor settlement. Our relationships with our suppliers are managed carefully and we do not have any significant concerns about the deferred payment arrangements. We are continuing to raise capital and believe that this will assist greatly in reducing the overdue creditor position in the coming financial year.

As of January 31, 2019 and January 31, 2018

|  | January 31, 2019 NZ$000 |  |  | January 31, 2018 NZ$000 |
Current Assets |  |  | 33,369 |  |  |  | 70,343 |
Current Liabilities |  |  | (62,795 | ) |  |  | (91,095 | )
Working Capital |  |  | (29,426 | ) |  |  | (20,752 | )

As of January 31, 2019, current assets decreased due to the reduction in related party receivables, the reduction in inventory because of the reduced stock supply, and the reduced trade and other receivables because of cancelled orders from our wholesale accounts due to ongoing stock supply issues. Our cash balance also reduced by $8.8m from $10.7m as at the year ended January 31, 2018 to $1.9m as at the year ended January 31, 2019.

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As of January 31, 2018 and January 31, 2017

|  | January 31, |  |  | January 31, |
|  | 2018 |  |  | 2017 |
|  | NZ$000 |  |  | NZ$000 |
Current Assets |  |  | 70,343 |  |  |  | 81,588 |
Current Liabilities |  |  | (91,095 | ) |  |  | (101,232 | )
Working Capital |  |  | (20,752 | ) |  |  | (19,644 | )

The negative working capital is primarily driven by the classification of bank debt and shareholder loan as current liabilities. As of January 31, 2018, current assets decreased due to both the reduction in inventory because of vendor supply issues and the reduced trade and other receivables as a result of cancelled orders from our wholesale accounts due to vendor supply issues

As of January 31, 2017, June 30, 2016 and June 30, 2015

|  | January 31, 2017 NZ$000’s |  |  | June 30, 2016 NZ$000’s |  |  | June 30, 2015 NZ000’s |
Current Assets |  |  | 81,588 |  |  |  | 74,807 |  |  |  | 70,026 |
Current Liabilities |  |  | (108,027 | ) |  |  | (94,794 | ) |  |  | (94,093 | )
Working Capital |  |  | (26,439 | ) |  |  | (19,987 | ) |  |  | (24,067 | )

The negative working capital is primarily driven by the classification of bank debt and shareholders loan as current liabilities.

Cash flows

Year ended January 31, 2019 compared to 12-month period ended January 31, 2018

|  | 12 months ended |  |  | 12 months ended |
|  | January 31, 2019 |  |  | January 31, 2018 |
|  |  | NZ$000 |  |  |  | NZ$000 |
Net cash outflow from operating activities |  |  | (9,434 | ) |  |  | (4,116 | )
Net cash outflow from investing activities |  |  | (1,867 | ) |  |  | (2,312 | )
Net cash inflow from financing activities |  |  | 2,168 |  |  |  | 14,496 |
Net increase/(decrease) in cash and cash equivalents held |  |  | (9,133 | ) |  |  | 8,068 |
Cash and cash equivalents at end of the year |  |  | 1,962 |  |  |  | 10,739 |

Operating Activities

Net cash outflow from operating activities for the 12-month period to January 31, 2019 and, 12-month period to January 31, 2018 was $9.4m, and $4.1m, respectively. This was largely because of the increased net loss for the current period. The company is committed to a strategic plan lead by our new CEO to create cost savings and manage the overhead structure moving forward, we anticipate that this plan will have a positive impact on our operating cashflow moving forward.

Investing Activities

Net cash outflow from investing activities for the 12-month period to January 31, 2019 and for the 12-month period to January 31, 2018 was $1.9m and $2.3m respectively. This was driven by the proceeds from the businesses acquired during the period.

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Financing Activities

Net cash inflow from financing activities for the 12-month period to January 31, 2019 and, 12-month period to January 31, 2018 was $2.2m, and $14.5m, respectively. During the 12-month period to January 31, 2019 the company raised $23.2m through the issue of shares. These funds were partially used to fund interest charges of $2.3m during the period, and to also repay the bank $18.5m.

Year ended January 31, 2018 compared to 12-month period ended January 31, 2017 (unaudited)

|  | 12 months |  |  | 12 months |
|  | ended |  |  | ended |
|  | January 31, |  |  | January 31, |
|  | 2018 |  |  | 2017 |
|  | NZ$000 |  |  | NZ$000 |
Net cash outflow from operating activities |  |  | (4,116 | ) |  |  | (15,160 | )
Net cash outflow from investing activities |  |  | (2,312 | ) |  |  | (2,933 | )
Net cash inflow from financing activities |  |  | 14,496 |  |  |  | 17,039 |
Net increase/(decrease) in cash and cash equivalents held |  |  | 8,068 |  |  |  | (1,053 | )
Cash and cash equivalents at end of the year |  |  | 10,739 |  |  |  | 2,645 |

Operating Activities

Net cash outflow from operating activities for the 12-month period to January 31, 2018 and, 12-month period to January 31, 2017 was $4.1m, and $15.1m, respectively. This was largely as a result of the net loss for the periods. Bendon Limited will continue to implement a restructure plan to create cost savings and manage the overhead structure, which will show as favorable impact in the cash flow going forward.

Investing Activities

Net cash outflow from investing activities for the 12-month period to January 31, 2018 and, 12-month period to January 31, 2017 was $2.3m, and $2.9m, respectively. This was largely driven by capital expenditure on property, plant and equipment in stores including enhancement of existing stores and introduction of new stores.

Financing Activities

Net cash inflow from financing activities for the 12-month period to January 31, 2018 and, 12-month period to January 31, 2017 was $14.5m, and $17m, respectively. During the 12-month period to January 31, 2018 the company raised $22m through the issue of shares and an additional $4.5m through convertible note issuance. These funds were used partly to fund interest charges of $3.4m during the period, and to also repay the bank $9.7m.

7-month period ended January 31, 2017 compared to 12-month period ended June 30, 2016 and 12-month period ended June 30 2015

|  | 7 months ended January 31, 2017 NZ$000’s |  |  | 12 months ended June 30, 2016 NZ$000’s |  |  | 12 months ended June 30, 2015 NZ000’s |
Net cash (outflow) from operating activities |  |  | (13,518 | ) |  |  | (5,040 | ) |  |  | (17,199 | )
Net cash (outflow) from investing activities |  |  | (1,074 | ) |  |  | (3,178 | ) |  |  | (5,794 | )
Net cash inflow from financing activities |  |  | 13,082 |  |  |  | 11,251 |  |  |  | 20,524 |
Net increase/decrease in cash and cash equivalents held |  |  | (1,510 | ) |  |  | 3,033 |  |  |  | (2,469 | )
Cash and cash equivalents |  |  | 2,644 |  |  |  | 4,193 |  |  |  | 1,246 |

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Operating Activities

Net cash (outflow) from operating activities for the 7-month period to January 31, 2017, 12 month period ended June 30 2016 and the 12 month period ended June 30, 2015 was $13.5m, $5.0m, and $17.2m, respectively, which was largely as a result of the net loss for the periods.

Investing Activities

Net cash (outflow) from investing activities for the 7-month period to January 31, 2017, the 12 month period ended June 30, 2016 and the 12 month period ended June 30, 2015 was $1.1m, $3.2m, and $5.8m respectively. This was largely driven by capital expenditure on property, plant and equipment in stores including enhancement of existing stores and introduction of new stores.

Financing Activities

Net cash inflow from financing activities for the 7- month period to January 31, 2017, the 12 month period ended June 30, 2016, and the 12 month period ended June 30, 2015 was $13.1m, $11.3m, and $20.5m respectively. Bank debt and shareholder loan finance increased in the 12 month period ended June 30 2015 and the 12 month period ended June 30 2016 to fund operating cash outflows. During the 7- month period ended January 31, 2017, in addition to additional bank and shareholder debt, cash was also raised through issuance of $16.5m in convertible note debt.

Indebtedness

Bank loan

On June 27, 2016, all banking facilities were repaid and a new banking arrangement with BNZ commenced. This debt arrangement with BNZ was entered into on June 27, 2016 and included a term loan facility and revolving (working capital) loan facility. The facility limits of the term loan and revolving loan were $54,000,000 in aggregate.

On June 13, 2018, we entered into a Deed of Amendment with BNZ to reduce the facility limits from $54,000,000 in the aggregate to a single revolving facility limit of $20,000,000. In addition, the new facility takes over guarantees and financial instruments totalling $1,345,000. In connection with the Deed of Amendment, we repaid approximately $18 million of the outstanding loans.

The new facility of $20,000,000 has been extended to August 31, 2019 and discussions are continuing to extend the facility beyond that point. The current amount outstanding under the facilities (including the instruments referenced above) is $20,000,000 (January 31, 2018: $38,489,428, 2017: $41,710,000). The current interest rate on this loan is 5.57% (January 31, 2019: 5.57%, 2018: 5.55%, 2017: 4.84%) per annum.

BNZ has the first ranking charge over all assets of the Company and its subsidiaries. Under the terms of the major borrowing facility, the new facility is subject to four undertakings being: Interest cover ratio of three times that is first tested as at April 30, 2019; gross EBITDA ratio measured to 3 months to September 2018 had to be greater than $0, six months to December 30, 2018 is greater than $3 million; inventory and receivables ratio must be greater than 2 times being first measured as at September 30, 2018; and the actual sales and gross margin must not vary by more than 10% from the budget submitted to the Bank.

As at October 31, 2018, there was a breach in minimum gross EBITDA ratio. As at January 31, 2019, there was a breach of the minimum Gross EBITDA ratio and a breach of the inventory and receivables ratio. The Bank has advised that they are currently taking these breaches under review.

Shareholder loan

On September 29, 2016, Bendon Limited issued 24,839 Bendon Ordinary Shares to the shareholders as part of an agreement to convert debt to equity. The amount of debt converted on this date amounted to $24,839,783.

On June 19, 2018, Bendon Limited issued additional 24,221 Bendon Ordinary Shares to the shareholders as part of an agreement to convert the remainder of the shareholder debt to equity. The amount of debt converted on this date amounted to a fair value of $12,244,208.

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After this conversion, the shareholder loan is fully converted to equity and the outstanding balance as at January 31, 2019 was zero (January 31, 2018: $10,951,295, 2017: $8,200,000). The interest rate on the shareholder loans up to the date of conversion was 30%, and was capitalised quarterly. Total interest capitalised during the twelve months to January 31, 2019 was $641,000 (January 31, 2018: $553,000, 2017: $275,000).

Convertible notes

On September 29, 2017, the holders of US$11.75m (NZ$16.79m) of convertible notes converted to 23,961 Bendon Ordinary Shares. On June 19, 2018, in connection with the closing of the Reorganization, the holders of US$2.8m (NZ$4.2m) of convertible notes converted to 16,408 Bendon Ordinary Shares.

The holder of US$1.0m (NZ$1.42m) of convertible notes elected for their convertible note to be repaid which is due at a future date to be agreed between us and the holder. The amount owing has been classified as a current borrowing and amounted to NZ$1.247m as at January 31, 2019.

All the convertible notes have now converted to equity due to the closing of the Reorganization, or been reclassified as other loans. Accordingly, the outstanding balance of the convertible notes was zero as at January 31, 2019 (January 31, 2018: US$2,600,000 (NZ$3,624,198), 2017: US$12,000,000 (NZ$16,474,465)). The convertible notes had been issued pursuant to an Investment Agreement dated on August 9, 2017. The convertible notes accrued interest at 10% interest, were subject to a conversion at a fixed value on the business day immediately prior to the Reorganization and had a maturity date of August 10, 2019. Conversion was at the noteholders option. If conversion had not occurred the convertible notes would have been redeemable at maturity. The issuer could have elected to redeem the convertible notes at any time prior to maturity.

The carrying value of the convertible notes at initial recognition was determined as the difference between the consideration received and the fair value of the embedded derivative recognised. The convertible notes are subsequently measured at amortised cost using the effective interest rate method. The carrying value of the convertible notes at January 31, 2019 was zero (2018: $1,740,000, 2017: $13,744,000).

C. | Research and Development, Patents and Licenses

We do not have any set research and development policies and have not spent a significant amount on research and development in the last three fiscal years

D. | Trend Information

For a discussion of trends relating to revenues, please see Item 5.A, “Results of Operations,” contained in this Annual Report and incorporated herein by reference.

E. | Off-balance Sheet Arrangements

Except for amounts due under operating lease commitments disclosed below under Item E, “Contractual Obligations,” of this Annual Report, we do not have any material off-balance sheet commitments or arrangements.

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F. | Contractual Obligations

As of January 31, 2019, our contractual, obligations, excluding trade creditors, were as set forth below:

|  | Total January 31, 2019 |  |  | Not later than one year |  |  | Between one year and five years |  |  | Later than five years |
|  | NZ$000 |  |  | NZ$000 |  |  | NZ$000 |  |  | NZ$000 |
Bank loan |  |  | 20,000 |  |  |  | 20,000 |  |  |  |  |  |  |  |  |
Shareholder loans |  |  | 1,049 |  |  |  | 1,049 |  |  |  |  |  |  |  |  |
Other Loans |  |  | 967 |  |  |  | 967 |  |  |  |  |  |  |  |  |
Working capital financing bank facility |  |  | - |  |  |  | - |  |  |  |  |  |  |  |  |
Convertible notes |  |  | 0 |  |  |  | 0 |  |  |  |  |  |  |  |  |
Minimum lease payments under non-cancellable operating leases |  |  | 28,057 |  |  |  | 8,974 |  |  |  | 18,532 |  |  |  | 1,485 |
Contracted commitements |  |  | 12,982 |  |  |  | 4,286 |  |  |  | 8,696 |  |  |  |  |
Total |  |  | 64,066 |  |  |  | 35,354 |  |  |  | 27,228 |  |  |  | 1,485 |

G. | Safe Harbor

The safe harbor provided in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act applies to forward-looking information provided under “Off-Balance Sheet Arrangements” and “Contractual Obligations.”

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. | Directors and Senior Management

Effective as of the consummation of the Transactions, our officers and directors are as follows:

Name |  | Age |  | Position
Justin Davis-Rice |  | 48 |  | Executive Chairman and Director
Anna Johnson |  | 47 |  | Chief Executive Officer
Howard Herman |  | 54 |  | Chief Financial Officer
Paul Hayes |  | 53 |  | Independent Non Executive Director
Andrew Shape |  | 46 |  | Independent Non Executive Director

Justin Davis-Rice has been a member of our board of directors since our formation and became our Chief Executive Officer upon consummation of the Transactions. Mr. Davis-Rice is currently Executive Chairman of Bendon Limited. Prior to becoming Executive Chairman, Mr. Davis-Rice served as Chief Executive Officer of Bendon Limited for six years during which he transformed the company through an operational restructuring and a re-engineering of key functional and operational aspects of the business including, supply chain, human resources, design and development, sourcing, wholesale and retail sales. Prior to joining the Company, Mr. Davis-Rice co-founded Pleasure State, an intimate apparel company which he merged with Bendon Limited in May 2010. Mr. Davis-Rice helped turn Pleasure State into a business with multimillion dollar earnings. Mr. Davis-Rice has served as a member of Naked (NV)’s board of directors since January 2017. The Company believes Mr. Davis-Rice’s experience in the fashion industry makes him well suited to serve as a member of the board of directors.

Anna Johnson became our Chief Executive Officer in April 2019. She brings to Naked a track record of over 25 years’ experience driving growth across a number of industries, including consumer electronics, outdoor adventure and intimate apparel. From September 2018 until her appointment as Chief Executive Officer of the Company, Ms. Johnson was the Chief Executive Officer of Bendon, our wholly owned subsidiary. In addition, from 2012 to June 2017, she was Executive General Manager of Bendon, spearheading Bendon’s retail channel and delivering sequential 30% plus returns from multiple women’s categories. From June 2017 to September 2018, Ms. Johnson was Executive General Manager of operations with The Warehouse Group (NZE: WHS), one of New Zealand’s largest publicly listed companies, where she oversaw $1 billion of revenue and a 93-store footprint. Prior to 2012, Ms. Johnson was the General Manager for the New Zealand territory and franchisee with Harvey Norman (ASX: HVN), one of Australia’s largest list retailers.

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Howard Herman became our Chief Financial Officer upon consummation of the Transactions. Mr. Herman joined Bendon Limited in March 2015 and is a Chartered Accountant with 25 years’ experience in the retail, finance and property sectors. Prior to joining Bendon Limited, Mr. Herman was a Director for 4.5 years at Universal Retail Brands which completed a management buyout of the Queenspark fashion retail chain from Specialty Fashion Group, and subsequently bought Events Fashion. The business were subsequently sold to Noni B, a retailer listed on the Australia Stock Exchange, ASX. Previously Mr. Herman was CFO at Speciality Fashion Group for 9 years. Speciality Fashion Group is a leading Apparel ASX listed retailer with over 900 doors across Australia and New Zealand and revenues of approximately AUD$800m.

Paul Hayes became a member of our board of directors upon consummation of the Transactions. Mr. Hayes has served as a member of Naked (NV)’s board of directors since February 2015. Mr. Hayes, a certified public accountant, has been the Vice President Finance for Parfums de Coeur Ltd, a beauty and wellness products concern, since September 2014. From October 2013 to August 2014 he was an independent consultant providing advice to a range of companies in the areas of financial reporting, systems implementation, risk management, and compliance. Through September 2013 and for more than five years previous he was with The Warnaco Group, Inc. in several roles of financial leadership. He has extensive global experience managing and driving growth in a wide range of industries, particularly in the intimate apparel and sleepwear categories through his tenure at Calvin Klein. Mr. Hayes is a Certified Public Accountant and led the commercial finance and accounting team for the $500 million Calvin Klein brand business in Europe in his capacity as Chief Financial Officer for the Europe region of The Warnaco Group. Previously, he held senior positions at Nokia Corporation and Deloitte & Touche LLP. Mr. Hayes received a BBA from Iona College and an MBA from New York University Leonard N. Stern School of Business. The Company believes Mr. Hayes’ extensive business experiences in the apparel merchandising industries makes him well suited to serve as a member of the board of directors.

Andrew Shape became a member of our board of directors upon consummation of the Transactions. Mr. Shape has over 25 years of merchandising, marketing, branding, licensing, and management experience. He also has provided consulting and management services to early stage brands on launching of the brand, creating a marketing plan, establishing distribution models, earning market share, and formulating an exit strategy. Mr. Shape is a co-founder of Stran & Company, Inc., a promotional merchandise and marketing agency that provides leading consumer brands with promotional merchandise and marketing support, and has served as its President since September 1996. He is also the founder of Harbor Scientific Consulting, and has served as its President since November 2017. Prior to forming Stran & Company, Inc., he worked at Copithorne & Bellows Public Relations (a Porter Novelli company) as an Account Executive covering the technology industry. Mr. Shape received a BA from the University of New Hampshire. The Company believes Mr. Shape’s extensive experience in branding and licensing makes him well suited to serve as a member of the board of directors.

B. | Compensation

Compensation of Senior Management/Executive Officers

Justin Davis-Rice, Howard Herman and Carole Hochman served as executive officers of our company for the twelve months ended January 31, 2019. Ms. Hochman resigned as Executive Chairman and as a director in February 2019. Anna Johnson was appointed as our Chief Executive Officer in April 2019, with Mr. Davis-Rice becoming our Executive Chairman upon such appointment.

During the twelve months ended January 31, 2019, the aggregate amount of compensation paid to our executive officers was approximately US$1.15m. The following table sets forth the compensation of each of our executive officers for the twelve months ended January 31, 2019:

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Name and Principal Position |  | Salary |  |  | Bonus |  |  | Equity Compensation |  |  | All Other Compensation |  |  | Total |
Justin Davis-Rice Executive Chairman (former Chief Executive Officer) |  | $ | 576,003 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  | $ | 576,003 |
Howard Herman Chief Financial Officer |  | $ | 324,000 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  | $ | 324,000 |
Carole Hochman Former Executive Chairman |  | $ | 349,998 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  | $ | 349,998 |

Compensation of Non-Executive Independent Directors

Our non-employee directors receive an annual cash fee of $25,000 and an annual grant of $35,000 of ordinary shares for service on our board of directors. In addition, the chair of our audit committee receives an additional annual cash fee of $10,000, the chair of our compensation committee receives an additional annual cash fee of $5,000 and the chair of our nominating committee receives an additional annual cash fee of $5,000.

During the twelve months ended January 31, 2019, the aggregate amount of compensation paid to our non-employee directors (former and current) was $67,500. The following table sets forth the compensation of each of our non-employee directors for the twelve months ended January 31, 2019:

Name and Principal Position |  | Cash Fees USD |  |  | Equity USD |  |  | All Other Compensation |  |  | Total USD |
Paul Hayes |  | $ | 17,500 |  |  | $ | 17,500 |  |  | $ | - |  |  | $ | 35,000 |
Andy Shape |  | $ | 15,000 |  |  | $ | 17,500 |  |  | $ | - |  |  | $ | 32,500 |

C. | Board Practices

Director Term of Office

Each director will serve until our next annual general meeting, if one is called for, and until his successor is elected and qualified. Each of our directors has served since the consummation of the Transactions in June 2018. We have not entered into service or similar contracts with our directors.

Independence of Directors

The Naked Ordinary Shares are listed on Nasdaq. As a result, we adhere to the rules of Nasdaq in determining whether a director is independent. The rules of Nasdaq general define an “independent director” as a person, other than an executive officer of a company or any other individual having a relationship which, in the opinion of the issuer’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Our board of directors has consulted, and will consult, with its counsel to ensure that the board’s determinations are consistent with these rules and all relevant securities and other laws and regulations regarding the independence of directors. Based on the foregoing, we have determined that Messrs. Hayes and Shape are independent directors. Our independent directors will have regularly scheduled meetings at which only independent directors are present.

Board Committees

We have separately standing audit, corporate governance and nominating and compensation committees.

Audit Committee Information

We have an audit committee of the board of directors, comprised of Messrs. Hayes, Shape and Davis-Rice. Each of the members of the audit committee, other than Mr. Davis-Rice, is independent under the applicable listing standards and the rules and regulations of the SEC. Pursuant to Nasdaq’s “phase-in” rules for newly listed companies, we have one year from the date on which we were first listed on Nasdaq, or until June 19, 2019, to have our audit committee be comprised solely of independent directors. We intend to identify one additional independent director to serve on the audit committee within the applicable time periods, at which time Mr. Davis-Rice will resign from the committee. The audit committee has a written charter. The purpose of the audit committee is, among other things, to appoint, retain, set compensation of, and supervise our independent accountants, review the results and scope of the audit and other accounting related services and review our accounting practices and systems of internal accounting and disclosure controls.

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Financial Experts on Audit Committee

The audit committee will at all times be composed exclusively of directors who are “financially literate,” as defined under the applicable listing standards. Such listing standards generally define “financially literate” as being able to read and understand fundamental financial statements, including a company’s balance sheet, income statement and cash flow statement. In addition, we will be required to certify to the exchange that the committee has, and will continue to have, at least one member who has past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background that results in the individual’s financial sophistication. Our board of directors has determined that Mr. Hayes satisfies the exchange’s definition of financial sophistication and also qualifies as an “audit committee financial expert” as defined under rules and regulations of the SEC.

Nominating Committee Information

We have a nominating committee of the board of directors, comprised of Messrs. Hayes and Shape. Each member of the nominating committee is independent under the applicable listing standards. The nominating committee has a written charter. The nominating committee is responsible for overseeing the selection of persons to be nominated to serve on our board of directors.

Compensation Committee Information

We have a compensation committee of the board of directors, comprised of Messrs. Hayes and Shape. Each member of the compensation committee is independent under the applicable listing standards. In addition, each member is a “non-employee” director as defined in Rule 16b-3 under the Exchange Act and the rules and regulations thereunder. The compensation committee has a written charter. The purpose of the compensation committee is to review and approve compensation paid to our officers and directors and to administer our incentive compensation plans, including authority to make and modify awards under such plans.

D. | Employees

For information about the Company’s employees, see Item 5.B of this Annual Report, “Employee Relations,” contained in this Annual Report and incorporated herein by reference.

E. | Share Ownership

The disclosure relating to the share ownership of the persons listed in Item 6.B that is set forth in Item 7.A of this Form 20-F is incorporated herein by reference.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. | Major Shareholders

The following table sets forth information regarding the beneficial ownership of Naked Ordinary Shares as of May 31, 2019:

| ● | each person expected by us to be the beneficial owner of more than 5% of the outstanding Naked Ordinary Shares;
| ● | each of our executive officers and directors;
| ● | all of our executive officers and directors as a group.

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Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security. The beneficial ownership of Naked Ordinary Shares is based on 59,487,636 Naked Ordinary Shares issued and outstanding. Unless otherwise indicated, we believe that all persons named in the table below have sole voting and investment power with respect to all ordinary shares beneficially owned by them.

Name and Address of Beneficial Owner(1) |  | Amount and Nature of Beneficial Ownership |  |  | Percentage of Beneficial Ownership |
Current Directors and Officers: |  |  |  |  |  |  |  |
Justin Ashley Davis-Rice(2) |  |  | 1,685,233 |  |  |  | 2.8 | %
Anna Johnson |  |  | 0 |  |  |  | 0 | %
Howard Herman |  |  | 102,387 |  |  |  | * |
Paul Hayes |  |  | 15,671 |  |  |  | * |
Andrew Shape |  |  | 10,071 |  |  |  | 0 | %
All directors and executive officers (5 persons) |  |  | 1,813,362 |  |  |  | 3.0 | %
Five Percent Holders: |  |  |  |  |  |  |  |
TokenPay AG(3) |  |  | 7,840,216 |  |  |  | 13.2 | %
Whitespace Atelier Limited(4) |  |  | 6,200,000 |  |  |  | 10.4 | %
Acuitas Capital LLC(5) |  |  | 5,482,862 |  |  |  | 9.9 | %
Armistice Capital Master Fund Ltd.(6) |  |  | 4,000,000 |  |  |  | 6.7 | %
United Garments Limited(7) |  |  | 3,800,000 |  |  |  | 6.4 | %

| (1) | Unless otherwise indicated, the business address of each of the individuals is c/o Bendon Limited, Building 7B, Huntley Street, Alexandria, NSW 2015.
| (2) | Includes (i) 997,299 Naked Ordinary Shares held by PS Holdings No. 2 Pty Ltd., which is controlled by Mr. Davis-Rice, and (iii) 29,110 Naked Ordinary Shares held by Nesriver Pty Ltd., which is controlled by Mr. Davis-Rice.
| (3) | Prof Dr. Jorg Wilhelm is the President of the Supervisory Board of TokenPay Swiss AG. The business address of TokenPay Swiss AG and the Reporting Person is Azaleenweg 5, Weggis, Switzerland.
| (4) | Samantha Sin Man Chong may be deemed to have votiong and dispositive power over the shares held by Whitespace Atelier Limited. The business address of Whitespace Atelier Limited is 209 Shek O Village Road, Suite A, Shek O, Hong Kong.
| (5) | Includes (i) 2,934,455 Naked Ordinary Shares held by Acuitas Capital LLC, and (ii) 2,548,407 Naked Ordinary Shares underlying warrants held by Acuitas Capital LLC. Excludes 14,124,982 Naked Ordinary Shares underlying the warrants, as to which the warrants are not currently exercisable due to limitations on beneficial ownership contained in the warrants that prevent them from being exercised to the extent the holder and its affiliates would beneficially own more than 9.99% of the outstanding Naked Ordinary Shares. Terren S. Peizer owns all of the membership interests of Acuitas Capital LLC. The business address of Acuitas Capital LLC and Mr. Peizer is 11601 Wilshire Blvd., Suite 1100, Los Angeles, CA 90025.
| (6) | Includes (i) 2,000,000 Naked Ordinary Shares held by Armistice Capital Master Fund Ltd., and (ii) 2,800,000 Naked Ordinary Shares underlying warrants held by Armistice Capital Master Fund Ltd. Armistice Capital LLC and Steven Boyd may be deemed to have voting and dispostive control over the Naked Ordinary Shares held by Armistice Capital Master Fund Ltd. The business address of Armistice Capital Master Fund Ltd. is c/o dms Corporate Services Ltd., 20 Genesis Close, P.O. Box 314, Grand Cayman KY1-1104, Cayman Islands, and the business address of Armistice Capital LLC and Mr. Boyd is 510 Madison Avenue, 7th Floor, New York, New York 10022.
| (7) | Ching To Yau may be deemed to have voting and dispostive power over the shares held by United Garments Limited. The business address of United Garments Limited is Unit D, 5th Floor, Charmhill Centre, 50 Hillwood Road, Tsim Sha Tsui, Hong Kong.

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B. | Related Party Transactions

Our Related Party Policy

Upon consummation of the Transactions, we adopted a related party policy that will require us and our subsidiaries to avoid, wherever possible, all related party transactions that could result in actual or potential conflicts of interests, except under guidelines approved by the board of directors (or audit committee). Related-party transactions are defined as transactions in which (1) the aggregate amount involved will or may be expected to exceed the lesser of $120,000 or one percent of the average of the company’s total assets at year end for the last two completed fiscal years, (2) our company or any of our subsidiaries is a participant, and (3) any (a) executive officer, director or nominee for election as a director, (b) greater than 5% beneficial owner of our shares of common stock, or (c) immediate family member, of the persons referred to in clauses (a) and (b), has or will have a direct or indirect material interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). A conflict of interest situation can arise when a person takes actions or has interests that may make it difficult to perform his or her work objectively and effectively. Conflicts of interest may also arise if a person, or a member of his or her family, receives improper personal benefits as a result of his or her position.

Our audit committee, pursuant to its written charter, will be responsible for reviewing and approving related party transactions to the extent we enter into such transactions. The audit committee will consider all relevant factors when determining whether to approve a related party transaction, including whether the related party transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the related party’s interest in the transaction. We will require each of our directors and executive officers to complete an annual directors’ and officers’ questionnaire that elicits information about related party transactions.

These procedures are intended to determine whether any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a director, employee or officer.

Our Related Party Transactions

Summary of Related Party Loans

|  | Opening balance NZ$ |  |  | Closing balance NZ$ |
Loans to related parties |  |  |  |  |  |  |  |
Cullen Investments Limited - January 31, 2019 |  |  | 11,535,622 |  |  |  | 0 |
Cullen Investments Limited - January 31, 2018 |  |  | 13,051,321 |  |  |  | 11,535,677 |
Cullen Investments Limited - January 31, 2017 |  |  | 9,613,014 |  |  |  | 13,051,321 |
Whitespace Atelier Limited - January 31, 2019 |  |  | 272,665 |  |  |  | 281,714 |
Whitespace Atelier Limited - January 31, 2018 |  |  | - |  |  |  | 272,665 |
FOH Online Corp. - January 31, 2019 |  |  | 3,518,009 |  |  |  | 0 |
FOH Online Corp. - January 31, 2018 |  |  | - |  |  |  | 3,518,009 |
Loans from related parties |  |  |  |  |  |  |  |
SBL Holdings, Limited - January 31, 2019 |  |  | - |  |  |  | (1,448,646 | )
Naked Brand Group, Inc. - January 31, 2019 |  |  | (1,368,577 | ) |  |  | 0 |
Naked Brand Group, Inc. - January 31, 2018 |  |  | - |  |  |  | (1,368,577 | )
Naked Brand Group, Inc. - January 31, 2017 |  |  | - |  |  |  | - |
EJ Watson – January 31, 2019 |  |  | - |  |  |  | (2,289,212 | )

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Description of Related Party Transactions

On October 25, 2018, we closed a private placement of ordinary shares and warrants for aggregate gross proceeds of approximately $3.4 million with two accredited investors, including an affiliate of Mr. Davis-Rice, our Chief Executive Officer, and our then largest institutional shareholder, Armistice Capital. The ordinary shares were sold at a per share price of $1.55 pursuant to a subscription agreement with each investor. Each investor also received a warrant to purchase 100% of the number of ordinary shares for which it subscribed. The warrants have an exercise price of $1.55 per share and expire three years from the date of issuance. The exercise price and number of shares covered by the warrants are subject to adjustment for stock splits, stock combinations and certain other transactions affecting the share capital as a whole.

