Annual Report 2018
— ACCENT GROUP LIMITED ANNUAL REPORT 2018 —
Contents
Our Brands 2
Chairman and Chief Executive Officers’ Report 6
Directors’ Report 10
Auditor’s Independence Declaration 23
Statement of Profit or Loss and Other Comprehensive Income 24
Statement of Financial Position 25
Statement of Changes in Equity 26
Statement of Cash Flows 27
Notes to the Financial Statements 28
Directors’ Declaration 67
Independent Auditor’s Report 68
Shareholder Information 73
Corporate Directory 75
Accent Group Limited (AX1)
is a leading retailer and
distributor of performance
and lifestyle footwear
With over 446 stores across 10 different retail
banners and exclusive distribution rights for
10 international brands across Australia and New
Zealand, we are a leader in the retail and distribution
sectors of performance and lifestyle footwear.
Accent Group Limited Annual Report 2018
1
— OUR BR ANDS —
Our Brands
Accent Group Limited Annual Report 2018
2
Cat Footwear and apparel has been
designed and engineered to live up
to the hard-working reputation of
the Caterpillar brand. Made with
uncompromising toughness and style.
Merrell is one of the worlds leading
brands of performance outdoor and
adventure footwear. We operate
22 Merrel stores.
Hype DC is a retailer of premium,
exclusive and limited edition sneakers,
curated from the world’s leading brands.
We operate 64 stores across Australia.
Dr Martens range of footwear was
born in 1960 and it is a representation
of rebellion and free-thinking youth
culture. We opened 2 stores in FY18.
Accent Group Limited Annual Report 2018
3
— OUR BR ANDS —
A staple for skaters and surfers, Vans
has a strong heritage in action sports,
and prides itself on being grounded in
youth, authenticity and individual style.
We operate 17 Vans stores.
Offering a range of fashionable
footwear for the urban explorer,
Palladium combines authenticity
with cutting-edge style.
With 143 stores, The Athlete’s
Foot is Australia’s largest specialty
athletic footwear retailer, known for
its exceptional in-store customer
service experience.
With 98 stores across Australia
and New Zealand, Platypus is the
region’s largest multi-branded sneaker
destination, offering a wide range of
iconic sneakers from around the world.
Accent Group Limited Annual Report 2018
4
Sperry Top-Sider is the original and
authentic boat shoe brand, and is for
people drawn to the surf, sun and soul
of the ocean.
Inspired by the company’s New
England heritage, Timberland is a
brand true to the outdoor lifestyle.
We operate 7 Timberland stores.
Skechers is a global leader in lifestyle
and performance footwear. We operate
81 Skechers stores across Australia
and New Zealand.
Dedicated to the spirit of individuality,
the Stance range of action-sport socks
offers cutting-edge style, extreme
comfort and exceptional durability.
Saucony exists for runners. This
focus and passion drives Saucony
to create the world’s best running
shoes and apparel.
Accent Group Limited Annual Report 2018
5
— CHAIRMAN AND CHIEF EXECUTIVE OFFICERS’ REPORT —
Another strong
year of trading
and profit growth
Dear fellow Shareholders
We are delighted to report that Accent Group has had another
strong year of trading and profit growth, delivering underlying1
EBITDA of $90.8 million, an increase of 16% over the prior year.
Your Board has declared a final fully franked dividend of 3.75
cents per share, which represents an increase of 25% on the
prior year final dividend. This brings the dividends declared
during the year to 6.75 cents per share.
It continues to be a great testament to the strength and
quality of the Accent Group team that we have been able to
consistently deliver excellent results. Over the 5 years from
FY13 to FY18, Accent Group has delivered a total shareholder
return of 177%, at a compound annual growth rate of over 22%
per annum. The investments that the business has continued
to make in digital capability, store environment, people and
marketing have ensured that the Company is well positioned
to continue to deliver a world class customer experience and
growth in shareholder value.
Overview of operations
During the year, the team at Accent Group has implemented
many exciting initiatives which we expect will allow our business
to deliver further efficiency and growth in the future.
We merged our three Sydney offices into one office in
Waterloo, Sydney and similarly combined our two Queensland
offices into one. We are also pleased to report that we moved
our Melbourne distribution facility (and 800,000 pairs of shoes)
to a purpose built TOLL distribution centre in Preston, Sydney.
This new, fully automated 35,000 square metre facility will
allow us to further expand our digital fulfilment capability with
speed and efficiency.
In FY18, we changed the company name to Accent Group
Limited, signalling the completion of the integration of the
RCG, Accent and Hype businesses and positioning us as the
regional leader in the retail and distribution sector of lifestyle
and performance footwear in Australia and New Zealand. Along
with this change, Daniel Agostinelli became the sole group CEO.
Underlying Financials
($ millions)
Total Sales (incl. TAF)
Accent Group Sales (company owned)
Like for Like retail sales3
Gross Profit %
EBITDA
NPAT
EPS (cents per share)
Dividends (cents per share)
FY18
Full-year
FY17
Pro-forma2
Full-year
860.8
675.6
2%
54.8%
90.8
47.1
8.78
6.75
820.7
617.8
1.5%
52.8%
78.2
39.9
7.48
6.00
Up 5%
Up 9%
+200bp
Up 16%
Up 18%
Up 17%
Up 13%
1 Unless otherwise stated all FY18 results and references to growth are based on FY18 underlying results (52 Weeks to 1 July 2018) and pro-forma underlying FY17
results (53 Weeks to 2 July 2017). The pro-forma underlying results for the full-year to 2 July 2017 include the sales, gross profit and EBITDA for Hype DC for the full
period including the period prior to completion (1/7/16 – 3/8/16). Refer to the Accent Group Limited FY18 investor presentation Appendix for reconciliations between
underlying and statutory reported results.
2 Underlying pro-forma results (refer to note 1) include FY17 pro-forma sales of $617.8 million (including $10.7 million of sales for the Hype business). Reported sales for
the period were $607.1 million.
3 Includes The Athlete’s Foot franchise store sales.
Accent Group Limited Annual Report 2018
6
Underlying EBITDA
$90.8m
Underlying NPAT
$47.1m
Underlying EPS
8.78c
These changes have allowed our team
to truly become ONE TEAM, focussed
on driving customer satisfaction, the
achievement of budgets and cost
control.
Retail
Company owned retail sales grew
strongly to $566.9 million, which was
12% up on the prior year. This was
driven by strong growth in digital sales
and new store rollouts. Like-for-like
(‘LFL’) retail sales for the second half
of FY18 grew by 3%3 and were up 2%3
for the full year.
We opened 31 new stores and closed
15 stores during the year, resulting in
a total of 446 stores and online sites in
the group. The targeted investment in
store concept updates continued with
our new (cid:91)next level(cid:92) concepts launched
for Hype (QVB Sydney, Queen St Mall
Auckland) and Platypus (Bondi Junction),
all performing ahead of expectations.
In addition, 29 stores were refurbished
during the financial year.
3 Includes The Athlete’s Foot franchise store sales.
In the retail banners, Skechers, Dr.
Martens, Vans and Timberland all traded
strongly during the year, with sales in
Platypus, Merrell and Hype in line with
expectations. Following the restructure
and changes in the Hype business in the
first half of the year, the improvement in
Hype performance has continued, with
Hype sales and EBITDA well ahead of
last year.
Performance in The Athlete’s Foot (‘TAF’)
business has improved with the roll out
of decentralised eCommerce fulfilment
to all stores now complete. TAF online
sales are up 100% on last year since
this deployment. Corporate store sales
have significantly outperformed the
broader franchise network, reflecting
the investments made in store fit-outs,
inventory and people. During the year
a number of stores were acquired, and
we now have 28 corporate TAF stores
in the group.
Omnichannel
In FY18, total digital sales, including
click-and-collect and click-and-dispatch,
grew 131%. A range of new initiatives
was implemented during the year,
including new eCommerce sites for
Timberland, Dr. Martens, Platypus New
Zealand and Skechers New Zealand, the
launch and rollout of click-and-collect
and click-and-dispatch in Platypus and
Hype and the roll-out of Afterpay instore
for all retail banners.
During FY19, the group will implement
and roll out further new initiatives,
including endless aisle in-store, Vans
New Zealand, same day delivery
(launched July), and in October we will
launch The Trybe, a new online business
focused on kids shoes.
With a nationwide network of 446
stores and online sites, Accent Group
is uniquely positioned in our segment to
deliver an integrated, seamless customer
experience through click-and-collect,
click-and-dispatch, endless aisle and
same day delivery.
Accent Group Limited Annual Report 2018
7
— CHAIRMAN AND CHIEF EXECUTIVE OFFICERS’ REPORT —
Wholesale
Wholesale sales for the year
were $108.7m million with strong
performances in Vans, Dr. Martens,
Merrell and CAT. Skechers wholesale
sales were below last year. As we
execute the strategy to grow our
Skechers store network we expect
moderate declines in Skechers
wholesale sales.
Wholesale gross profit margins were up
strongly on the prior year due to cleaner
inventories and improved exchange
rates. Accent Group continues to drive
the growth of exclusive brands through
its retail store network with Vans and
Dr. Martens growing strongly in Hype
during the year.
Growth Plan Update
New Stores
Based on the continued strength of new
store performance, more than 30 new
stores will open in FY19 and there is
potential for a further 30-40 new stores
across the group over the next 2-3 years.
As part of our new store program we
have secured a lease to open a Platypus
Megastore in Melbourne Central. This
Megastore is 600 square metres in size
and will showcase third party brands
and a full range of Accent Group vertical
brands and accessories.
The Athlete’s Foot corporate
(owned) stores
The group is implementing a strategy
to build a strong network of TAF
corporate stores.
The expanded corporate network will be
built through the acquisition of selected
franchisee stores where franchisees
are willing sellers, flagship CBD stores
and new outlet stores. In FY18 the
corporate store network has grown
from 12 stores to 28 stores now under
TAF corporate ownership. We expect
a further 5-10 Australian franchise
stores will be acquired in FY19.
TAF has also reached agreement to
repurchase the New Zealand (‘NZ’) TAF
master franchise licence along with 6 NZ
corporate stores and 3 franchise stores.
This will take effect from the beginning
of October 2018.
The ownership of a strong network of
corporate stores enables the business
to provide brand leadership, deliver
a contemporary customer experience
and react quickly to market and
competitive trends. Along with targeted
improvements in sales, the full EBITDA
margin of these stores will now be
captured rather than just franchise fees
and royalty payments.
Due to the investment required to
acquire the stores and develop a
strong retail infrastructure, the EBITDA
impact of the TAF acquisitions will be
broadly profit neutral in FY19 with
the benefit growing over time. The
investment required in FY19 to acquire
TAF corporate stores and the NZ TAF
business will be funded from cash
on hand, free cashflow and existing
debt facilities.
Accent Group Limited Annual Report 2018
8
Vertical & Emerging Brands
As part of the strategy to drive improved
gross margins and product differentiation
in-store, a dedicated team has been set
up to focus on vertical and emerging
brands. During FY19, several exciting
product initiatives will launch in Hype,
including new exclusive brands, Filling
Pieces and ARKK, a range of Hype
branded apparel and accessories, the
introduction of RM Williams boots and
further range expansion of Vans and
Dr. Martens. In Platypus, the focus
will be on increased penetration of
vertically distributed brands and owned
accessories and shoe care products.