On November 15, 2018, we and our wholly-owned subsidiary, Bendon Limited, entered into a Stock Purchase Agreement with the shareholders of FOH, including Cullen, at the time a significant shareholder of the Company. Pursuant to the agreement, on December 6, 2018, we purchased all of the issued and outstanding shares of FOH. Under the terms of the agreement, we paid a purchase price of approximately US$18.2 million, as follows (i) Bendon Limited forgave all of debt owed to it by FOH and Cullen, in the aggregate amount of approximately US$9.9 million, and (ii) we issued 3,765,087 of our Ordinary Shares to FOH’s shareholders, valued at a price per share of US$2.20. We also agreed to satisfy certain obligations with respect to certain claims involving the parties. A portion of the Ordinary Shares issued to FOH’s shareholders are held in trust and may be released to Cullen to the extent not applied in satisfaction of such claims.

Whitespace Atelier Limited (“Whitespace”) is owned by one of our shareholders. Beginning February 1, 2017, Whitespace was engaged by the Company to procure stock from various suppliers at competitive prices. During the year ended January 31, 2019, purchases amounting to $12,720,499 (January 31, 2018: $13,281,727) have been made from Whitespace. As at January 31, 2019, the Company has made prepayments to Whitespace amounting to $281,714 (January 31, 2018: $272,665).

Subsequent to the Merger with Naked Brand Group Inc. (sometimes referred to herein as “Naked (NV)”) on June 19, 2018, Naked (NV) became part of the Company. As at January 31, 2019, the balances between the subsidiaries are eliminated in the Company Balance Sheet (January 31, 2018: $1,368,557).

During the period, a shareholder, SBL Holdings, Limited, loaned the business funds to be utilised as working capital in the business.

C. | Interests of Experts and Counsel

Not applicable.

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ITEM 8. FINANCIAL INFORMATION

A. | Consolidated Financial Statements and Other Financial Information

Consolidated Financial Statements

See Item 18 of this Annual Report.

Legal Proceedings

From time to time, the Company is subject to certain legal proceedings and claims in the ordinary course of business. Bendon Limited is not presently party to any legal proceedings the resolution of which it believes would have a material adverse effect on the Company’s business, financial condition, operating results or cash flows. Bendon Limited establishes reserves for specific legal matters when it determines that the likelihood of an unfavorable outcome is probable and the loss is reasonably estimable.

Dividend Policy

Shareholders are entitled to receive such dividends as may be declared by the directors. If the directors determine that a final or interim dividend is payable, it is (subject to the terms of issue on any shares or class of shares) paid on all shares proportionate to the amount for the time being paid on each share. Dividends may be paid by cash, electronic transfer or any other method as the board determines.

The directors have the power to capitalize and distribute the whole or part of the amount from time to time standing to the credit of any reserve account or otherwise available for distribution to shareholders. The capitalization and distribution must be in the same proportions which the shareholders would be entitled to receive if distributed by way of a dividend.

Subject to the rules of Nasdaq, the directors may pay a dividend out of any fund or reserve or out of profits derived from any source.

B. | Significant Changes

Except for the events described in “Recent Developments” in Item 5 of this Annual Report, we have not experienced any significant changes since the date of our audited annual consolidated financial statements included in this Annual Report.

ITEM 9. THE OFFER AND LISTING

A. | Offer and Listing Details

The Naked Ordinary Shares are listed on the Nasdaq Capital Market under the symbol “NAKD.” The Naked Ordinary Shares are not listed on any exchange or traded in any market outside of the United States.

B. | Plan of Distribution

Not applicable.

C. | Markets

See Item 9.A of this Annual Report.

D. | Selling Shareholders

Not applicable.

E. | Dilution

Not applicable.

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F. | Expenses of the Issue

Not applicable.

ITEM 10. ADDITIONAL INFORMATION

A. | Share Capital

Not applicable.

B. | Constitution

The summary below relates to our constitution as currently in effect. The summary below is of the key provisions of our constitution and does not purport to be a summary of all of the provisions thereof or of all relevant provisions of Australian law governing the management and regulation of Australian companies.

Incorporation

We were incorporated in Australia on May 11, 2017 under the Corporations Act with company registration number ACN 619 054 938. We are an Australian public limited company.

Objects and Purposes

Our constitution grants us full power and authority to exercise any power, take any action or engage in any conduct which the Corporations Act permits a company limited by shares to exercise, take or engage in.

Directors

There must be a minimum of three directors and a maximum of ten directors unless our shareholders in general meeting resolves otherwise. Where required by the Corporations Act or Stock Market Rules, we must hold an election of directors each year. No director, other than the managing director, may hold office without re-election beyond the third annual general meeting following the meeting at which the director was last elected or re-elected. A director appointed to fill a casual vacancy, who is not a managing director, holds office until the conclusion of the next annual general meeting following his or her appointment. If there would otherwise not be a vacancy, and no director is required to retire, then the director who has been longest in office since last being elected must retire. If a number of directors were elected on the same day, the directors to retire are (in default of agreement between them) determined by ballot.

Our constitution provides that no person shall be disqualified from the office of director or prevented by such office from contracting with us, nor shall any such contract or any contract or transaction entered into by or on our behalf in which any director shall be in any way interested be or be liable to be avoided, nor shall any director so contracting or being so interested be liable to account to us for any profit realised by or arising in connection with any such contract or transaction by reason of such director holding office or of the fiduciary relationship thereby established. A director shall be at liberty to vote in respect of any contract or transaction in which he is interested provided that the nature of the interest of any director in any such contract or transaction shall be disclosed by him at or prior to its consideration and any vote thereon. However, a director who has a material personal interest in a matter that is being considered by the directors must not be present at a meeting while the matter is being considered nor vote on the matter, except where permitted by the Corporations Act.

Each director is entitled to remuneration from our company for his or her services as decided by the directors but the total amount provided to all directors for their services as directors must not exceed in aggregate in any financial year the amount fixed by us in general meeting. The remuneration of an executive director must not include a commission on, or a percentage of, profits or operating revenue. Remuneration may be provided in the manner that the directors decide, including by way of non-cash benefits. There is also provision for directors to be paid extra remuneration (as determined by the directors) if they devote special attention to our business or otherwise perform services which are regarded as being outside of their ordinary duties as directors or, at the request of the directors, engage in any journey on our business. Directors are also entitled to be paid all travelling and other expenses they incur in attending to our affairs, including attending and returning from general meetings or board meetings, or meetings of any committee engaged in our business.

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Directors also may exercise all the powers of the company to borrow or raise money, to charge any of the company’s property or business or any of its uncalled capital, and to issue debentures or give any security for a debt, liability or obligation of the company or of any other person.

As at the date of this report, the Company is in non compliance of the Australian Corporations Act requiring a second Director resident in Australia. The Company is in the process of making this appointment.

Rights and Obligations of Shareholders

Dividends

Ordinary shareholders are entitled to receive such dividends as may be declared by the directors. If the directors determine that a final or interim dividend is payable, it is (subject to the terms of issue on any shares or class of shares) paid on all shares proportionate to the amount for the time being paid on each share. Dividends may be paid by cash, electronic transfer or any other method as the board determines.

The directors have the power to capitalize and distribute the whole or part of the amount from time to time standing to the credit of any reserve account or otherwise available for distribution to shareholders. The capitalization and distribution must be in the same proportions which the shareholders would be entitled to receive if distributed by way of a dividend.

Subject to the Stock Market Rules, the directors may pay a dividend out of any fund or reserve or out of profits derived from any source.

Voting Rights

Each of our ordinary shareholders is entitled to receive notice of and to be present, to vote and to speak at general meetings. Subject to any rights or restrictions attached to any shares, on a show of hands each ordinary shareholder present has one vote and, on a poll, one vote for each fully paid share held, and for each partly paid share, a fraction of a vote equivalent to the proportion to which the share has been paid up. Voting may be in person or by proxy, attorney or representative.

Two shareholders must be present to constitute a quorum for a general meeting and no business may be transacted at any meeting except the election of a chair and the adjournment of the meeting, unless a quorum is present when the meeting proceeds to business.

Variation of Class Rights

The Corporations Act provides that if a company has a constitution that sets out the procedure for varying or cancelling rights attached to shares in a class of shares, those rights may be varied or cancelled only in accordance with the procedure.

The rights attached to Naked Ordinary Shares may only be varied with the consent in writing of members holding at least three-quarters of the shares of that class, or with the sanction of a special resolution passed at a separate meeting of the holders of shares of that class.

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General Meetings

A general meeting of shareholders may be called by a directors’ resolution or as otherwise provided in the Corporations Act. The Corporations Act requires the directors to call a general meeting on the request of shareholders with at least 5% of the vote that may be cast at the general meeting. Shareholders with at least 5% of the votes that may be cast at a general meeting may also call, and arrange to hold, a general meeting themselves. In addition, where it is impracticable to call the meeting in any other way, the Court may order a meeting of our members to be called.

The Corporations Act requires at least 21 clear days of notice to be given for a general meeting. Notice of a general meeting must be given to each person who, at the time of giving the notice, is a member, director or auditor of ours, or is entitled to a share because of the death of a shareholder (and who has satisfied the directors of his or her right to be registered as the holder of, or to transfer, the shares).

The notice of meeting must include the date and time of the meeting, the location, an electronic address, planned business for the meeting, information about any proposed special resolutions and information about proxy votes.

Changes in Capital

Australia does not have a limit on the authorized share capital that may be issued and do not recognize the concept of par value under Australian law.

Indemnity

We must indemnify our current and past directors and other executive officers on a full indemnity basis and to the fullest extent permitted by law against all liabilities incurred by the director or officer as a result of their holding office or a related body corporate.

We may also, to the extent permitted by law, purchase and maintain insurance, or pay or agree to pay a premium for insurance, for each director and officer against any liability incurred by the director or officer as a result of their holding office or a related body corporate.

Disposal of assets

The Corporations Act does not specifically preclude a company from disposing of its assets, or a significant portion of its assets. Subject to any other provision which may apply (such as those provisions relating to related party transactions summarized above), a company may generally deal with its assets as it sees fit without seeking shareholder approval.

Rights of non-resident or foreign shareholders

There are no specific limitations in the Corporations Act which restrict the acquisition, ownership or disposal of shares in an Australian company by non-resident or foreign shareholder. The Foreign Acquisitions and Takeovers Act 1975 (Cth) regulates investment in Australian companies and may restrict the acquisition, ownership and disposal of our shares by non-resident or foreign shareholders.

C. | Material Contracts

The following summarizes each material contract, other than contracts entered into in the ordinary course of business, to which we or any subsidiary of ours is a party, for the preceding two years.

Deed of Lease. Bendon Pty Limited’s lease for the property located in Alexandria, Australia has an expiry of April 2019, the current rental is circa NZ$850k per annum pre-subleasing agreements. Terms have been agreed for the lease of alternate premises within the same business complex . The new lease has yet to be signed. Bendon Limited has renegotiated a new lease for the property located in Airpark Drive. The term is for six years commencing May 1, 2018 and annual rental of circa NZD$1.4m per annum.

Heidi Klum License Agreement. In September 2014, Bendon Limited signed a 5 year license agreement with Heidi Klum for the design, manufacture and sale of Heidi Klum branded intimate apparel and swimwear. The initial term expires in December 2021 and is renewable for additional periods of 5 years at our discretion.

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Frederick’s of Hollywood License Agreement. In June 2015, FOH signed a license agreement with ABG, the owner of the Frederick of Hollywood brand. The license is for the design, manufacture and sale of Frederick’s of Hollywood branded intimate apparel through our E-commerce channel. The initial term expires in December 2020 and is renewable for additional 10 consecutive periods of 5 years each at the Licensee discretion.

Agreement and Plan of Reorganization. On June 19, 2018, we consummated the transactions contemplated by that certain Merger Agreement, dated as of May 25, 2017 and amended on July 26, 2017, February 21, 2018, March 19, 2018 and April 23, 2018, by and among our us, Naked (NV), Bendon Limited, Merger Sub and the Principal Shareholder, at the time the owner of a majority of the outstanding shares of Bendon Limited. The Merger Agreement is more fully described Item 4.A, “History and Development of the Company,” and in the sections titled “The Merger Proposal” and “The Merger Agreement” of the final prospectus dated April 27, 2018, filed as part of our registration statement on Form F-4 (File No. 333-223786), as modified by the supplement dated June 1, 2018, and such descriptions are incorporated herein by reference.

Stock Purchase Agreement. On November 15, 2018, we and our wholly-owned subsidiary, Bendon Limited , entered into a stock purchase agreement with the shareholders of FOH, including Cullen, at the time a significant shareholder of the Company. Pursuant to the agreement, on December 6, 2018, we purchased all of the issued and outstanding shares of FOH, in order to gain direct ownership of the Frederick’s of Hollywood license arrangement FOH had with Authentic Brands Group (“ABG”). The stock purchase agreement is more fully described in Item 4.A, “History and Development of the Company,” and in the Report of Foreign Private Issuer on Form 6-K filed by us on November 21, 2018, and such descriptions are incorporated herein by reference.

Loan Agreements. As at January 31 2018, the Company had loans from shareholders of $10,951,295 (January 31, 2017: $8,200,000, June 30, 2016: $29,280,991, June 30, 2015: $16,917,902), which were secured by a debenture over the assets of the Company, subordinated to the bank loan. On September 29, 2016, Bendon Limited issued 24,839 Bendon Ordinary Shares to the shareholders as part of an agreement to convert debt to equity. The amount of debt converted on this date amounted to $24,839,783. The remainder of the shareholder loan remained outstanding until the Reorganization and converted to equity on June 19, 2018. Bendon issued 33,269 Bendon Ordinary Shares to the shareholders in connection with such conversion. As at January 31, 2018, the interest rate on shareholder loans was 30% (January 31, 2017: 30%, June 30, 2016: 30%, June 30, 2015: 30%) and was capitalised quarterly. Total interest capitalised and accrued during the year ending January 31, 2019 was $$1,061,588 (2018: $2,806,945; 2017: $6,436,987, year ended June 30, 2016: $7,042,000, year ended June 30, 2015: $3,192,000). None of the loans from shareholders currently remain outstanding. The shareholder loans are more fully described in Item 5 of this Annual Report, “Liquidity and Capital Resources,” and such description is incorporated herein by reference.

Bank of New Zealand Credit Facility. On the June 14, 2018, Bendon Limited and BNZ signed an amendment to an existing bank debt facility which was entered into in 2016. The amendment is a one year NZ $20m revolving loan facility. At the time of this report, the facility has been extended to August 31, 2019. The debt facility is more fully described in Item 5 of this Annual Report, “Liquidity and Capital Resources,” and such description is incorporated herein by reference.

Securities Purchase Agreement, Warrants and Registration Rights Agreement. On March 27, 2019, we entered into a securities purchase agreement relating to the issue of 10,784,313 Naked Ordinary Shares to certain accredited investors at an agreed per share price of US$0.255, except that, to the extent an investor would beneficially own more than 9.9% of our outstanding Naked Ordinary Shares after the closing, we agreed to issue the investor a March Pre-Funded Warrant in lieu of such shares. Each investor also received a March Investment Warrant to purchase 100% of the number of Naked Ordinary Shares for which it had agreed to subscribe. In connection with the transaction, we also entered into a registred rights agreement relating to the registration for resale of the Naked Ordinary Shares sold pursuant ot the securities purchase agreement and issuable upon exercise of the March Warrants. The securities purchase agreement, the March Warrants and the registration rights agreement are more fully described in Item 4.B, “Business Overview—Recent Developments,” and in the Report of Foreign Private Issuer on Form 6-K filed by us on March 28, 2019, and such descriptions are incorporated herein by reference.

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Note Purchase Agreement, Note, Security Agreement and Subordination Agreement. Effective on May 13, 2019, we completed a private placement of the Note for a purchase price of US$3,000,000, pursuant to the NSPA of even date. The Note is secured by all of our assets pursuant to a security agreement with the holder of the Note. The rights of the holder of the Note are subordinated to the rights of BNZ under our bank debt facility. The NSPA, the Note, the security agreement and the subordination agreement are more fully described in Item 4.B, “Business Overview—Recent Developments,” and in the Report of Foreign Private Issuer on Form 6-K filed by us on May 17, 2019, and such descriptions are incorporated herein by reference.

D. | Exchange Controls

Under Australian law, there are currently no restrictions on the export or import of capital, including foreign exchange controls or restrictions that affect the remittance of dividends, interest or other payments to nonresident holders of our shares.

E. | Taxation

The following is a summary of material U.S. federal and Australian income tax considerations to U.S. holders, as defined below, of the acquisition, ownership and disposition of Naked Ordinary Shares. This discussion is based on the laws in force as at the date of this annual report, and is subject to changes in the relevant income tax law, including changes that could have retroactive effect. The following summary does not take into account or discuss the tax laws of any country or other taxing jurisdiction other than the United States and Australia. Holders are advised to consult their tax advisors concerning the overall tax consequences of the acquisition, ownership and disposition of Naked Ordinary Shares in their particular circumstances. This discussion is not intended, and should not be construed, as legal or professional tax advice.

This summary does not describe U.S. federal estate and gift tax considerations, or any state and local tax considerations within the United States, and is not a comprehensive description of all U.S. federal or Australian income tax considerations that may be relevant to a decision to acquire or dispose of Naked Ordinary Shares. Furthermore, this summary does not address U.S. federal or Australian income tax considerations relevant to holders subject to taxing jurisdictions other than or in addition to the United States and Australia, and does not address all possible categories of holders, some of which may be subject to special tax rules.

U.S. Federal Income Tax Considerations

In this section, we discuss certain material U.S. federal income tax considerations applicable to the acquisition, ownership and disposition of Naked Ordinary Shares by a U.S. holder, as defined below, that will hold the Naked Ordinary Shares as capital assets within the meaning of Section 1221 of Internal Revenue Code of 1986, as amended (the “Code”). This discussion is based on the Code, U.S. Treasury regulations promulgated thereunder and administrative and judicial interpretations thereof, all as in effect on the date hereof and all of which are subject to change, possibly with retroactive effect. There can be no assurances that the U.S. Internal Revenue Service (the “IRS”) will not take a different position concerning the tax consequences of the acquisition, ownership and disposition of Naked Ordinary Shares or that such a position would not be sustained. We do not discuss the tax consequences to any particular U.S. holder nor any tax considerations that may apply to U.S. holders subject to special tax rules, such as banks, insurance companies, individual retirement and other tax-deferred accounts, regulated investment companies, individuals who are former U.S. citizens or former long-term U.S. residents, dealers in securities or currencies, tax-exempt entities, persons subject to the alternative minimum tax, persons that hold Naked Ordinary Shares as a position in a straddle or as part of a hedging, constructive sale or conversion transaction for U.S. federal income tax purposes, persons that have a functional currency other than the U.S. dollar, persons that own (directly, indirectly or constructively) 10% or more of our equity or persons that are not U.S. holders.

In this section, a “U.S. holder” means a beneficial owner of Naked Ordinary Shares that is, for U.S. federal income tax purposes:

| ● | an individual who is a citizen or resident of the United States for U.S. federal income tax purposes;
| ● | a corporation, or other entity treated as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States or any state thereof or the District of Columbia;
| ● | an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
| ● | a trust (i) the administration of which is subject to the primary supervision of a court in the United States and for which one or more U.S. persons have the authority to control all substantial decisions or (ii) that has an election in effect under applicable income tax regulations to be treated as a U.S. person.

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As used in this section, a “non-U.S. holder” is a beneficial owner of Naked Ordinary Shares that is not a U.S. holder or an entity or arrangement treated as a partnership for U.S. federal income tax purposes.

If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds Naked Ordinary Shares, the U.S. federal income tax treatment of a partner generally will depend on the status of the partner and the activities of the partnership. Partners of partnerships that will hold Naked Ordinary Shares should consult their tax advisors.

You are urged to consult your own tax advisor with respect to the U.S. federal, as well as state, local and non-U.S., tax consequences to you of acquiring, owning and disposing of Naked Ordinary Shares in light of your particular circumstances, including the possible effects of changes in U.S. federal and other tax laws.

Dividends

Subject to the passive foreign investment company (“PFIC”) rules, discussed below, U.S. holders will include as dividend income the U.S. dollar value of the gross amount of any distributions of cash or property (without deduction for any withholding tax), other than certain pro rata distributions of Naked Ordinary Shares, with respect to Naked Ordinary Shares to the extent the distributions are made from our current or accumulated earnings and profits, as determined for U.S. federal income tax purposes. A U.S. holder will include the dividend income at the time of actual or constructive receipt. To the extent, if any, that the amount of any distribution by us is not a dividend because it exceeds the U.S. holder’s pro rata share of our current and accumulated earnings and profits, as so determined, the excess will be treated first as a tax-free return of capital and reduce (but not below zero) the U.S. holder’s tax basis in the Naked Ordinary Shares. Thereafter, to the extent, if any, that the amount of any distribution by us exceeds the adjusted tax basis of the U.S. holder’s Ordinary Shares, the remainder will be taxed as capital gain. Notwithstanding the foregoing, there can be no assurance that we will maintain calculations of earnings and profits, as determined for U.S. federal income tax purposes. Consequently, U.S. holders should therefore assume that any distribution with respect to our ordinary shares will constitute ordinary dividend income and that any distributions generally will be reported as dividend income for U.S. information reporting purposes. See “Backup Withholding Tax and Information Reporting Requirements” below. Dividends paid by us will not be eligible for the dividends-received deduction generally allowed to U.S. corporate shareholders.

Subject to the PFIC rules, discussed below, certain distributions treated as dividends received by an individual U.S. holder (as well as certain trusts and estates) from a “qualified foreign corporation” are eligible for a preferential U.S. federal income tax rate (currently a maximum tax rate of 20%), subject to certain minimum holding period requirements and other limitations. A foreign corporation (other than a corporation that is treated as a PFIC for the taxable year in which the dividend is paid or the preceding taxable year) may be a “qualified foreign corporation” if (i) it is eligible for the benefits of a comprehensive income tax treaty with the United States which the U.S. Secretary of Treasury determines is satisfactory for this purpose and which includes an exchange of information program or (ii) with respect to any dividend it pays on stock which is readily tradable on an established securities market in the U.S. We expect to be considered a qualified foreign corporation with respect to the Naked Ordinary Shares because we believe we are eligible for the benefits under the Double Taxation Convention between Australia and the United States and because we expect the Naked Ordinary Shares will continue to be listed on the Nasdaq Capital Market (although there can be no assurance that the Naked Ordinary Shares will remain so listed). Accordingly, dividends we pay generally should be eligible for the reduced income tax rate. However, the determination of whether a dividend qualifies for the preferential tax rates must be made at the time the dividend is paid. U.S. holders should consult their own tax advisers. The additional 3.8% “net investment income tax” (described below) may apply to dividends received by certain U.S. holders who meet certain modified adjusted gross income thresholds.

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Non-corporate U.S. holders will not be eligible for reduced rates of taxation on any dividends received from us if we are a passive foreign investment company in the taxable year in which such dividends are paid or in the preceding taxable year.

Includible distributions paid in Australian dollars, including any Australian withholding taxes, will be included in the gross income of a U.S. holder in a U.S. dollar amount calculated by reference to the exchange rate in effect on the date of actual or constructive receipt of such distribution, regardless of whether the Australian dollars are converted into U.S. dollars at that time. If Australian dollars are converted into U.S. dollars on the date of actual or constructive receipt of the distribution, the tax basis of the U.S. holder in those Australian dollars will be equal to their U.S dollar value on that date and, as a result, a U.S. holder generally should not be required to recognize any foreign exchange gain or loss.

If Australian dollars so received are not converted into U.S. dollars on the date of actual or constructive receipt, the U.S. holder will have a basis in the Australian dollars equal to their U.S. dollar value on the date of receipt. Any gain or loss on a subsequent conversion or other disposition of the Australian dollars generally will be treated as ordinary income or loss to such U.S. holder and generally such gain or loss will be income or loss from sources within the United States for foreign tax credit limitation purposes.

Dividends received by a U.S. holder with respect to Naked Ordinary Shares generally will be treated as foreign source income, which may be relevant in calculating the holder’s foreign tax credit limitation. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For these purposes, dividends will be categorized as “passive” or “general” income depending on a U.S. holder’s circumstance.

Subject to certain complex limitations, a U.S. holder generally will be entitled, at its option, to claim either a credit against its U.S. federal income tax liability or a deduction in computing its U.S. federal taxable income in respect of any Australian taxes withheld by us. If a U.S. holder elects to claim a deduction, rather than a foreign tax credit, for Australian taxes withheld by us for a particular taxable year, the election will apply to all foreign taxes paid or accrued by or on behalf of the U.S. holder in the particular taxable year.

The availability of the foreign tax credit and the application of the limitations on its availability are fact specific. You are urged to consult your own tax advisor as to the consequences of Australian withholding taxes and the availability of a foreign tax credit or deduction. See “Australian Tax Considerations — Taxation of Dividends.”

Sale or Exchange of Ordinary Shares

Subject to the passive foreign investment company rules, discussed below, a U.S. holder generally will, for U.S. federal income tax purposes, recognize capital gain or loss on a sale, exchange or other disposition of Naked Ordinary Shares equal to the difference between the amount realized on the disposition and the U.S. holder’s tax basis in the Naked Ordinary Shares. This gain or loss recognized on a sale, exchange or other disposition of Naked Ordinary Shares will generally be long-term capital gain or loss if the U.S. holder has held the Naked Ordinary Shares for more than one year. Generally, for U.S. holders who are individuals (as well as certain trusts and estates), long-term capital gains are subject to U.S. federal income tax at preferential rates. For foreign tax credit limitation purposes, gain or loss recognized upon a disposition generally will be treated as from sources within the United States. The deductibility of capital losses is subject to limitations for U.S. federal income tax purposes.

You should consult your own tax advisor regarding the availability of a foreign tax credit or deduction in respect of any Australian tax imposed on a sale or other disposition of Naked Ordinary Shares. See “Australian Tax Considerations — Tax on Sales or other Dispositions of Shares.”

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Passive Foreign Investment Company Considerations

The Code provides special, generally adverse, rules regarding certain distributions received by U.S. holders with respect to, and sales, exchanges and other dispositions, including pledges, of shares of stock of, a passive foreign investment company, or PFIC. A foreign corporation will be treated as a PFIC for any taxable year if at least 75% of its gross income for the taxable year is passive income or at least 50% of its gross assets during the taxable year, based on a quarterly average and generally by value, produce or are held for the production of passive income. Passive income for this purpose generally includes, among other things, dividends, interest, rents, royalties, gains from commodities and securities transactions and gains from assets that produce passive income. In determining whether a foreign corporation is a PFIC, a pro-rata portion of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest (by value) is taken into account.

The determination of whether or not we are or will become a PFIC is a factual determination that must be determined annually at the close of each taxable year. We do not believe that we are currently a PFIC for U.S. federal income tax purposes for the taxable year ended January 31, 2019. Similarly, we do not anticipate becoming a PFIC for the taxable year ended January 31, 2020 or in the foreseeable future. Notwithstanding the foregoing, because PFIC status is a fact-intensive determination made on an annual basis, and also may be affected by the application of the PFIC rules, which are subject to differing interpretations, no assurance can be given that we are not, or will not become in any future taxable year, a PFIC. Our U.S. counsel expresses no opinion with respect to our PFIC status in any prior taxable year or the current taxable year and also expresses no opinion with respect to our predictions regarding our PFIC status in the future. Prospective investors should consult their own tax advisors regarding our potential PFIC status.

If we are a PFIC for any taxable year during which a U.S. holder holds Naked Ordinary Shares, any “excess distribution” that the holder receives and any gain realized from a sale or other disposition (including a pledge) of such Naked Ordinary Shares will be subject to special tax rules, unless the holder makes a mark-to-market election or qualified electing fund election as discussed below. Any distribution in a taxable year that is greater than 125% of the average annual distribution received by a U.S. holder during the shorter of the three preceding taxable years or such holder’s holding period for the Naked Ordinary Shares will be treated as an excess distribution. Under these special tax rules:

| ● | the excess distribution or gain will be allocated ratably over the U.S. holder’s holding period for the Naked Ordinary Shares;
| ● | the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were a PFIC, will be treated as ordinary income; and
| ● | the amount allocated to each other year will be subject to income tax at the highest rate in effect for that year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.

The tax liability for amounts allocated to years prior to the year of disposition or excess distribution cannot be offset by any net operating loss, and gains (but not losses) realized on the transfer of the Naked Ordinary Shares cannot be treated as capital gains, even if the Naked Ordinary Shares are held as capital assets. In addition, non-corporate U.S. holders will not be eligible for reduced rates of taxation on any dividends received from us if we are a PFIC in the taxable year in which such dividends are paid or in the preceding taxable year.

If we are a PFIC for any taxable year during which any of our non-United States subsidiaries is also a PFIC, a U.S. holder of Naked Ordinary Shares during such year would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the application of these rules to such subsidiary. You should consult your tax advisors regarding the tax consequences if the PFIC rules apply to any of our subsidiaries.

Unless otherwise provided by the U.S. Treasury, each U.S. shareholder of a PFIC is required to file an IRS Form 8621 (Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund) and such other form as the U.S. Treasury may require. If you are a U.S. holder, you should consult your tax advisors regarding whether we are a PFIC and the potential application of the PFIC rules, including any reporting requirements that may apply to you as a result of our status as a PFIC.

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A U.S. holder may avoid some of the adverse tax consequences of owning shares in a PFIC by making a “qualified electing fund” election. The availability of this election with respect to the Naked Ordinary Shares requires that we provide information to shareholders making the election. We do not intend to provide you with the information you would need to make or maintain a qualified electing fund election and you will, therefore, not be able to make such an election with respect to your Naked Ordinary Shares.

Alternatively, a U.S. holder owning marketable stock in a PFIC may make a mark-to-market election to elect out of the tax treatment discussed above. If a valid mark-to-market election for the Naked Ordinary Shares is made, the electing U.S. holder will include in income each year an amount equal to the excess, if any, of the fair market value of the Naked Ordinary Shares as of the close of the holder’s taxable year over the adjusted basis in such Naked Ordinary Shares. The U.S. holder is allowed a deduction for the excess, if any, of the adjusted basis of the Naked Ordinary Shares over their fair market value as of the close of the holder’s taxable year. Deductions are allowable, however, only to the extent of any net mark-to-market gains on the Naked Ordinary Shares included in the U.S. holder’s income for prior taxable years. Amounts included in the U.S. holder’s income under a mark-to-market election, as well as gain on the actual sale or other disposition of the Naked Ordinary Shares, are treated as ordinary income. Ordinary loss treatment also applies to the deductible portion of any mark-to-market loss on the Naked Ordinary Shares, as well as to any loss realized on the actual sale or disposition of the Naked Ordinary Shares, to the extent the amount of such loss does not exceed the net mark-to-market gains previously included for such Naked Ordinary Shares. The tax basis in the Naked Ordinary Shares will be adjusted to reflect any such income or loss amounts. A mark-to-market election will be effective for the taxable year for which the election is made and all subsequent taxable years unless the Naked Ordinary Shares are no longer regularly traded on an applicable exchange or the IRS consents to the revocation of the election.

The mark-to-market election is available only for stock which is regularly traded on (i) a national securities exchange that is registered with the U.S. Securities and Exchange Commission, (ii) NASDAQ, or (iii) an exchange or market that the U.S. Secretary of the Treasury determines has rules sufficient to ensure that the market price represents a legitimate and sound fair market value. The Naked Ordinary Shares are listed on the Nasdaq Capital Market and, consequently, we expect that, assuming the Naked Ordinary Shares are so listed and are regularly traded, the mark-to-market election would be available to you were we to be or become a PFIC.

U.S. holders are urged to contact their own tax advisors regarding the determination of whether we are a PFIC and the tax consequences of such status.

Net Investment Income Tax

Certain U.S. holders who are individuals, estates, or trusts must pay a 3.8% tax on, among other things, dividends and capital gains from the sale or other disposition of shares of common stock.

Backup Withholding Tax and Information Reporting Requirements

U.S. holders that are “exempt recipients” (such as corporations) generally will not be subject to U.S. backup withholding tax and related information reporting requirements on payments of dividends on, and the proceeds from the disposition of, Naked Ordinary Shares unless, when required, they fail to demonstrate their exempt status. Other U.S. holders (including individuals) generally will be subject to U.S. backup withholding tax at the applicable statutory rate, currently 24%, in respect of any payments of dividends on, and the proceeds from the disposition of, Naked Ordinary Shares if they fail to furnish their correct taxpayer identification number or otherwise fail to comply with applicable backup withholding requirements. Information reporting requirements generally will apply to payments of dividends on, and the proceeds from the disposition of, Naked Ordinary Shares to a U.S. holder that is not an exempt recipient. U.S. holders who are required to establish their exempt status generally must provide IRS Form W-9 (Request for Taxpayer Identification Number and Certification).

Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against a U.S. holder’s U.S. federal income tax liability. A U.S. holder may obtain a refund of any amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the Internal Revenue Service in a timely manner and furnishing any required information.

U.S. holders are urged to contact their own tax advisors as to their qualification for an exemption from backup withholding tax and the procedure for obtaining this exemption.

Certain U.S. holders who are individuals may be required to report information relating to an interest in the Naked Ordinary Shares, subject to certain exceptions by filing IRS Form 8938 (Statement of Specified Foreign Financial Assets) with their U.S. federal income tax return. U.S. holders are urged to consult their tax advisers regarding their reporting obligation in connection with their ownership and disposition of the Naked Ordinary Shares.

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The discussion above is not intended to constitute a complete analysis of all tax considerations applicable to an investment in Naked Ordinary Shares. You should consult with your own tax advisor concerning the tax consequences to you in your particular situation.

Australian Tax Considerations

In this section, we discuss the material Australian income tax considerations related to the acquisition, ownership and disposal by the absolute beneficial owners of the Naked Ordinary Shares. This discussion does not address all aspects of Australian income tax law which may be important to particular investors in light of their individual investment circumstances, such as shares held by investors subject to special tax rules (for example, financial institutions, insurance companies or tax exempt organizations). In addition, this summary does not discuss any foreign or state tax considerations, other than transfer duty. Prospective investors are urged to consult their tax advisors regarding the Australian and foreign income and other tax considerations of the purchase, ownership and disposition of the shares. This summary is based upon the premise that the holder is not an Australian tax resident.

Taxation of Dividends

Australia operates a dividend imputation system under which dividends may be declared to be ‘franked’ to the extent of tax paid on company profits. Fully franked dividends are not subject to dividend withholding tax. Dividends payable to non-Australian resident shareholders that are not operating from an Australian permanent establishment (Foreign Shareholders) will be subject to dividend withholding tax, to the extent the dividends are not foreign sourced and declared to be conduit foreign income (CFI) and are unfranked. Dividend withholding tax will be imposed at 30%, unless a shareholder is a resident of a country with which Australia has a double taxation agreement and qualifies for the benefits of the treaty. Under the provisions of the current Double Taxation Convention between Australia and the United States, the Australian tax withheld on unfranked dividends that are not CFI paid by us to which a resident of the United States is beneficially entitled is limited to 15%.

If a company that is a non-Australian resident shareholder owns a 10% or more interest, the Australian tax withheld on dividends paid by us to which a resident of the United States is beneficially entitled is limited to 5%. In limited circumstances the rate of withholding can be reduced to nil.

Tax on Sales or other Dispositions of Shares — Capital gains tax

Foreign Shareholders will not be subject to Australian capital gains tax on the gain made on a sale or other disposal of our shares, unless they, together with associates, hold 10% or more of our issued capital, at the time of disposal or for 12 months of the last 2 years.

Foreign Shareholder who, together with associates, owns a 10% or more interest would be subject to Australian capital gains tax if more than 50% of our direct or indirect assets determined by reference to market value, consists of Australian land, leasehold interests or Australian mining, quarrying or prospecting rights. Double Taxation Convention between the United States and Australia is unlikely to limit the amount of this taxable gain. Australian capital gains tax applies to net capital gains at a taxpayer’s marginal tax rate but for certain shareholders a discount of the capital gain may apply if the shares have been held for 12 months or more. For individuals, this discount is 50%, which may not be available for non-resident shareholders. Net capital gains are calculated after reduction for capital losses, which may only be offset against capital gains. Non-resident shareholders are urged to obtain tax advise as required.

Tax on Sales or other Dispositions of Shares — Shareholders Holding Shares on Revenue Account

Some Foreign shareholders may hold shares on revenue rather than on capital account, for example, share traders. These shareholders may have the gains made on the sale or other disposal of the shares included in their assessable income under the ordinary income provisions of the income tax law, if the gains are sourced in Australia.

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Non-Australian resident shareholders assessable under these ordinary income provisions in respect of gains made on shares held on revenue account would be assessed for such gains at the Australian tax rates for non-Australian residents, which start at a marginal rate of 32.5%. Some relief from Australian income tax may be available to such non-Australian resident shareholders under the Double Taxation Convention between the United States and Australia.

To the extent an amount would be included in a non-Australian resident shareholder’s assessable income under both the capital gains tax provisions and the ordinary income provisions, the capital gain amount would generally be reduced, so that the shareholder would not be subject to double tax on any part of the income gain or capital gain.

Dual Residency

If a shareholder were a resident of both Australia and the United States under those countries’ domestic taxation laws, that shareholder may be subject to tax as an Australian resident. If, however, the shareholder is determined to be a U.S. resident for the purposes of the Double Taxation Convention between the United States and Australia, the Australian tax would be subject to limitation by the Double Taxation Convention. Shareholders should obtain specialist taxation advice in these circumstances.

Transfer Duty

No transfer duty is payable by Australian residents or foreign residents on the trading of shares that are quoted on Nasdaq.

Australian Death Duty

Australia does not have estate or death duties. As a general rate, no capital gains tax liability is realized upon the inheritance of a deceased person’s shares. The disposal of inherited shares by beneficiaries, may, however, give rise to a capital gains tax liability if the gain falls within the scope of Australia’s jurisdiction to tax (as discussed above).

Goods and Services Tax

The issue or transfer of shares will not incur Australian goods and services tax.

F. | Dividends and Paying Agents

Not applicable.

G. | Statement by Experts

Not applicable.

H. | Documents on Display

We file annual or transition reports on Form 20-F and furnish certain reports and other information with the SEC as required by the Exchange Act in accordance with our status as a foreign private issuer. You may read and copy any report or other document filed or furnished by us, including the exhibits, at the SEC’s public reference room located at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Such materials can also be obtained on the SEC’s site on the internet at http://www.sec.gov.

We will also provide without charge to each person, including any beneficial owner, upon written or oral request of that person, a copy of any and all of the information that has been incorporated by reference in this Form 20-F. Please direct such requests to us, Attention Justin Davis-Rice, Naked Brand Group Limited, c/o Bendon Limited, Building 7B, Huntley Street, Alexandria, NSW 2015, Australia.

I. | Subsidiary Information

Not applicable.

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ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and Qualitative Disclosures About Market Risk

Market risk is a broad term for the risk of economic loss due to adverse market changes affecting financial instruments. These changes may be the result of various factors, including interest rates, foreign exchange rates, commodity prices and/or equity prices. Our business is exposed to a variety of market risks, including credit risk, currency risk, interest rate risk and price risk. These risks arise in part through use of the following financial instruments: trade receivables, cash bank accounts, bank overdrafts, trade and other payables, floating rate bank loans, forward currency contracts.

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to our company. Credit risk arises from cash and cash equivalents, derivative financial instruments, as well as credit exposure to wholesale and retail customers, including outstanding receivables and committed transactions.

We have adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. The utilisation of credit limits by customers is regularly monitored by line management. Customers who subsequently fail to meet their credit terms are required to make purchases on a prepayment basis until creditworthiness can be re-established. Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable. Management considers that all the financial assets that are not impaired for each of the reporting dates under review are of good credit quality, including those that are past due.

The credit risk for liquid funds and other short-term financial assets is considered negligible, since the counterparties are reputable banks with high quality external credit ratings.

Currency Risk

Exposure to foreign exchange risk may result in the fair value or future cash flows of a financial instrument fluctuating due to movement in foreign exchange rates of currencies in which financial instruments are held in currencies other than the functional currency. Exposures to currency exchange rates arise from overseas sales and purchases, which are primarily denominated in currencies other than the functional currency, in particular U.S. dollars.

We have open forward exchange contracts at January 31, 2019 relating to highly probable forecast transactions and recognised financial assets and financial liabilities. These contracts commit us to buy specified amounts of foreign currencies in the future at specified exchange rates. We have a policy of requiring that forward exchange contracts be entered into where future commitments are entered into requiring settlement at a time in excess of 1 month but less than 1 year, to a value of approximately 75% total foreign exchange exposure. Contracts are taken out with terms that reflect the underlying settlement terms of the commitment to the maximum extent possible so that hedge ineffectiveness is minimised.

Interest Rate

We are exposed to interest rate risk as funds are borrowed at floating and fixed rates. Borrowings issued at fixed rates expose us to fair value interest rate risk.

Our policy is to minimise interest rate cash flow risk exposures on long-term financing. Longer-term borrowings are therefore usually at fixed rates. At January 31, 2019, we are exposed to changes in market interest rates through its bank borrowings, which are subject to variable interest rates.

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Price Risk

We do not believe that inflation has had a material impact on our revenues or income over the past two fiscal years. However, increases in inflation could result in increases in our expenses, which may not be readily recoverable in the price of goods or services provided to our clients. To the extent that inflation results in rising interest rates and has other adverse effects on capital markets, it could adversely affect our financial position and profitability.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

We have breached certain of the financial covenants contained in the loan documents governing our loan from BNZ. As of the date of this Annual Report, the bank has not declared an event of default. The bank has advised that they are currently taking these breaches under review. See Item 5.B, “Liquidity, and Capital Resources,” of this Annual Report.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

A. – D. Material Modifications to the Rights of Security Holders

None.

E. | Use of Proceeds

Not applicable.

ITEM 15. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer are responsible for establishing and maintaining our disclosure controls and procedures. These controls and procedures were designed to ensure that information that we are required to disclose in the reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms of the Securities and Exchange Commission, and that it is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective controls and procedures can only provide reasonable assurance of achieving their control objectives.

We performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of January 31, 2019 under the supervision of our Chief Executive Officer and Chief Financial Officer. Based upon this evaluation and as a result of the material weaknesses discussed below, our Company Chief Executive Officer and Company Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of January 31, 2019.

Notwithstanding the assessment that there were material weaknesses, we believe that our consolidated financial statements contained in this annual report fairly present our financial position, results of operations and cash flows for the years covered thereby in all material respects.

In designing and evaluating our disclosure controls and procedures, our management, including the Company Chief Executive Officer and the Company Chief Financial Officer, recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Because of the inherent limitations in all control systems, no evaluations of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

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Material Weakness

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally acceptable accounting principles. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual financial statements will not be prevented or detected on a timely basis.

In connection with the preparation of our fiscal 2019 consolidated financial statements, the matters involving internal controls and procedures that our management considered the following to be material weaknesses:

| (1) | The audit committee has been established, however is still operating under the first year exemptions as outlined in section 16 D in respect of independent members.
| (2) | Lack of skilled resources and lack of expertise with complex IFRS and SEC reporting matters.
| (3) | No formally implemented system of internal control over financial reporting and no associated written documentation of our internal control policies and procedures.
| (4) | We did not maintain an effective process for reviewing financial information and did not have a sufficient number of personnel with an appropriate level of accounting knowledge, experience and training in the application of International Financial Reporting Standards commensurate with management’s financial reporting requirements.

These control deficiencies could result in a material misstatement of the annual consolidated financial statements that would not be prevented or detected. Accordingly, management has determined that these control deficiencies constitute material weaknesses.

Management’s Plan for Remediation of Material Weakness

We plan to implement the following actions to address the material weaknesses:

| ● | adding experienced accounting and financial personnel to support our CFO and consider retaining third party consultants to review our internal controls and recommend improvements; and
| ● | appointing an additional independent board member who is resident of Australia, so that the appointment will remedy a breach of the requirement in the Corporations Act that two of the directors be Australian, and will allow us to satisfy the Nasdaq corporate governance requirement to have an audit committee comprised of three independent directors.

Our efforts to remediate these material weaknesses may not be effective. If our efforts to remediate these material weaknesses are not successful, the remediated material weaknesses may reoccur, or other material weaknesses could occur in the future.

We cannot guarantee that we will be able to complete these actions successfully. Even if we are able to complete these planned remediation activities successfully, there is no assurance that these measures will address our material weaknesses effectively. In addition, it is possible that we will discover additional material weaknesses in the future.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a process used to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with IFRS. Internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with IFRS, and that our receipts and expenditures are being made only in accordance with the authorization of our board of directors and management; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

| 75 |

Under the supervision and with the participation of our management, including our Executive Chairman (our principal executive), the Chief Executive Officer and Chief Financial Officer (principal financial officer), we performed a complete documentation of the Company’s significant processes and key controls, and conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on this evaluation, management concluded that our internal control over financial reporting was not effective as of January 31, 2019 due to the material weaknesses described above.

This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting as such report is not required for emerging growth companies.

During the year ended January 31, 2019, we completed the Transactions. In connection with the Transactions, among other things, we established an audit committee and gained access to Bendon Limited’s finance personnel. There were no other changes in our internal control over financial reporting during the year ended January 31, 2019 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

For information about our audit committee financial expert, see Item 6.C of this Annual Report, “Board Practices—Financial Experts on Audit Committee,” which is incorporated herein by reference.

ITEM 16B. CODE OF ETHICS

Effective upon consummation of the Transactions, we adopted a Code of Ethics that applies to all of our employees, officers, and directors. This includes our principal executive officer, principal financial officer, and principal accounting officer or controller, or persons performing similar functions. The full text of our Code of Ethics will be posted on our website at www.nakedbrands.com. We intend to disclose on our website any future amendments of the Code of Ethics or waivers that exempt any principal executive officer, principal financial officer, principal accounting officer or controller, persons performing similar functions, or our directors from provisions in the Code of Ethics.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Our audit committee of the board of directors pre-approves all audit, audit-related and non-audit services not prohibited by law to be performed by our independent auditors and associated fees prior to the engagement of the independent auditor with respect to such services.

|  | 31 Jan 2019 |  |  | 31 Jan 2018 |  |  | 7 months to 31 Jan 2017 |
|  | NZ$ |  |  | NZ$ |  |  | NZ$ |
Pricewaterhouse Coopers Australia |  |  |  |  |  |  |  |  |  |  |  |
Audit Fees |  |  | 477,000 |  |  |  | 485,000 |  |  |  | 1,406,721 |
Taxation Fees |  |  | 32,706 |  |  |  | - |  |  |  | 224,226 |
Other |  |  | 402,800 |  |  |  | - |  |  |  | 42,647 |
Total Remuneration of PricewaterhouseCoopers Australia |  |  | 912,506 |  |  |  | 485,000 |  |  |  | 1,673,594 |
Network firms of PricewaterhouseCoopers Australia |  |  |  |  |  |  |  |  |  |  |  |
Taxation fees |  |  | 137,263 |  |  |  | 27,858 |  |  |  | 181,630 |
Total remuneration of network firms of PricewaterhouseCoopers Australia |  |  | 137,263 |  |  |  | 27,858 |  |  |  | 181,630 |

| 76 |

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

One member of our audit committee of the board of directors, Mr. Justin Davis-Rice, our Executive Chairman, is not considered independent under the applicable listing standards and the rules and regulations of the SEC. Pursuant to Nasdaq’s “phase-in” rules for newly listed companies and the rules and regulations of the SEC, we have one year from the date on which we were first listed on Nasdaq, or until June 19, 2019, to have our audit committee be comprised solely of independent directors. We intend to identify one additional independent director to serve on the audit committee within the applicable time periods, at which time Mr. Davis-Rice will resign from the committee.

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

Not applicable.

ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not applicable.

ITEM 16G. CORPORATE GOVERNANCE

The Nasdaq Listing Rules allow foreign private issuers, such as the Company, to follow home country corporate governance practices (in our case Australian) in lieu of the otherwise applicable Nasdaq corporate governance requirements. In order to rely on this exception, we are required to disclose each Nasdaq Listing Rule that we do not follow and describe the home country practice we do follow in lieu thereof. In accordance with this exception, we intend to follow Australian corporate governance practices in lieu of the following Nasdaq corporate governance standards:

| ● | We will follow Australian law and corporate governance practices in lieu of the requirement under the Nasdaq Listing Rules to have a majority of board of directors be comprised of independent directors. Australian law and generally accepted business practices in Australia do not require that a majority of our board of directors be independent and, accordingly, we will claim the exemption for foreign private issuers with respect to the Nasdaq majority of independent directors requirement.
| ● | We will follow Australian law and corporate governance practices in lieu of the requirement under Nasdaq Listing Rules that a quorum for a meeting of shareholders may not be less than 33 1/3% of the outstanding shares of an issuer’s voting ordinary shares. In compliance with Australian law, our constitution provides that a quorum is two or more shareholders present at the meeting of shareholders and entitled to vote on a resolution at the meeting and, accordingly, we will claim the exemption for foreign private issuers with respect to the Nasdaq quorum requirement.
| ● | We will follow Australian law and corporate governance practices in lieu of the requirements under the Nasdaq Listing Rules that issuers obtain shareholder approval prior to the issuance of securities in connection with a change of control, certain acquisitions, private placements of securities, or the establishment or amendment of certain stock option, purchase or other equity compensation plans or arrangements. Applicable Australian law prohibits the acquisition of a relevant interest in voting shares of a public company such as Naked, if, because of that transaction, a person’s voting power in the company increases from under 20% to over 20% or increases from a starting point that is above 20% and below 90%. This prohibition is subject to a number of exceptions including where the acquisition is approved by a resolution of shareholders of the company in which the acquisition is made. Due to differences between Australian law and corporate governance practices and the Nasdaq Listing Rules, we will claim the exemption for foreign private issuers with respect to the Nasdaq shareholder approval requirements.

ITEM 16H. MINE SAFETY DISCLOSURE

Not applicable.

| 77 |

PART III

ITEM 17. FINANCIAL STATEMENTS

See Item 18, “Financial Statements,” of this Annual Report.

ITEM 18. FINANCIAL STATEMENTS

Our Audited Annual Consolidated Financial Statements are included at the end of this Annual Report.

ITEM 19. EXHIBITS

Exhibit No. |  | Description
1.1 |  | Form of Constitution (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form F-4 (File No. 333-223786) filed Bendon Group Holdings Limited).
2.1 |  | Specimen Ordinary Share Certificate (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form F-4 (File No. 333-223786) filed Bendon Group Holdings Limited).
2.2* |  | Bendon Group Holdings Limited 2017 Equity Incentive Plan (incorporated by reference to Annex C of the proxy statement/prospectus included in the Registration Statement on Form F-4 (File No. 333-223786) filed Bendon Group Holdings Limited).
4.1 |  | Merger Agreement (incorporated by reference to Annex A, A-1, A-2, A-3, A-4 and A-5 of the proxy statement/prospectus included in the Registration Statement on Form F-4 (File No. 333-223786) filed Bendon Group Holdings Limited).
4.2 |  | Deed of Lease, dated as of November 6, 2002, as amended, by and between Bendon Properties Limited and Bendon Limited, for the property located in Auckland, New Zealand (incorporated by reference to Exhibit 10.2 to the Registration Statement on Form F-4 (File No. 333-223786) filed Bendon Group Holdings Limited).
4.3 |  | Stock Purchase Agreement dated November 15, 2018, by and among the stockholders of FOH Online Corp., Naked Brand Group Limited, Bendon Limited and FOH Online Corp. (incorporated by reference to Exhibit 2.1 to the Report of Foreign Issuer on Form 6-K filed by Naked Brand Group Limited on November 21, 2018).
4.4 |  | Deed of Amendment and Restatement and Accession, dated as of June 14, 2018, by and among Bendon Limited, the parties listed in Schedule 1 thereto, Naked Brand Group Limited (formerly known as Bendon Group Holdings Limited) and Bank of New Zealand.
4.5** |  | Agreement, effective as of September 26, 2014, by and between Heidi Klum and Heidi Klum Company LLC and Bendon Limited.
4.6** |  | License Agreement, dated June 18, 2015, by and between ABG-Frederick’s of Hollywood, LLC and FOH Online Corp.
4.7.1 |  | Securities Purchase Agreement, dated as of March 27, 2019, between Naked Brand Group Limited and the investors listed on the Buyer Schedules attached hereto.
4.7.2 |  | Form of Pre-Funded Warrant issued as of March 27, 2019.
4.7.3 |  | Form of Warrant issued as of March 27, 2019.
4.7.4 |  | Registration Rights Agreement, dated as of March 27, 2019, between Naked Brand Group Limited and the buyers on the signature page thereto.

| 78 |

4.8.1 |  | Securities Purchase Agreement, dated as of May 13, 2019, by and between Naked Brand Group Limited and St. George Investments LLC.
4.8.2 |  | Note issued as of May 13, 2019.
4.8.3 |  | Security Agreement, dated as of May 13, 2019, by and between Naked Brand Group Limited and St. George Investments LLC
4.8.4 |  | Deed of Priority and Subordination, dated as of May 13, 2019, by and among Naked Brand Group Limited, Bank of New Zealand and St. George Investments LLC.
8.1 |  | List of subsidiaries.
11.1 |  | Code of ethics.
12.1 |  | Certification of Principal Executive Officer required by Rule 13a-14(a).
12.2 |  | Certification of Principal Financial Officer required by Rule 13a-14(a).
13.1 |  | Certification required by Section 1350 of Chapter 63 of Title 18 of the United States Code.
101.INS |  | XBRL Instance Document
101.SCH |  | XBRL Taxonomy Extension Schema Document
101.CAL |  | XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF |  | XBRL Taxonomy Extension Definition Linkbase Document
101.LAB |  | XBRL Taxonomy Extension Label Linkbase Document
101.PRE |  | XBRL Taxonomy Extension Presentation Linkbase Document

* Management compensation contract, plan or arrangement.

** Certain portions of these exhibits have been omitted as confidential.

| 79 |

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on annual report on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

| Naked Brand Group Limited
| By: | /s/ Justin Davis-Rice
| Name: | Justin Davis-Rice
| Title: | Executive Chairman
| By: | /s/ Howard Herman
| Name: | Howard Herman
| Title: | Chief Financial Officer

Date: June 14, 2019

| 80 |

Naked Brand Group Limited

Consolidated Financial Statements

(Expressed in New Zealand Dollars)

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

| F-1 |

Naked Brand Group Limited

Contents

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

| Page
Report of the Independent Registered Public Accounting Firm | F-3
Consolidated Statements of Profit or Loss and Other Comprehensive Income | F-4
Consolidated Balance Sheets | F-6
Consolidated Statements of Changes in Equity | F-7
Consolidated Statements of Cash Flows | F-8
Notes to the Consolidated Financial Statements | F-9

| F-2 |

Report of the Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Naked Brand Group Limited

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Naked Brand Group Limited and its subsidiaries (the “Company”) as of January 31, 2019, 2018 and 2017, and the related consolidated statements of profit or loss and other comprehensive income, of changes in equity, and of cash flows for the years ended January 31, 2019 and January 31, 2018, the seven months ended January 31, 2017, and the year ended June 30, 2016, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2019, 2018 and 2017, and the results of its operations and its cash flows for the years ended January 31, 2019 and January 31, 2018, the seven months ended January 31, 2017, and the year ended June 30, 2016, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Substantial Doubt About the Company’s Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has suffered recurring losses and cash outflows from operations, has a net working capital deficiency, has breached debt covenants and other matters that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers

PricewaterhouseCoopers

Sydney, Australia

June 14, 2019

We have served as the Company’s auditor since 2016.

| F-3 |

Naked Brand Group Limited

Consolidated Statements of Profit or Loss and Other Comprehensive Income

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

|  | Note |  |  | For the Year Ended 31 January 2019 NZ$000’s |  |  | For the Year Ended 31 January 2018 NZ$000’s |  |  | For the 7 Months Ended 31 January 2017 NZ$000’s |  |  | For the Year Ended 30 June 2016 NZ$000’s |
Revenue |  |  | 5 |  |  |  | 111,920 |  |  |  | 131,388 |  |  |  | 96,284 |  |  |  | 151,000 |
Cost of goods sold |  |  |  |  |  |  | (74,480 | ) |  |  | (87,459 | ) |  |  | (57,144 | ) |  |  | (83,525 | )
Gross profit |  |  |  |  |  |  | 37,440 |  |  |  | 43,929 |  |  |  | 39,140 |  |  |  | 67,475 |
Brand management |  |  |  |  |  |  | (49,256 | ) |  |  | (53,653 | ) |  |  | (32,040 | ) |  |  | (48,362 | )
Administrative expenses |  |  |  |  |  |  | (3,432 | ) |  |  | (4,131 | ) |  |  | (2,383 | ) |  |  | (4,090 | )
Corporate expenses |  |  |  |  |  |  | (14,145 | ) |  |  | (12,851 | ) |  |  | (8,082 | ) |  |  | (13,002 | )
Finance expense |  |  | 6 |  |  |  | (4,041 | ) |  |  | (8,791 | ) |  |  | (6,238 | ) |  |  | (10,409 | )
Brand transition, restructure and transaction expenses |  |  | 6 |  |  |  | (10,075 | ) |  |  | (3,272 | ) |  |  | (1,321 | ) |  |  | (2,232 | )
Impairment expense |  |  | 6 |  |  |  | (8,173 | ) |  |  | (1,914 | ) |  |  | (292 | ) |  |  | (2,157 | )
Other foreign currency gains/(losses) |  |  | 6 |  |  |  | 1,963 |  |  |  | 757 |  |  |  | (3,306 | ) |  |  | (2,423 | )
Fair value gain/(loss) on Convertible Notes derivative |  |  |  |  |  |  | (775 | ) |  |  | 2,393 |  |  |  | (592 | ) |  |  | - |
Loss before income tax |  |  |  |  |  |  | (50,494 | ) |  |  | (37,533 | ) |  |  | (15,114 | ) |  |  | (15,200 | )
Income tax (expense)/benefit |  |  | 7 |  |  |  | 1,274 |  |  |  | (60 | ) |  |  | (865 | ) |  |  | (5,546 | )
Loss for the period |  |  |  |  |  |  | (49,220 | ) |  |  | (37,593 | ) |  |  | (15,979 | ) |  |  | (20,746 | )
Other comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Items that may be reclassified to profit or loss |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Exchange differences on translation of foreign operations |  |  | 22 |  |  |  | (7 | ) |  |  | 148 |  |  |  | (29 | ) |  |  | 31 |
Other comprehensive income/(loss) for the period, net of tax |  |  |  |  |  |  | (7 | ) |  |  | 148 |  |  |  | (29 | ) |  |  | 31 |
Total comprehensive income/(loss) for the period |  |  |  |  |  |  | (49,227 | ) |  |  | (37,445 | ) |  |  | (16,008 | ) |  |  | (20,715 | )
Total comprehensive income/(loss) attributable to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owners of Naked Brand Group Limited |  |  |  |  |  |  | (49,227 | ) |  |  | (37,445 | ) |  |  | (16,008 | ) |  |  | (20,715 | )

| F-4 |

Naked Brand Group Limited

Consolidated Statements of Profit or Loss and Other Comprehensive Income

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

|  | Note |  |  | For the Year Ended 31 January 2019 |  |  | For the Year Ended 31 January 2018 |  |  | For the 7 Months Ended 31 January 2017 |  |  | For the Year Ended 30 June 2016 |
Loss per share for profit from continuing operations attributable to the ordinary equity holders of the Group: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic loss per share (NZ$) |  |  | 23 |  |  |  | (2.01 | ) |  |  | (1.79 | ) |  |  | (0.82 | ) |  |  | (1.13 | )
Diluted loss per share (NZ$) |  |  | 23 |  |  |  | (2.01 | ) |  |  | (1.79 | ) |  |  | (0.82 | ) |  |  | (1.13 | )

A stock reorganization occurred on the 19th June 2018 upon completion of the merger between Naked Brands Inc. and Bendon Limited. As a result, the calculation of basic and diluted earnings per share for 2018, 2017 and 2016 has been adjusted retrospectively. The number of ordinary shares outstanding has been adjusted to reflect the proportionate change in the number of shares. See note 23 for further information.