In other product initiatives, we have
secured supply of new Nike and
Adidas styles from FY19.
International
As flagged at the half year results
release, the company is investigating
expansion in a range of international
markets. The evaluation of entry
opportunities in several markets is
ongoing along with in-market review
of supplier arrangements, operational
requirements and potential store sites.
Our preferred model for international
expansion is organic direct entry
through the Platypus brand.
Outlook
Like for like retail sales for the first
7 weeks of the second-half are up
4.6%. We have continued our strategy
of reduced discounting, which impacted
LFL store sales in June as we cycled
through a promotions period in the
prior year.
The company is targeting mid-single
digit EBITDA growth in FY19. This is
expected to be achieved through low
single digit LFL store growth, continued
strong growth online, new stores,
stores annualising from FY18, continued
margin improvement through vertical
and emerging brands and reduced
discounting, which will primarily benefit
margins in H1. We expect the TAF new
corporate store program to be broadly
earnings neutral after implementation
costs in FY19 and there will be some
upfront investment and expenditure
incurred opening in international
markets.
The company refinanced its debt
facilities on 17 August 2018, in advance
of their maturity. The new $154.8 million
facility is provided by NAB and HSBC
and consists of a combination of 3 and
5 year terms.
For the FY19 year, a dividend payout
ratio of 75% to 80% of net profit after
tax is targeted.
Left:
David Gordon
Chairman
Right:
Daniel Agostinelli
Chief Executive Officer
Conclusion
Your Board is delighted with the
performance of the Company and would
like to thank the Accent Group team,
franchisees and suppliers for their hard
work and results delivered in FY18.
In FY19, we intend to continue our
strategy of avoiding lazy, discount-driven
retailing, and instead drive profitable
sustainable sales and margin growth
through a world class omnichannel
offering, best in class websites and
fulfilment infrastructure, exciting store
environments and the magic of our in-
store customer experience.
David Gordon
Chairman
Daniel Agostinelli
Chief Executive Officer
Accent Group Limited Annual Report 2018
9
— DIRECTORS’ REPORT —
For the year ended 1 July 2018
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the
'Consolidated Entity' or 'Group') consisting of Accent Group Limited (referred to hereafter as the 'Company' or 'Accent Group')
and the entities it controlled at the end of, or during, the year ended 1 July 2018.
Directors
The following persons were directors of Accent Group during the whole of the financial year and up to the date of this report, unless
otherwise stated:
David Gordon
Daniel Agostinelli
Michael Hapgood
Stephen Kulmar
Brett Blundy (appointed effective 6 December 2017)
Stephen Goddard (appointed effective 23 November 2017)
Donna Player (appointed effective 23 November 2017)
Ivan Hammerschlag (resigned effective 23 November 2017)
Michael Hirschowitz (resigned effective 28 February 2018)
Hilton Brett (resigned effective 31 March 2018)
Craig Thompson (resigned effective 31 March 2018)
Daniel Gilbert (resigned effective 31 March 2018)
Company secretaries
The following persons were company secretaries of Accent Group during the whole of the financial year and up to the date of this
report, unless otherwise stated:
Matthew Durbin (appointed effective 23 January 2018)
Celesti Harmse (appointed effective 31 May 2018)
Leanne Ralph (resigned effective 31 May 2018)
Principal activities
Accent Group is a regional leader in the retail and distribution sectors of branded performance and lifestyle footwear, with over
400 stores across 9 different retail banners and exclusive distribution rights for 10 international brands across Australia and
New Zealand.
The combined Group’s brands include The Athlete’s Foot, Platypus Shoes, Hype DC, Skechers, Merrell, CAT, Vans,
Dr. Martens, Saucony, Timberland, Sperry, Palladium and Stance.
Dividends
Dividends paid during the financial year were as follows:
Final dividend for the year ended 2 July 2017 (2017: 26 June 2016) of 3.00 cents (2017: 3.00 cents)
per ordinary share
Interim dividend for the year ended 1 July 2018 (2017: 2 July 2017) of 3.00 cents (2017: 3.00 cents)
per ordinary share
Dividends paid to non-controlling interests
Consolidated
2018
$'000
2017
$'000
16,269
16,239
16,269
16,239
81
83
32,619
32,561
In respect of the financial year ended 1 July 2018, the directors recommended the payment of a final dividend of 3.75 cents per
share franked to 100% at 30% corporate income tax rate to be paid on 27 September 2018 to the registered holders of fully paid
ordinary shares as at 13 September 2018.
Accent Group Limited Annual Report 2018
10
— DIRECTORS’ REPORT —
For the year ended 1 July 2018
Review of operations
Profit for the year attributable to the owners of the Group amounted to $43,957,000 (2 July 2017: $29,157,000).
The Operating and Financial Review of the Group for the financial year ended 1 July 2018 is provided in the Chairman and
Chief Executive Officer’s Report on page 6 and forms part of the Directors Report.
Significant changes in the state of affairs
On 25 November 2017 the Group changed its name from RCG Corporation Limited to Accent Group Limited. This included
the change in the ASX ticker code from RCG to AX1 on 29 November 2017.
During the period, the Group issued a net total of 24,050,000 performance rights to employees. The performance rights
were granted under the terms and conditions of the Company's Performance Rights Plan. The Performance Rights Plan was
approved at the Company’s 2016 Annual General Meeting on 25 November 2016 and the grant of the performance rights
to the Executive Directors was approved at the Company’s 2017 Annual General Meeting on 23 November 2017.
There were no other significant changes in the state of affairs of the Group during the financial year.
Matters subsequent to the end of the financial year
The following significant events have arisen since the end of the financial year:
Vendor loan notes repayment
As part of the purchase consideration for Hype DC, the Company issued vendor loan notes to each of the vendors in proportion
to their shareholding in Hype DC. The vendor loan notes of $13,125,000 which were due to be repaid by 4 August 2018 were
repaid in full on 13 July 2018 from existing NAB facilities.
Release of Shares from Escrow
As part of the acquisition of Hype DC Pty Ltd by the Company under a share sale and purchase deed dated 4 July 2016, the
Company issued 36,842,105 fully paid ordinary shares to the shareholders of Hype DC Pty Ltd, subject to an escrow period of
2 years. On 4 August 2018 these fully paid ordinary shares were released from Escrow.
De(cid:35)t (cid:10)acilit(cid:64) (cid:24)e(cid:41)nancing
The Company refinanced its existing debt facilities on 17 August 2018, in advance of its maturity. The Company has taken advantage
of favourable loan market conditions to refinance the existing $149,900,000 facility provided by NAB. The new $154,825,000
facility, to be provided by NAB and HSBC, is split between $76,125,000 of senior debt, $58,700,000 multi-option facility and
$20,000,000 of permitted indebtedness not yet drawn down. The new facility has a combination of three and five year tenure
with maturity dates of August 2021 and August 2023.
Apart from the dividend declared as disclosed in note 28 and matters noted above, no other matter or circumstance has arisen since
1 July 2018 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the
Group's state of affairs in future financial years.
Likely developments and expected results of operations
All relevant future developments are outlined in the Chairman and Chief Executive Officer’s Report on page 6.
Environmental regulation
The Group operates primarily within the retail and wholesale sectors and conducts its business activities with respect for the
environment while continuing to meet the expectations of shareholders, customers, employees and suppliers.
During the year under review, the Directors are not aware of any particular or significant environmental issues which have been
raised in relation to the Group’s operations.
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.
Accent Group Limited Annual Report 2018
11
— DIRECTORS’ REPORT —
For the year ended 1 July 2018
Information on directors
The names and particulars of the directors of the Company during or since the end of the financial year are:
Name:
Title:
David Gordon
Non-Executive Chairman
(cid:23)(cid:60)ali(cid:41)(cid:36)ations(cid:86)
BCom, LLB
(cid:9)(cid:63)(cid:54)e(cid:56)ien(cid:36)e an(cid:38) e(cid:63)(cid:54)e(cid:56)tise(cid:86)
David was a former Mergers and Acquisitions partner at Freehills and corporate advisory firm
Wentworth Associates. He is also the founder of Lexicon Partners, an independent advisory
and investment firm. He has over 30 years’ experience advising companies, funds and high net
worth individuals on complex corporate transactions. David is also Chairman of the Advisory
Board of the Winning Group and Chairman and Director of a number of private companies.
He has been a Non-Executive Director of Accent Group since October 2006 and was appointed
Non-Executive Chairman in November 2017.
(cid:25)(cid:54)e(cid:36)ial (cid:56)es(cid:54)onsi(cid:35)ilities(cid:86)
Chairman of the Board and member of the Audit and Risk Committee and Remuneration
and Nomination Committee.
Name:
Title:
(cid:9)(cid:63)(cid:54)e(cid:56)ien(cid:36)e an(cid:38) e(cid:63)(cid:54)e(cid:56)tise(cid:86)
Daniel Agostinelli
Chief Executive Officer
Daniel oversees the day to day operations of Accent Group. He has over 30 years of retail
experience and was formerly the CEO of Sanity Music and part owner of the Ghetto Shoes
sneaker business. Daniel has been with Accent Group since 2006 and CEO of Accent Group
since March 2015.
(cid:25)(cid:54)e(cid:36)ial (cid:56)es(cid:54)onsi(cid:35)ilities(cid:86)
None
Name:
Title:
(cid:9)(cid:63)(cid:54)e(cid:56)ien(cid:36)e an(cid:38) e(cid:63)(cid:54)e(cid:56)tise(cid:86)
(cid:17)i(cid:36)(cid:44)ael (cid:12)a(cid:54)goo(cid:38)
Co-Founder and Non-Executive Director
A founding director and shareholder of Accent Group, Michael has extensive knowledge of
the processes required to effectively launch, source and manage global brands within the
Australasian market. From Accent Group’s inception, Michael has been intimately involved in the
development of all major strategic initiatives for the business initially from 1988 as marketing
director before becoming CEO in 1998 until the sale to RCG Group in May 2015. Michael then
became Accent Group’s Chairman until August 2016 when all ongoing executive roles were
relinquished. He continues as a Non-Executive Director and shareholder of Accent Group.
(cid:25)(cid:54)e(cid:36)ial (cid:56)es(cid:54)onsi(cid:35)ilities(cid:86)
None
Name:
Title:
(cid:9)(cid:63)(cid:54)e(cid:56)ien(cid:36)e an(cid:38) e(cid:63)(cid:54)e(cid:56)tise(cid:86)
(cid:25)(cid:59)e(cid:54)(cid:44)en (cid:15)(cid:60)l(cid:49)a(cid:56)
Non-Executive Director
Stephen is the former CEO of IdeaWorks and is currently the CEO of Retail Oasis, a retail
marketing consultancy business. Stephen has over 40 years’ experience in advertising and has
extensive experience in retail strategy, brand strategy, channel to market strategy, business
re-engineering and new retail business development. Stephen sits on a number of boards
as a Non-Executive Director, including Thorn Group Limited. He has been a director since
August 2007.
(cid:25)(cid:54)e(cid:36)ial (cid:56)es(cid:54)onsi(cid:35)ilities(cid:86)
Chairman of the Remuneration and Nomination Committee.
Name:
Title:
(cid:9)(cid:63)(cid:54)e(cid:56)ien(cid:36)e an(cid:38) e(cid:63)(cid:54)e(cid:56)tise(cid:86)
(cid:5)(cid:56)e(cid:295) (cid:5)l(cid:60)n(cid:38)(cid:64) (cid:108)a(cid:54)(cid:54)oin(cid:59)e(cid:38) e(cid:248)e(cid:36)ti(cid:61)e (cid:164) De(cid:36)e(cid:49)(cid:35)e(cid:56) (cid:137)(cid:135)(cid:136)(cid:141)(cid:109)
Non-Executive Director
Brett is one of Australia’s best known and most successful retailers and entrepreneurs.
He is the Chairman and Founder of BBRC, a private investment group with diverse global
interests across retail, capital management, retail property, beef, and other innovative ventures.
BBRC’s Retail presence extends to over 800 stores across more than 15 countries, and its
Capital Management business has offices in Sydney & New York. Brett was appointed
Non-Executive Director in December 2017.
(cid:25)(cid:54)e(cid:36)ial (cid:56)es(cid:54)onsi(cid:35)ilities(cid:86)
Member of the Audit and Risk Committee.
Accent Group Limited Annual Report 2018
12
— DIRECTORS’ REPORT —
For the year ended 1 July 2018
Name:
Title:
(cid:9)(cid:63)(cid:54)e(cid:56)ien(cid:36)e an(cid:38) e(cid:63)(cid:54)e(cid:56)tise(cid:86)
(cid:25)(cid:59)e(cid:54)(cid:44)en (cid:11)o(cid:38)(cid:38)a(cid:56)(cid:38) (cid:108)a(cid:54)(cid:54)oin(cid:59)e(cid:38) e(cid:248)e(cid:36)ti(cid:61)e (cid:137)(cid:138) (cid:18)o(cid:61)e(cid:49)(cid:35)e(cid:56) (cid:137)(cid:135)(cid:136)(cid:141)(cid:109)
Non-Executive Director
Stephen is currently a non-executive director and Chair of the Audit and Risk Committee of GWA
Group Limited and a non-executive director of JB Hi-Fi Limited and Nick Scali Limited. Stephen is
a former non-executive director and Chair of the Audit and Risk Committee of both Pacific Brands
Limited and Surfstitch Group Limited. He was also formerly the Finance Director and Operations
Director for David Jones Limited and the founding Managing Director of Officeworks. Stephen
is the Chairman of the Audit and Risk Committee and has extensive retail, finance, and board
experience. Stephen was appointed Non-Executive Director in November 2017.
(cid:25)(cid:54)e(cid:36)ial (cid:56)es(cid:54)onsi(cid:35)ilities(cid:86)
Chairman of the Audit and Risk Committee.
Name:
Title:
(cid:9)(cid:63)(cid:54)e(cid:56)ien(cid:36)e an(cid:38) e(cid:63)(cid:54)e(cid:56)tise(cid:86)
Donna (cid:22)la(cid:64)e(cid:56) (cid:108)a(cid:54)(cid:54)oin(cid:59)e(cid:38) e(cid:248)e(cid:36)ti(cid:61)e (cid:137)(cid:138) (cid:18)o(cid:61)e(cid:49)(cid:35)e(cid:56) (cid:137)(cid:135)(cid:136)(cid:141)(cid:109)
Non-Executive Director
Donna has over 35 years’ experience in retail including senior executive positions in
merchandising, planning and marketing with Big W and David Jones. Donna is currently a
non-executive director of Baby Bunting Group Limited, a member of The Iconic advisory board
and Merchandise Director of Camilla, Australia. Donna has a proven track record in developing
and delivering retail strategy and business transformation. Donna was appointed Non-Executive
Director in November 2017.
(cid:25)(cid:54)e(cid:36)ial (cid:56)es(cid:54)onsi(cid:35)ilities(cid:86)
Member of the Remuneration and Nomination Committee.
Name:
Title:
(cid:13)(cid:61)an (cid:12)a(cid:49)(cid:49)e(cid:56)s(cid:36)(cid:44)lag (cid:108)(cid:56)esigne(cid:38) e(cid:248)e(cid:36)ti(cid:61)e (cid:137)(cid:138) (cid:18)o(cid:61)e(cid:49)(cid:35)e(cid:56) (cid:137)(cid:135)(cid:136)(cid:141)(cid:109)
Former Non-Executive Chairman
(cid:23)(cid:60)ali(cid:41)(cid:36)ations(cid:86)
BCom, CTA
(cid:9)(cid:63)(cid:54)e(cid:56)ien(cid:36)e an(cid:38) e(cid:63)(cid:54)e(cid:56)tise(cid:86)
Ivan has had over 35 years of specialist retail experience, including as CEO and shareholder in
Freedom Furniture prior to its Initial Public Offering. He has also chaired, managed and invested
in a number of other successful retail and other businesses. Ivan was Chairman of Accent Group
from October 2006 until 23 November 2017.
Name:
Title:
(cid:17)i(cid:36)(cid:44)ael (cid:12)i(cid:56)s(cid:36)(cid:44)o(cid:62)i(cid:59)(cid:65) (cid:108)(cid:56)esigne(cid:38) e(cid:248)e(cid:36)ti(cid:61)e (cid:137)(cid:165) (cid:10)e(cid:35)(cid:56)(cid:60)a(cid:56)(cid:64) (cid:137)(cid:135)(cid:136)(cid:165)(cid:109)
Former Group Chief Financial Officer and Former Finance Director
(cid:23)(cid:60)ali(cid:41)(cid:36)ations(cid:86)
BCom, BAcc
(cid:9)(cid:63)(cid:54)e(cid:56)ien(cid:36)e an(cid:38) e(cid:63)(cid:54)e(cid:56)tise(cid:86)
Michael has extensive experience in retail. He joined The Athlete’s Foot in 1996 and worked
in various capacities before becoming Commercial Director in 2002. On the formation of
RCG (now Accent Group) he became Chief Financial Officer and later the Group Chief Financial
Officer until 28 February 2018.
Name:
Title:
(cid:12)il(cid:59)on (cid:5)(cid:56)e(cid:295) (cid:108)(cid:56)esigne(cid:38) e(cid:248)e(cid:36)ti(cid:61)e (cid:138)(cid:136) (cid:17)a(cid:56)(cid:36)(cid:44) (cid:137)(cid:135)(cid:136)(cid:165)(cid:109)
Former Co-Chief Executive Officer
(cid:23)(cid:60)ali(cid:41)(cid:36)ations(cid:86)
BCom, PGDA
(cid:9)(cid:63)(cid:54)e(cid:56)ien(cid:36)e an(cid:38) e(cid:63)(cid:54)e(cid:56)tise(cid:86)
Name:
Title:
(cid:9)(cid:63)(cid:54)e(cid:56)ien(cid:36)e an(cid:38) e(cid:63)(cid:54)e(cid:56)tise(cid:86)
Hilton has extensive retailing and franchising experience and proven skills in maximising
opportunities in acquiring, growing, re-engineering and selling businesses. Hilton joined
Accent Group as an Executive Director in December 2006 and assumed day-to-day responsibility
for re-engineering the business through rationalisation and acquisition. Hilton was CEO from July
2012 and Co-CEO with Daniel Agostinelli from August 2016 until 31 March 2018.
Daniel (cid:11)il(cid:35)e(cid:56)(cid:59) (cid:108)(cid:56)esigne(cid:38) e(cid:248)e(cid:36)ti(cid:61)e (cid:138)(cid:136) (cid:17)a(cid:56)(cid:36)(cid:44) (cid:137)(cid:135)(cid:136)(cid:165)(cid:109)
Former Non-Executive Director
Daniel was the co-founder of Hype DC which he established together with his wife, Cindy,
20 years ago with the opening of their first store in the Sydney suburb of Mosman. They have
since built a substantial business which has become Australia's premier destination for premium,
exclusive and limited-edition sneakers.
Name:
Title:
(cid:6)(cid:56)aig (cid:26)(cid:44)o(cid:49)(cid:54)son (cid:108)(cid:56)esigne(cid:38) e(cid:248)e(cid:36)ti(cid:61)e (cid:138)(cid:136) (cid:17)a(cid:56)(cid:36)(cid:44) (cid:137)(cid:135)(cid:136)(cid:165)(cid:109)
Former Non-Executive Director
(cid:23)(cid:60)ali(cid:41)(cid:36)ations(cid:86)
BCA, LLB, Dip Acc, ACA
(cid:9)(cid:63)(cid:54)e(cid:56)ien(cid:36)e an(cid:38) e(cid:63)(cid:54)e(cid:56)tise(cid:86)
Craig was a co-founder of Accent Group and was appointed Chairman upon its inception.
Craig is a widely experienced company director and has been intimately involved in business in
multiple sectors. Craig has held directorships in listed and private companies in media, insurance,
finance, retirement villages, retailing and on-line trading sectors.
Accent Group Limited Annual Report 2018
13
— DIRECTORS’ REPORT —
For the year ended 1 July 2018
Information on Company Secretaries
(cid:17)a(cid:295)(cid:44)e(cid:62) D(cid:60)r(cid:35)in (cid:108)a(cid:54)(cid:54)ointed e(cid:248)ecti(cid:61)e (cid:137)(cid:138) (cid:14)an(cid:60)ar(cid:64) (cid:137)(cid:135)(cid:136)(cid:165)(cid:109)
Matthew is Group Chief Financial Officer and joint Company Secretary. Matthew is a qualified accountant (FCPA) with 29 years’
of experience in retail. Prior to joining Accent Group he was the CFO and COO of The PAS Group and has also held executive roles
with David Jones in strategy, financial services and merchandise planning.
(cid:6)elesti (cid:12)armse (cid:108)a(cid:54)(cid:54)ointed e(cid:248)ecti(cid:61)e (cid:138)(cid:136) (cid:17)a(cid:64) (cid:137)(cid:135)(cid:136)(cid:165)(cid:109)
Celesti is General Counsel and joint Company Secretary with over 15 years’ experience practicing law across a range of industries.
Celesti started her career at Minter Ellison and, prior to joining Accent Group, she held senior legal positions in the retail, distribution
and technology sectors.
(cid:16)eanne (cid:24)al(cid:54)(cid:44) (cid:108)resigned e(cid:248)ecti(cid:61)e (cid:138)(cid:136) (cid:17)a(cid:64) (cid:137)(cid:135)(cid:136)(cid:165)(cid:109)
Leanne has a wealth of experience in Company Secretarial activities particularly with listed companies. She is currently the Company
Secretary of numerous listed companies as well as a number of unlisted companies. Leanne is a member of the Governance Institute.
Meetings of directors
The following table sets out the number of directors meetings (including meetings of Committees of directors) held during the
year ended 1 July 2018 and the number of meetings attended by the members of the Board or the relevant committee. During the
financial year, 7 Board Meetings, 4 Audit and Risk Committee meetings and 4 Remuneration and Nomination Committee meetings
were held.
David Gordon
Daniel Agostinelli
Michael Hapgood
Stephen Kulmar
Brett Blundy
Stephen Goddard
Donna Player
Ivan Hammerschlag
Michael Hirschowitz
Hilton Brett
Craig Thompson
Daniel Gilbert
Full Board
Audit and Risk
Committee
Attended
(cid:12)eld
Attended
(cid:12)eld
Remuneration and
Nomination Committee
Attended
(cid:12)eld
7
5
4
7
2
2
3
4
5
5
4
6
7
7
7
7
2
3
3
4
6
6
6
6
4
–
–
–
–
1
–
3
–
–
4
–
4
–
–
–
–
1
–
3
–
–
4
–
4
–
–
4
–
–
2
2
–
–
3
–
4
–
–
4
–
–
2
2
–
–
3
–
Held: represents the number of meetings held during the time the director held office.