The above consolidated statements of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

| F-5 |

Naked Brand Group Limited

Consolidated Balance Sheets

As at 31 January 2019, 31 January 2018 and 31 January 2017

|  | Note |  |  | 31 January 2019 NZ$000’s |  |  | 31 January 2018 NZ$000’s |  |  | 31 January 2017 NZ$000’s |
ASSETS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
CURRENT ASSETS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | 11 |  |  |  | 1,962 |  |  |  | 10,739 |  |  |  | 2,644 |
Trade and other receivables |  |  | 12 |  |  |  | 9,650 |  |  |  | 13,165 |  |  |  | 28,090 |
Inventories |  |  | 13 |  |  |  | 21,120 |  |  |  | 31,113 |  |  |  | 37,751 |
Current tax receivable |  |  |  |  |  |  | 355 |  |  |  | - |  |  |  | 52 |
Related party receivables |  |  | 34 |  |  |  | 282 |  |  |  | 15,326 |  |  |  | 13,051 |
TOTAL CURRENT ASSETS |  |  |  |  |  |  | 33,369 |  |  |  | 70,343 |  |  |  | 81,588 |
NON-CURRENT ASSETS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Property, plant and equipment |  |  | 14 |  |  |  | 3,763 |  |  |  | 4,741 |  |  |  | 4,964 |
Deferred tax assets |  |  | 28 |  |  |  | 692 |  |  |  | - |  |  |  | - |
Intangible assets |  |  | 15 |  |  |  | 37,864 |  |  |  | 13,012 |  |  |  | 14,680 |
TOTAL NON-CURRENT ASSETS |  |  |  |  |  |  | 42,319 |  |  |  | 17,753 |  |  |  | 19,644 |
TOTAL ASSETS |  |  |  |  |  |  | 75,687 |  |  |  | 88,096 |  |  |  | 101,232 |
LIABILITIES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
CURRENT LIABILITIES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trade and other payables |  |  | 18 |  |  |  | 35,545 |  |  |  | 32,516 |  |  |  | 28,566 |
Borrowings |  |  | 19 |  |  |  | 20,967 |  |  |  | 52,121 |  |  |  | 68,998 |
Derivative financial instruments |  |  | 16 |  |  |  | 1,484 |  |  |  | 2,087 |  |  |  | 4,188 |
Derivative on Convertible Notes |  |  | 17 |  |  |  | - |  |  |  | 1,110 |  |  |  | 4,112 |
Current tax liabilities |  |  |  |  |  |  | 140 |  |  |  | 786 |  |  |  | - |
Related party payables |  |  | 34 |  |  |  | 3,738 |  |  |  | 1,369 |  |  |  | 635 |
Provisions |  |  | 20 |  |  |  | 921 |  |  |  | 1,106 |  |  |  | 1,528 |
TOTAL CURRENT LIABILITIES |  |  |  |  |  |  | 62,795 |  |  |  | 91,095 |  |  |  | 108,027 |
NON-CURRENT LIABILITIES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Provisions |  |  | 20 |  |  |  | 2,372 |  |  |  | 2,711 |  |  |  | 2,249 |
TOTAL NON-CURRENT LIABILITIES |  |  |  |  |  |  | 2,372 |  |  |  | 2,711 |  |  |  | 2,249 |
TOTAL LIABILITIES |  |  |  |  |  |  | 65,167 |  |  |  | 93,806 |  |  |  | 110,276 |
NET ASSETS/(LIABILITIES) |  |  |  |  |  |  | 10,519 |  |  |  | (5,710 | ) |  |  | (9,044 | )
EQUITY |  |  |  |  |  |  |  |  |  |  |  |
Share capital |  |  | 21 |  |  |  | 134,183 |  |  |  | 68,727 |  |  |  | 27,948 |
Other reserves |  |  | 22 |  |  |  | (2,013 | ) |  |  | (2,006 | ) |  |  | (2,154 | )
Accumulated losses |  |  | 24 |  |  |  | (121,651 | ) |  |  | (72,431 | ) |  |  | (34,838 | )
TOTAL EQUITY |  |  |  |  |  |  | 10,519 |  |  |  | (5,710 | ) |  |  | (9,044 | )

The above consolidated balance sheets should be read in conjunction with the accompanying notes.

| F-6 |

Naked Brand Group Limited

Consolidated Statements of Changes in Equity

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

|  | Ordinary Shares NZ$000’s |  |  | Retained Earnings/ (Accumulated Losses) NZ$000’s |  |  | Foreign Currency Translation Reserve NZ$000’s |  |  | Total NZ$000’s |
Balance at 1 July 2015 |  |  | 3,108 |  |  |  | 1,887 |  |  |  | (2,156 | ) |  |  | 2,839 |
Loss for the year |  |  | - |  |  |  | (20,746 | ) |  |  | - |  |  |  | (20,746 | )
Other comprehensive income for the year |  |  | - |  |  |  | - |  |  |  | 31 |  |  |  | 31 |
Balance at 30 June 2016 |  |  | 3,108 |  |  |  | 18,859 |  |  |  | (2,125 | ) |  |  | (17,876 | )
Balance at 1 July 2016 |  |  | 3,108 |  |  |  | (18,859 | ) |  |  | (2,125 | ) |  |  | (17,876 | )
Loss for the 7 month period |  |  | - |  |  |  | (15,979 | ) |  |  | - |  |  |  | (15,979 | )
Other comprehensive income for the period |  |  | - |  |  |  | - |  |  |  | (29 | ) |  |  | (29 | )
Transactions with owners in their capacity as owners |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Issue of shares |  |  | 24,840 |  |  |  | - |  |  |  | - |  |  |  | 24,840 |
Balance 31 January 2017 |  |  | 27,948 |  |  |  | (34,838 | ) |  |  | (2,154 | ) |  |  | (9,044 | )
Balance at 1 February 2017 |  |  | 27,948 |  |  |  | (34,838 | ) |  |  | (2,154 | ) |  |  | (9,044 | )
Loss for the year |  |  | - |  |  |  | (37,593 | ) |  |  | - |  |  |  | (37,593 | )
Other comprehensive income for the year |  |  | - |  |  |  | - |  |  |  | 148 |  |  |  | 148 |
Transactions with owners in their capacity as owners |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Issue of shares |  |  | 22,990 |  |  |  | - |  |  |  | - |  |  |  | 22,990 |
Convertible notes converted to equity |  |  | 17,789 |  |  |  | - |  |  |  | - |  |  |  | 17,789 |
Balance 31 January 2018 |  |  | 68,727 |  |  |  | (72,431 | ) |  |  | (2,006 | ) |  |  | (5,710 | )
Balance at 1 February 2018 |  |  | 68,727 |  |  |  | (72,431 | ) |  |  | (2,006 | ) |  |  | (5,710 | )
Loss for the year |  |  | - |  |  |  | (49,220 | ) |  |  | - |  |  |  | (49,220 | )
Other comprehensive income for the year |  |  | - |  |  |  | - |  |  |  | (7 | ) |  |  | (7 | )
Transactions with owners in their capacity as owners |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Issuance new shares |  |  | 40,228 |  |  |  | - |  |  |  | - |  |  |  | 40,228 |
Issuance new shares from business combination Naked |  |  | 14,196 |  |  |  | - |  |  |  | - |  |  |  | 14,196 |
Issuance new shares for the acquisition of FOH Online Corp |  |  | 6,873 |  |  |  | - |  |  |  | - |  |  |  | 6,873 |
Convertible notes converted to equity |  |  | 4,159 |  |  |  | - |  |  |  | - |  |  |  | 4,159 |
Balance 31 January 2019 |  |  | 134,183 |  |  |  | (121,651 | ) |  |  | (2,013 | ) |  |  | 10,519 |

The above consolidated statements of changes in equity should be read in conjunction with the accompanying notes.

| F-7 |

Naked Brand Group Limited

Consolidated Statements of Cash Flows

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

|  | Note |  |  | For the Year Ended 31 January 2019 NZ$000’s |  |  | For the Year Ended 31 January 2018 NZ$000’s |  |  | For the 7 Months Ended 31 January 2017 NZ$000’s |  |  | For the Year Ended 30 June 2016 NZ$000’s |
CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Receipts from customers |  |  |  |  |  |  | 140,736 |  |  |  | 159,042 |  |  |  | 92,066 |  |  |  | 160,880 |
Payments to suppliers and employees |  |  |  |  |  |  | (149,750 | ) |  |  | (163,304 | ) |  |  | (105,389 | ) |  |  | (165,708 | )
Income taxes paid |  |  |  |  |  |  | (420 | ) |  |  | 146 |  |  |  | (195 | ) |  |  | (530 | )
Net cash (outflow) from operating activities |  |  | 35 |  |  |  | (9,434 | ) |  |  | (4,116 | ) |  |  | (13,518 | ) |  |  | (5,040 | )
CASH FLOWS FROM INVESTING ACTIVITIES: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment for intangible asset |  |  |  |  |  |  | (151 | ) |  |  | (118 | ) |  |  | (351 | ) |  |  | (475 | )
Payments for property, plant and equipment |  |  |  |  |  |  | (2,585 | ) |  |  | (2,194 | ) |  |  | (723 | ) |  |  | (2,703 | )
Proceeds from business combination, net of cash acquired |  |  |  |  |  |  | 870 |  |  |  | - |  |  |  | - |  |  |  | - |
Net cash (outflow) from investing activities |  |  |  |  |  |  | (1,867 | ) |  |  | (2,312 | ) |  |  | (1,074 | ) |  |  | (3,178 | )
CASH FLOWS FROM FINANCING ACTIVITIES: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Proceeds from issue of shares |  |  |  |  |  |  | 23,248 |  |  |  | 22,721 |  |  |  | - |  |  |  | - |
Proceeds from borrowings - Bank |  |  |  |  |  |  | - |  |  |  | 463 |  |  |  | 1,940 |  |  |  | 62,127 |
Proceeds from borrowings - Convertible notes issue |  |  |  |  |  |  | - |  |  |  | 4,521 |  |  |  | 16,474 |  |  |  | - |
Repayment of borrowings - Bank |  |  |  |  |  |  | (18,489 | ) |  |  | (9,684 | ) |  |  | (2,832 | ) |  |  | (46,986 | )
Debt issuance costs |  |  |  |  |  |  | (322 | ) |  |  | (107 | ) |  |  | (367 | ) |  |  | (750 | )
Interest paid |  |  |  |  |  |  | (2,269 | ) |  |  | (3,418 | ) |  |  | (2,133 | ) |  |  | (3,140 | )
Net cash inflow from financing activities |  |  |  |  |  |  | 2,168 |  |  |  | 14,496 |  |  |  | 13,082 |  |  |  | 11,251 |
Net increase/(decrease) in cash and cash equivalents held |  |  |  |  |  |  | (9,133 | ) |  |  | 8,068 |  |  |  | (1,510 | ) |  |  | 3,033 |
Cash and cash equivalents at beginning of year |  |  |  |  |  |  | 10,739 |  |  |  | 2,644 |  |  |  | 4,193 |  |  |  | 1,246 |
Effects of exchange rate changes on cash and cash equivalents |  |  |  |  |  |  | 355 |  |  |  | 27 |  |  |  | (39 | ) |  |  | (86 | )
Cash and cash equivalents at end of the year |  |  | 11 |  |  |  | 1,962 |  |  |  | 10,739 |  |  |  | 2,644 |  |  |  | 4,193 |

Certain amounts in the prior year period have been reclassified to conform to the current year period presentation. The above consolidated statements of cash flows should be read in conjunction with the accompanying notes.

| F-8 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

Description of business

Naked Brand Group Limited (“the Group”) is a designer, distributor, wholesaler and retailer of women’s and men’s intimates apparel globally. The Group sells its merchandise through retail and outlet stores in New Zealand and Australia, wholesale operations in New Zealand, Australia, the United States and Europe, and through online channels. The Group operates both licenced and owned brands, including the following:

Licenced brands:

Heidi Klum, Fredericks of Hollywood

Owned brands:

Pleasure State, Davenport, Lovable, Bendon, Fayreform, Naked, VaVoom, Evollove, Hickory

The financial report covers Naked Brand Group Limited and its controlled entities (‘the Group’). Naked Brand Group Limited is a for-profit Group, incorporated and domiciled in Australia.

During the year the following significant changes occurred, of which there is further disclosure contained within this report:

| ● | On 19th June 2018, Bendon Limited (Bendon) and Naked Brand Group Inc. (Naked) completed a business combination pursuant to the Merger Agreement.
| ● | On 30th June 2018, the licence agreement with Stella McCartney was terminated
| ● | On 15th November 2018 the Group entered into a Stock Purchase Agreement with the shareholders of FOH Online Corp Inc (FOH)

The financial report was authorised for issue by the Directors on 14 June 2019.

Comparatives are consistent with prior years, unless otherwise stated.

The amounts in the financial statements have been rounded to the nearest thousand dollars.

1 | Basis of Preparation

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Naked Brand Group Limited is a for-profit entity for the purpose of preparing the financial statements.

| F-9 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

1 | Basis of Preparation

Naked Brand Group Limited (The Group) acquired all the share capital of Bendon Limited as part of a corporate reorganization on 19 June 2018. Following the reorganization, Naked Brand Group Limited completed a merger with Naked Brand Group Inc. which for accounting purposes was treated as an acquisition such that Naked brand group limited is deemed the accounting acquirer of the Naked Brand Group Inc. The reorganization of the ownership of Bendon Limited results in the financial statements of the consolidated Naked Brand Group Limited being a continuation of the Bendon Limited financial statements. The consolidated financial report of Naked Brand Limited represents a full year of Bendon Limited’s financial results plus Naked Brand Group Inc. from the date of acquisition being 19 June 2018 to 31 January 2019. The comparative period represents Bendon Limited and its controlled entities only.

(a) Historical cost convention

The financial statements are based on historical costs, except for the measurement at fair value of selected financial assets and financial liabilities.

2 | Summary of Significant Accounting Policies

| (a) | Going concern

The financial statements have been prepared on the basis of going concern which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business.

For the financial year ended 31 January 2019 the Group experienced a loss after income tax from continuing operations of NZ$49.220million and operating cash outflows of NZ$9.434 million. It also is in a net current liability position of $NZ29.426 million and a positive net asset position of NZ$10.519 million.

The losses in the year ended 31 January 2019 were a result of reduced revenue from wholesale customers, increased rebates and discounts, and the plateauing of sales in retail outlets believed to be due to the stores and stockists not having new high margin inventory. The business is experiencing challenging trading conditions which have been impacted by the cancellation of the Stella McCartney licence held by the Group which expired on 30 June 2018, the lack of working capital to purchase sufficient levels of inventory required for trading, reduced customer foot traffic in retail stores and outlets, and a reduction of revenue from wholesale customers. The business also incurred NZ$10.075 million of non-trading costs in relation to brand transition, restructure, and transaction costs associated with listing the Group on the Nasdaq stock exchange. The Group also has trade creditors that are trading beyond their original credit terms.

The Group has also breached its Bank debt loan covenants during financial year, and the Bank has extended the facility from being due on 30 June 2019 to being due or subject to renewal on 31 August 2019. The extension of time in the term of the facility is to provide the Group and the Bank time to consider a refinance of the facility to a longer term to assist the group continue as a going concern.

In consequent to the challenging trading conditions and the negative working capital the business raised NZ$23.248 million of funds in the form of issued capital and convertible notes over the course of the financial year and generated further working capital by reducing inventory by NZ$9.993 million. The Group used the funds to reduce the bank debt from NZ$38.489 million to NZ$20.000 million, reduce long overdue trade creditors (both pre and post year end), fund operating losses, reduce costs, rebuild higher margin inventory, recruit new staff, and pay the costs of listing on the Nasdaq stock exchange.

| F-10 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

2 | Summary of Significant Accounting Policies

| (a) | Going concern

The funds raised and cash flow generated during the financial year ended 31 January 2019 have not been sufficient to provide the Group with adequate working capital, so subsequent to the end of the financial year management has taken steps to raise further capital to complete a program that will fund new inventory that will restock stores and supply wholesale customers, fund further losses, reduce out of term creditors, reduce costs, and provide funds to amortise the Bank debt. It is expected the group will need to continue to fund losses through to the start of the year ending 31 January 2022. This capital raising/recapitalisation is continuing at the time of this report with management having set a target to raise a further NZ$31.587 million between March 2019 and 31 January 2020. At the date of this report management had raised NZ$12.179 million and was still planning on raising NZ$19.409 million, of which NZ$4.347 million is in the forecast for collection in June 2019, NZ$7.31 million in July 2019; and NZ$7.531 million in October 2019. The Group may need to raise further funds beyond these amounts to fund the period to 31 January 2022.

Management has also engaged in further restructuring of the businesses operations including reducing costs across distribution channels, renegotiating supplier contracts, resetting customer supply commitments, updating leadership roles including appointing a new CEO (which occurred in October 2018) at the Bendon Limited level and the Naked Brand Group Limited level in April 2019, for the operating business, and managing the opening of new stores. The impact from the proposed capital raising and the restructure will take time to generate positive cash flows from operations. The Group expects the business will trend to be cash flow positive by through the year ending 31 January 2021, but will not be fully cash flow positive until the beginning of the year ending 31 January 2022.

As part of the discussions to renegotiate the Bank facilities the Bank appointed an independent review accountant (Review Accountant) to review the cash flow and working capital history and forecasts. The Review Accountant issued a report which is consistent with the information in this note and the Bank has advised they will continue to monitor the Group’s performance during the Bank debt renegotiation process through a formal appointment of a Review Accountant. The Directors expect the Bank to offer a new one year facility with amortisation over the next twelve months by 31 August 2019. The offer of a new Bank facility is dependent on the Group achieving inventory covenants set by the Bank through to 31 August 2019 and the Bank being satisfied that the Group has progressed with securing the remaining capital planned of $NZD$19.409 million.

The directors have also considered the Loan Agreement from its previous major shareholder Cullen Investments Limited (“Cullen”) and has been advised by Cullen that due to some changes with Cullen’s financial circumstances Cullen is not likely to be a reliable source of funding and as a result the directors have decided to pursue new capital raising activities and not rely on Cullen.

Despite the ongoing losses, reduced cash flow and cash facilities, and the other negative financial conditions, the Directors are confident that the Group will continue as a going concern. However, while the Directors are confident of continuing as a going concern and meeting its debt obligation to its Bank and creditor commitments as they fall due, the going concern is dependent upon the Directors and Group being successful in:

| ● | Raising further capital in line with the Group’s cashflow forecast of at least NZ$19.409 million and collecting it between June 2019 and October 2019 (NZ$4.347 million in June 2019; NZ$7.531 million in July 2019; and NZ$7.531 million in October 2019) then raising follow on capital (the amount is yet to be determined) to fund the business through until it expects to become cash flow positive;
| ● | Generating sufficient sales and increasing gross margins and reducing overheads from trading in line with forecast;
| ● | Having sufficient funds from the capital raised to reduce costs, recruit new staff, rebuild higher margin inventory, increasing revenue across the wholesale and retail channels, increase gross margin percentages and contribution that leads to a reduction in the current cash outflow being incurred each month to reach a cash flow positive position, and to reduce bank debt;
| ● | Continue to receive support from creditors to delay payment of overdue amounts until the Group has adequate cash flow to commence a repayment arrangement or repay the debt in full;and
| ● | Renegotiating the current bank facilities of $20 million to a facility that is at least a 12 month facility, reviewed annually that commences before the current facilities mature on 31 August 2019; and

| F-11 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

2 | Summary of Significant Accounting Policies

| (a) | Going concern

As a result the viability of the Group is dependent on the above matters, and there is a substantial doubt about the Group’s ability to continue as a going concern. However, the Directors’ believe that the Group will be successful in the above matters and, accordingly, have prepared the report on a going concern basis.

| (b) | Basis for consolidation

Subsidiaries

Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.

Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of profit or loss, statement of comprehensive income, statement of changes in equity and balance sheet respectively.

When the group ceases to consolidate or equity account for an investment because of a loss of control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

If the ownership interest in a joint venture or an associate is reduced but joint control or significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate.

| (c) | Business combinations

Business combinations are accounted for by applying the acquisition method which requires an acquiring entity to be identified in all cases. The acquisition date under this method is the date that the acquiring entity obtains control over the acquired entity.

| F-12 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

2 | Summary of Significant Accounting Policies

| (c) | Business combinations

The fair value of identifiable assets and liabilities acquired are recognised in the consolidated financial statements at the acquisition date.

Goodwill or a gain on bargain purchase may arise on the acquisition date, this is calculated by comparing the consideration transferred and the amount of non-controlling interest in the acquiree with the fair value of the net identifiable assets acquired. Where consideration is greater than the net assets acquired, the excess is recorded as goodwill. Where the net assets acquired are greater than the consideration, the measurement basis of the net assets are reassessed before a gain from bargain purchase recognised in profit or loss.

All acquisition-related costs are recognised as expenses in the periods in which the costs are incurred except for costs to issue debt or equity securities.

Any contingent consideration which forms part of the combination is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity then it is not remeasured and the settlement is accounted for within equity. Otherwise subsequent changes in the value of the contingent consideration liability are measured through profit or loss.

| (d) | Income Tax

The tax expense/(benefit) recognised in the consolidated statements of profit or loss and other comprehensive income comprises of current income tax expense plus deferred tax expense/(benefit).

Current tax is the amount of income taxes payable/(recoverable) in respect of the taxable profit/(loss) for the period and is measured at the amount expected to be paid to/(recovered from) the taxation authorities, using the tax rates and laws that have been enacted or substantively enacted by each jurisdiction by the end of the reporting period. Current tax liabilities/(assets) are measured at the amounts expected to be paid to/(recovered from) the relevant taxation authority.

Deferred tax is provided on temporary differences which are determined by comparing the carrying amounts of tax bases of assets and liabilities to the carrying amounts in the consolidated financial statements.

Deferred tax is not provided for the following:

| ● | The initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit/(tax loss).
| ● | Taxable temporary differences arising on the initial recognition of goodwill.
| ● | Temporary differences related to investment in subsidiaries, associates and jointly controlled entities to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future.

| F-13 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

2 | Summary of Significant Accounting Policies

| (d) | Income Tax

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by each jurisdiction by the end of the reporting period.

Deferred tax assets are recognised for all deductible temporary differences and unused tax losses to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and losses can be utilised.

Current and deferred tax is recognised as income or an expense and included in profit or loss for the period except where the tax arises from a transaction which is recognised in other comprehensive income or equity, in which case the tax is recognised in other comprehensive income or equity respectively.

In determining the amount of current and deferred income tax, the Group takes into account the impact of uncertain income tax positions and whether additional taxes and interest may be due. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Group to change its judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact the income tax expense in the period that such a determination is made.

| (e) | Leases

Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership that are transferred to entities in the Group, are classified as finance leases.

Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period.

Lease payments for operating leases, where substantially all of the risks and benefits remain with the lessor, are charged as expenses on a straight-line basis over the life of the lease term.

Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term.

| F-14 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

2 | Summary of Significant Accounting Policies

| (f) | Revenue and other income

Sale of goods

Sales of goods through retail stores, e-commerce and wholesale channels are recognised when control of the products have been transferred to the customer which is a point in time. For wholesale and e-commerce sales, risks and rewards are transferred when goods are delivered to customers, and therefore reflects an estimate of shipments that have not been received at year end based on shipping terms and historical delivery times. The Group also provides a reserve for projected merchandise returns based on prior experience.

The Group sells gift cards to customers. The Group recognises revenue from gift cards when they are redeemed by the customers. In addition, the Group recognises revenue on all of it’s unredeemed gift cards when the gift cards have expired.

(i) Sale of goods - wholesale

The Group sells a range of lingerie products in the wholesale market. Sales are recognised when control of the products has transferred, being when the products are delivered to the wholesaler, the wholesaler has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the wholesaler’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the wholesaler, and either the wholesaler has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the group has objective evidence that all criteria for acceptance have been satisfied.

Revenue from these sales is recognised based on the price specified in the contract, net of the estimated volume discounts. The estimates of discount is based on the trading terms in the contracts, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. A refund liability (included in trade and other payables) is recognised for expected volume payable to customers in relation to sales made until the end of the reporting period. The Group’s obligation to provide a refund for faulty products under the standard trading terms is recognised as a provision.

(ii) Sale of goods - retail/e-commerce

The group operates a chain of retail stores and e-commerce websites selling lingerie products. Revenue from the sale of goods is recognised when a group entity sells a product to the customer.

| F-15 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

2 | Summary of Significant Accounting Policies

| (f) | Revenue and other income

Payment of the transaction price is due immediately when the customer purchases the product. It is the group’s policy to sell its products to the end customer with a right of return within 30 days. Therefore, a refund liability (included in trade and other payables) and a right to the returned goods (included in inventory if deemed saleable) are recognised for the products expected to be returned. Accumulated experience is used to estimate such returns at the time of sale at a portfolio level (expected value method). Because the number of products returned has been steady for years, it is highly probable that a significant reversal in the cumulative revenue recognised will not occur. The validity of this assumption and the estimated amount of returns are reassessed at each reporting date.

Interest revenue

Interest is recognised using the effective interest method.

Other income

Other income is recognised on an accruals basis when the Group is entitled to it.

| (g) | Brand management, administrative and corporate expenses

Corporate expenses includes head office costs such as human resources, finance team and rental costs. Administrative expenses includes depreciation and amortisation, as well as professional accounting fees. Brand management expenses includes other costs incurred in selling products, including advertising, design and retail store occupancy and payroll.

| (h) | Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowing pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised as an expense in the period in which they are incurred.

| (i) | Inventories

Inventories are measured at the lower of cost and net realisable value. Cost of inventory is determined using the weighted average costs basis and is net of any rebates and discounts received. Net realisable value represents the estimated selling price for inventories less costs necessary to make the sale. Net realisable value is estimated using the most reliable evidence available at the reporting date and inventory is written down through an obsolescence provision if necessary.

| F-16 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

2 | Summary of Significant Accounting Policies

| (j) | Property, plant and equipment
|  | Plant and equipment

Plant and equipment are measured using the cost model.

Under the cost model the asset is carried at its cost less any accumulated depreciation and any impairment losses. Costs include purchase price and other directly attributable costs associated with locating the asset to the installation site, where applicable.

Depreciation

Property, plant and equipment, is depreciated on a straight-line basis over the assets useful life to the Group, commencing when the asset is ready for use.

The estimated useful lives used for each class of depreciable asset are shown below:

Fixed asset class | Useful life
Leasehold improvements | 1 - 10 years
Plant, furniture, fittings and motor vehicles | 3 - 7 years

At the end of each annual reporting period, the depreciation method, useful life and residual value of each asset is reviewed. Any revisions are accounted for prospectively as a change in accounting estimate.

| F-17 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

2 | Summary of Significant Accounting Policies

| (k) | Financial instruments

Financial instruments are recognised initially using trade date accounting, i.e. on the date that the Group becomes party to the contractual provisions of the instrument.

On initial recognition, all financial instruments are measured at fair value plus transaction costs (except for instruments measured at fair value through profit or loss where transaction costs are expensed as incurred).

Financial Assets

(i) Classification

From 1 February 2018, the group classifies its financial assets in the following measurement categories:

| ● | those to be measured subsequently at fair value (either through OCI or through profit or loss), and
| ● | those to be measured at amortised cost.

The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments that are not held for trading, this will depend on whether the group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI).

The group reclassifies debt investments when and only when its business model for managing those assets changes.

(ii) Recognition and derecognition

Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the group has transferred substantially all the risks and rewards of ownership.

| F-18 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

2 | Summary of Significant Accounting Policies

| (k) | Financial instruments

(iii) Measurement

At initial recognition, the group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.

Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.

Debt instruments

Subsequent measurement of debt instruments depends on the group’s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the group classifies its debt instruments:

| ● | Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the statement of profit or loss.
| ● | FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/(losses). Interest income from these financial assets is included in finance income using the effective interest rate method. Foreign exchange gains and losses are presented in other gains/(losses) and impairment expenses are presented as separate line item in the statement of profit or loss.
| ● | FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a debt investment that is subsequently measured at FVPL is recognised in profit or loss and presented net within other gains/(losses) in the period in which it arises.

Equity instruments

The group subsequently measures all equity investments at fair value. Where the group’s management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in profit or loss as other income when the group’s right to receive payments is established.

| F-19 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

2 | Summary of Significant Accounting Policies

| (k) | Financial instruments

Changes in the fair value of financial assets at FVPL are recognised in other gains/(losses) in the statement of profit or loss as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.

(iv) Impairment

From 1 February 2018, the group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

For trade receivables, the group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

(v) Subsequent measurement

If there is objective evidence that an impairment loss on financial assets carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the financial assets original effective interest rate.

Subsequent recoveries of amounts previously written off are credited against other expenses in profit or loss.

Financial liabilities

Financial liabilities are classified as either financial liabilities ‘at fair value through profit or loss’ or other financial liabilities depending on the purpose for which the liability was acquired. Although the Group uses derivative financial instruments in economic hedges of currency and interest rate risk, it does not hedge account for these transactions.

The Group’s financial liabilities include borrowings, trade and other payables (including finance lease liabilities), which are measured at amortised cost using the effective interest rate method.

All of the Group’s derivative financial instruments that are not designated as hedging instruments are accounted for at fair value through profit or loss.

| (l) | Impairment of non-financial assets

At the end of each reporting period the Group determines whether there is an evidence of an impairment indicator for non-financial assets.

| F-20 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

2 | Summary of Significant Accounting Policies

| (l) | Impairment of non-financial assets

Where an indicator exists and regardless for goodwill, indefinite life intangible assets and intangible assets not yet available for use, the recoverable amount of the asset is estimated.

Where assets do not operate independently of other assets, the recoverable amount of the relevant cash-generating unit (CGU) is estimated.

The recoverable amount of an asset or CGU is the higher of the fair value less costs of disposal and the value in use. Value in use is the present value of the future cash flows expected to be derived from an asset or cash-generating unit.

Where the recoverable amount is less than the carrying amount, an impairment loss is recognised in profit or loss.

Reversal indicators are considered in subsequent periods for all assets which have suffered an impairment loss, except for goodwill.

| (m) | Cash and cash equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.

| (n) | Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

| (o) | Trade and other payables

These amounts represent liabilities for goods and services provided to the group prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

| F-21 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

2 | Summary of Significant Accounting Policies

| (p) | Intangibles
|  | Goodwill

Goodwill is carried at cost less accumulated impairment losses. Goodwill is calculated as the excess of the sum of:

| i) | the consideration transferred;
| ii) | any non-controlling interest; and
| iii) | the acquisition date fair value of any previously held equity interest;

over the acquisition date fair value of net identifiable assets acquired in a business combination.

Patents and licences

Separately acquired patents and licences are shown at historical cost. Licenses and customer contracts acquired in a business combination are recognised at fair value at the acquisition date. They have a finite useful life and are subsequently carried at cost less accumulated amortisation and impairment losses. Licence fees have an estimated useful life of 5 – 50 years.

Software

Software has a finite life and is carried at cost less any accumulated amortisation and impairment losses. It has an estimated useful life of between one and three years.

Brands

Brand assets relate to brands owned by the Group that have arisen on historical acquisitions. These assets were initially measured at fair value.

Brands are considered as to whether they have a finite or indefinite useful life at their acquisition and are amortized if considered to have a finite life. Brands are considered to have indefinite lives in circumstances when there is no foreseeable limit to the period over which the asset is expected to generate net cash flows for the entity they are not amortised. Brands with indefinite useful lives have been in existence for many years, are well established and show no signs of deteriorating. These indefinite life brands are assessed for impairment annually or more frequently if impairment indicators are noted.

| F-22 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

2 | Summary of Significant Accounting Policies

| (p) | Intangibles
|  | Amortisation

Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill and indefinite life brands, from the date that they are available for use.

Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

Goodwill and indefinite life brands are not amortised but are tested for impairment annually or more frequently if impairment indicators exist. Goodwill is allocated to the Group’s cash generating units or groups of cash generating units, which represent the lowest level at which goodwill is monitored but where such level is not larger than an operating segment. Gains and losses on the disposal of an entity include the carrying amount of goodwill related to the entity sold.

| (q) | Employee benefits

| (i) | Short-term obligations

Liabilities for wages and salaries, including non-monetary benefits and accumulating sick leave that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.

| (ii) | Other long-term employee benefit obligations

The liabilities for long service leave and annual leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service.

Expected future payments are discounted using market yields at the end of the reporting period of high-quality corporate bonds with terms and currencies that match, as closely as possible, the estimated future cash outflows. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or loss.

The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.

| F-23 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

2 | Summary of Significant Accounting Policies

| (r) | Provisions

Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

Provisions are measured at the present value of management’s best estimate of the outflow required to settle the obligation at the end of the reporting period. The discount rate used is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the unwinding of the discount is taken to finance costs in the consolidated statements of profit or loss and other comprehensive income.

Provisions recognised represent the best estimate of the amounts required to settle the obligation at the end of the reporting period.

| (i) | Lease incentive provision

Lease contributions include payment for improvements initially funded by the landlord. The improvement asset is capitalised and a provision for the amount of landlord contribution is recognised. The provision is released on a monthly basis over the term of the lease of the property.

| (ii) | Onerous contract provision

The Group provides for future losses on long-term contracts where it is considered probable that the contract costs are likely to exceed revenues in future years. A provision is required for the present value of future losses. Estimating these future losses involves a number of assumptions about the achievement of contract performance targets and the likely levels of future cost escalation over time.

| (iii) | Make good provision

The Group is required to restore the lease premises of various retail stores to their original condition at the end of the respective lease terms. Provisions for make good obligations are recognised when the group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. A provision is recognised for the present value of the estimated expenditure required to remove any leasehold improvements. These costs have been capitalised as part of the cost of leasehold improvements and are amortised over the lease term.

| F-24 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

2 | Summary of Significant Accounting Policies

| (s) | Earnings/(loss) per share

(i) Basic earnings/(loss) per share

Basic earnings/(loss) per share is calculated by dividing:

| ● | the profit/(loss) attributable to owners of the Group, excluding any costs of servicing equity other than ordinary shares
| ● | by the weighted average number of ordinary shares outstanding during the financial year.

(ii) Diluted earnings/(loss) per share

Diluted earnings/(loss) per share adjusts the figures used in the determination of basic earnings per share to take into account:

| ● | the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and
| ● | the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.

For periods in which the Group has reported net losses, diluted net loss per share attributable to common shareholders is the same as basic net loss per share attributable to common stockholders, since their impact would be anti-dilutive to the calculation of net loss per share.

| (t) | Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.

Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.

Where the terms of a financial liability are renegotiated and the entity issues equity instruments to a creditor to extinguish all or part of the liability (debt for equity swap), a gain or loss is recognised in profit or loss, which is measured as the difference between the carrying amount of the financial liability and the fair value of the equity instruments issued.

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 reporting period.

| F-25 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

2 | Summary of Significant Accounting Policies

| (u) | Convertible Notes

On issuance of the convertible notes, an assessment is made to determine whether the convertible notes contain an equity instrument or whether the whole instrument should be classified as a financial liability.

When it is determined that the whole instrument is a financial liability and no equity instrument is identified (for example for foreign-currency-denominated convertibles notes), the conversion option is separated from the host debt and classified as a derivative liability. The carrying value of the host contract (a contract denominated in a foreign currency) at initial recognition is determined as the difference between the consideration received and the fair value of the embedded derivative. The host contract is subsequently measured at amortised cost using the effective interest rate method. The embedded derivative is subsequently measured at fair value at the end of each reporting period through the profit and loss. The convertible note and the derivative are presented as a single number on the balance sheet within interest-bearing loans and borrowings.

When it is determined that the instrument contains an equity component based on the terms of the contract, on issuance of the convertible notes, the fair value of the liability component is determined using a market rate for an equivalent non-convertible bond. This amount is classified as a financial liability measured at amortised cost (net of transaction costs) until it is extinguished on conversion or redemption. The remainder of the proceeds is allocated to the conversion option that is recognised and included in equity. Transaction costs are deducted from equity, net of associated income tax. The carrying amount of the conversion option is not re-measured in subsequent years.

| (v) | Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.

| (w) | Foreign currency transactions and balances

Each of the entities within the Group prepare their financial statements based on the currency of the primary economic environment in which the entity operates (functional currency). The consolidated financial statements are presented in New Zealand dollars which is the parent entity’s functional and presentation currency.

| F-26 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

2 | Summary of Significant Accounting Policies

| (w) | Foreign currency transactions and balances
|  | Transaction and balances

Foreign currency transactions are recorded at the spot rate on the date of the transaction.

At the end of the reporting period:

| ● | Foreign currency monetary items are translated using the closing foreign currency rate;
| ● | Non-monetary items that are measured at historical cost are translated using the exchange rate at the date of the transaction; and
| ● | Non-monetary items that are measured at fair value are translated using the rate at the date when fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition or in prior reporting periods are recognised through profit or loss, except where they relate to an item of other comprehensive income or whether they are deferred in equity as qualifying hedges.

Group companies

The financial results and position of foreign operations whose functional currency is different from the Group’s presentation currency are translated as follows:

| ● | assets and liabilities are translated at period-end exchange rates prevailing at that reporting date;
| ● | income and expenses are translated at average exchange rates for the period where the average rate approximates the rate at the date of the transaction; and
| ● | retained earnings are translated at the exchange rates prevailing at the date of the transaction.

Exchange differences arising on translation of foreign operations are transferred directly to the Group’s foreign currency translation reserve in the consolidated balance sheets. These differences are recognised in the consolidated statements of profit or loss and other comprehensive income in the period in which the operation is disposed.

| F-27 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

2 | Summary of Significant Accounting Policies

| (x) | Adoption of new and revised accounting standards
|  | A number of new or amended accounting standards become applicable for the current reporting period and the Group had to change it accounting policies as a result of adopting the following accounting standards.
|  | - IFRS 9 Financial Instruments
|  | - IFRS 15 Revenue from contract with customers
|  | There were no material impacts on adoption of IFRS 9 and IFRS 15. The other accounting standards did not have any impact on the Group’s accounting policies and did not require retrospective adjustments.
| (y) | New Accounting Standards and Interpretations
|  | Certain new accounting standards and interpretations have been published that are not mandatory for 31 January 2019 reporting periods and have not been early adopted by the Group. The Group’s assessment of the impact of these new standards and interpretations is set out below.

| F-28 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

2 | Summary of Significant Accounting Policies
| (y) | New Accounting Standards and Interpretations

Title of Standard |  | Nature of change |  | Impact |  | Mandatory application date/Date of adoption by Group
IFRS 16 Leases |  | The IASB has issued a new standard for leases. This will replace IAS 17. The main impact on lessees is that almost all leases go on balance sheet. This is because the balance sheet distinction between operating and finance leases is removed for lessees. Instead, under the new standard an asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only exemptions are short-term and low-value leases. |  | Management is currently assessing the impact of the new rules and believes the adoption of the provisions of this update will have a material impact on the Group’s consolidated financial statements. The new standard will require that we record a liability and a related asset on the balance sheet for our leased facilities. |  | Management is currently assessing the impact of the new rules and believes the adoption of the provisions of this update will have a material impact on the Group’s consolidated financial statements. Mandatory for financial years commencing on or after 1 January 2019. Expected date of adoption by the Group: 1 February 2019.
IFRC 23 Uncertainty over Income Tax Treatments (IFRIC 23) |  | On June 7, 2017, the IASB issued IFRIC 23, Uncertainty over Income Tax Treatments (“IFRIC 23”). IFRIC 23 clarifies the application of recognition and measurement requirements in IAS 12, Income Taxes, when there is uncertainty over income tax treatments. The IFRIC 23 interpretation specifically addresses whether an entity considers uncertain tax treatments separately; the assumptions an entity makes about the examination of tax treatments by taxation authorities; how an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates; and how an entity considers changes in facts and circumstances. |  | The Group is currently evaluating the impact of adopting this standard on the consolidated financial statements. |  | IFRIC 23 is effective for annual periods beginning on or after January 1, 2019, with earlier application permitted.

There are no other standards that are not yet effective and that would be expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

| (z) | Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The executive directors are the chief operating decision maker, responsible for allocating resources and assessing performance of the operating segments.

| F-29 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

3 | Changes in accounting policies

This note explains the impact of the adoption of IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers on the group’s financial statements and also discloses the new accounting policies that have been applied from 1 February 2018, where they are different to those applied in prior periods.

| (a) | Impact on the financial statements

There were no impacts on the Group’s accounting policies on adoption of IFRS 9 and IFRS 15, and no retrospective adjustments required either.

| (b) | IFRS 9 Financial Instruments – Accounting policies applied from 1 February 2018

Impairment

For trade receivables, the group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

| (c) | IFRS 15 Revenue from Contracts with Customers – Accounting policies

|  | (i) | Sale of goods - wholesale

The Group sells a range of lingerie products in the wholesale market. Sales are recognised when control of the products has transferred, being when the products are delivered to the wholesaler, the wholesaler has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the wholesaler’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the wholesaler, and either the wholesaler has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the group has objective evidence that all criteria for acceptance have been satisfied.

Revenue from these sales is recognised based on the price specified in the contract, net of the estimated volume discounts. The estimates of discount is based on the trading terms in the contracts, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. A refund liability (included in trade and other payables) is recognised for expected volume payable to customers in relation to sales made until the end of the reporting period. The Group’s obligation to provide a refund for faulty products under the standard trading terms is recognised as a provision.

| F-30 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

3 | Changes in accounting policies
| (c) | IFRS 15 Revenue from Contracts with Customers – Accounting policies

| (ii) | Sale of goods - retail/e-commerce

The group operates a chain of retail stores and e-commerce websites selling lingerie products. Revenue from the sale of goods is recognised when a group entity sells a product to the customer.

Payment of the transaction price is due immediately when the customer purchases the product. It is the group’s policy to sell its products to the end customer with a right of return within 30 days. Therefore, a refund liability (included in trade and other payables) and a right to the returned goods (included in inventory) are recognised for the products expected to be returned. Accumulated experience is used to estimate such returns at the time of sale at a portfolio level (expected value method). Because the number of products returned has been steady for years, it is highly probable that a significant reversal in the cumulative revenue recognised will not occur. The validity of this assumption and the estimated amount of returns are reassessed at each reporting date.

4 | Critical Accounting Estimates and Judgments

The directors make estimates and judgements during the preparation of these financial statements regarding assumptions about current and future events affecting transactions and balances.

These estimates and judgements are based on the best information available at the time of preparing the financial statements, however as additional information is known then the actual results may differ from the estimates.

The significant estimates and judgements made have been described below.

| Key estimates - inventory

Each item on inventory is reviewed on an annual basis to determine whether it is being carried at higher than its net realisable value. During the period, management have written down inventory based on best estimate of the net realisable value, although until the time that inventory is sold this is an estimate.

| F-31 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

4 | Critical Accounting Estimates and Judgments

| Key estimates - fair value of financial instruments

The Group has certain financial assets and liabilities which are measured at fair value. Where fair value has not been able to be determined based on quoted price, a valuation model has been used. The inputs to these models are observable, where possible, however these techniques involve significant estimates and therefore fair value of the instruments could be affected by changes in these assumptions and inputs.

| Key estimates - impairment of brands

In accordance with IAS 36 Impairment of Assets, the Group is required to estimate the recoverable amount of indefinite-lived brand assets at each reporting period.

Impairment testing is an area involving management judgement, requiring assessment as to whether the carrying value of assets can be supported by their value in use or fair value less cost to sell.

In calculating the fair value less costs to sell, certain assumptions are required to be made in respect of highly uncertain matters including management’s expectations of:

| - | growth in brand revenues
| - | market royalty rate
| - | the selection of discount rates to reflect the risks involved, and
| - | long-term growth rates

Changing the assumptions selected by management, in particular the growth rate, discount rate and market royalty rate assumption used, could significantly affect the Group’s impairment evaluation and hence results.

The Group’s review includes the key assumptions related to sensitivity in the model. Further details are provided in note 15 to the consolidated financial statements.

| F-32 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

4 | Critical Accounting Estimates and Judgments

| Key estimates - impairment of goodwill

In accordance with IAS 36 Impairment of Assets, the Group is required to estimate the recoverable amount of goodwill at each reporting period.

Impairment testing is an area involving management judgement, requiring assessment as to whether the carrying value of assets can be supported by the net present value of future cash flows derived from such assets using cash flow projections which have been discounted at an appropriate rate and using a terminal value to incorporate expectations of growth thereafter.

In calculating the net present value of the future cash flows, certain assumptions are required to be made in respect of highly uncertain matters including management’s expectations of:

| - | growth in EBITDA future cash flows;
| - | timing and quantum of future capital expenditure;
| - | long-term growth rates; and
| - | the selection of discount rates to reflect the risks involved.

Changing the assumptions selected by management, in particular the discount rate and growth rate assumptions used in the cash flow projections, could significantly affect the Group’s impairment evaluation and hence results.

The Group’s review includes the key assumptions related to sensitivity in the cash flow projections. Further details are provided in note15(c) to the consolidated financial statements.

| Key judgments - taxes

Deferred tax assets

Determining income tax provisions and the recognition of deferred tax assets including carried forward income tax involves judgment on the tax treatment of certain transactions. Deferred tax is recognised on tax losses not yet used and on temporary differences where it is probable that there will be taxable revenue against which these can be offset. Management has made judgments as to the probability of future taxable income being generated against which tax losses will be available for offset based on budgets, current and future expected economic conditions.

| F-33 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

5 | Revenue and Other Income
| Revenue from continuing operations

|  | For the Year Ended 31 January 2019 NZ$000’s |  |  | For the Year Ended 31 January 2018 NZ$000’s |  |  | For the 7 Months Ended 31 January 2017 NZ$000’s |  |  | For the Year Ended 30 June 2016 NZ$000’s |
Gross revenue |  |  | 120,278 |  |  |  | 145,452 |  |  |  | 104,007 |  |  |  | 163,481 |
Rebates |  |  | (8,358 | ) |  |  | (14,064 | ) |  |  | (7,723 | ) |  |  | (12,481 | )
|  |  | 111,920 |  |  |  | 131,388 |  |  |  | 96,284 |  |  |  | 151,000 |
Sale of goods by channel |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
- Retail |  |  | 50,443 |  |  |  | 53,150 |  |  |  | 34,460 |  |  |  | 58,837 |
- Wholesale |  |  | 29,394 |  |  |  | 45,901 |  |  |  | 43,379 |  |  |  | 77,729 |
- Online |  |  | 32,083 |  |  |  | 32,234 |  |  |  | 18,157 |  |  |  | 6,724 |
|  |  | 111,920 |  |  |  | 131,285 |  |  |  | 95,996 |  |  |  | 143,290 |
Services |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 7,702 |
Other income |  |  | - |  |  |  | 103 |  |  |  | 288 |  |  |  | 8 |
|  |  | 111,920 |  |  |  | 131,388 |  |  |  | 96,284 |  |  |  | 151,000 |
Sales of goods by geography |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
- New Zealand |  |  | 40,703 |  |  |  | 46,665 |  |  |  | 30,676 |  |  |  | 62,109 |
- Australia |  |  | 32,065 |  |  |  | 38,208 |  |  |  | 32,913 |  |  |  | 53,193 |
- United States |  |  | 34,156 |  |  |  | 32,323 |  |  |  | 23,146 |  |  |  | 19,167 |
- Europe |  |  | 4,996 |  |  |  | 14,192 |  |  |  | 9,549 |  |  |  | 16,531 |
|  |  | 111,920 |  |  |  | 131,388 |  |  |  | 96,284 |  |  |  | 151,000 |

Other income relates to non-recurring advisory, management and design services provided to other third party intimates apparel brand owners.

All revenue is recognised at a point in time.

| F-34 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

6 | Loss for the Period

The loss for the period was derived after charging / (crediting) the following items that are unusual and of significance because of their size, nature and incidence:

|  | For the Year Ended 31 January 2019 NZ$000’s |  |  | For the Year Ended 31 January 2018 NZ$000’s |  |  | For the 7 Months Ended 31 January 2017 NZ$000’s |  |  | For the Year Ended 30 June 2016 NZ$000’s |
Finance Costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
- Interest expense on external borrowings |  |  | 2,338 |  |  |  | 5,431 |  |  |  | 2,923 |  |  |  | 3,140 |
- Interest expense on shareholder loans |  |  | 1,062 |  |  |  | 2,807 |  |  |  | 3,040 |  |  |  | 7,042 |
- Amortisation on loan set up costs |  |  | 641 |  |  |  | 553 |  |  |  | 275 |  |  |  | 227 |
|  |  | 4,041 |  |  |  | 8,791 |  |  |  | 6,238 |  |  |  | 10,409 |
Other (gains)/losses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
- Fair value (gain)/loss on foreign exchange contracts |  |  | 1,065 |  |  |  | (502 | ) |  |  | 2,135 |  |  |  | 7,660 |
- Net foreign exchange(gains)/losses |  |  | (3,027 | ) |  |  | (255 | ) |  |  | 1,171 |  |  |  | (5,237 | )
|  |  | (1,963 | ) |  |  | (757 | ) |  |  | 3,306 |  |  |  | 2,423 |

| F-35 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

6 | Loss for the Period

|  | For the Year Ended 31 January 2019 NZ$000’s |  |  | For the Year Ended 31 January 2018 NZ$000’s |  |  | For the 7 Months Ended 31 January 2017 NZ$000’s |  |  | For the Year Ended 30 June 2016 NZ$000’s |
Brand transition, restructure and transaction expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
- Brand transition expenses |  |  | 291 |  |  |  | - |  |  |  | - |  |  |  | 884 |
- Onerous contracts |  |  | (109 | ) |  |  | (265 | ) |  |  | 1,166 |  |  |  | 789 |
- Restructure expenses |  |  | 626 |  |  |  | 215 |  |  |  | 103 |  |  |  | 559 |
- Transaction expenses |  |  | 9,267 |  |  |  | 3,322 |  |  |  | 52 |  |  |  | - |
|  |  | 10,075 |  |  |  | 3,272 |  |  |  | 1,321 |  |  |  | 2,232 |

The onerous contracts expense reversal relates to a reversal of the provision raised in the prior year.

Transaction expenses relate to costs incurred in respect of the US listing process.

| F-36 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

6 | Loss for the Period

The loss for the period includes the following specific expenses:

|  | For the Year Ended 31 January 2019 NZ$000’s |  |  | For the Year Ended 31 January 2018 NZ$000’s |  |  | For the 7 Months Ended 31 January 2017 NZ$000’s |  |  | For the Year Ended 30 June 2016 NZ$000’s |
Employee benefits expense: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
- Salaries and wages |  |  | 30,872 |  |  |  | 33,613 |  |  |  | 19,917 |  |  |  | 33,666 |
- Defined contribution expenses |  |  | 508 |  |  |  | 545 |  |  |  | 1,022 |  |  |  | 1,588 |
|  |  | 31,380 |  |  |  | 34,158 |  |  |  | 20,939 |  |  |  | 35.254 |
Depreciation |  |  | 2,151 |  |  |  | 2,724 |  |  |  | 1,664 |  |  |  | 2,966 |
Amortisation |  |  | 231 |  |  |  | 306 |  |  |  | 178 |  |  |  | 323 |
Impairment loss |  |  | 8,173 |  |  |  | 1,914 |  |  |  | 292 |  |  |  | 2,157 |
|  |  | 10,555 |  |  |  | 4,944 |  |  |  | 2,134 |  |  |  | 5,446 |
Rental expense on operating leases: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
- Lease payments |  |  | 9,760 |  |  |  | 10,807 |  |  |  | 6,485 |  |  |  | 11,034 |
- Sublease payments received |  |  | - |  |  |  | (483 | ) |  |  | (354 | ) |  |  | (567 | )
|  |  | 9,760 |  |  |  | 10,324 |  |  |  | 6,131 |  |  |  | 10,467 |

| F-37 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

7 | Income Tax Expense/(benefit)

(a) The major components of tax expense/(benefit) comprise:

|  | For the Year Ended 31 January 2019 NZ$000’s |  |  | For the Year Ended 31 January 2018 NZ$000’s |  |  | For the 7 Months Ended 31 January 2017 NZ$000’s |  |  | For the Year Ended 30 June 2016 NZ$000’s |
Current tax |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current tax on profits for the period |  |  | (667 | ) |  |  | 537 |  |  |  | 807 |  |  |  | 301 |
Adjustments for current tax of prior periods |  |  | (607 | ) |  |  | (477 | ) |  |  | 58 |  |  |  | (344 | )
Total current tax expense/(benefit) |  |  | (1,274 | ) |  |  | 60 |  |  |  | 865 |  |  |  | (43 | )
Deferred tax expense/(benefit) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Decrease/(increase) in deferred tax assets (note 28) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 5,589 |
Income tax expense/(benefit) for continuing operations |  |  | (1,274 | ) |  |  | 60 |  |  |  | 865 |  |  |  | 5,546 |

(b) Reconciliation of income tax to accounting profit:

Loss before income tax |  |  | (50,492 | ) |  |  | (37,533 | ) |  |  | (15,114 | ) |  |  | (15,200 | )
Tax at New Zealand tax rate of 28% |  |  | (14,138 | ) |  |  | (10,509 | ) |  |  | (4,232 | ) |  |  | (4,256 | )
Tax effect of: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
- permanent differences (including impairment expense) |  |  | 753 |  |  |  | (105 | ) |  |  | (6 | ) |  |  | 757 |
- adjustments in respect of current income tax of previous years |  |  | (522 | ) |  |  | (449 | ) |  |  | 41 |  |  |  | (237 | )
- effects of different tax rates of subsidiaries operating in other jurisdictions |  |  | 493 |  |  |  | (30 | ) |  |  | (15 | ) |  |  | (42 | )
- deferred tax assets relating to the current year not brought to account |  |  | 12,077 |  |  |  | 11,150 |  |  |  | 5,119 |  |  |  | 3,934 |
- deferred tax assets relating to prior periods no longer recognised (note 28) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 5,589 |
- other |  |  | 63 |  |  |  | 3 |  |  |  | (42 | ) |  |  | (199 | )
Income tax expense/(benefit) |  |  | (1,274 | ) |  |  | 60 |  |  |  | 865 |  |  |  | 5,546 |

| F-38 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

7 | Income Tax Expense/(benefit)

(c) Tax losses not recognised

|  | For the Year Ended 31 January 2019 NZ$000’s |  |  | For the Year Ended 31 January 2018 NZ$000’s |  |  | For the 7 Months Ended 31 January 2017 NZ$000’s |  |  | For the Year Ended 30 June 2016 NZ$000’s |
Unused tax losses for which no deferred tax asset has been recognised |  |  | 130,587 |  |  |  | 87,455 |  |  |  | 43,269 |  |  |  | 23,765 |
Potential tax benefit at 28% |  |  | 36,564 |  |  |  | 24,487 |  |  |  | 12,115 |  |  |  | 6,654 |

The Group has assessed future forecast profits and concluded that not enough criteria have been satisfied to recognise any deferred tax assets at the period ended 31 January 2019. Unused tax losses do not have an expiry date.

(d) Temporary differences not recognised

|  | For the Year Ended 31 January 2019 NZ$000’s |  |  | For the Year Ended 31 January 2018 NZ$000’s |  |  | For the 7 Months Ended 31 January 2017 NZ$000’s |  |  | For the Year Ended 30 June 2016 NZ$000’s |
Temporary differences for which no deferred tax asset has been recognised |  |  | 14,504 |  |  |  | 14,661 |  |  |  | 18,703 |  |  |  | 19,924 |
Potential tax benefit at 28% |  |  | 4,061 |  |  |  | 4,105 |  |  |  | 5,237 |  |  |  | 5,579 |

8 | Business Combinations

On 19th June 2018, Bendon Limited (Bendon) and Naked Brand Group Inc. (Naked) completed a business combination pursuant to the Merger Agreement. The business combination was executed after Bendon Limited reorganised its group and inserted a new entity as its parent entity in which the Bendon shareholders rolled over their shares into the new entity. The new parent entity is called Naked Brand Group Limited. Bendon Limited was considered the accounting acquirer of the consolidated group and the consolidated accounts represents a continuation of the Bendon Limited financial statements.

Pursuant to the Merger Agreement, (i) Bendon undertook a reorganization (the “Reorganization”) pursuant to which all of the shareholders of Bendon Limited exchanged all of the outstanding ordinary shares of Bendon Limited (the “Bendon Ordinary Shares”) for ordinary shares in Naked Brand Group Limited (“Naked Brand Group Ordinary Shares”), and (ii) immediately thereafter, the parties effectuated a merger of Merger Sub and Naked, with Naked surviving as a wholly owned subsidiary of Naked Brand Group Limited and the Naked stockholders receiving Naked Brand Group Ordinary Shares in exchange for all of the outstanding shares of common stock of Naked (the “Merger” and together with the Reorganization, the “Transactions”).

| F-39 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

8 | Business Combinations

Details of the purchase consideration, the net assets acquired and goodwill are as follows:

|  | Naked NZ$000’s |
Purchase consideration |  |  |  |
Shares issued - fair value |  |  | 14,196 |

The assets and liabilities recognised as a result of the acquisition are as follows:

|  | Fair value NZ$000’s |
Cash |  |  | 592 |
Trade and other receivables |  |  | 4,186 |
Inventories |  |  | 1,810 |
Intangible assets |  |  |  |
- Brand |  |  | 2,726 |
Trade and other payables |  |  | (916 | )
Net identifiable assets acquired |  |  | 8,398 |
Add: goodwill |  |  | 5,798 |
Net assets acquired |  |  | 14,196 |

There were no acquisitions in the year ended 31 January 2018.

| F-40 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

8 | Business Combinations

| (a) | Acquisition-related costs

Acquisition-related costs of $3,739,279 that were not directly attributable to the issue of shares are included in administrative expenses in profit or loss and in operating cash flows in the statement of cash flows. In addition, approximately 100,000 Naked Brand Group’s share was issued to advisors as part of their consultancy in lieu of cash payment. The fair value of these was $700 thousand and that cost has been recognised as an expense in the profit and loss.

| (b) | Revenue and profit contribution

The acquired business contributed revenues of $2,244,095 and net loss of $813,808 to the group for the period from 19 June 2018 to 31 January 2019. If the acquisition occurred on 1 February 2018, the full year revenue of the combined group would have been $113,969,040 and loss of $49,255,319.

| (c) | Provisional accounting

The initial accounting for the business combination is incomplete at the time of the end of the reporting period and will be recognised using provisional amounts. During the measurement period, the Group will retrospectively adjust the provisional amounts recognised at the acquisition date to reflect new information obtained about facts and circumstance that existed as at the acquisition date. The measurement period ends as soon the Group receives the information it was seeking about facts and circumstances that existed as of the acquisition date or learns that more information is not obtained. The measurement shall not exceed one year from the acquisition date.

| F-41 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

9 | Acquisition of FOH Online Corp Inc.

On November 15, 2018 the Group entered into a Stock Purchase Agreement with the shareholders of FOH Online Corp Inc (FOH), which included Cullen Investments Limited (Cullen) a related entity, that the Group purchased all of the issued and outstanding shares of FOH. The transaction was settled on December 6, 2019. The sub licence agreement which was in place between the Group and FOH was terminated upon completion of this transaction. The Group has treated this transaction as an asset acquisition as the activities of FOH did not constitute a business.

Details of the purchase consideration, the net assets acquired and goodwill are as follows:

|  | FOH |
|  | NZ$000’s |
Purchase consideration |  |  |  |
Shares issued at fair value |  |  | 6,872 |
Debt forgiveness |  |  | 13,074 |
Total |  |  | 19,946 |

The assets and liabilities recognised as a result of the acquisition are as follows

|  | Fair value |
|  | NZ$000’s |
Cash |  |  | 278 |
Net balance with sub licencee |  |  | (3,119 | )
Loan payable to EJ Watson |  |  | (2,172 | )
Patents and Licences |  |  | 24,959 |
Total of assets acquired |  |  | 19,946 |

| F-42 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

10 | Operating Segments

Segment information

Identification of reportable operating segments

The consolidated entities’ Director examined the group’s performance from both sales channel and geographical perspective and identified seven reportable segments being Australia Retail, New Zealand Retail, Australia wholesale, New Zealand wholesale, US Wholesale, EU Wholesale and e-commerce.

Australia retail

This segment covers retail and outlet stores located in Australia.

New Zealand retail

This segment covers retail and outlet stores located in New Zealand.

Australia wholesale

This segment covers the wholesale of intimates apparel to customers based in Australia.

New Zealand wholesale

This segment covers the wholesale of intimates apparel to customers based in New Zealand.

US wholesale

This segment covers the wholesale of intimates apparel to customers based in the United States of America.

Europe wholesale

This segment covers the wholesale of intimates apparel to customers based in Europe.

| F-43 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

10 | Operating Segments

Identification of reportable operating segments

E-commerce

This segment covers the group’s online retail activities. E-commerce revenue for the periods ended 31 January 2019, 31 January 2018 and 31 January 2017 include revenue from a US brand called Fredericks of Hollywood for which Bendon Limited currently has a licence agreement.

These operating segments are based on the internal reports that are reviewed and used by the Chief Executive Officer (who is identified as the Chief Operating Decision Makers (‘CODM’)) in assessing performance and in determining the allocation of resources.

The CODM reviews underlying EBITDA (earnings before interest, tax, depreciation and amortisation). The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the financial statements.

EBITDA is a financial measure which is not prescribed by IFRS and represents the profit adjusted for specific non-cash and significant items. The directors consider EBITDA to reflect the core earnings of the consolidated entity.

The information reported to the CODM is on a monthly basis.

Other Costs and Business Activities

Certain costs are not allocated to our reporting segment results, such as costs associated with the following:

- Corporate overheads, which is responsible for centralized functions such as information technology, facilities, legal, finance, human resources, business development, and procurement. These costs also include compensation costs and other miscellaneous operating expenses not charged to our operating segments, as well as interest and tax income and expense.