Remuneration report (audited)
The remuneration report details the key management personnel remuneration arrangements for the Group, in accordance with the
requirements of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities
of the entity, directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
– Principles used to determine the nature and amount of remuneration
– Details of remuneration
– Service agreements
– Share-based compensation
– Additional information
– Additional disclosures relating to key management personnel
Accent Group Limited Annual Report 2018
14
— DIRECTORS’ REPORT —
For the year ended 1 July 2018
(cid:22)rinci(cid:54)les (cid:60)sed to determine t(cid:44)e nat(cid:60)re and amo(cid:60)nt o(cid:40) rem(cid:60)neration
Remuneration policy
Remuneration policy is determined and executed on behalf of the Board by the Remuneration and Nomination Committee
('RNC'). The RNC consists of Stephen Kulmar (Chairman), David Gordon and Donna Player, all non-executive directors. The RNC
makes recommendations to the Board on matters relating to remuneration for the entities within the Group. The RNC considers
recruitment, retention and termination policies and procedures, non-executive directors’ remuneration, executive directors and
senior managements’ remuneration and incentive policy and awards, and contractual arrangements with senior managers and
executives. More detail on the Company’s remuneration policy is provided in the Corporate Governance Statement.
The Group’s remuneration reviews take place within three months of the end of each financial year. Prior to these reviews, the
Chief Executive Officer makes recommendations to the RNC regarding the remuneration of each of his direct reports and the
overall remuneration framework for all employees. The RNC meets to discuss the remuneration of the Chief Executive Officer.
The Group’s remuneration policy is designed to attract, motivate and retain employees, while ensuring that the interests of
employees are in line with the interests of shareholders. The Board recognises that the success of the Group hinges on the
performance and abilities of its employees. Therefore, as a matter of policy, employees of the Group are remunerated on the
following basis:
Base remuneration
Base remuneration is set with reference to prevailing market rates for similar positions, adjusted to account for the experience, ability
and productivity of the individual employee. Base remuneration provides fixed remuneration on a total cost-to-company basis, which
includes any fringe benefits to the employee as well as superannuation at 9.50% of the base remuneration up to the statutory cap.
Salary packaging options are available for some employees.
Short Term Incentives (STI)
The Board believes that well designed STI plans are essential elements of remuneration as they provide tangible incentives for
employees to strive for excellence. Relevant employees are eligible to earn STIs if certain pre-determined measurable financial
targets are achieved. The STIs for all non-store employees are linked to base remuneration and the maximum amount that can be
earned is a fixed percentage of that base remuneration. Senior Executives are eligible for bonuses, of between 20% and 100% of
their base remuneration, based on the same pre-determined measurable financial targets.
Senior executives have a significant proportion of their STI tied directly to the achievement of pre-determined profit targets,
either for the Group as a whole or a relevant business unit or both as the case may be. During the financial year ended 1 July 2018
the percentage of STI tied directly to these profit targets ranged between 50% and 100%. The remainder of the available STI is
dependent on other measurable objectives. The RNC signs off all bonuses paid to senior executives. This STI drives a contribution
to the short-term performance of the Company by being tied to the annual profit targets.
Long Term Incentives (LTI)
The Company has implemented an LTI under the Employee Option Plan ('EOP'), the Employee Share Scheme ('ESS') and the
Performance Rights Plan ('PRP'). The purpose of these plans is to encourage employees to share in the ownership of the Company in
order to promote the long-term success of the Company as a goal shared by the employees and to align employees’ interest to that
of shareholders.
The EOP, which was implemented during the 2007 financial year, operates under the rules approved by shareholders at the
19 December 2006 Extraordinary General Meeting. As at 1 July 2018, no options issued under the EOP were outstanding.
The ESS, which was implemented during the 2013 financial year, is part of the Company’s long-term retention and corporate
alignment strategy. As at 1 July 2018, 6,040,000 shares issued under the ESS were outstanding. The PRP operates under the rules
approved by shareholders at the Company's 2016 Annual General Meeting, held on 25 November 2016. The Board intends for the
PRP to replace the ESS. As at 1 July 2018, 25,260,552 rights issued under the plan were outstanding.
Remuneration of non-executive directors
On an annual basis the RNC considers the fees payable to non-executive directors. When considering the level of fees, the
Committee undertakes a survey of the market and accesses independent advice as well as drawing on the knowledge and experience
of its members. The remuneration committee makes recommendations on non-executive director fees to the Board. Non-executive
directors can choose, subject to certain restrictions, the amount of their fees allotted to superannuation.
In summary, the Board believes that the remuneration policies in place align the interests of all employees with those of the
Company’s shareholders while at the same time enabling the Group to retain a high-quality team of executives.
Performance rights
The objective of the PRP is to align the interests of employees of the Group with those of the shareholders and provide employees
of the Group who are considered to be key to the future success of the Group with an opportunity to receive shares in order to
reward and retain the services of those persons and recognise the employees of the Group for their contribution to the future
success of the Group.
Accent Group Limited Annual Report 2018
15
— DIRECTORS’ REPORT —
For the year ended 1 July 2018
Eligibility and grant of performance rights
The Board may, from time to time, grant performance rights to an employee of the Group who the Board determines to be eligible
to participate in the PRP. The performance rights granted are under the terms and conditions of the PRP and may include additional
terms and conditions, including any performance conditions, as the Board determine. The Board may only grant performance rights
where an employee continues to satisfy any relevant conditions imposed by the Board.
The terms and conditions of each grant of performance rights over ordinary shares affecting remuneration of directors and other key
management personnel in this financial year or future reporting years are as follows:
Name
D Agostinelli
M Durbin
Performance
condition
(cid:18)(cid:60)m(cid:35)er
o(cid:40) rig(cid:44)ts
granted
Grant date
Vesting date
Expiry date
(cid:10)air (cid:61)al(cid:60)e
(cid:54)er rig(cid:44)t at
grant date
(cid:26)otal (cid:61)al(cid:60)e
o(cid:40) rig(cid:44)ts
granted
TSR
EPS
EPS
EPS
185,763
11/01/2017
09/09/2019
09/11/2019
185,763
11/01/2017
09/09/2019
09/11/2019
$0.76
$1.28
141,180
237,777
5,500,000
27/12/2017
31/08/2022 30/10/2022
$0.55
3,025,000
3,000,000
03/10/2017
31/08/2022 30/10/2022
$0.55
1,650,000
The Group recognises the fair value at the grant date of equity settled shares above as an employee benefit expense proportionally
over the vesting period with a corresponding increase in equity. Fair value is measured at grant date using Monte-Carlo simulation
and Binomial option pricing models where applicable. For the performance rights to vest, the Company’s compound annual growth
in adjusted diluted earnings per share (‘ADEPS’) must equal or exceed 10% over a five-year period. If the performance condition
is met, 100% of the performance rights vest at the end of the five-year period. If the performance condition is not met, 0% of the
performance rights vest.
Non-market vesting conditions are determined with reference to the underlying financial or non-financial performance measures
to which they relate.
Use of remuneration consultants
During the year, the Company did not engage independent consultants to provide information on remuneration matters.
Voting and comments made at the Company's 2017 Annual General Meeting ('AGM') held on 23 November 2017
At the 2017 AGM, 82.42% of the votes received supported the adoption of the remuneration report for the year ended 2 July 2017.
The Company did not receive any specific feedback at the AGM regarding its remuneration practices.
Details of remuneration
Amounts of remuneration
The key management personnel of the Group consisted of the following directors of Accent Group Limited:
– David Gordon
– Daniel Agostinelli
– Michael Hapgood
– Stephen Kulmar
– Brett Blundy (appointed effective 6 December 2017)
– Stephen Goddard (appointed effective 23 November 2017)
– Donna Player (appointed effective 23 November 2017)
– Ivan Hammerschlag (resigned effective 23 November 2017)
– Michael Hirschowitz (resigned effective 28 February 2018)
– Hilton Brett (resigned effective 31 March 2018)
– Craig Thompson (resigned effective 31 March 2018)
– Daniel Gilbert (resigned effective 31 March 2018)
And the following person:
– Matthew Durbin – Chief Financial Officer (appointed effective 18 December 2017)
Accent Group Limited Annual Report 2018
16
— DIRECTORS’ REPORT —
For the year ended 1 July 2018
Details of the remuneration of key management personnel of the Group are set out in the following tables.
Cash salary
and fees
$
Short-term benefits
Cash
(cid:35)on(cid:60)s
$
Other
monetary**
$
(cid:16)ea(cid:61)e
benefits
$
Post-
employment
benefits
(cid:25)(cid:60)(cid:54)er(cid:102)
ann(cid:60)ation
$
Share-based
payments
E(cid:55)(cid:60)it(cid:64)(cid:102)
settled
$
(cid:136)(cid:141)(cid:141)(cid:84)(cid:135)(cid:139)(cid:139)
96,813
(cid:142)(cid:165)(cid:84)(cid:136)(cid:141)(cid:139)
(cid:140)(cid:164)(cid:84)(cid:141)(cid:137)(cid:135)
(cid:140)(cid:142)(cid:84)(cid:139)(cid:142)(cid:142)
(cid:140)(cid:165)(cid:84)(cid:138)(cid:138)(cid:136)
(cid:136)(cid:136)(cid:141)(cid:84)(cid:138)(cid:139)(cid:142)
(cid:165)(cid:138)(cid:84)(cid:137)(cid:137)(cid:135)
(cid:164)(cid:165)(cid:84)(cid:139)(cid:142)(cid:138)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
16,819
–
(cid:142)(cid:84)(cid:138)(cid:137)(cid:141)
–
(cid:140)(cid:84)(cid:164)(cid:140)(cid:137)
–
–
–
(cid:164)(cid:84)(cid:140)(cid:135)(cid:141)
–
–
–
–
–
–
–
–
–
Total
$
193,863
96,813
(cid:136)(cid:135)(cid:141)(cid:84)(cid:140)(cid:135)(cid:136)
(cid:140)(cid:164)(cid:84)(cid:141)(cid:137)(cid:135)
(cid:164)(cid:140)(cid:84)(cid:136)(cid:140)(cid:136)
(cid:140)(cid:165)(cid:84)(cid:138)(cid:138)(cid:136)
(cid:136)(cid:136)(cid:141)(cid:84)(cid:138)(cid:139)(cid:142)
(cid:165)(cid:138)(cid:84)(cid:137)(cid:137)(cid:135)
(cid:141)(cid:140)(cid:84)(cid:135)(cid:135)(cid:135)
2018
Non-Executive Directors:
D Gordon
M Hapgood
S Kulmar
B Blundy
S Goddard
D Player
I Hammerschlag
C Thompson
D Gilbert
Executive Directors:
D Agostinelli*
(cid:142)(cid:136)(cid:164)(cid:84)(cid:136)(cid:142)(cid:135)
(cid:142)(cid:135)(cid:135)(cid:84)(cid:135)(cid:135)(cid:135)
(cid:138)(cid:164)(cid:84)(cid:139)(cid:139)(cid:139)
M Hirschowitz**
(cid:137)(cid:165)(cid:165)(cid:84)(cid:139)(cid:141)(cid:137)
–
(cid:141)(cid:135)(cid:137)(cid:84)(cid:135)(cid:142)(cid:138)
H Brett**
(cid:140)(cid:142)(cid:138)(cid:84)(cid:138)(cid:165)(cid:137)
(cid:164)(cid:141)(cid:140)(cid:84)(cid:135)(cid:135)(cid:135)
(cid:136)(cid:84)(cid:135)(cid:136)(cid:136)(cid:84)(cid:164)(cid:164)(cid:136)
(cid:138)(cid:140)(cid:84)(cid:139)(cid:141)(cid:141)
(cid:137)(cid:139)(cid:84)(cid:136)(cid:142)(cid:139)
(cid:140)(cid:140)(cid:84)(cid:138)(cid:164)(cid:165)
(cid:137)(cid:140)(cid:84)(cid:135)(cid:135)(cid:135)
(cid:138)(cid:164)(cid:142)(cid:84)(cid:142)(cid:139)(cid:137)
(cid:137)(cid:84)(cid:137)(cid:165)(cid:138)(cid:84)(cid:135)(cid:140)(cid:138)
(cid:136)(cid:165)(cid:84)(cid:165)(cid:140)(cid:139)
(cid:136)(cid:165)(cid:84)(cid:141)(cid:140)(cid:135)
–
(cid:136)(cid:84)(cid:135)(cid:138)(cid:138)(cid:84)(cid:164)(cid:136)(cid:138)
(cid:108)(cid:137)(cid:139)(cid:84)(cid:139)(cid:141)(cid:142)(cid:109)
2,329,682
Other Key Management
Personnel:
M Durbin*
(cid:137)(cid:140)(cid:138)(cid:84)(cid:138)(cid:135)(cid:165)
(cid:137)(cid:136)(cid:165)(cid:84)(cid:141)(cid:140)(cid:135)
–
(cid:140)(cid:84)(cid:141)(cid:136)(cid:139)
(cid:136)(cid:135)(cid:84)(cid:165)(cid:137)(cid:135)
(cid:137)(cid:139)(cid:136)(cid:84)(cid:137)(cid:138)(cid:138)
(cid:141)(cid:137)(cid:142)(cid:84)(cid:165)(cid:137)(cid:140)
(cid:137)(cid:84)(cid:165)(cid:164)(cid:164)(cid:84)(cid:142)(cid:142)(cid:140)
(cid:136)(cid:84)(cid:141)(cid:142)(cid:138)(cid:84)(cid:141)(cid:140)(cid:135)
(cid:136)(cid:84)(cid:141)(cid:140)(cid:135)(cid:84)(cid:136)(cid:142)(cid:165)
(cid:136)(cid:137)(cid:135)(cid:84)(cid:141)(cid:140)(cid:138)
(cid:136)(cid:136)(cid:136)(cid:84)(cid:141)(cid:137)(cid:142)
(cid:140)(cid:165)(cid:164)(cid:84)(cid:164)(cid:142)(cid:164)
(cid:141)(cid:84)(cid:137)(cid:138)(cid:135)(cid:84)(cid:136)(cid:137)(cid:136)
*
Cash bonuses relate to STI bonuses issued on the basis of the achievement of relevant performance measures for the year ended 1 July 2018 and were
approved by the Remuneration and Nomination Committee in August 2018. Share based payments represent performance rights issued during the year.
The fair value of performance rights is measured at grant date and progressively allocated to profit and loss over a five-year period. The amount included in
remuneration above may not be indicative of the benefit (if any) that key management personnel may ultimately realise should the performance rights vest.
** Other monetary short term benefits represents payments and entitlements upon retirement from the Group.
Accent Group Limited Annual Report 2018
17
— DIRECTORS’ REPORT —
For the year ended 1 July 2018
Cash salary
and fees
$
Short-term benefits
Cash
(cid:35)on(cid:60)s
$
Other
monetary
$
(cid:16)ea(cid:61)e
benefits
$
Post-
employment
benefits
(cid:25)(cid:60)(cid:54)er(cid:102)
ann(cid:60)ation
$
Share-based
payments
E(cid:55)(cid:60)it(cid:64)(cid:102)
settled
$
2017
Non-Executive Directors:
D Gordon
M Hapgood
S Kulmar
I Hammerschlag
C Thompson
D Gilbert
Executive Directors:
D Agostinelli
H Brett
M Hirschowitz
D Gilbert
M Cooper
98,174
96,445
98,174
250,000
96,445
26,344
–
–
–
–
–
–
565,000
300,000
560,000
540,800
454,000
212,400
–
–
–
–
–
–
33,198
10,000
16,000
–
–
–
–
–
–
–
40,010
38,923
33,123
–
–
9,326
–
9,326
–
–
2,502
37,500
30,000
30,000
19,038
30,000
298,269
679,523
–
23,542
7,405
Total
$
107,500
96,445
107,500
250,000
96,445
28,846
–
–
–
–
–
–
24,479
1,000,187
24,479
1,204,202
–
–
–
745,523
317,307
740,470
3,222,374
1,076,742
66,603
112,056
167,692
48,958
4,694,425
The proportion of the cash bonus paid/payable or forfeited is as follows:
Name
Executive Directors:
Daniel Agostinelli
Michael Hirschowitz
Hilton Brett**
Other Key Management Personnel:
Matthew Durbin**
STI Cash bonus
paid/payable
2018
STI Cash bonus
paid/payable*
2017
STI Cash bonus
forfeited
STI Cash bonus
forfeited
2018
2017
(cid:136)(cid:135)(cid:135)(cid:166)
–
(cid:141)(cid:140)(cid:166)
(cid:141)(cid:140)(cid:166)
–
–
–
–
–
–
–
–
100%
100%
100%
–
* Executive directors did not meet their STI targets for FY17. The amounts shown above were discretionary and not part of any STI or LTI plan.
** STI cash bonus payable for FY18 have been pro-rated based on length of employment.
Service agreements
The remuneration and other terms of employment for key management personnel are set out in individual Company employment
agreements that are not fixed term contracts.
Termination of Daniel Agostinelli is subject to 12 months' notice in writing provided by either party and the termination of Matthew
Durbin is subject to 6 months’ notice in writing provided by either party.
Share-based compensation
Issue of shares
There were no shares issued to directors and other key management personnel as part of compensation during the year ended
1 July 2018.
Options
There were no options over ordinary shares granted to or vested by directors and other key management personnel as part of
compensation during the year ended 1 July 2018.
Accent Group Limited Annual Report 2018
18
— DIRECTORS’ REPORT —
For the year ended 1 July 2018
Performance rights
The terms and conditions of each grant of performance rights over ordinary shares affecting remuneration of directors and other
key management personnel in this financial year or future reporting years is detailed in 'Principles used to determine the nature and
amount of remuneration' section above.
Performance rights granted carry no dividend or voting rights.
Additional information
The following tables show the gross revenue, profits and dividends for the last five years for the listed entity, as well as the share
price capitalisation at the end of the respective financial years.
The earnings of the Group for the five years to 1 July 2018 are summarised below:
Revenue
(cid:141)(cid:135)(cid:138)(cid:84)(cid:136)(cid:165)(cid:136)
636,153
442,723
135,872
2018
$'000
2017
$'000
2016
$'000
2015
$'000
Net profit from continuing operations
Net profit attributable to owners of the company
Dividends
Share price at financial year end ($)
Shares on issue ('000)
(cid:139)(cid:139)(cid:84)(cid:135)(cid:135)(cid:135)
(cid:139)(cid:138)(cid:84)(cid:142)(cid:140)(cid:141)
32,619
2018
(cid:136)(cid:87)(cid:164)(cid:140)
29,352
29,157
32,561
2017
0.86
30,183
29,924
23,513
2016
1.48
10,549
10,323
11,963
2015
1.21
(cid:140)(cid:139)(cid:136)(cid:84)(cid:141)(cid:142)(cid:136)
542,291
490,304
436,265
254,094
2014
$'000
81,190
11,770
11,696
10,942
2014
0.63
The tables above show that there has been a general trend of increasing net profit from continuing operations. The share price
is subject to share market volatility and is beyond the control of the Company.
The Board is of the opinion that these results can be attributed in part to the previously described remuneration policy and
is satisfied that it has contributed to increasing shareholder wealth over the past five years.
A(cid:38)(cid:38)itional (cid:38)is(cid:36)los(cid:60)(cid:56)es (cid:56)elating (cid:59)o (cid:48)e(cid:64) (cid:49)anage(cid:49)en(cid:59) (cid:54)e(cid:56)sonnel
Shareholding
The number of shares in the Company held during the financial year by each director and other members of key management
personnel of the Group, including their personally related parties, is set out below:
Balance at
the start of
the year
(cid:24)ecei(cid:61)ed
as part of
rem(cid:60)neration
Additions/
(cid:108)dis(cid:54)osals(cid:109)
Other**
Balance at
the end of
the year
Ordinary shares
David Gordon
Daniel Agostinelli
Michael Hapgood
Stephen Kulmar
Brett Blundy*
Stephen Goddard
Donna Player
(cid:13)(cid:61)an (cid:12)a(cid:49)(cid:49)e(cid:56)sc(cid:44)lag
Michael Hirschowitz
Hilton Brett
Craig Thompson
Daniel Gilbert
(cid:164)(cid:84)(cid:140)(cid:142)(cid:142)(cid:84)(cid:135)(cid:138)(cid:139)
(cid:136)(cid:139)(cid:84)(cid:137)(cid:165)(cid:140)(cid:84)(cid:141)(cid:136)(cid:137)
(cid:137)(cid:165)(cid:84)(cid:140)(cid:141)(cid:136)(cid:84)(cid:139)(cid:137)(cid:140)
(cid:165)(cid:135)(cid:138)(cid:84)(cid:141)(cid:140)(cid:135)
(cid:142)(cid:141)(cid:84)(cid:140)(cid:138)(cid:142)(cid:84)(cid:164)(cid:142)(cid:138)
–
–
(cid:164)(cid:84)(cid:139)(cid:139)(cid:140)(cid:84)(cid:165)(cid:165)(cid:136)
(cid:139)(cid:84)(cid:164)(cid:136)(cid:138)(cid:84)(cid:140)(cid:137)(cid:135)
(cid:138)(cid:84)(cid:165)(cid:137)(cid:140)(cid:84)(cid:142)(cid:141)(cid:137)
(cid:141)(cid:136)(cid:84)(cid:139)(cid:137)(cid:165)(cid:84)(cid:140)(cid:164)(cid:137)
(cid:136)(cid:137)(cid:84)(cid:165)(cid:142)(cid:139)(cid:84)(cid:141)(cid:138)(cid:141)
(cid:137)(cid:139)(cid:141)(cid:84)(cid:135)(cid:135)(cid:165)(cid:84)(cid:137)(cid:165)(cid:164)
–
–
–
(cid:137)(cid:84)(cid:136)(cid:135)(cid:138)(cid:84)(cid:135)(cid:135)(cid:135)
– (cid:108)(cid:136)(cid:139)(cid:84)(cid:135)(cid:135)(cid:135)(cid:84)(cid:135)(cid:135)(cid:135)(cid:109)
(cid:142)(cid:164)(cid:84)(cid:137)(cid:140)(cid:135)
–
(cid:140)(cid:135)(cid:84)(cid:135)(cid:135)(cid:135)
–
–
–
–
–
–
–
–
–
(cid:108)(cid:164)(cid:84)(cid:139)(cid:139)(cid:140)(cid:84)(cid:165)(cid:165)(cid:136)(cid:109)
(cid:108)(cid:137)(cid:84)(cid:140)(cid:135)(cid:135)(cid:84)(cid:135)(cid:135)(cid:135)(cid:109)
(cid:108)(cid:137)(cid:84)(cid:136)(cid:136)(cid:138)(cid:84)(cid:140)(cid:137)(cid:135)(cid:109)
–
(cid:108)(cid:138)(cid:84)(cid:165)(cid:137)(cid:140)(cid:84)(cid:142)(cid:141)(cid:137)(cid:109)
– (cid:108)(cid:138)(cid:164)(cid:84)(cid:135)(cid:135)(cid:135)(cid:84)(cid:135)(cid:135)(cid:135)(cid:109)
(cid:108)(cid:138)(cid:140)(cid:84)(cid:139)(cid:137)(cid:165)(cid:84)(cid:140)(cid:164)(cid:137)(cid:109)
–
(cid:108)(cid:136)(cid:137)(cid:84)(cid:165)(cid:142)(cid:139)(cid:84)(cid:141)(cid:138)(cid:141)(cid:109)
–
–
–
–
–
–
–
–
–
(cid:164)(cid:84)(cid:140)(cid:142)(cid:142)(cid:84)(cid:135)(cid:138)(cid:139)
(cid:136)(cid:164)(cid:84)(cid:138)(cid:165)(cid:165)(cid:84)(cid:141)(cid:136)(cid:137)
(cid:136)(cid:139)(cid:84)(cid:140)(cid:141)(cid:136)(cid:84)(cid:139)(cid:137)(cid:140)
(cid:142)(cid:135)(cid:135)(cid:84)(cid:135)(cid:135)(cid:135)
(cid:142)(cid:141)(cid:84)(cid:140)(cid:138)(cid:142)(cid:84)(cid:164)(cid:142)(cid:138)
(cid:140)(cid:135)(cid:84)(cid:135)(cid:135)(cid:135)
–
–
–
–
–
–
(cid:108)(cid:140)(cid:135)(cid:84)(cid:137)(cid:140)(cid:135)(cid:84)(cid:141)(cid:140)(cid:135)(cid:109)
(cid:108)(cid:164)(cid:135)(cid:84)(cid:141)(cid:135)(cid:165)(cid:84)(cid:164)(cid:141)(cid:137)(cid:109) (cid:136)(cid:138)(cid:164)(cid:84)(cid:135)(cid:139)(cid:165)(cid:84)(cid:165)(cid:164)(cid:139)
'Balance at start of the year' is balance as at date of appointment for directors appointed during the financial year.