These costs are included with in “unallocated” segment in our segment performance.

| F-44 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

10 | Operating Segments

Other assets and liabilities

We manage our assets and liabilities on a Group basis, not by segment. CODM does not regularly review any asset or liability information by segment and its preparation is impracticable. Accordingly, we do not report asset and liability information by segment.

| (a) | Reconciliations

Reconciliation of segment revenue to consolidated statements of profit or loss and other comprehensive income:

|  | For the Year Ended 31 January 2019 NZ$000’s |  |  | For the Year Ended 31 January 2018 NZ$000’s |  |  | For the 7 Months Ended 31 January 2017 NZ$000’s |  |  | For the Year Ended 30 June 2016 NZ$000’s |
Total segment revenue |  |  | 136,842 |  |  |  | 156,311 |  |  |  | 113,031 |  |  |  | 176,145 |
Intersegment eliminations |  |  | (24,922 | ) |  |  | (24,923 | ) |  |  | (16,747 | ) |  |  | (32,855 | )
Other revenue |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 7,710 |
Total revenue |  |  | 111,920 |  |  |  | 131,388 |  |  |  | 96,284 |  |  |  | 151,000 |

| F-45 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

10 | Operating Segments

| (a) | Reconciliations

Reconciliation of segment EBITDA to the consolidated statements of profit or loss and other comprehensive income:

The Board meets on a monthly basis to assess the performance of each segment, net operating profit does not include non-operating revenue and expenses such as dividends, fair value gains and losses.

|  | For the Year Ended 31 January 2019 NZ$000’s |  |  | For the Year Ended 31 January 2018 NZ$000’s |  |  | For the 7 Months Ended 31 January 2017 NZ$000’s |  |  | For the Year Ended 30 June 2016 NZ$000’s |
Segment EBITDA |  |  | (25,602 | ) |  |  | (24,053 | ) |  |  | (2,126 | ) |  |  | 10,470 |
Income tax (expense)/benefit |  |  | 1,274 |  |  |  | (60 | ) |  |  | (865 | ) |  |  | (5,546 | )
Other revenue |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 7,710 |
Any other reconciling items |  |  | (24,892 | ) |  |  | (13,480 | ) |  |  | (12,988 | ) |  |  | (33,380 | )
Total net loss after tax |  |  | (49,220 | ) |  |  | (37,593 | ) |  |  | (15,979 | ) |  |  | (20,746 | )

Any other reconciling items includes brand transition, finance expenses, impairment expense, depreciation and amortisation, fair value gain/loss on foreign exchange contracts, and unrealised foreign exchange gain/loss that cannot be allocated to segments.

| (b) | Geographical information

In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers whereas segment assets are based on the location of the assets.

| F-46 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

10 | Operating Segments

| (b) | Geographical information

|  | For the Year Ended 31 January 2019 NZ$000’s |  |  | For the Year Ended 31 January 2018 NZ$000’s |  |  | For the 7 Months Ended 31 January 2017 NZ$000’s |  |  | For the Year Ended 30 June 2016 NZ$000’s |
New Zealand |  |  | 40,703 |  |  |  | 46,665 |  |  |  | 30,676 |  |  |  | 62,109 |
Australia |  |  | 32,065 |  |  |  | 38,208 |  |  |  | 32,913 |  |  |  | 53,193 |
United States |  |  | 34,156 |  |  |  | 32,323 |  |  |  | 23,146 |  |  |  | 19,167 |
Europe |  |  | 4,996 |  |  |  | 14,192 |  |  |  | 9,549 |  |  |  | 16,531 |
|  |  | 111,920 |  |  |  | 131,388 |  |  |  | 96,284 |  |  |  | 151,000 |

The revenues resulting from the Naked business combination are included in the United States segment shown above.

| F-47 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

10 | Operating Segments

| (c) | Segment performance

For the year ended 31 January 2019 |  | NZ Retail NZ$000’s |  |  | AU Retail NZ$000’s |  |  | NZ Wholesale NZ$000’s |  |  | AU Wholesale NZ$000’s |  |  | US Wholesale NZ$000’s |  |  | EU Wholesale NZ$000’s |  |  | e-commerce NZ$000’s |  |  | Unallocated NZ$000’s |  |  | Total NZ$000’s |
Revenue from external customers |  |  | 31,801 |  |  |  | 18,547 |  |  |  | 7,154 |  |  |  | 11,491 |  |  |  | 5,798 |  |  |  | 4,996 |  |  |  | 32,133 |  |  |  | - |  |  |  | 111,920 |
Service income |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
|  |  | 31,801 |  |  |  | 18,547 |  |  |  | 7,154 |  |  |  | 11,491 |  |  |  | 5,798 |  |  |  | 4,996 |  |  |  | 32,133 |  |  |  | - |  |  |  | 111,920 |
Cost of sales |  |  | (15,424 | ) |  |  | (9,192 | ) |  |  | (6,372 | ) |  |  | (8,498 | ) |  |  | (5,222 | ) |  |  | (4,490 | ) |  |  | (21,248 | ) |  |  | (4,034 | ) |  |  | (74,480 | )
Gross margin |  |  | 16,377 |  |  |  | 9,355 |  |  |  | 782 |  |  |  | 2,993 |  |  |  | 576 |  |  |  | 506 |  |  |  | 10,885 |  |  |  | (4,034 | ) |  |  | 37,440 |
Other segment expenses* |  |  | (13,537 | ) |  |  | (11,003 | ) |  |  | (912 | ) |  |  | (4,495 | ) |  |  | (2,724 | ) |  |  | (1,536 | ) |  |  | (11,247 | ) |  |  | - |  |  |  | (45,454 | )
Unallocated expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Administrative expenses |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (1,050 | ) |  |  | (1,050 | )
Corporate expenses |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (17,947 | ) |  |  | (17,947 | )
Other foreign exchange gain/loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,409 |  |  |  | 1,409 |
EBITDA |  |  | 2,840 |  |  |  | (1,648 | ) |  |  | (130 | ) |  |  | (1,502 | ) |  |  | (2,148 | ) |  |  | (1,030 | ) |  |  | (362 | ) |  |  | (21,622 | ) |  |  | (25,602 | )
Brand transition, restructure and transaction expenses |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (10,075 | ) |  |  | (10,075 | )
Finance expense |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (4,041 | ) |  |  | (4,041 | )
Impairment expense |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (8,173 | ) |  |  | (8,173 | )
Depreciation and amortisation |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (2,382 | ) |  |  | (2,382 | )
Fair value gain/(loss) on foreign exchange contracts |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (1,704 | ) |  |  | (1,704 | )
Unrealised foreign exchange gain/(loss) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2,258 |  |  |  | 2,258 |
Fair value gain/(loss) on Convertible Notes derivative |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (775 | ) |  |  | (775 | )
Loss before income tax expense |  |  | 2,840 |  |  |  | (1,648 | ) |  |  | (130 | ) |  |  | (1,502 | ) |  |  | (2,148 | ) |  |  | (1,030 | ) |  |  | (362 | ) |  |  | (46,514 | ) |  |  | (50,494 | )
Income tax expense |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,274 |  |  |  | 1,274 |
Loss after income tax expense |  |  | 2,840 |  |  |  | (1,648 | ) |  |  | (130 | ) |  |  | (1,502 | ) |  |  | (2,148 | ) |  |  | (1,030 | ) |  |  | (362 | ) |  |  | (45,240 | ) |  |  | (49,220 | )

| F-48 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

10 | Operating Segments

| (c) | Segment performance

For the year ended 31 January 2018 |  | NZ Retail NZ$000’s |  |  | AU Retail NZ$000’s |  |  | NZ Wholesale NZ$000’s |  |  | AU Wholesale NZ$000’s |  |  | US Wholesale NZ$000’s |  |  | EU Wholesale NZ$000’s |  |  | e-commerce NZ$000’s |  |  | Unallocated NZ$000’s |  |  | Total NZ$000’s |
Revenue from external customers |  |  | 34,269 |  |  |  | 18,236 |  |  |  | 10,453 |  |  |  | 15,512 |  |  |  | 6,390 |  |  |  | 14,192 |  |  |  | 32,234 |  |  |  | - |  |  |  | 131,286 |
Service income |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 102 |  |  |  | 102 |
|  |  | 34,269 |  |  |  | 18,236 |  |  |  | 10,453 |  |  |  | 15,512 |  |  |  | 6,390 |  |  |  | 14,192 |  |  |  | 32,234 |  |  |  | 102 |  |  |  | 131,388 |
Cost of sales |  |  | (16,488 | ) |  |  | (9,457 | ) |  |  | (8,213 | ) |  |  | (12,545 | ) |  |  | (6,438 | ) |  |  | (10,221 | ) |  |  | (20,974 | ) |  |  | (3,123 | ) |  |  | (87,459 | )
Gross margin |  |  | 17,781 |  |  |  | 8,779 |  |  |  | 2,240 |  |  |  | 2,967 |  |  |  | (48 | ) |  |  | 3,971 |  |  |  | 11,260 |  |  |  | (3,021 | ) |  |  | 43,929 |
Other segment expenses* |  |  | (13,451 | ) |  |  | (11,329 | ) |  |  | (1,068 | ) |  |  | (3,781 | ) |  |  | (3,301 | ) |  |  | (2,904 | ) |  |  | (11,520 | ) |  |  | - |  |  |  | (47,354 | )
Unallocated expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Administrative expenses |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (1,101 | ) |  |  | (1,101 | )
Corporate expenses |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (19,150 | ) |  |  | (19,150 | )
Other foreign exchange gain/loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (377 | ) |  |  | (377 | )
EBITDA |  |  | 4,330 |  |  |  | (2,550 | ) |  |  | 1,172 |  |  |  | (814 | ) |  |  | (3,349 | ) |  |  | 1,067 |  |  |  | (260 | ) |  |  | (23,649 | ) |  |  | (24,053 | )
Brand transition, restructure and transaction expenses |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (3,272 | ) |  |  | (3,272 | )
Finance expense |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (8,791 | ) |  |  | (8,791 | )
Impairment expense |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (1,914 | ) |  |  | (1,914 | )
Depreciation and amortisation expense |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (3,030 | ) |  |  | (3,030 | )
Fair value gain/(loss) on foreign exchange contracts |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (502 | ) |  |  | (502 | )
Unrealised foreign exchange (gain)/loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,636 |  |  |  | 1,636 |
Fair value (gain)/loss on Convertible Note derivative |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2,393 |  |  |  | 2,393 |
Loss before income tax expense |  |  | 4,330 |  |  |  | (2,550 | ) |  |  | 1,172 |  |  |  | (814 | ) |  |  | (3,349 | ) |  |  | 1,067 |  |  |  | (260 | ) |  |  | (37,129 | ) |  |  | (37,533 | )
Income tax expense |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (60 | ) |  |  | (60 | )
Loss after income tax expense |  |  | 4,330 |  |  |  | (2,550 | ) |  |  | 1,172 |  |  |  | (814 | ) |  |  | (3,349 | ) |  |  | 1,067 |  |  |  | (260 | ) |  |  | (37,189 | ) |  |  | (37,593 | )

* Other segment expenses relate to brand management expenses and some corporate expenses.

| F-49 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

10 | Operating Segments

| (c) | Segment performance

For the 7 months ended 31 January 2017 |  | NZ Retail NZ$000’s |  |  | AU Retail NZ$000’s |  |  | NZ Wholesale NZ$000’s |  |  | AU Wholesale NZ$000’s |  |  | US Wholesale NZ$000’s |  |  | EU Wholesale NZ$000’s |  |  | e-commerce NZ$000’s |  |  | Unallocated NZ$000’s |  |  | Total NZ$000’s |
Revenue from external customers |  |  | 21,953 |  |  |  | 12,053 |  |  |  | 7,484 |  |  |  | 18,091 |  |  |  | 9,015 |  |  |  | 9,548 |  |  |  | 18,140 |  |  |  | - |  |  |  | 96,284 |
|  |  | 21,953 |  |  |  | 12,053 |  |  |  | 7,484 |  |  |  | 18,091 |  |  |  | 9,015 |  |  |  | 9,548 |  |  |  | 18,140 |  |  |  | - |  |  |  | 96,284 |
Cost of sales |  |  | (9,707 | ) |  |  | (5,592 | ) |  |  | (4,961 | ) |  |  | (11,431 | ) |  |  | (6,934 | ) |  |  | (6,277 | ) |  |  | (11,902 | ) |  |  | (340 | ) |  |  | (57,144 | )
Gross margin |  |  | 12,246 |  |  |  | 6,461 |  |  |  | 2,523 |  |  |  | 6,660 |  |  |  | 2,081 |  |  |  | 3,271 |  |  |  | 6,238 |  |  |  | (340 | ) |  |  | 39,140 |
Other segment expenses* |  |  | (7,480 | ) |  |  | (6,196 | ) |  |  | (475 | ) |  |  | (2,089 | ) |  |  | (2,065 | ) |  |  | (2,013 | ) |  |  | (3,654 | ) |  |  | (8,068 | ) |  |  | (32,040 | )
Unallocated expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Administrative expenses |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (541 | ) |  |  | (541 | )
Corporate expenses |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (8,082 | ) |  |  | (8,082 | )
Other foreign exchange gain/loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (603 | ) |  |  | (603 | )
EBITDA |  |  | 4,766 |  |  |  | 265 |  |  |  | 2,048 |  |  |  | 4,571 |  |  |  | 16 |  |  |  | 1,258 |  |  |  | 2,584 |  |  |  | (17,634 | ) |  |  | (2,126 | )
Brand transition, restructure and transaction expenses |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (1,321 | ) |  |  | (1,321 | )
Finance expense |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (6,238 | ) |  |  | (6,238 | )
Impairment expense |  |  | - |  |  |  | (281 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (11 | ) |  |  | (292 | )
Depreciation and amortisation expense |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (1,842 | ) |  |  | (1,842 | )
Fair value gain/(loss) on foreign exchange contracts |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (2,135 | ) |  |  | (2,135 | )
Unrealised foreign exchange (gain)/loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (568 | ) |  |  | (568 | )
Fair value (gain)/loss on Convertible Note derivative |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (592 | ) |  |  | (592 | )
Loss before income tax expense |  |  | 4,766 |  |  |  | (16 | ) |  |  | 2,048 |  |  |  | 4,571 |  |  |  | 16 |  |  |  | 1,258 |  |  |  | 2,584 |  |  |  | (30,341 | ) |  |  | (15,114 | )
Income tax expense |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (865 | ) |  |  | (865 | )
Loss after income tax expense |  |  | 4,766 |  |  |  | (16 | ) |  |  | 2,048 |  |  |  | 4,571 |  |  |  | 16 |  |  |  | 1,258 |  |  |  | 2,584 |  |  |  | (31,206 | ) |  |  | (15,979 | )

* Other segment expenses relate to brand management expenses and some corporate expenses.

| F-50 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

10 | Operating Segments

| (c) | Segment performance

For the year ended 30 June 2016 |  | NZ Retail NZ$000’s |  |  | AU Retail NZ$000’s |  |  | NZ Wholesale NZ$000’s |  |  | AU Wholesale NZ$000’s |  |  | US Wholesale NZ$000’s |  |  | EU Wholesale NZ$000’s |  |  | e-commerce NZ$000’s |  |  | Unallocated NZ$000’s |  |  | Total NZ$000’s |
Revenue from external customers |  |  | 37,389 |  |  |  | 20,680 |  |  |  | 15,071 |  |  |  | 28,021 |  |  |  | 18,876 |  |  |  | 16,531 |  |  |  | 6,722 |  |  |  | - |  |  |  | 143,290 |
Service income |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 7,702 |  |  |  | 7,702 |
Other income |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 8 |  |  |  | 8 |
|  |  | 37,389 |  |  |  | 20,680 |  |  |  | 15,071 |  |  |  | 28,021 |  |  |  | 18,876 |  |  |  | 16,531 |  |  |  | 6,722 |  |  |  | 7,710 |  |  |  | 151,000 |
Cost of sales |  |  | (16,053 | ) |  |  | (8,930 | ) |  |  | (10,721 | ) |  |  | (18,056 | ) |  |  | (14,540 | ) |  |  | (11,658 | ) |  |  | (3,582 | ) |  |  | 15 |  |  |  | (83,525 | )
Gross margin |  |  | 21,336 |  |  |  | 11,750 |  |  |  | 4,350 |  |  |  | 9,965 |  |  |  | 4,336 |  |  |  | 4,873 |  |  |  | 3,140 |  |  |  | 7,725 |  |  |  | 67,475 |
Other segment expenses* |  |  | (12,263 | ) |  |  | (9,835 | ) |  |  | (709 | ) |  |  | (3,520 | ) |  |  | (2,817 | ) |  |  | (3,204 | ) |  |  | (2,039 | ) |  |  | (13,975 | ) |  |  | (48,362 | )
Unallocated expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Administrative expenses |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (801 | ) |  |  | (801 | )
Corporate expenses |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (13,002 | ) |  |  | (13,002 | )
Other foreign exchange gain/loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 5,160 |  |  |  | 5,160 |
EBITDA |  |  | 9,073 |  |  |  | 1,915 |  |  |  | 3,641 |  |  |  | 6,445 |  |  |  | 1,519 |  |  |  | 1,669 |  |  |  | 1,101 |  |  |  | (14,893 | ) |  |  | 10,470 |
Brand transition, restructure and transaction expenses |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (2,232 | ) |  |  | (2,232 | )
Finance expense |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (10,409 | ) |  |  | (10,409 | )
Impairment expense |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Depreciation and amortisation expense |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (2,157 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (3,289 | ) |  |  | (5,446 | )
Fair value gain/(loss) on foreign exchange contracts |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (7,660 | ) |  |  | (7,660 | )
Unrealised foreign exchange (gain)/loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 77 |  |  |  | 77 |
Loss before income tax expense |  |  | 9,073 |  |  |  | 1,915 |  |  |  | 3,641 |  |  |  | 4,288 |  |  |  | 1,519 |  |  |  | 1,669 |  |  |  | 1,101 |  |  |  | (38,406 | ) |  |  | (15,200 | )
Income tax expense |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (5,546 | ) |  |  | (5,546 | )
Loss after income tax expense |  |  | 9,073 |  |  |  | 1,915 |  |  |  | 3,641 |  |  |  | 4,288 |  |  |  | 1,519 |  |  |  | 1,669 |  |  |  | 1,101 |  |  |  | (43,952 | ) |  |  | (20,746 | )

* Other segment expenses relate to brand management expenses and some corporate expenses.

| F-51 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

11 | Cash and Cash Equivalents

|  | 31 January 2019 NZ$000’s |  |  | 31 January 2018 NZ$000’s |  |  | 31 January 2017 NZ$000’s |
Cash on hand |  |  | 47 |  |  |  | 54 |  |  |  | 48 |
Cash at bank |  |  | 1,915 |  |  |  | 10,685 |  |  |  | 2,596 |
|  |  | 1,962 |  |  |  | 10,739 |  |  |  | 2,644 |

12 | Trade and Other Receivables

|  |  |  | 31 January 2019 NZ$000’s |  |  | 31 January 2018 NZ$000’s |  |  | 31 January 2017 NZ$000’s |
CURRENT |  |  |  |  |  |  |  |  |  |  |
Trade receivables |  |  |  |  | 7,789 |  |  |  | 9,982 |  |  |  | 26,499 |
Provision for impairment |  | (a) |  |  | (609 | ) |  |  | (326 | ) |  |  | (537 | )
|  |  |  |  | 7,180 |  |  |  | 9,656 |  |  |  | 25,962 |
Prepayments |  |  |  |  | 2,280 |  |  |  | 1,792 |  |  |  | 1,779 |
Other receivables |  |  |  |  | 183 |  |  |  | 1,717 |  |  |  | 349 |
Total current trade and other receivables |  |  |  |  | 9,650 |  |  |  | 13,165 |  |  |  | 28,090 |

Due to the short-term nature of the current receivables, their carrying amount is considered to be the same as their fair value.

| F-52 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

12 | Trade and Other Receivables

| (a) | Impairment of receivables

The Group applies the simplified approach to providing for expected credit losses prescribed by AASB 9, which permits the use of the lifetime expected loss provision for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. The loss allowance provision as at 31 January 2019 is determined as follows, the expected credit losses incorporate forward looking information.

31 January 2019 |  | 0 - 30 days |  |  | 31 - 60 days |  |  | 60 - 90 days |  |  | > 90 days overdue |  |  | Total |
Expected loss rate (%) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 48.40 |  |  |  |  |
Gross carrying amount ($) |  |  | 5,577 |  |  |  | 852 |  |  |  | 101 |  |  |  | 1,259 |  |  |  | 7,789 |
ECL provision |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 609 |  |  |  | 609 |

| F-53 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

12 | Trade and Other Receivables

| (a) | Impairment of receivables

Reconciliation of changes in the provision for impairment of receivables is as follows:

|  | For the Year Ended 31 January 2019 NZ$000’s |  |  | For the Year Ended 31 January 2018 NZ$000’s |  |  | For the 7 Months Ended 31 January 2017 NZ$000’s |
Balance at beginning of the period (calculated in accordance with AASB 139) |  |  | (326 | ) |  |  | (537 | ) |  |  | (268 | )
Amount restated through opening retained earnings on adoption of AASB 9 |  |  | - |  |  |  | - |  |  |  | - |
Opening impairment allowance calculated under AASB 9 |  |  | (326 | ) |  |  | (537 | ) |  |  | (268 | )
Additional impairment loss recognised |  |  | - |  |  |  | - |  |  |  | - |
Amounts written off as uncollectable |  |  |  |  |  |  |  |  |  |  |  |
Directly to P&L |  |  | - |  |  |  | - |  |  |  | - |
Movement through provision |  |  | (1,037 | ) |  |  | (92 | ) |  |  | (364 | )
Unused amounts reversed |  |  | 772 |  |  |  | 316 |  |  |  | 80 |
Foreign exchange movement |  |  | (18 | ) |  |  | (13 | ) |  |  | 15 |
Balance at end of the period |  |  | (609 | ) |  |  | (326 | ) |  |  | (537 | )

The Group measures the loss allowance for trade receivables at an amount equal to lifetime expected credit loss (ECL). The ECL on trade receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for factors that are specific to the debtors, general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of conditions at the reporting date.

The Group has recognised a loss allowance of 48.40% against identifiable receivables at risk in excess of 90 days because historical experience has indicated that these receivables are generally not recoverable.

There has been no change in the estimation techniques or significant assumptions made during the current reporting period.

The Group writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered into bankruptcy proceedings, whichever occurs first.

| F-54 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

12 | Trade and Other Receivables

| (b) | Aged analysis

The ageing analysis of receivables is as follows:

|  | 31 January 2019 NZ$000’s |  |  | 31 January 2018 NZ$000’s |  |  | 31 January 2017 NZ$000’s |
0-30 days |  |  | 5,577 |  |  |  | 7,945 |  |  |  | 14,883 |
31-60 days |  |  | 852 |  |  |  | 335 |  |  |  | 2,566 |
61-90 days (past due not impaired) |  |  | 101 |  |  |  | 489 |  |  |  | 2,166 |
61-90 days (considered impaired) |  |  | - |  |  |  | - |  |  |  | - |
91+ days (past due not impaired) |  |  | 3,295 |  |  |  | 1,213 |  |  |  | 6,884 |
91+ days (considered impaired) |  |  | (2,036 | ) |  |  | - |  |  |  | - |
|  |  | 7,789 |  |  |  | 9,982 |  |  |  | 26,499 |

| (c) | Transferred receivables

During the periods ended 31 January 2018 and 31 January 2017 the carrying amounts of the trade receivables included receivables which were subject to a bank funding arrangement. Under this arrangement, Bendon had transferred the relevant receivables to BNZ in exchange for cash and is prevented from selling or pledging the receivables. However, Bendon has retained credit risk. The group therefore continues to recognise the transferred assets in their entirety in the balance sheet. The amount repayable under the factoring agreement is presented as secured borrowings.

|  | 31 January 2019 NZ$000’s |  |  | 31 January 2018 NZ$000’s |  |  | 31 January 2017 NZ$000’s |
Transferred receivables |  |  | - |  |  |  | 9,790 |  |  |  | 11,649 |

| F-55 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

| 13 | Inventories

|  | 31 January 2019 NZ$000’s |  |  | 31 January 2018 NZ$000’s |  |  | 31 January 2017 NZ$000’s |
Finished goods |  |  | 21,564 |  |  |  | 31,451 |  |  |  | 37,904 |
Provision for impairment |  |  | (444 | ) |  |  | (338 | ) |  |  | (153 | )
|  |  | 21,120 |  |  |  | 31,113 |  |  |  | 37,751 |

Write downs of inventories to net realisable value during the period were NZ$106,433 (2018: NZ$185,026, 2017: NZ$364,660).

14 | Property, plant and equipment

|  | 31 January 2019 NZ$000’s |  |  | 31 January 2018 NZ$000’s |  |  | 31 January 2017 NZ$000’s |
Plant, furniture, fittings and motor vehicles |  |  |  |  |  |  |  |  |  |  |  |
At cost |  |  | 25,666 |  |  |  | 27,801 |  |  |  | 25,455 |
Accumulated depreciation |  |  | (25,167 | ) |  |  | (25,788 | ) |  |  | (23,182 | )
|  |  | 499 |  |  |  | 2,013 |  |  |  | 2,273 |
Leasehold Improvements |  |  |  |  |  |  |  |  |  |  |  |
At cost |  |  | 12,035 |  |  |  | 10,762 |  |  |  | 10,132 |
Accumulated depreciation |  |  | (8,771 | ) |  |  | (8,034 | ) |  |  | (7,441 | )
|  |  | 3,264 |  |  |  | 2,728 |  |  |  | 2,691 |
Total property, plant and equipment |  |  | 3,763 |  |  |  | 4,741 |  |  |  | 4,964 |

| F-56 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

14 | Property, plant and equipment

| (a) | Movements in carrying amounts of property, plant and equipment

Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial period:

|  | Leasehold improvements NZ$000’s |  |  | Plant, furniture, fittings and motor vehicles NZ$000’s |  |  | Total NZ$000’s |
Year ended 31 January 2019 |  |  |  |  |  |  |  |  |
Balance at the beginning of year |  |  | 2,728 |  |  |  | 2,013 |  |  |  | 4,741 |
Additions |  |  | 1,501 |  |  |  | 1,084 |  |  |  | 2,585 |
Disposals |  |  | (105 | ) |  |  | (2,736 | ) |  |  | (2,841 | )
Depreciation expense |  |  | (982 | ) |  |  | (1,170 | ) |  |  | (2,152 | )
Impairment loss |  |  | - |  |  |  | (239 | ) |  |  | (239 | )
Foreign exchange movements |  |  | 122 |  |  |  | 1,547 |  |  |  | 1,669 |
Balance at the end of the year |  |  | 3,264 |  |  |  | 499 |  |  |  | 3,763 |

| F-57 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

14 | Property, plant and equipment

| (a) | Movements in carrying amounts of property, plant and equipment

|  | Leasehold Improvements NZ$000’s |  |  | Plant, furniture, fittings and motor vehicles NZ$000’s |  |  | Total NZ$000’s |
Year ended 31 January 2018 |  |  |  |  |  |  |  |  |
Balance at the beginning of year |  |  | 2,691 |  |  |  | 2,273 |  |  |  | 4,964 |
Additions |  |  | 285 |  |  |  | 2,032 |  |  |  | 2,317 |
Disposals |  |  | (4 | ) |  |  | (118 | ) |  |  | (122 | )
Depreciation expense |  |  | (496 | ) |  |  | (2,228 | ) |  |  | (2,724 | )
Foreign exchange movements |  |  | 252 |  |  |  | 54 |  |  |  | 306 |
Balance at the end of the year |  |  | 2,728 |  |  |  | 2,013 |  |  |  | 4,741 |

| F-58 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

14 | Property, plant and equipment

| (a) | Movements in carrying amounts of property, plant and equipment

|  | Leasehold improvements NZ 000’s $ |  |  | Plant, furniture, fittings and motor vehicles NZ 000’s $ |  |  | Total NZ 000’s $ |
7 months ended 31 January 2017 |  |  |  |  |  |  |  |  |
Balance at the beginning of period |  |  | 2,795 |  |  |  | 3,414 |  |  |  | 6,209 |
Additions |  |  | 241 |  |  |  | 482 |  |  |  | 723 |
Depreciation expense |  |  | (296 | ) |  |  | (1,368 | ) |  |  | (1,664 | )
Impairment |  |  | - |  |  |  | (281 | ) |  |  | (281 | )
Foreign exchange movements |  |  | (49 | ) |  |  | 26 |  |  |  | (23 | )
Balance at the end of the period |  |  | 2,691 |  |  |  | 2,273 |  |  |  | 4,964 |

The group is currently assessing the impact of IFRS 16 Leases and believes adoption of the provisions of this standard will have a material impact on the Group’s consolidated financial statements.

IFRS 16 Leases will require that the group record a liability and a related asset on the balance sheet for our leased facilities.

| F-59 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

15 | Intangible Assets

|  | 31 January 2019 NZ$000’s |  |  | 31 January 2018 NZ$000’s |  |  | 31 January 2017 NZ$000’s |
Goodwill |  |  |  |  |  |  |  |  |
Cost |  |  | 5,607 |  |  |  | - |  |  |  | - |
Accumulated impairment |  |  | (3,287 | ) |  |  | - |  |  |  | - |
|  |  | 2,320 |  |  |  | - |  |  |  | - |
Patents and licences |  |  |  |  |  |  |  |  |  |  |  |
Cost |  |  | 25,993 |  |  |  | 919 |  |  |  | 1,169 |
Accumulated amortisation and impairment |  |  | (918 | ) |  |  | (718 | ) |  |  | (573 | )
|  |  | 25,075 |  |  |  | 201 |  |  |  | 596 |
Brands |  |  |  |  |  |  |  |  |  |  |  |
Cost |  |  | 14,769 |  |  |  | 12,463 |  |  |  | 12,036 |
Accumulated amortisation and impairment |  |  | (4,563 | ) |  |  | - |  |  |  | - |
|  |  | 10,205 |  |  |  | 12,463 |  |  |  | 12,036 |
Software |  |  |  |  |  |  |  |  |  |  |  |
Cost |  |  | 15,718 |  |  |  | 15,788 |  |  |  | 17,308 |
Accumulated amortisation and impairment |  |  | (15,455 | ) |  |  | (15,440 | ) |  |  | (15,260 | )
|  |  | 263 |  |  |  | 348 |  |  |  | 2,048 |
Total Intangible assets |  |  | 37,864 |  |  |  | 13,012 |  |  |  | 14,680 |

| F-60 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements
For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

15 | Intangible Assets

| (a) | Software impairment

For the year ended 31 January 2018, management decided to fully impair the costs on the ERP upgrade and are currently reviewing alternatives.

| (b) | Movements in carrying amounts of intangible assets

|  | Software NZ$000’s |  |  | Patents and licences NZ$000’s |  |  | Brands NZ$000’s |  |  | Goodwill NZ$000’s |  |  | Total NZ$000’s |
Year ended 31 January 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at the beginning of the year |  |  | 348 |  |  |  | 201 |  |  |  | 12,463 |  |  |  | - |  |  |  | 13,012 |
Additions |  |  | 33 |  |  |  | 25,076 |  |  |  | 2,726 |  |  |  | 5,798 |  |  |  | 33,633 |
Amortisation |  |  | (29 | ) |  |  | (202 | ) |  |  | - |  |  |  | - |  |  |  | (231 | )
Impairment |  |  | (83 | ) |  |  | - |  |  |  | (4,563 | ) |  |  | (3,287 | ) |  |  | (7,933 | )
Foreign exchange movements |  |  | (6 | ) |  |  | - |  |  |  | (420 | ) |  |  | (192 | ) |  |  | (618 | )
Closing value at 31 January 2019 |  |  | 263 |  |  |  | 25,075 |  |  |  | 10,205 |  |  |  | 2,320 |  |  |  | 38,864 |

| F-61 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements
For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

15 | Intangible Assets

| (b) | Movements in carrying amounts of intangible assets

|  | Software NZ$000’s |  |  | Patents and licences NZ$000’s |  |  | Brands NZ$000’s |  |  | Goodwill NZ$000’s |  |  | Total NZ$000’s |
Year ended 31 January 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at the beginning of the year |  |  | 2,048 |  |  |  | 596 |  |  |  | 12,036 |  |  |  | - |  |  |  | 14,680 |
Additions |  |  | 106 |  |  |  | 12 |  |  |  | - |  |  |  | - |  |  |  | 118 |
Amortisation |  |  | (163 | ) |  |  | (143 | ) |  |  | - |  |  |  | - |  |  |  | (306 | )
Impairment |  |  | (1,650 | ) |  |  | (264 | ) |  |  | - |  |  |  | - |  |  |  | (1,914 | )
Foreign exchange movements |  |  | 7 |  |  |  | - |  |  |  | 427 |  |  |  | - |  |  |  | 434 |
Closing value at 31 January 2018 |  |  | 348 |  |  |  | 201 |  |  |  | 12,463 |  |  |  | - |  |  |  | 13,012 |

|  | Software NZ 000’s $ |  |  | Patents and licences NZ 000’s $ |  |  | Brands NZ 000’s $ |  |  | Goodwill NZ 000’s $ |  |  | Total NZ 000’s $ |
7 months ended 31 January 2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at the beginning of the year |  |  | 2,196 |  |  |  | 274 |  |  |  | 12,105 |  |  |  | - |  |  |  | 14,575 |
Additions |  |  | - |  |  |  | 351 |  |  |  | - |  |  |  | - |  |  |  | 351 |
Amortisation |  |  | (148 | ) |  |  | (30 | ) |  |  | - |  |  |  | - |  |  |  | (178 | )
Foreign exchange movements |  |  | - |  |  |  | 1 |  |  |  | (69 | ) |  |  | - |  |  |  | (68 | )
Closing value at 31 January 2017 |  |  | 2,048 |  |  |  | 596 |  |  |  | 12,036 |  |  |  | - |  |  |  | 14,680 |

| F-62 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements
For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

15 | Intangible Assets

| (c) | Impairment testing for goodwill

For the purpose of impairment testing, goodwill is allocated to cash-generating units as below:

Description of the cash-generating unit (CGU) |  | For the Year Ended 31 January 2019 NZ $000’s |  |  | For the Year Ended 31 January 2018 NZ $000’s |  |  | For the 7 Months Ended 31 January 2017 NZ $000’s |
United States |  |  | 2,320 |  |  |  | - |  |  |  | - |
|  |  | 2,320 |  |  |  | - |  |  |  | - |

Impairment assumptions

Goodwill relates to the acquisition of Naked Inc, a business operating in the United States and was allocated to the Group’s operation in United States which is the cash generating unit (CGU) for the purpose of impairment testing. The recoverable amount of the CGU was determined based on value-in-use calculations which require the use of assumptions. The calculations use cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are extrapolated using the estimated growth rates stated below. These growth rates do not exceed the long-term average growth rates for the industry.