*
** Other represents the key management personnel that have resigned during the period and, therefore, any shareholding associated with them has been
removed from this table.
Accent Group Limited Annual Report 2018
19
— DIRECTORS’ REPORT —
For the year ended 1 July 2018
Option holding
There were no options in the Company held during the financial year by a director or other members of key management personnel
of the Group, including their personally related parties.
Performance rights holding
The number of performance rights over ordinary shares in the Company held during the financial year by each director and other
members of key management personnel of the Group, including their personally related parties, is set out below:
Performance rights over ordinary shares
Daniel Agostinelli
Hilton Brett
Michael Hirschowitz
Matthew Durbin
Balance at
the start of
the year
Granted
Vested
Expired/
forfeited/
other*
Balance at
the end of
the year
371,526
5,500,000
371,526
5,500,000
247,684
–
–
3,000,000
990,736 14,000,000
–
–
–
–
–
–
5,871,526
(5,871,526)
(247,684)
–
–
–
3,000,000
(6,119,210)
8,871,526
*
Other represents the key management personnel that have resigned during the period and, therefore, any performance rights holding associated with them
has been removed from this table.
Loans to key management personnel and their related parties
The following loans were held by key management personnel at the beginning and end of the year:
Loans to/(from) key management personnel:
– Ivan Hammerschlag (interest free)*
– Craig Thompson (interest free)***
– Daniel Gilbert (interest at 6% per annum)**
Consolidated
2018
$
2017
$
–
–
78,200
(200,000)
(cid:108)(cid:139)(cid:84)(cid:140)(cid:142)(cid:138)(cid:84)(cid:141)(cid:140)(cid:135)(cid:109)
(4,593,750)
(cid:108)(cid:139)(cid:84)(cid:140)(cid:142)(cid:138)(cid:84)(cid:141)(cid:140)(cid:135)(cid:109)
(4,715,550)
*
Under the EOP approved by the shareholders at the Extraordinary General Meeting held on 19 December 2006, the Company provided loans to option
recipients in respect of the option fees payable for the right to acquire the options.
** Relates to vendor finance component of Hype DC acquisition.
*** Relates to vendor finance component of Accent acquisition outstanding at balance date. Loan is repayable at call.
This concludes the remuneration report, which has been audited.
Accent Group Limited Annual Report 2018
20
— DIRECTORS’ REPORT —
For the year ended 1 July 2018
Shares under option and issued under the Employee Share Scheme and other Treasury shares
There were no unissued ordinary shares of Accent Group under option. Unvested ordinary shares of Accent Group Limited under
the ESS at the date of this report are as follows:
Grant date
28/02/2013
03/12/2013
02/10/2014
30/03/2015
27/05/2015
27/05/2015
28/08/2015
13/05/2016
Expiry date
28/08/2018
03/06/2019
30/03/2020
30/09/2020
30/09/2020
30/09/2020
30/08/2020
28/02/2021
Exercise price
(cid:18)(cid:60)m(cid:35)er (cid:60)nder
option
$0.490
$0.690
993,333
66,666
$0.590
1,083,334
$0.730
146,667
$0.730
1,750,000
$1.010
500,000
$1.140
1,100,000
$1.490
400,000
6,040,000
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the
Company or of any other body corporate.
Shares under performance rights
Unissued ordinary shares of Accent Group under performance rights at the date of this report are as follows:
Grant date
11/01/2017
03/10/2017
27/12/2017
20/06/2018
Expiry date
09/11/2019
30/10/2022
30/10/2022
30/10/2022
(cid:18)(cid:60)m(cid:35)er (cid:60)nder
rig(cid:44)ts
1,210,552
16,950,000
6,700,000
400,000
25,260,552
No person entitled to exercise the performance rights had or has any right by virtue of the performance right to participate in any
share issue of the Company or of any other body corporate.
Shares issued on the exercise of options
There were no ordinary shares of Accent Group issued on the exercise of options during the year ended 1 July 2018 and up to the date
of this report.
Shares issued on the exercise of performance rights
There were no ordinary shares of Accent Group Limited issued on the exercise of performance rights during the year ended
1 July 2018 and up to the date of this report.
Indemnity and insurance of officers
The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as a director or
executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the Company paid a premium in respect of a contract to insure the directors and executives of the Company
against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of
the liability and the amount of the premium.
Accent Group Limited Annual Report 2018
21
— DIRECTORS’ REPORT —
For the year ended 1 July 2018
Indemnity and insurance of auditor
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the Company or
any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company or any
related entity.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the
Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the
Company for all or part of those proceedings.
During the year no proceedings were brought or intervened in on behalf of the Company with leave of the Court under section 237 of
the Corporations Act 2001.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are
outlined in note 32 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another person or firm
on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.
The directors are of the opinion that the services as disclosed in note 32 to the financial statements do not compromise the external
auditor's independence requirements of the Corporations Act 2001 for the following reasons:
– all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the
auditor; and
– none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for
Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the
auditor's own work, acting in a management or decision-making capacity for the Company, acting as advocate for the Company
or jointly sharing economic risks and rewards.
Officers of the Company who are former partners of Deloitte Touche Tohmatsu
There are no officers of the Company who are former partners of Deloitte Touche Tohmatsu.
Rounding of amounts
The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and Investments
Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that Corporations
Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately
after this directors' report.
Auditor
Deloitte Touche Tohmatsu continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the directors
Da(cid:61)id (cid:11)ordon
Chairman
28 August 2018
Melbourne
Accent Group Limited Annual Report 2018
22
— AUDITOR’S INDEPENDENCE DECLAR ATION —
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1220 Australia
DX 10307SSE
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
www.deloitte.com.au
The Board of Directors
Accent Group Limited
719 Elizabeth Street
Waterloo NSW 2017
28 August 2018
Dear Board Members,
Accent Group Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of Accent Group Limited.
As lead audit partner for the audit of the financial statements of Accent Group Limited for the year
ended 1 July 2018, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely,
DELOITTE TOUCHE TOHMATSU
David White
Partner
Deloitte Touche Tohmatsu
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited.
19
Accent Group Limited Annual Report 2018
23
— STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME —
For the year ended 1 July 2018
Revenue
Other income/(expenses)
(cid:9)(cid:63)(cid:54)enses
Finished goods used
Changes in inventories of finished goods
Employee benefits expense
Depreciation and amortisation expense
Impairment of brand name
Write off-of assets
Rental expense on operating leases
Advertising and promotion expenses
Travel and telecommunication expenses
Warehousing and freight expenses
Other expenses
Finance costs
(cid:22)(cid:56)o(cid:40)i(cid:59) (cid:35)e(cid:40)o(cid:56)e in(cid:36)o(cid:49)e (cid:59)a(cid:63) e(cid:63)(cid:54)ense
Income tax expense
(cid:22)(cid:56)o(cid:40)i(cid:59) a(cid:40)(cid:59)e(cid:56) in(cid:36)o(cid:49)e (cid:59)a(cid:63) e(cid:63)(cid:54)ense (cid:40)o(cid:56) (cid:59)(cid:44)e (cid:64)ea(cid:56)
(cid:19)(cid:59)(cid:44)e(cid:56) (cid:36)o(cid:49)(cid:54)(cid:56)e(cid:44)ensi(cid:61)e in(cid:36)o(cid:49)e
Items that may be reclassified subsequently to profit or loss
Net change in the fair value of cash flow hedges taken to equity, net of tax
Foreign currency translation
Other comprehensive income for the year, net of tax
(cid:26)o(cid:59)al (cid:36)o(cid:49)(cid:54)(cid:56)e(cid:44)ensi(cid:61)e in(cid:36)o(cid:49)e (cid:40)o(cid:56) (cid:59)(cid:44)e (cid:64)ea(cid:56)
Profit for the year is attributable to:
Non-controlling interest
Owners of Accent Group Limited
Total comprehensive income for the year is attributable to:
Non-controlling interest
Owners of Accent Group Limited
Note
5
6
7
7
7
7
8
Consolidated
2018
$'000
2017
$'000
(cid:141)(cid:135)(cid:138)(cid:84)(cid:136)(cid:165)(cid:136)
636,153
2
(51)
(cid:108)(cid:137)(cid:142)(cid:137)(cid:84)(cid:136)(cid:135)(cid:135)(cid:109)
(320,332)
(cid:108)(cid:136)(cid:138)(cid:84)(cid:138)(cid:142)(cid:135)(cid:109)
33,408
(cid:108)(cid:136)(cid:139)(cid:140)(cid:84)(cid:140)(cid:135)(cid:165)(cid:109)
(129,671)
(cid:108)(cid:137)(cid:139)(cid:84)(cid:136)(cid:138)(cid:138)(cid:109)
(21,665)
–
(cid:108)(cid:164)(cid:140)(cid:109)
(cid:108)(cid:165)(cid:136)(cid:84)(cid:164)(cid:139)(cid:139)(cid:109)
(cid:108)(cid:137)(cid:139)(cid:84)(cid:139)(cid:137)(cid:140)(cid:109)
(cid:108)(cid:140)(cid:84)(cid:142)(cid:164)(cid:137)(cid:109)
(cid:108)(cid:137)(cid:137)(cid:84)(cid:136)(cid:135)(cid:141)(cid:109)
(cid:108)(cid:137)(cid:165)(cid:84)(cid:138)(cid:140)(cid:135)(cid:109)
(cid:108)(cid:139)(cid:84)(cid:140)(cid:165)(cid:136)(cid:109)
(cid:164)(cid:135)(cid:84)(cid:142)(cid:136)(cid:165)
(9,714)
–
(70,904)
(20,697)
(4,447)
(19,938)
(26,663)
(4,055)
41,424
(cid:108)(cid:136)(cid:164)(cid:84)(cid:142)(cid:136)(cid:165)(cid:109)
(12,072)
(cid:139)(cid:139)(cid:84)(cid:135)(cid:135)(cid:135)
29,352
(cid:141)(cid:84)(cid:139)(cid:138)(cid:139)
(cid:108)(cid:139)(cid:139)(cid:135)(cid:109)
(cid:164)(cid:84)(cid:142)(cid:142)(cid:139)
(cid:140)(cid:135)(cid:84)(cid:142)(cid:142)(cid:139)
(cid:139)(cid:138)
(cid:139)(cid:138)(cid:84)(cid:142)(cid:140)(cid:141)
(cid:139)(cid:139)(cid:84)(cid:135)(cid:135)(cid:135)
(cid:139)(cid:138)
(cid:140)(cid:135)(cid:84)(cid:142)(cid:140)(cid:136)
(cid:140)(cid:135)(cid:84)(cid:142)(cid:142)(cid:139)
1,431
43
1,474
30,826
195
29,157
29,352
195
30,631
30,826
Basic earnings per share
Diluted earnings per share
42
42
(cid:6)en(cid:59)s
(cid:6)en(cid:59)s
8.23
(cid:165)(cid:87)(cid:137)(cid:135)
5.54
5.49
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
Accent Group Limited Annual Report 2018
24
— STATEMENT OF FINANCIAL POSITION —
As at 1 July 2018
Asse(cid:59)s
(cid:6)(cid:60)rrent assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Other current assets
Total current assets
(cid:18)on(cid:102)c(cid:60)rrent assets
Receivables
Derivative financial instruments
Property, plant and equipment
Intangibles
Deferred tax
Total non-current assets
Total assets
(cid:16)ia(cid:35)ili(cid:59)ies
(cid:6)(cid:60)rrent lia(cid:35)ilities
Trade and other payables
Borrowings
Derivative financial instruments
Provision for income tax
Employee benefits
Deferred lease incentives
Total current liabilities
(cid:18)on(cid:102)c(cid:60)rrent lia(cid:35)ilities
Borrowings
Derivative financial instruments
Deferred tax
Employee benefits
Deferred lease incentives
Total non-current liabilities
Total liabilities
Net assets
(cid:9)(cid:55)(cid:60)i(cid:59)(cid:64)
Issued capital
Reserves
Accumulated losses
Equity attributable to the owners of Accent Group Limited
Non-controlling interest
(cid:26)otal e(cid:55)(cid:60)it(cid:64)
Note
Consolidated
2018
$'000
2017
$'000
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
(cid:138)(cid:165)(cid:84)(cid:141)(cid:141)(cid:137)
(cid:136)(cid:165)(cid:84)(cid:138)(cid:141)(cid:135)
(cid:142)(cid:165)(cid:84)(cid:140)(cid:140)(cid:164)
(cid:139)(cid:84)(cid:164)(cid:136)(cid:139)
(cid:136)(cid:84)(cid:138)(cid:164)(cid:141)
46,279
19,856
111,946
–
3,259
(cid:136)(cid:164)(cid:136)(cid:84)(cid:164)(cid:141)(cid:142)
181,340
(cid:138)(cid:139)(cid:136)
(cid:164)(cid:141)(cid:164)
(cid:141)(cid:139)(cid:84)(cid:164)(cid:164)(cid:139)
(cid:138)(cid:139)(cid:140)(cid:84)(cid:135)(cid:140)(cid:136)
(cid:137)(cid:137)(cid:84)(cid:138)(cid:136)(cid:135)
(cid:139)(cid:139)(cid:138)(cid:84)(cid:135)(cid:139)(cid:137)
(cid:164)(cid:135)(cid:139)(cid:84)(cid:141)(cid:137)(cid:136)
(cid:165)(cid:135)(cid:84)(cid:142)(cid:164)(cid:140)
(cid:137)(cid:137)(cid:84)(cid:164)(cid:137)(cid:140)
(cid:137)(cid:140)(cid:136)
(cid:136)(cid:135)(cid:84)(cid:139)(cid:142)(cid:141)
(cid:164)(cid:84)(cid:136)(cid:135)(cid:141)
(cid:141)(cid:84)(cid:136)(cid:141)(cid:139)
705
–
74,800
347,758
18,501
441,764
623,104
88,849
15,097
5,054
7,990
4,893
4,949
(cid:136)(cid:137)(cid:141)(cid:84)(cid:164)(cid:136)(cid:142)
126,832
(cid:140)(cid:136)(cid:84)(cid:135)(cid:135)(cid:135)
88,625
(cid:136)(cid:165)(cid:139)
710
(cid:136)(cid:140)(cid:84)(cid:139)(cid:139)(cid:141)
13,685
(cid:164)(cid:139)
(cid:136)(cid:165)(cid:84)(cid:139)(cid:142)(cid:139)
(cid:165)(cid:140)(cid:84)(cid:136)(cid:165)(cid:142)
(cid:137)(cid:136)(cid:137)(cid:84)(cid:165)(cid:135)(cid:165)
391,913
613
21,987
125,620
252,452
370,652
26
(cid:138)(cid:165)(cid:164)(cid:84)(cid:142)(cid:141)(cid:138)
385,310
(cid:136)(cid:137)(cid:84)(cid:136)(cid:140)(cid:136)
(cid:108)(cid:165)(cid:84)(cid:136)(cid:165)(cid:139)(cid:109)
3,208
(19,603)
(cid:138)(cid:142)(cid:135)(cid:84)(cid:142)(cid:139)(cid:135)
368,915
27
(cid:142)(cid:141)(cid:138)
1,737
391,913
370,652
The above statement of financial position should be read in conjunction with the accompanying notes
Accent Group Limited Annual Report 2018
25
— STATEMENT OF CHANGES IN EQUITY —
For the year ended 1 July 2018
Consolidated
Iss(cid:60)ed ca(cid:54)ital
$'000
(cid:10)oreign
c(cid:60)rrenc(cid:64)
translation
reser(cid:61)e
$'000
(cid:12)edging
reser(cid:61)e (cid:103) cas(cid:44)
flow
(cid:44)edges
$'000
(cid:25)(cid:44)are(cid:102)(cid:35)ased
payments
reser(cid:61)e
$'000
Acc(cid:60)m(cid:60)lated
losses
$'000
(cid:18)on(cid:102)
controlling
interest
$'000
(cid:26)otal e(cid:55)(cid:60)it(cid:64)
$'000
Balance at 26 June 2016
319,319
3,135
(5,466)
3,721
(16,282)
1,860
306,287
Profit after income tax
expense for the year
Other comprehensive
income for the year, net
of tax
Total comprehensive
income for the year
Transactions with owners in
their capacity as owners:
Share-based payments
Exercise of options
Issue of shares for
acquisition
Treasury share payments
Non-controlling interest
on disposals
Dividends paid (note 28)
–
–
–
–
995
62,926
2,070
–
–
–
43
43
–
–
–
–
–
–
–
1,431
1,431
–
–
–
–
–
–
–
–
–
344
–
–
–
–
–
Balance at 2 July 2017
385,310
3,178
(4,035)
4,065
29,157
195
29,352
–
–
1,474
29,157
195
30,826
–
–
–
–
–
(32,478)
(19,603)
–
–
–
–
(235)
(83)
1,737
344
995
62,926
2,070
(235)
(32,561)
370,652
Consolidated
(cid:10)oreign
c(cid:60)rrenc(cid:64)
translation
reser(cid:61)e
$'000
Iss(cid:60)ed
capital
$'000
(cid:12)edging
reser(cid:61)e (cid:103) cas(cid:44)
(cid:40)lo(cid:62) (cid:44)edges
$'000
(cid:25)(cid:44)are(cid:102)(cid:35)ased
payments
reser(cid:61)e
$'000
Acc(cid:60)m(cid:60)lated
losses
$'000
(cid:18)on(cid:102)
controlling
interest
$'000
(cid:26)otal e(cid:55)(cid:60)it(cid:64)
$'000
Balance at 3 July 2017
385,310
3,178
(4,035)
4,065
(19,603)
1,737
370,652
Profit after income tax
expense for the year
Other comprehensive
income for the year, net
of tax
Total comprehensive
income for the year
Transactions with owners in
their capacity as owners:
Share-based payments
–
–
–
–
Treasury share payments
1,663
Non-controlling interest
on disposals
Dividends paid (note 28)
–
–
–
–
(440)
7,434
(440)
7,434
–
–
–
–
–
–
–
–
–
–
–
1,949
–
–
–
Balance at 1 July 2018
386,973
2,738
3,399
6,014
43,957
43
44,000
–
43,957
–
–
–
(32,538)
(8,184)
–
43
–
–
(726)
(81)
973
6,994
50,994
1,949
1,663
(726)
(32,619)
391,913
The above statement of changes in equity should be read in conjunction with the accompanying notes
Accent Group Limited Annual Report 2018
26
— STATEMENT OF CASH FLOWS —
For the year ended 1 July 2018
Note
Consolidated
2018
$'000
2017
$'000
(cid:6)as(cid:44) (cid:40)lo(cid:62)s (cid:40)(cid:56)o(cid:49) o(cid:54)e(cid:56)a(cid:59)ing a(cid:36)(cid:59)i(cid:61)i(cid:59)ies
Receipts from customers and franchisees (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Interest and other finance costs paid
Income taxes paid
Net cash from operating activities
(cid:6)as(cid:44) (cid:40)lo(cid:62)s (cid:40)(cid:56)o(cid:49) in(cid:61)es(cid:59)ing a(cid:36)(cid:59)i(cid:61)i(cid:59)ies
Payment for purchase of businesses, net of cash acquired and minority interest
40
37
Net acquisition of franchise stores
Payments for property, plant and equipment
Payments for intangibles
Proceeds from disposal of property, plant and equipment
Net cash used in investing activities
(cid:6)as(cid:44) (cid:40)lo(cid:62)s (cid:40)(cid:56)o(cid:49) (cid:40)inan(cid:36)ing a(cid:36)(cid:59)i(cid:61)i(cid:59)ies
Proceeds from issue of shares, net of transaction costs
Proceeds from borrowings
Repayment of loans from option recipients
Repayment of borrowings
Dividends paid
Net cash from/(used in) financing activities
(cid:18)e(cid:59) in(cid:36)(cid:56)ease(cid:99)(cid:108)(cid:38)e(cid:36)(cid:56)ease(cid:109) in (cid:36)as(cid:44) an(cid:38) (cid:36)as(cid:44) e(cid:55)(cid:60)i(cid:61)alen(cid:59)s
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the financial year
9
The above statement of cash flows should be read in conjunction with the accompanying notes
(cid:141)(cid:165)(cid:137)(cid:84)(cid:141)(cid:137)(cid:138)
705,267
(cid:108)(cid:164)(cid:165)(cid:142)(cid:84)(cid:137)(cid:138)(cid:138)(cid:109)
(637,777)
(cid:165)(cid:135)(cid:139)
(cid:108)(cid:139)(cid:84)(cid:140)(cid:165)(cid:136)(cid:109)
(cid:108)(cid:136)(cid:142)(cid:84)(cid:164)(cid:139)(cid:140)(cid:109)
(cid:141)(cid:135)(cid:84)(cid:135)(cid:164)(cid:165)
986
(4,055)
(19,002)
45,419
–
(cid:108)(cid:139)(cid:137)(cid:139)(cid:109)
(30,579)
–
(cid:108)(cid:136)(cid:140)(cid:84)(cid:142)(cid:137)(cid:141)(cid:109)
(23,885)
–
33
(288)
–
(cid:108)(cid:136)(cid:164)(cid:84)(cid:138)(cid:136)(cid:165)(cid:109)
(54,752)
1,663
–
(cid:136)(cid:165)(cid:139)
(cid:108)(cid:137)(cid:142)(cid:84)(cid:140)(cid:135)(cid:135)(cid:109)
(cid:108)(cid:138)(cid:137)(cid:84)(cid:164)(cid:136)(cid:142)(cid:109)
(cid:108)(cid:164)(cid:135)(cid:84)(cid:137)(cid:141)(cid:137)(cid:109)
(cid:108)(cid:164)(cid:84)(cid:140)(cid:137)(cid:137)(cid:109)
(cid:139)(cid:140)(cid:84)(cid:164)(cid:165)(cid:137)
(cid:108)(cid:138)(cid:165)(cid:165)(cid:109)
(cid:138)(cid:165)(cid:84)(cid:141)(cid:141)(cid:137)
2,809
42,000
256
(2,000)
(32,561)
10,504
1,171
44,573
(62)
45,682
Accent Group Limited Annual Report 2018
27
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 1. General information
The financial statements cover Accent Group Limited
('Company', 'parent entity' or 'Accent') as a Group consisting of
Accent Group Limited and the entities it controlled at the end
of, or during, the year ('Group'). The financial statements are
presented in Australian dollars, which is Accent Group Limited's
functional and presentation currency.