The result of the impairment assessment is that the carrying value exceeded the fair value less costs to sell by an amount of $3.2m. As such, the goodwill has been partially impaired for the year ended 31 January 2019.

Significant assumptions used for the purposes of the value-in-use calculation include:

United States

Post-tax discount rate - 10.50%

EBITDA growth rate - 10%

Terminal growth - 2%

| F-63 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

15 | Intangible Assets

| (c) | Impairment testing for goodwill

Impact of possible changes in key assumptions

The directors have made judgements and estimates to assess goodwill for impairment. Should these judgements and estimates not occur the resulting carrying amount may decrease.

The sensitivities that have been separately modelled are as follows:

(a) a 3.25% increase in the post-tax discount rate

(b) EBITDA growth rate reduced to 5%

The carrying amount of the goodwill is sensitive to assumptions used in the impairment test calculations including the post-tax discount rate and sales growth rate. A 3.25% increase in the post-tax discount rate would result in an additional impairment of $2,320 thousand against the carrying amount of the goodwill. A reduction of the EBITDA growth rate to 5% would not result in a further impairment as goodwill would be fully impaired from the increase of the post-tax discount rate.

| (d) | Impairment testing for indefinite-lived brand intangibles

Brand intangible assets represent brands owned by the Group, that arose on historical acquisitions including Pleasure State, Davenport and Lovable. The intangible assets increased in the current period as result of the business combinations with Naked Brand Group Inc. See note 8 for further information.

The brand intangible assets of $10,205,000 (2018: $12,463,000, 2017: $12,036,000) are tested for impairment annually.

Impairment assumptions

Management has determined the recoverable amount of the indefinite-lived brand assets by assessing the fair value less cost of disposal (FVLCOD) of the underlying assets. The relief from royalty method adopted to complete the valuation determines, in lieu of ownership, the cost that would be required to obtain comparable rights to use the asset via a third-party licence arrangement. These calculations use cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are extrapolated using the estimated growth rates shown below. These growth rates do not exceed the long-term average growth rates for the industry. The result of the impairment assessment is that the carrying value has exceeded the fair value less costs to sell by $3.9m. As such, the indefinite-lived brand assets has been partially impaired for the year ended 31 January 2019.

| F-64 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

15 | Intangible Assets

| (d) | Impairment testing for indefinite-lived brand intangibles

Management’s approach and the key assumptions used to determine the FVLCOD were as follows:

Sales growth: 2.5% (31 January 2018: 5%)

Royalty rate: 5.0% (31 January 2018: 6.6%)

Cash flow - revenue forecast period: 5 years (31 January 2018: 5 years)

Post-tax discount rate (%) for US brands: 10.5% (31 January 2018: 0%)

Post-tax discount rate (%) for NZ brands: 11.75% (31 January 2018: 11.4%)

Long term sales growth rate (%): 2% (31 January 2018: 2%)

Impact of possible changes in key assumptions

The directors have made judgements and estimates to assess indefinite-lived assets for impairment. Should these judgements and estimates not occur the resulting carrying amount may decrease.

The sensitivities that have been separately modelled are as follows:

(a) a 2.1% increase in the post-tax discount rate

(b) sales growth rate reduced to 0%

The carrying amounts of the indefinite-lived brand intangible assets are sensitive to assumptions used in the impairment test calculations including the post-tax discount rate and sales growth rate. A 2.1% increase in the post-tax discount rate would result in an additional impairment of $951 thousand (31 January 2018: an increase of 1.5% would result an impairment of $929 thousand) against the carrying amount of the indefinite-lived brand intangibles. A reduction of the sales growth rate to 0% would result in an additional impairment of $1,554 thousand (31 January 2018: a reduction to 2% would result an impairment of $611 thousand) against the carrying amount of the indefinite-lived brand intangible assets.

In order to mitigate exchange rate movements and to manage the inventory costing process, the Group has entered into forward currency contracts to purchase US dollars.

16 | Derivative Financial Instruments

|  | 31 January 2019 NZ$000’s |  |  | 31 January 2018 NZ$000’s |  |  | 31 January 2017 NZ$000’s |
Current liabilities |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  |  | 1,484 |  |  |  | 2,087 |  |  |  | 4,188 |

| F-65 |

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

17 | Derivative on Convertible Notes

|  | 31 January 2019 NZ$000’s |  |  | 31 January 2018 NZ$000’s |  |  | 31 January 2017 NZ$000’s |
Derivative on Convertible Notes |  |  | - |  |  |  | 1,110 |  |  |  | 4,112 |

The Group has an embedded derivative feature in convertible notes due to foreign currency. Derivatives are recognized initially at fair value; attributable transaction costs are recognized in profit or loss as incurred. Fair value of the derivative is determined on inception using the Black-Scholes model. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted in profit or loss.

The fair value of the separable embedded derivative in the convertible notes has been determined using Black-Scholes model. Measurement inputs include share price on measurement date, expected term of the instrument, risk free rate (based on government bonds), expected volatility (based on weighted average historic volatility) and expected dividend rate.

18 | Trade and Other Payables

|  | 31 January 2019 NZ$000’s |  |  | 31 January 2018 NZ$000’s |  |  | 31 January 2017 NZ$000’s |
CURRENT |  |  |  |  |  |  |  |  |  |  |  |
Trade payables |  |  | 23,580 |  |  |  | 21,143 |  |  |  | 19,221 |
Accruals |  |  | 10,150 |  |  |  | 9,568 |  |  |  | 7,503 |
Employee benefit liabilities |  |  | 1,815 |  |  |  | 1,805 |  |  |  | 1,842 |
|  |  | 35,545 |  |  |  | 32,516 |  |  |  | 28,566 |

Trade and other payables are unsecured, non-interest bearing and are normally settled within 30 days however some the trade creditors are out of term as at 31 January 2019 and subsequent to the end of the financial period the Group has reduced the out of term trade creditors but further work is required to bring all of the creditors in term. The carrying amounts are considered to be a reasonable approximation of fair value.

F-66

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

19 | Borrowings

|  | Note |  | 31 January 2019 NZ$000’s |  |  | 31 January 2018 NZ$000’s |  |  | 31 January 2017 NZ$000’s |
CURRENT |  |  |  |  |  |  |  |  |  |  |  |  |  |
Secured liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Shareholder loans |  |  |  |  | - |  |  |  | 10,951 |  |  |  | 8,200 |
Bank loans |  |  |  |  | 20,000 |  |  |  | 16,000 |  |  |  | 16,000 |
Debt issuance costs in relation to bank loan |  |  |  |  | (270 | ) |  |  | (218 | ) |  |  | (656 | )
Working capital financing bank facility |  |  |  |  | - |  |  |  | 22,489 |  |  |  | 31,710 |
Convertible notes |  |  |  |  | - |  |  |  | 1,740 |  |  |  | 13,744 |
Other loan |  |  |  |  | 1,237 |  |  |  | 1,159 |  |  |  | - |
|  |  |  |  | 20,967 |  |  |  | 52,121 |  |  |  | 68,998 |

The fair value of borrowings is not considered to be materially different to their carrying amounts.

| (a) | Assets pledged as collateral:

Borrowings are collateralized by a fixed and floating charge over the assets of the consolidated entity. The lease liabilities are effectively secured as the rights to the leased assets, recognised in the balance sheet, revert to the lessor in the event of default.

| (b) | Bank overdrafts and bank loans

On 27 June 2016, all banking facilities were repaid and a new banking arrangement with BNZ commenced. BNZ has a first ranking charge over all assets of the Bendon Limited group.

The term loan facility of NZD$16,000,000 was repaid on 27 June 2018. The current interest rate on this loan was 5.55% as at 31 January 2018 (31 January 2017: 4.84%, 2016: 4.77%) per annum.

On 13 June 2018, the Group entered into a Deed of Amendment with BNZ to reduce the facility to NZD$20,000,000 (31 January 2018: NZD$38,489,428). In addition the new facility takes over guarantees and financial instruments totalling NZD$1,345,000.

F-67

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

19 | Borrowings

| (b) | Bank overdrafts and bank loans

The term loan facility of NZD$20,000,000 was repayable on 14 June 2019. The current interest rate on this loan is 5.57% (31 January 2018: 5.55%) per annum. There has been a breach of covenant during the period.

Bank of New Zealand has the first ranking charge over all assets of Naked Brand Group Limited. Under the terms of the major borrowing facility, the facility is subject to four undertakings being: Interest cover ratio of three times that is first tested as at 30 April 2019; gross EBITDA ratio measured to 3 months to September 2018 had to be greater than $0, six months to 30 December 2018 is greater than $3 million; inventory and receivables ratio must be greater than 2 times being first measured as at 30 September 2018; and the actual sales and gross margin must not vary by more than 10% from the budget submitted to the Bank.

| (c) | Shareholder loan - related party

On 19 June 2018, Naked Brand Group Limited issued additional 24,221 Naked shares to the shareholders as part of an agreement to convert a portion of the outstanding liability (Debt) to equity. The amount of debt converted on this date amounted to a fair value of $12,244,208. After this conversion, the shareholder loan is fully converted to equity and the outstanding balance as at 31 January 2019 is nil (31 January 2018: $10,951,295).

The interest rate on the shareholder loans up to the date of conversion was 30% (31 January 2018: 30%) and was increased at the end of 2014, and was capitalised quarterly. Total interest capitalised during the year ended 31 January is $1.062 million (year ended 31 January 2018: $2.807 million, 7 months to 31 January 2017 is $3.040 million).

| (d) | Convertible notes

On 19th June 2018, the holders of USD$2.8m (NZ$4.2m) of convertible notes converted to 16,408 Bendon ordinary shares. The holder of US$1.0m (NZ$1.42m) of convertible notes elected for their convertible note to be repaid at a future date as agreed. The amount owing has been classified as a current borrowing and amounted to $1.159 million as at 31 January 2019.

| (e) | Loan covenants

As at 31 January 2019, there was a breach of the minimum Gross EBITDA ratio and a breach of the Inventory and Receivables ratio. The Bank has advised that they are currently taking these Breaches under review.

| (f) | Other loan

The other loan is convertible note which the note holder elected not to convert. This loan is payable at a future date to be agreed.

F-68

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

20 | Provisions

|  | 31 January 2019 NZ$000’s |  |  | 31 January 2018 NZ$000’s |  |  | 31 January 2017 NZ$000’s |
CURRENT |  |  |  |  |  |  |  |  |  |  |  |
Lease contributions |  |  | 179 |  |  |  | 412 |  |  |  | 480 |
Onerous contracts |  |  | - |  |  |  | 264 |  |  |  | 377 |
Make good |  |  | 742 |  |  |  | 430 |  |  |  | 671 |
|  |  | 921 |  |  |  | 1,106 |  |  |  | 1,528 |

|  | 31 January 2019 NZ$000’s |  |  | 31 January 2018 NZ$000’s |  |  | 31 January 2017 NZ$000’s |
NON-CURRENT |  |  |  |  |  |  |  |  |  |  |  |
Lease contributions |  |  | 906 |  |  |  | 910 |  |  |  | 702 |
Onerous contracts |  |  | - |  |  |  | - |  |  |  | 176 |
Make good |  |  | 1,466 |  |  |  | 1,801 |  |  |  | 1,371 |
|  |  | 2,372 |  |  |  | 2,711 |  |  |  | 2,249 |

|  | Lease contributions NZ$000’s |  |  | Onerous contracts NZ$000’s |  |  | Make good NZ$000’s |  |  | Total NZ$000’s |
Opening balance at 1 February 2018 |  |  | 1,322 |  |  |  | 264 |  |  |  | 2,231 |  |  |  | 3,817 |
Additional provisions recognised |  |  | 337 |  |  |  | - |  |  |  | 717 |  |  |  | 1,054 |
Unused amounts reversed |  |  | - |  |  |  | - |  |  |  | (600 | ) |  |  | (600 | )
Unwinding of discounts |  |  | - |  |  |  | - |  |  |  | (84 | ) |  |  | (84 | )
Amounts used during the period |  |  | (510 | ) |  |  | (264 | ) |  |  | - |  |  |  | (774 | )
Exchange differences |  |  | (64 | ) |  |  | - |  |  |  | (56 | ) |  |  | (120 | )
Balance at 31 January 2019 |  |  | 1,085 |  |  |  | - |  |  |  | 2,208 |  |  |  | 3,293 |

F-69

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

20 | Provisions

|  | Lease contributions NZ$000’s |  |  | Onerous contracts NZ$000’s |  |  | Make good NZ$000’s |  |  | Total NZ$000’s |
Opening balance at 1 February 2017 |  |  | 1,182 |  |  |  | 553 |  |  |  | 2,042 |  |  |  | 3,777 |
Additional provisions recognised |  |  | 635 |  |  |  | - |  |  |  | 595 |  |  |  | 1,230 |
Unused amounts reversed |  |  | - |  |  |  | - |  |  |  | (658 | ) |  |  | (658 | )
Unwinding of discounts |  |  | - |  |  |  | - |  |  |  | 271 |  |  |  | 271 |
Amounts used during the period |  |  | (547 | ) |  |  | (289 | ) |  |  | (77 | ) |  |  | (913 | )
Exchange differences |  |  | 52 |  |  |  | - |  |  |  | 58 |  |  |  | 110 |
Balance at 31 January 2018 |  |  | 1,322 |  |  |  | 264 |  |  |  | 2,231 |  |  |  | 3,817 |
Opening balance at 1 July 2016 |  |  | 1,318 |  |  |  | 275 |  |  |  | 1,817 |  |  |  | 3,410 |
Additional provisions recognised |  |  | 145 |  |  |  | 508 |  |  |  | 353 |  |  |  | 1,006 |
Unused amounts reversed |  |  | - |  |  |  | - |  |  |  | (112 | ) |  |  | (112 | )
Unwinding of discounts |  |  | - |  |  |  | - |  |  |  | (9 | ) |  |  | (9 | )
Amounts used during the period |  |  | (269 | ) |  |  | (230 | ) |  |  | - |  |  |  | (499 | )
Exchange differences |  |  | (12 | ) |  |  | - |  |  |  | (7 | ) |  |  | (19 | )
Balance at 31 January 2017 |  |  | 1,182 |  |  |  | 553 |  |  |  | 2,042 |  |  |  | 3,777 |

Onerous contracts

The onerous provision relates to a head office lease for which the space is not fully utilised. The provision is calculated using a pre-tax discount rate of 10.25% (2018: 11.4%, 2017: 11.4%). The balance of this provision at 31 January 2019 is $nil.

Make good

In accordance with certain lease agreements, the Group must refurbish and restore the lease premises to a condition agreed with the landlord at the end of the lease term or as prescribed. The provision has been calculated using a pre-tax discount rate of 2% (2018: 2%, 2017: 2%), and other market assumptions and re-assessed annually.

During the 2019 financial year an additional $595 thousand was recognised in relation to new retail leases in New Zealand and Australia.

F-70

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

21 | Share Capital

|  | 31 January 2019 NZ$000’s |  |  | 31 January 2018 NZ$000’s |  |  | 31 January 2017 NZ$000’s |
29,640,965 (2018: 306,028, 2017: 274,839) Ordinary shares |  |  | 134,183 |  |  |  | 68,727 |  |  |  | 27,948 |

| (a) | Ordinary shares

|  | For the Year Ended 31 January 2019 NZ$000’s |  |  | For the Year Ended 31 January 2018 NZ$000’s |  |  | For the 7 months Ended 31 January 2017 NZ$000’s |
At the beginning of the reporting period |  |  | 68,727 |  |  |  | 27,948 |  |  |  | 3,108 |
Issuance of new shares |  |  |  |  |  |  |  |  |  |  |  |
- Cash collected |  |  | 23,248 |  |  |  | 22,990 |  |  |  | 24,840 |
- Settle shareholder loan |  |  | 12,242 |  |  |  | - |  |  |  | - |
- Shares issued in lieu of consultancy fee |  |  | 692 |  |  |  | - |  |  |  | - |
- Shares issued in lieu of inventory payment |  |  | 4,047 |  |  |  | - |  |  |  | - |
Convertible note maturity |  |  | 4,159 |  |  |  | 17,789 |  |  |  | - |
Business combination with Naked Brand Group Inc. |  |  | 14,196 |  |  |  | - |  |  |  | - |
Asset acquisition of FOH Online Inc. |  |  | 6,872 |  |  |  | - |  |  |  | - |
At the end of the reporting period |  |  | 134,183 |  |  |  | 68,727 |  |  |  | 27,948 |

The holders of ordinary shares are entitled to participate in dividends and the proceeds on winding up of the Group. On a show of hands at meetings of the Group, each holder of ordinary shares has one vote in person or by proxy, and upon a poll each share is entitled to one vote.

The Group does not have authorised capital or par value in respect of its shares.

F-71

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

21 | Share Capital

|  | For the Year Ended 31 January 2019 Number |  |  | For the Year Ended 31 January 2018 Number |  |  | For the 7 months Ended 31 January 2017 Number |
Naked Brand Group Limited shares issued on close of the merger between Bendon Limited and Naked Brand Group Inc. |  |  |  |  |  |  |  |  |  |  |  |
- Bendon shareholders |  |  | 20,889,940 |  |  |  | 274,839 |  |  |  | 250,000 |
- Naked shareholders |  |  | 2,068,438 |  |  |  | - |  |  |  | - |
Shares issued during the period |  |  | 6,682,587 |  |  |  | 10,180 |  |  |  | 24,839 |
At the end of the period |  |  | 29,640,965 |  |  |  | 285,019 |  |  |  | 274,839 |

The number of shares for the year ended 31 January 2018 and 31 January 2017 relate to the pre-merger entity Bendon Limited.

| (b) | Other equity

|  | 31 January 2019 NZ$000’s |  |  | 31 January 2018 NZ$000’s |  |  | 31 January 2017 NZ$000’s |
Value of conversion rights - convertible notes |  |  | 4,159 |  |  |  | 17,789 |  |  |  | - |

The amount shown for other equity is the value of the conversion rights relating to the 15% convertible notes, details of which are shown in note 19(d).

| (c) | Capital Management

The key objectives of the Group when managing capital is to safeguard its ability to continue as a going concern and maintain optimal benefits to stakeholders. Management also aims to maintain a capital structure that ensures the lowest cost of capital available to the entity. The Group defines capital as its equity and net debt.

F-72

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

21 | Share Capital

| (c) | Capital Management

There has been no change to capital risk management policies during the year.

Management are constantly adjusting the capital structure to take advantage of favourable costs of capital or high return on assets. As the market is constantly changing, management may change the amount of dividends to be paid to shareholders, return capital to shareholders or sell assets to reduce debt. The Group is not subject to any externally imposed capital requirements.

The gearing ratio for the years ended 31 January 2019, 31 January 2018 and 31 January 2017 are as follows:

|  | Note |  | 31 January 2019 NZ$000’s |  |  | 31 January 2018 NZ$000’s |  |  | 31 January 2017 NZ$000’s |
Total borrowings |  | 19 |  |  | 22,016 |  |  |  | 52,121 |  |  |  | 68,998 |
Less Cash and cash equivalents |  | 11 |  |  | (1,962 | ) |  |  | (10,739 | ) |  |  | (2,644 | )
Net debt |  |  |  |  | 20,054 |  |  |  | 41,382 |  |  |  | 66,354 |
Equity |  |  |  |  | 10,800 |  |  |  | (5,710 | ) |  |  | (9,044 | )
Total capital |  |  |  |  | 30,854 |  |  |  | 35,672 |  |  |  | 57,310 |
Gearing ratio |  |  |  |  | 65 | % |  |  | 116 | % |  |  | 116 | %

F-73

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

22 | Reserves

|  | 31 January 2019 NZ$000’s |  |  | 31 January 2018 NZ$000’s |  |  | 31 January 2017 NZ$000’s |
Foreign currency translation reserve |  |  |  |  |  |  |  |  |  |  |  |
Opening balance |  |  | (2,006 | ) |  |  | (2,154 | ) |  |  | (2,125 | )
Transfers in |  |  | (7 | ) |  |  | 148 |  |  |  | (29 | )
Balance at the end of the year |  |  | (2,013 | ) |  |  | (2,006 | ) |  |  | (2,154 | )

Foreign currency translation reserve

Exchange differences arising on translation of the foreign controlled entity are recognised in other comprehensive income - foreign currency translation reserve. The cumulative amount is reclassified to profit or loss when the net investment is disposed of.

F-74

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

23 | Loss per Share

| (a) | Basic and diluted loss per share

|  | For the Year Ended 31 January 2019 NZ$ |  |  | For the Year Ended 31 January 2018 NZ$ |  |  | For the 7 months Ended 31 January 2017 NZ$ |  |  | For the Year Ended 30 June 2016 NZ$ |
From continuing operations attributable to the ordinary equity holders of the Group |  |  | (2.01 | ) |  |  | (1.79 | ) |  |  | (0.82 | ) |  |  | (1.13 | )
Total basic and diluted loss per share attributable to the ordinary equity holders of the Group |  |  | (2.01 | ) |  |  | (1.79 | ) |  |  | (0.82 | ) |  |  | (1.13 | )

All convertible notes issued during the period are not included in the calculation of diluted loss per share because they are antidilutive in nature for the period ended 31 January 2018. These notes could potentially dilute earnings/loss per share in the future.

| (b) | Reconciliation of loss used in calculating loss per share

|  | For the Year Ended 31 January 2019 NZ$000’s |  |  | For the Year Ended 31 January 2018 NZ$000’s |  |  | For the 7 Months Ended 31 January 2017 NZ$000’s |  |  | For the Year Ended 30 June 2016 NZ$000’s |
Basic and diluted loss per share |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Profit/(loss) attributable to the ordinary equity holders of the Group used in calculating basic earnings per share: |  |  | (48,946 | ) |  |  | (37,445 | ) |  |  | (16,008 | ) |  |  | (20,715 | )

F-75

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

23 | Loss per Share

| (c) | Weighted average number of shares used as the denominator

|  | 31 January 2019 Number |  |  | 31 January 2018 Number |  |  | 31 January 2017 Number |  |  | 30 June 2016 Number |
Weighted average number of ordinary shares used as the denominator in calculating basic and diluted loss per share |  |  | 24,379,019 |  |  |  | 20,915,036 |  |  |  | 19,404,681 |  |  |  | 18,345,000 |

* A stock reorganization occurred on the 19th June 2018 upon completion of the merger between Naked Brands Inc. and Bendon Limited. As a result, the calculation of basic and diluted earnings per share for 2018, 2017 and 2016 has been adjusted retrospectively. Number of ordinary shares outstanding has been adjusted to reflect the proportionate change in the number of shares following this consolidation.

| (d) | Information concerning the classification of securities

Convertible notes

At 31 January 2019, the Group had no convertible notes.

24 | Accumulated Losses

|  | Year Ended 31 January 2019 NZ$000’s |  |  | Year Ended 31 January 2018 NZ$000’s |  |  | For the 7 Months Ended 31 January 2017 NZ$000’s |
Accumulated losses at the beginning of the financial year |  |  | (72,431 | ) |  |  | (34,838 | ) |  |  | (18,859 | )
Loss for the year |  |  | (49,220 | ) |  |  | (37,593 | ) |  |  | (15,989 | )
Accumulated losses at end of the financial year |  |  | (121,651 | ) |  |  | (72,431 | ) |  |  | (34,848 | )

F-76

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

25 | Capital and Leasing Commitments

| (a) | Operating Leases

|  | 31 January 2019 NZ$000’s |  |  | 31 January 2018 NZ$000’s |  |  | 31 January 2017 NZ$000’s |
Minimum lease payments under non-cancellable operating leases: |  |  |  |  |  |  |  |  |  |  |  |
- not later than one year |  |  | 8,533 |  |  |  | 9,618 |  |  |  | 9,472 |
- between one year and five years |  |  | 18,039 |  |  |  | 14,943 |  |  |  | 14,435 |
- later than five years |  |  | 1,485 |  |  |  | 528 |  |  |  | 59 |
|  |  | 28,057 |  |  |  | 25,089 |  |  |  | 23,966 |

Operating leases are in place for leased premises and vehicles, and normally have a term between 1 and 11 years. Lease payments are increased on an annual basis to reflect market rentals.

| (b) | Contracted Commitments

|  | 31 January 2019 NZ$000’s |  |  | 31 January 2018 NZ$000’s |  |  | 31 January 2017 NZ$000’s |
Licence contract |  |  |  |  |  |  |  |  |  |  |  |
- not later than one year |  |  | 4,286 |  |  |  | 3,797 |  |  |  | 3,652 |
- between one year and five years |  |  | 8,696 |  |  |  | 12,009 |  |  |  | 15,917 |
|  |  | 12,982 |  |  |  | 15,806 |  |  |  | 19,569 |

The Group has an exclusive licence to use the trademark and name Heidi Klum in the manufacture, promotion, sale and distribution of product. The contract was executed on 26 September 2014 and commenced on 1 January 2015. The contract has a 7 year term with no rights to renew. Licence royalties are calculated based on net sales, and the minimum guarantee payments payable by the Group are set out above.

F-77

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

26 | Lessor Commitments

The Group sub leases its US and Australian premises under a commercial lease. These non-cancellable leases have terms between 1 and 6 years. All leases include an option for the Group to increase rent to current market rental on an annual basis.

The future minimum lease payments under non-cancellable leases are:

|  | 31 January 2019 NZ$000’s |  |  | 31 January 2018 NZ$000’s |  |  | 31 January 2017 NZ$000’s |
- no later than 1 year |  |  | 441 |  |  |  | 166 |  |  |  | 503 |
- between 1 year and 5 years |  |  | 493 |  |  |  | - |  |  |  | 1,076 |
- greater than 5 years |  |  | - |  |  |  | - |  |  |  | - |
Total minimum lease payments |  |  | 934 |  |  |  | 166 |  |  |  | 1,579 |

F-78

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

27 | Financial Risk Management

The Group is exposed to a variety of financial risks through its use of financial instruments.

The Group’s overall risk management plan seeks to minimise potential adverse effects due to the unpredictability of financial markets.

The most significant financial risks to which the Group is exposed to are described below:

Specific risks

| ● | Liquidity risk
| ● | Credit risk
| ● | Market risk - currency risk, interest rate risk and price risk

Financial instruments used

The principal categories of financial instruments used by the Group are:

| ● | Trade receivables
| ● | Cash at bank
| ● | Bank overdraft
| ● | Trade and other payables
| ● | Floating rate bank loans
| ● | Forward currency contracts
| ● | Shareholders loan

Objectives, policies and processes

The Board of Directors have overall responsibility for the establishment of the Group’s financial risk management framework. This includes the development of policies covering specific areas such as foreign exchange risk, interest rate risk, credit risk and the use of derivatives.

Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities.

The day-to-day risk management is carried out by the Group’s finance function under policies and objectives which have been approved by the Board of Directors.

F-79

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

27 | Financial Risk Management

Objectives, policies and processes

Mitigation strategies for specific risks faced are described below:

Liquidity risk

Liquidity risk arises from the Group’s management of working capital and the finance charges and principal repayments on its debt instruments. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.

The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities as and when they fall due.

The Group manages its liquidity needs by carefully monitoring scheduled debt servicing payments for long-term financial liabilities as well as cash-outflows due in day-to-day business.

The timing of cash flows presented in the table to settle financial liabilities reflects the earliest contractual settlement dates and does not reflect management’s expectations that banking facilities will be rolled forward. The amounts disclosed in the table are the undiscounted contracted cash flows and therefore the balances in the table may not equal the balances in the consolidated balance sheets due to the effect of discounting.

F-80

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

27 | Financial Risk Management

The Group’s liabilities have contractual maturities which are summarised below:

|  | Non-derivatives Borrowings NZ$000’s |  |  | Non-derivatives Trade payables NZ$000’s |  |  | Non-derivatives Total NZ$000’s |  |  | Derivatives Gross future cash settlement on forward currency contracts - inflow NZ$000’s |  |  | Derivatives Gross future cash settlement on forward currency contracts - (outflow) NZ$000’s |  |  | Derivatives Total NZ$000’s |
Not later than 1 month |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
31 January 2019 |  |  | 1,329 |  |  |  | 23,580 |  |  |  | 24,908 |  |  |  | 18,325 |  |  |  | (19,212 | ) |  |  | (887 | )
31 January 2018 |  |  | 26,482 |  |  |  | 21,143 |  |  |  | 47,625 |  |  |  | 13,577 |  |  |  | (13,950 | ) |  |  | (373 | )
31 January 2017 |  |  | 56,333 |  |  |  | 19,221 |  |  |  | 75,554 |  |  |  | 2,078 |  |  |  | (2,250 | ) |  |  | (172 | )
1 to 3 months |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
31 January 2019 |  |  | 184 |  |  |  | - |  |  |  | 184 |  |  |  | 9,610 |  |  |  | (10,061 | ) |  |  | (451 | )
31 January 2018 |  |  | 148 |  |  |  | - |  |  |  | 148 |  |  |  | 13,837 |  |  |  | (14,453 | ) |  |  | (616 | )
31 January 2017 |  |  | 129 |  |  |  | - |  |  |  | 129 |  |  |  | 9,900 |  |  |  | (11,326 | ) |  |  | (1,426 | )
3 months to 1 year |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
31 January 2019 |  |  | 20,184 |  |  |  | - |  |  |  | 20,184 |  |  |  | 4,976 |  |  |  | (5,121 | ) |  |  | (145 | )
31 January 2018 |  |  | 27,247 |  |  |  | - |  |  |  | 27,247 |  |  |  | 20,895 |  |  |  | (21,993 | ) |  |  | (1,098 | )
31 January 2017 |  |  | 18,631 |  |  |  | - |  |  |  | 18,631 |  |  |  | 37,855 |  |  |  | (40,445 | ) |  |  | (2,590 | )
1 to 5 years |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
31 January 2019 |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
31 January 2018 |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
31 January 2017 |  |  | 323 |  |  |  | - |  |  |  | 323 |  |  |  | - |  |  |  | - |  |  |  | - |

F-81

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

27 | Financial Risk Management

|  | Non-derivatives Borrowings NZ$000’s |  |  | Non-derivatives Trade payables NZ$000’s |  |  | Non-derivatives Total NZ$000’s |  |  | Derivatives Gross future cash settlement on forward currency contracts - inflow NZ$000’s |  |  | Derivatives Gross future cash settlement on forward currency contracts - (outflow) NZ$000’s |  |  | Derivatives Total NZ$000’s |
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
31 January 2019 |  |  | 21,697 |  |  |  | 23,580 |  |  |  | 45,277 |  |  |  | 32,912 |  |  |  | (34,395 | ) |  |  | (1,483 | )
31 January 2018 |  |  | 53,877 |  |  |  | 21,143 |  |  |  | 75,020 |  |  |  | 48,309 |  |  |  | (50,396 | ) |  |  | (2,087 | )
31 January 2017 |  |  | 75,416 |  |  |  | 19,221 |  |  |  | 94,637 |  |  |  | 49,833 |  |  |  | (54,021 | ) |  |  | (4,188 | )

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Group.

Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposure to wholesale and retail customers, including outstanding receivables and committed transactions.

Trade receivables and contract assets

Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable.

The Group has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. The utilisation of credit limits by customers is regularly monitored by line management. Customers who subsequently fail to meet their credit terms are required to make purchases on a prepayment basis until creditworthiness can be re-established.

F-82

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

27 | Financial Risk Management

Credit risk

Management considers that all the financial assets that are not impaired for each of the reporting dates under review are of good credit quality, including those that are past due.

The Group has no significant concentration of credit risk with respect to any single counterparty or group of counterparties.

The credit risk for liquid funds and other short-term financial assets is considered negligible, since the counterparties are reputable banks with high quality external credit ratings.

On a geographical basis, the Group has significant credit risk exposures in New Zealand, Australia, United States and United Kingdom given the substantial operations in those regions.

The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings if available or historical information about counterparty default rate.

|  | 31 January 2019 NZ$000’s |  |  | 31 January 2018 NZ$000’s |  |  | 31 January 2017 NZ$000’s |
Trade receivables Counterparty without external credit ratings |  |  |  |  |  |  |  |  |  |  |  |
New customer less than 6 months |  |  | 42 |  |  |  | 12 |  |  |  | 187 |
Existing customers (more than 6 months with default in past) |  |  | 7,747 |  |  |  | 9,970 |  |  |  | 26,312 |
Total |  |  | 7,789 |  |  |  | 9,982 |  |  |  | 26,499 |

|  | 31 January 2019 NZ$000’s |  |  | 31 January 2018 NZ$000’s |  |  | 31 January 2017 NZ$000’s |
Credit ratings |  |  |  |  |  |  |  |  |  |  |  |
AA- |  |  | 1,915 |  |  |  | 10,591 |  |  |  | 2,655 |
A+ |  |  | - |  |  |  | 94 |  |  |  | (11 | )
Total |  |  | 1,915 |  |  |  | 10,685 |  |  |  | 2,644 |

The Group has no significant concentration of credit risk with respect to any single counterparty or group of counterparties.

F-83

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

27 | Financial Risk Management

Credit risk

On a geographical basis, the Group has significant credit risk exposures in New Zealand and Australia, United States and United Kingdom given the substantial operations in those regions.

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices.

(i) Foreign exchange risk

Exposure to foreign exchange risk may result in the fair value or future cash flows of a financial instrument fluctuating due to movement in foreign exchange rates of currencies in which the Group holds financial instruments which are other than the functional currency of the Group.

Exposures to currency exchange rates arise from the Group’s overseas sales and purchases, which are primarily denominated in currencies other than the functional currency, in particular USD.

F-84

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

27 | Financial Risk Management

Foreign currency denominated financial assets and liabilities, translated into New Zealand Dollars at the closing rate, are as follows:

|  | AUD NZ$000’s |  |  | USD NZ$000’s |  |  | GBP NZ$000’s |  |  | EUR NZ$000’s |  |  | HKD NZ$000’s |  |  | Total NZ$000’s |
31 January 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Nominal amounts |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trade receivables |  |  | 51 |  |  |  | 42 |  |  |  | - |  |  |  | 285 |  |  |  | - |  |  |  | 378 |
Trade payables |  |  | 1 |  |  |  | 9,035 |  |  |  | 8 |  |  |  | 61 |  |  |  | 7 |  |  |  | 9,112 |
Cash and cash equivalents |  |  | 623 |  |  |  | 149 |  |  |  | 38 |  |  |  | 8 |  |  |  | 11 |  |  |  | 829 |
31 January 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Nominal amounts |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trade receivables |  |  | 328 |  |  |  | 199 |  |  |  | - |  |  |  | 1,376 |  |  |  | - |  |  |  | 1,903 |
Trade payables |  |  | 781 |  |  |  | 11,209 |  |  |  | 74 |  |  |  | 29 |  |  |  | 53 |  |  |  | 12,146 |
Cash and cash equivalents |  |  | 1,660 |  |  |  | 7,190 |  |  |  | 77 |  |  |  | 92 |  |  |  | 165 |  |  |  | 9,184 |
31 January 2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trade receivables |  |  | 424 |  |  |  | 211 |  |  |  | - |  |  |  | 1,509 |  |  |  | - |  |  |  | 2,144 |
Trade payables |  |  | 315 |  |  |  | 8,557 |  |  |  | 131 |  |  |  | 32 |  |  |  | 16 |  |  |  | 9,051 |
Cash and cash equivalents |  |  | 926 |  |  |  | 401 |  |  |  | 131 |  |  |  | 388 |  |  |  | 28 |  |  |  | 1,874 |

The following table illustrates the sensitivity of the net result for the year and equity in regards to the Group’s financial assets and financial liabilities and the US dollar - New Zealand Dollar, Australian Dollar - New Zealand Dollar, GB Pound - New Zealand Dollar, Euro - New Zealand Dollar, and Hong Kong Dollar - New Zealand Dollar exchange rates. There have been no changes in the assumptions calculating this sensitivity from prior years.

It assumes a 10% change of the New Zealand Dollar / Australian Dollar exchange rate for the year ended 31 January 2019 (31 January 2018: 10%, 31 January 2017: 10%). A 10% change is considered for the New Zealand Dollar / US Dollar exchange rate (31 January 2018: 10%, 31 January 2017: 10%). A 10% change is considered for the New Zealand Dollar / GB Pound exchange rate (31 January 2018: 10%, 31 January 2017: 10%). A 10% change is considered for the New Zealand Dollar / Euro exchange rate (31 January 2018: 10%, 31 January 2017: 10%). All of these percentages have been determined based on the average market volatility in exchange rates in the previous 12 months.

The year end rate is 0.9513 AUD, 0.6903 USD, 0.5265 GBP, 0.6008 EUR and 5.4138 HKD.

The sensitivity analysis is based on the foreign currency financial instruments held at the reporting date and also takes into account forward exchange contracts that offset effects from changes in currency exchange rates.

F-85

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

27 | Financial Risk Management

If the New Zealand Dollar had strengthened and weakened against the Australian Dollar, US Dollar, GB Pound, Euro and HK Dollar by 10% (31 January 2018: 10%, 31 January 2017: 10%) and 10% (31 January 2018: 10%, 31 January 2017: 10%) respectively then this would have had the following impact:

|  | NZ$000’s |
|  | +10% |  |  | -10% |
USD |  |  |  |  |  |  |  |
Net results/Equity (31 January 2019) |  |  | (954 | ) |  |  | 954 |
Net results/Equity (31 January 2018) |  |  | (1,509 | ) |  |  | 1,509 |
Net results/Equity (31 January 2017) |  |  | (1,196 | ) |  |  | 1,196 |
AUD |  |  |  |  |  |  |  |
Net results/Equity (31 January 2019) |  |  | (5 | ) |  |  | 5 |
Net results/Equity (31 January 2018) |  |  | (805 | ) |  |  | 805 |
Net results/Equity (31 January 2017) |  |  | 86 |  |  |  | (86 | )
GBP |  |  |  |  |  |  |  |
Net results/Equity (31 January 2019) |  |  | (1 | ) |  |  | 1 |
Net results/Equity (31 January 2018) |  |  | (175 | ) |  |  | 175 |
Net results/Equity (31 January 2017) |  |  | 34 |  |  |  | (34 | )
EUR |  |  |  |  |  |  |  |
Net results/Equity (31 January 2019) |  |  | (32 | ) |  |  | 32 |
Net results/Equity (31 January 2018) |  |  | (136 | ) |  |  | 136 |
Net results/Equity (31 January 2017) |  |  | 186 |  |  |  | (186 | )
HKD |  |  |  |  |  |  |  |
Net results/Equity (31 January 2019) |  |  | (1 | ) |  |  | 1 |
Net results/Equity (31 January 2018) |  |  | (14 | ) |  |  | 14 |
Net results/Equity (31 January 2017) |  |  | 1 |  |  |  | (1 | )

Exposures to foreign exchange rates vary during the year depending on the volume of overseas transactions. Nonetheless, the analysis above is considered to be representative of the Group’s exposure to foreign currency risk.

Forward exchange contracts

The Group has open forward exchange contracts at the end of the reporting period relating to highly probable forecast transactions and recognised financial assets and financial liabilities. These contracts commit the Group to buy specified amounts of foreign currencies in the future at specified exchange rates. The Group has a policy of requiring that forward exchange contracts be entered into where future commitments are entered into requiring settlement at a time in excess of 1 month but less than 1 year, to a value of approximately 75% total foreign exchange exposure. Contracts are taken out with terms that reflect the underlying settlement terms of the commitment to the maximum extent possible so that hedge ineffectiveness is minimised.

F-86

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

27 | Financial Risk Management

The following table summarises the notional amount of the Group’s commitments in relation to forward exchange contracts.

|  | Notional Amounts |  |  | Average Exchange Rate |
|  | 31 January 2019 NZ$000’s |  |  | 31 January 2018 NZ$000’s |  |  | 31 January 2017 NZ$000’s |  |  | 31 January 2019 $ |  |  | 31 January 2018 $ |  |  | 31 January 2017 $ |
Buy USD / sell NZD |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Settlement |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Less than 6 months |  |  | 34,395 |  |  |  | 48,149 |  |  |  | 47,292 |  |  |  | 0.6620 |  |  |  | 0.7061 |  |  |  | 0.6687 |
6 months to 1 year |  |  | - |  |  |  | - |  |  |  | 3,479 |  |  |  | - |  |  |  | - |  |  |  | 0.7186 |

|  | NZ$000’s |  |  | NZ$000’s |  |  | NZ$000’s |  |  | $ |  |  | $ |  |  | $ |
Buy AUD / sell NZD |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Settlement |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Less than 6 months |  |  | - |  |  |  | 2,247 |  |  |  | 2,250 |  |  |  | - |  |  |  | 0.8900 |  |  |  | 0.8890 |

|  | NZ$000’s |  |  | NZ$000’s |  |  | NZ$000’s |  |  | $ |  |  | $ |  |  | $ |
Buy GBP / sell NZD |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Settlement |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Less than 6 months |  |  | - |  |  |  | - |  |  |  | 1,000 |  |  |  | - |  |  |  | - |  |  |  | 0.5784 |

F-87

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

27 | Financial Risk Management

(ii) Interest rate risk

The Group is exposed to interest rate risk as funds are borrowed at floating and fixed rates. Borrowings issued at fixed rates expose the Group to fair value interest rate risk.

The Group’s policy is to minimise interest rate cash flow risk exposures on long-term financing. Longer-term borrowings are therefore usually at fixed rates. At the reporting date, the Group is exposed to changes in market interest rates through its bank borrowings, which are subject to variable interest rates.

|  | 31 January 2018 NZ$000’s |  |  | 31 January 2017 NZ$000’s |  |  | 31 January 2017 NZ$000’s |
Floating rate instruments |  |  |  |  |  |  |  |  |  |  |  |
Bank overdrafts |  |  | - |  |  |  | - |  |  |  | - |
Working capital financing bank facility |  |  | - |  |  |  | 22,489 |  |  |  | 31,710 |
Convertible notes |  |  | 78 |  |  |  | 1,740 |  |  |  | 16,474 |
Borrowings |  |  | 20,000 |  |  |  | 16,000 |  |  |  | 16,000 |
|  |  | 20,078 |  |  |  | 40,229 |  |  |  | 64,184 |

The following table illustrates the sensitivity of the net result for the year and equity to a reasonably possible change in interest rates of +1.00%/-1.00% (2018: +1.00%/-1.00%, 2017: +1.00%/-1.00%), with effect from the beginning of the year. These changes are considered to be reasonably possible based on observation of current market conditions and economist reports.

The calculations are based on the financial instruments held at each reporting date. All other variables are held constant.

|  | NZ$000’s |
|  | 1.00% |  |  | -1.00% |
|  | NZ$000’s |  |  | NZ$000’s |
Net results/Equity (31 January 2019) |  |  | 200 |  |  |  | (200 | )
Net results/Equity (31 January 2018) |  |  | 402 |  |  |  | (402 | )
Net results/Equity (31 January 2017) |  |  | 642 |  |  |  | (642 | )

F-88

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

28 | Tax assets and liabilities

|  | Opening Balance NZ$000’s |  |  | Charged to Income NZ$000’s |  |  | Charged directly to Equity NZ$000’s |  |  | Changes in Tax Rate NZ$000’s |  |  | Exchange Differences NZ$000’s |  |  | Closing Balance NZ$000’s |
Deferred tax assets/(liabilities) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Carried forward tax losses |  |  | 630 |  |  |  | 692 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,322 |
Intangible assets |  |  | (630 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (630 | )
Balance at 31 January 2019 |  |  | - |  |  |  | 692 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 692 |
Carried forward tax losses |  |  | 630 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 630 |
Intangible assets |  |  | (630 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (630 | )
Balance at 31 January 2018 |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Carried forward tax losses |  |  | 630 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 630 |
Intangible assets |  |  | (630 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (630 | )
Balance at 31 January 2017 |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |

F-89

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

29 | Dividends

No final dividend will be paid in respect of the period ended 31 January 2019 (31 January 2018: Nil, 31 January 2017).

Franking account

|  | 31 January 2019 NZ$000’s |  |  | 31 January 2018 NZ$000’s |  |  | 31 January 2017 NZ$000’s |
Australian franking credits available for subsequent financial years at a tax rate of 30% |  |  | 3,995 |  |  |  | 3,995 |  |  |  | 3,757 |
New Zealand imputation credits available for subsequent financial years at a tax rate of 28% |  |  | 236 |  |  |  | 236 |  |  |  | 235 |

The above amounts are based on the dividend franking account at period-end adjusted for:

(a) Franking credits that will arise from the payment of the current tax liabilities;

(b) Franking debits that will arise from the payment of dividends recognised as a liability at the period end;

(c) Franking credits that will arise from the receipt of dividends recognised as receivables at the end of the period.

30 | Key Management Personnel Remuneration

Key management personnel remuneration included within employee expenses for the period is shown below:

|  | For the Year Ended 31 January 2019 NZ$000’s |  |  | For the Year Ended 31 January 2018 NZ$000’s |  |  | For the 7 Months Ended 31 January 2017 NZ$000’s |  |  | For the Year Ended 30 June 2016 NZ$000’s |
Short-term employee benefits |  |  | 2,056 |  |  |  | 1,743 |  |  |  | 1,492 |  |  |  | 1,752 |
|  |  | 2,056 |  |  |  | 1,743 |  |  |  | 1,492 |  |  |  | 1,752 |

F-90

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

31 | Interests in Subsidiaries

Composition of the Group

|  | Principal place of business / Country of Incorporation |  | Percentage Owned (%)* 31 January 2019 |  |  | Percentage Owned (%)* 31 January 2018 |  |  | Percentage Owned (%)* 31 January 2017 |
Subsidiaries: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Bendon Retail Limited |  | New Zealand |  |  | 100 |  |  |  | 100 |  |  |  | 100 |
Bendon Holdings Limited |  | New Zealand |  |  | 100 |  |  |  | 100 |  |  |  | 100 |
Bendon Holdings Pty Limited |  | Australia |  |  | 100 |  |  |  | 100 |  |  |  | 100 |
Bendon Pty Limited |  | Australia |  |  | 100 |  |  |  | 100 |  |  |  | 100 |
Bendon Intimates Pty Limited |  | Australia |  |  | 100 |  |  |  | 100 |  |  |  | 100 |
PS Holdings No. 1 Pty Limited |  | Australia |  |  | 100 |  |  |  | 100 |  |  |  | 100 |
Pleasure State Pty Limited |  | Australia |  |  | 100 |  |  |  | 100 |  |  |  | 100 |
Pleasure State (HK) Limited |  | Hong Kong |  |  | 100 |  |  |  | 100 |  |  |  | 100 |
Bendon UK Limited |  | United Kingdom |  |  | 100 |  |  |  | 100 |  |  |  | 100 |
Bendon USA Inc |  | United States of America |  |  | 100 |  |  |  | 100 |  |  |  | 100 |
Bendon Limited** |  | New Zealand |  |  | 100 |  |  |  | - |  |  |  | - |
Naked Brand Inc. |  | United States of America |  |  | 100 |  |  |  | - |  |  |  | - |
FOH Online Corp Inc. |  | United States of America |  |  | 100 |  |  |  | - |  |  |  | - |

*The percentage of ownership interest held is equivalent to the percentage voting rights for all subsidiaries.

** Bendon Limited was the parent entity in the periods ended 31 January 2018 and 31 January 2017.

F-91

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

32 | Fair Value Measurement

The Group measures the following assets and liabilities at fair value on a recurring basis:

| ● | Financial assets - derivative financial instruments
| ● | Financial liabilities - derivative financial instruments

Fair value hierarchy

AASB 13 Fair Value Measurement requires all assets and liabilities measured at fair value to be assigned to a level in the fair value hierarchy as follows:

| Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date.
| Level 2 | Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
| Level 3 | Unobservable inputs for the asset or liability.

F-92

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

32 | Fair Value Measurement

The table below shows the assigned level for each asset and liability held at fair value by the Group:

|  | Level 1 NZ$000’s |  |  | Level 2 NZ$000’s |  |  | Level 3 NZ$000’s |  |  | Total NZ$000’s |
31 January 2019 |  |  |  |  |  |  |  |  |  |  |  |
Recurring fair value measurements |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  |  | - |  |  |  | 1,484 |  |  |  | - |  |  |  | 1,484 |
Derivative on Convertible Notes |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |

|  | Level 1 NZ$000’s |  |  | Level 2 NZ$000’s |  |  | Level 3 NZ$000’s |  |  | Total NZ$000’s |
31 January 2018 |  |  |  |  |  |  |  |  |  |  |  |
Recurring fair value measurements |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  |  | - |  |  |  | 2,087 |  |  |  | - |  |  |  | 2,087 |
Derivative on Convertible Notes |  |  | - |  |  |  | - |  |  |  | 1,110 |  |  |  | 1,110 |

F-93

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

32 | Fair Value Measurement

|  | Level 1 NZ$000’s |  |  | Level 2 NZ$000’s |  |  | Level 3 NZ$000’s |  |  | Total NZ$000’s |
31 January 2017 |  |  |  |  |  |  |  |  |  |  |  |
Recurring fair value measurements |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  |  | - |  |  |  | 4,188 |  |  |  | - |  |  |  | 4,188 |
Derivative on Convertible Notes |  |  | - |  |  |  | - |  |  |  | 4,112 |  |  |  | 4,112 |

There were no transfers between levels during the financial periods.

The carrying amount of trade and other receivables and trade and other payables are assumed to approximate their fair values due to their short-term nature. Bank loans approximate fair value of the carrying amount on the basis of the variable nature of the interest rates associated with the loans.

Valuation techniques for fair value measurements categorised within level 2

The fair value of derivative financial instruments is determined using valuation techniques which maximise the use of observable market data where it is available and relies as little as possible on entity specific estimates.

F-94

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

32 | Fair Value Measurement

Valuation techniques for fair value measurements categorised within level 3

The fair value of the derivative on convertible notes has been determined using a Black-Scholes model. Measurement inputs include share price on measurement date, expected term of the instrument, risk free rate, expected volatility and expected dividend rate. The Group used valuations specialists to perform these valuations.

Fair value measurements using significant unobservable movements (level 3)

The following table presents the changes in level 3 instruments for the year ended 31 January 2019.

|  | Convertible note liability NZ$000’s |
Balance at 31 January 2018 |  |  | 1,110 |
Conversion |  |  | (1,110 | )
Balance at 31 January 2019 |  |  | - |

F-95

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

33 | Contingencies

Contingent Liabilities

The Group had the following contingent liabilities at the end of the reporting period:

|  | 31 January 2019 NZ$000’s |  |  | 31 January 2018 NZ$000’s |  |  | 31 January 2017 NZ$000’s |
Rent guarantees to certain landlords |  |  | 419 |  |  |  | 419 |  |  |  | 571 |
Standby letter of credit to JP Morgan Chase Bank |  |  | 291 |  |  |  | 291 |  |  |  | 286 |
Guarantee provided to UK Customs Department |  |  | 304 |  |  |  | 329 |  |  |  | 282 |
Guarantee provided to ANZ for Merchant Service |  |  | 172 |  |  |  | 172 |  |  |  | - |

A shareholder has lodged a court Action against the Group claiming they did not receive the correct number of shares in the Group on completion of the merger between Naked Inc. and Bendon Limited on 19 June 2018. The Group has sought to have this claim dismissed by the Court on the basis that the Group had no contract with the shareholder and that the shareholder did not have a possessory right over a certain number of shares in the Group.

34 | Related Parties

| (a) | The Group’s main related parties are entities owned/controlled by shareholders:

F-96

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

34 | Related Parties

| (b) | Loans (to)/from related parties

|  | Opening balance NZ$ |  |  | Closing balance NZ$ |
Loans to related parties |  |  |  |  |  |  |  |
Cullen Investments Limited - 31 January 2019 |  |  | 11,535,622 |  |  |  | - |
Cullen Investments Limited - 31 January 2018 |  |  | 13,051,321 |  |  |  | 11,535,677 |
Cullen Investments Limited - 31 January 2017 |  |  | 9,613,014 |  |  |  | 13,051,321 |
Whitespace Atelier Limited - 31 January 2019 |  |  | 272,665 |  |  |  | 281,714 |
Whitespace Atelier Limited - 31 January 2018 |  |  | - |  |  |  | 272,665 |
FOH Online Inc. - 31 January 2019 |  |  | 3,518,009 |  |  |  | - |
FOH Online Inc. - 31 January 2018 |  |  | - |  |  |  | 3,518,009 |
Loans from related parties |  |  |  |  |  |  |  |
SBL Holdings - 31 January 2019 |  |  | - |  |  |  | (1,448,646 | )
Naked Inc. - 31 January 2019 |  |  | (1,368,577 | ) |  |  | - |
Naked Inc. - 31 January 2018 |  |  | - |  |  |  | (1,368,577 | )
EJ Watson – 31 January 2019 |  |  | - |  |  |  | (2,289,212 | )

F-97

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

34 | Related Parties

| (b) | Loans (to)/from related parties

On 15th November 2018, the Group entered into a Stock Purchase Agreement with the shareholders of FOH Online Corp (FOH), which included Cullen Investments Limited (Cullen), that the Group will purchase all of the issued and outstanding shares of FOH. Under the terms of the Agreement, the amount owed by Cullen was fully forgiven by the Group (31 January 2018: $11,535,677).

Whitespace Atelier Limited (“Whitespace”) is owned by a shareholder of the Naked Brand Group Limited. Beginning 1 Feb 2017, Whitespace is engaged by the Group to procure stock from various suppliers at competitive prices. During the year ended 31 January 2019, purchases amounting to $12,720,499 (31 January 2018: $13,281,727) have been made from Whitespace. As at 31 January 2018, the Group has made prepayments to Whitespace amounting to $281,714 (31 January 2018: $272,665).

Subsequent to the merger with Naked Brand Group Inc. on 19th June 2018, Naked Brand Group Inc. became part of the Group as at 31 January 2019. The balances between the subsidiaries are eliminated in the Group Balance Sheet (31 January 2018: $1,368,557).

Subsequent to the transaction with FOH Online Inc. on 15th November 2018, FOH Online Inc. became part of the Group as at 31 January 2019. The balances between the subsidiaries are eliminated in the Group Balance Sheet (31 January 2018: $3,518,009).

During the period, a shareholder SBL Holdings Limited loaned the business funds to be utilised as working capital in the business.

During the period, and subsequent to the transaction with FOH Online Inc, the balance of the loan outstanding from EJ Watson as at 31 January 2019 was $2,289,212, which includes interest accrued for the period of $81,866 (31 January 2018: Nil)

F-98

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

35 | Cash Flow Information

| (a) | Reconciliation of result for the year to cashflows from operating activities

Reconciliation of net income to net cash provided by operating activities:

|  | Year Ended 31 January 2019 NZ$000’s |  |  | Year Ended 31 January 2018 NZ$000’s |  |  | For the 7 Months Ended 31 January 2017 NZ$000’s |  |  | Year Ended 30 June 2016 NZ$000’s |
Loss for the year |  |  | (49,220 | ) |  |  | (37,593 | ) |  |  | (15,979 | ) |  |  | (20,746 | )
Cash flows excluded from profit attributable to operating activities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
- interest paid on borrowings |  |  | 3,400 |  |  |  | 8,792 |  |  |  | 6,238 |  |  |  | 10,182 |
Non-cash flows in profit: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
- depreciation and amortisation expense |  |  | 2,382 |  |  |  | 3,030 |  |  |  | 1,842 |  |  |  | 3,516 |
- impairment expense |  |  | 8,173 |  |  |  | 1,914 |  |  |  | 292 |  |  |  | 2,157 |
- fair value gain/(loss) on Convertible Notes derivative |  |  | 775 |  |  |  | (2,393 | ) |  |  | 592 |  |  |  | - |
Changes in assets and liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
- (increase)/decrease in trade and other receivables |  |  | 14,267 |  |  |  | 14,925 |  |  |  | (4,748 | ) |  |  | (6,518 | )
- (increase)/decrease in current tax receivables |  |  | (355 | ) |  |  | 52 |  |  |  | 35 |  |  |  | (88 | )
- (increase)/decrease in derivative assets |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2,289 |
- (increase)/decrease in inventories |  |  | 13,350 |  |  |  | 6,638 |  |  |  | (179 | ) |  |  | 8,088 |
- (increase)/decrease in deferred tax asset/(liability) |  |  | (692 | ) |  |  | - |  |  |  | - |  |  |  | 5,589 |
- (increase)/decrease in related party receivables |  |  | 6,531 |  |  |  | (906 | ) |  |  | (3,438 | ) |  |  | (5,603 | )
- increase/(decrease) in trade and other payables |  |  | (5,681 | ) |  |  | 6,956 |  |  |  | 2,078 |  |  |  | (11,113 | )
- increase/(decrease) in income taxes payable |  |  | 226 |  |  |  | 152 |  |  |  | 635 |  |  |  | (483 | )
- increase/(decrease) in provisions |  |  | (522 | ) |  |  | 39 |  |  |  | 367 |  |  |  | 311 |
- increase/(decrease) in foreign currency derivative liability |  |  | (1,712 | ) |  |  | (5,104 | ) |  |  | (1,343 | ) |  |  | 5,530 |
- net exchange differences |  |  | (355 | ) |  |  | (618 | ) |  |  | 90 |  |  |  | 1,849 |
Cashflows from operations |  |  | (9,434 | ) |  |  | (4,116 | ) |  |  | (13,518 | ) |  |  | (5,040 | )

F-99

Naked Brand Group Limited

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

36 | Events occurring after the reporting date

On the 27th March 2019, the Group closed on the following share issuances.

(1) NZ$6.60 million/US$4.50 million related to the issue of 11,248,415 Ordinary Shares to trade creditors in satisfaction of trade payables due to them, at an effective per share price of US$0.40.

(2) NZ$1.25 million/US$0.85 million related to the issue of 2,119,178 Ordinary Shares to the holder of one of the outstanding promissory notes in the amount of $847,671 at US$0.40 per share.

(3) NZ$1.69 million/US$1.15 million related to the issue of 4,510,588 to investors in a private placement at a share price of US$0.255.

(4) NZ$4.05 million/US$2.75 million relating to certain accredited investors. 10,784,313 shares were agreed at a per share price of US$0.255, except that, to the extent an investor would beneficially own more than 9.9% of our outstanding Ordinary Shares after the closing, we agreed to issue the investor March 2019 Pre-Funded Warrants in lieu of such shares. Each investor also received a March 2019 Investment Warrant to purchase 100% of the number of Ordinary Shares for which it had agreed to subscribe. As a result, we issued 3,914,846 Ordinary Shares, March 2019 Pre-Funded Warrants to purchase 6,869,467 Ordinary Shares and March 2019 Investment Warrants to purchase 10,784,313 Ordinary Shares to the investor at the closing.

On the 13th May 2019, the Group completed a private placement of a secured convertible promissory note for a purchase price of NZ$4.35m/US$3m. The note accrues interest at 10% pa and matures on 13 November 2020.

On the 14th May 2019, the Group closed on NZ$2.17 million/US$1.5million share issuance of 6,000,000 shares to investors in a private placement at a share price of US$0.25.

On the 16th May 2019, the Group issued 635,585 ordinary shares in exchange for the cancellation of a NZ$0.3m/US$0.2m debt held by a shareholder.

F-100