Accent Group Limited is a listed public company limited by
shares, listed on the Australian Securities Exchange (‘ASX’),
incorporated and domiciled in Australia. Its registered
office and principal place of business is:
719 Elizabeth Street
Waterloo NSW 2017
A description of the nature of the Group's operations and its
principal activities are included in the Directors' Report, which
is not part of the financial statements.
On 25 November 2017 the Group changed its name from
RCG Corporation Limited to Accent Group Limited. This
included the change in the ASX ticker code from RCG to
AX1 on 29 November 2017.
The financial statements were authorised for issue, in
accordance with a resolution of directors, on 28 August
2018. The directors have the power to amend and reissue
the financial statements.
Note 2. Significant accounting policies
The principal accounting policies adopted in the preparation
of the financial statements are set out below. These policies
have been consistently applied to all the years presented,
unless otherwise stated.
(cid:18)e(cid:62) or amended Acco(cid:60)nting (cid:25)tandards and Inter(cid:54)retations
adopted
In the current year, the Group has adopted all of the following
new and revised Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board ('AASB')
that are relevant to its operations and mandatory for the
current annual reporting period:
– AASB 2016-1 Amendments to Australian Accounting
Standards – Recognition of Deferred Tax Assets for
Unrealised Losses
– AASB 2016-2 Amendments to Australian Accounting
Standards – Disclosure Initiative: Amendments to AASB 107
– AASB 2017-2 Amendments to Australian Accounting
Standards – Further Annual Improvements 2014-2016
– AASB 1048 Interpretations of Standards
The Group has applied the amendments to AASB 107 for the
first time in the current year. The amendments require an entity
to provide disclosures that enable users of financial statements
to evaluate changes in liabilities arising from financing activities,
including both cash and non-cash changes. The Group’s
liabilities arising from financing activities consist of borrowing.
A reconciliation between the opening and closing balances of
these items is provided in Note 20 and 23. Consistent with
the transition provision of the amendments, the Group has not
disclosed comparative information for the prior period.
The adoption of these new and revised Standards and
Interpretations did not have any material financial impact
on the amounts recognised and the disclosures presented
in the financial statements of the Group.
Basis o(cid:40) (cid:54)re(cid:54)aration
These general purpose financial statements have been prepared
in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards
Board ('AASB') and the Corporations Act 2001, as appropriate
for for-profit oriented entities. These financial statements also
comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the
historical cost convention, except for, where applicable,
derivative financial instruments and share-based payments
which have been measured at fair value at grant date.
Critical accounting estimates
The preparation of the financial statements requires the
use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of
applying the Group's accounting policies. The areas involving
a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial
statements, are disclosed in Note 3.
(cid:22)arent entit(cid:64) in(cid:40)ormation
In accordance with the Corporations Act 2001, these
financial statements present the results of the Group only.
Supplementary information about the parent entity is disclosed
in Note 36.
(cid:22)rinci(cid:54)les o(cid:40) consolidation
The consolidated financial statements incorporate the assets
and liabilities of all subsidiaries of Accent Group Limited as
at 1 July 2018 and the results of all subsidiaries for the year
then ended.
Subsidiaries are all those 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 de-consolidated
from the date that control ceases.
Intercompany transactions, balances and unrealised gains on
transactions between entities in the Group are eliminated.
Unrealised gains and losses are also eliminated unless the
transaction provides evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the
policies adopted by the Group.
The acquisition of subsidiaries is accounted for using the
acquisition method of accounting. A change in ownership
interest, without the loss of control, is accounted for as
an equity transaction, where the difference between the
consideration transferred and the book value of the share of
the non-controlling interest acquired is recognised directly in
equity attributable to the parent.
Non-controlling interest in the results and equity of subsidiaries
are shown separately in the statement of profit or loss and
other comprehensive income, statement of financial position
and statement of changes in equity of the Group. Losses
incurred by the Group are attributed to the non-controlling
interest in full, even if that results in a deficit balance.
Accent Group Limited Annual Report 2018
28
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 2. Significant accounting policies (continued)
Where the Group loses control over a subsidiary, it
derecognises the assets including goodwill, liabilities and
non-controlling interest in the subsidiary together with any
cumulative translation differences recognised in equity. The
Group recognises the fair value of the consideration received
and the fair value of any investment retained together with any
gain or loss in profit or loss.
Interest
Interest revenue is recognised as interest accrues using the
effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest
income over the relevant period using the effective interest
rate, which is the rate that exactly discounts estimated future
cash receipts through the expected life of the financial asset to
the net carrying amount of the financial asset.
(cid:10)oreign c(cid:60)rrenc(cid:64) translation
Foreign currency transactions
Foreign currency transactions are translated into Australian
dollars using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation
at financial year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised
in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated
into Australian dollars using the exchange rates at the reporting
date. The revenues and expenses of foreign operations are
translated into Australian dollars using the average exchange
rates, which approximate the rates at the dates of the
transactions, for the period. All resulting foreign exchange
differences are recognised in other comprehensive income
through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss
when the foreign operation or net investment is disposed of.
(cid:24)e(cid:61)en(cid:60)e recognition
Revenue is recognised when it is probable that the economic
benefit will flow to the Group and the revenue can be reliably
measured. Revenue is measured at the fair value of the
consideration received or receivable.
Sale of goods
This comprises revenue earned from sale of goods to customers,
net of actual returns, and is recognised when control of the
goods passes to the customer.
Franchise establishment fees
Franchise establishment fees are recognised as income in the
period when all services are completed in accordance with the
Franchise Agreement.
Marketing levies
Marketing levies are recognised in the period the sales are
recorded by the The Athletes Foot ('TAF') stores. Marketing
levies are collected by the Group for specific use within the
TAF Marketing Fund, which is operated on behalf of the TAF
stores. Expenses in relation to the marketing of TAF stores are
recorded within advertising and promotion expenses in profit
or loss.
Royalty fees
Royalty fees are recognised as income on an accruals basis in
the same period that the sales on which royalties are charged
are recognised by franchisees.
Supplier rebate
Supplier rebates generated on purchases made by franchisees
are accounted for on an accruals basis and are recognised as
income in the same period to which the supplier invoice relates.
Other revenue
Other revenue is recognised when it is received or when
the right to receive payment is established.
Income tax
The income tax expense or benefit for the period is the tax
payable on that period's taxable income based on the applicable
income tax rate for each jurisdiction, adjusted by the changes
in deferred tax assets and liabilities attributable to temporary
differences, unused tax losses and the adjustment recognised
for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary
differences at the tax rates expected to be applied when the
assets are recovered or liabilities are settled, based on those
tax rates that are enacted or substantively enacted, except for:
– When the deferred income tax asset or liability arises from
the initial recognition of goodwill or an asset or liability
in a transaction that is not a business combination and
that, at the time of the transaction, affects neither the
accounting nor taxable profits; or
– When the taxable temporary difference is associated with
interests in subsidiaries, associates or joint ventures, and the
timing of the reversal can be controlled and it is probable
that the temporary difference will not reverse in the
foreseeable future.
Deferred tax assets are recognised for deductible temporary
differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those
temporary differences and losses.
The carrying amount of recognised and unrecognised deferred
tax assets are reviewed at each reporting date. Deferred tax
assets recognised are reduced to the extent that it is no longer
probable that future taxable profits will be available for the
carrying amount to be recovered. Previously unrecognised
deferred tax assets are recognised to the extent that it is
probable that there are future taxable profits available to
recover the asset.
Deferred tax assets and liabilities are offset only where there
is a legally enforceable right to offset current tax assets against
current tax liabilities and deferred tax assets against deferred
tax liabilities; and they relate to the same taxable authority on
either the same taxable entity or different taxable entities which
intend to settle simultaneously.
Accent Group Limited Annual Report 2018
29
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 2. Significant accounting policies (continued)
Accent Group Limited (the 'head entity') and its wholly-owned
Australian subsidiaries have formed an income tax consolidated
group under the tax consolidation regime. The head entity
and each subsidiary in the tax consolidated group continue to
account for their own current and deferred tax amounts. The
tax consolidated group has applied the 'separate taxpayer within
group' approach in determining the appropriate amount of taxes
to allocate to members of the tax consolidated group.
In addition to its own current and deferred tax amounts, the
head entity also recognises the current tax liabilities (or assets)
and the deferred tax assets arising from unused tax losses and
unused tax credits assumed from each subsidiary in the tax
consolidated group.
Assets or liabilities arising under tax funding agreements
with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the tax
consolidated group. The tax funding arrangement ensures
that the intercompany charge equals the current tax liability
or benefit of each tax consolidated group member, resulting
in neither a contribution by the head entity to the subsidiaries
nor a distribution by the subsidiaries to the head entity.
(cid:6)(cid:60)rrent and non(cid:102)c(cid:60)rrent classi(cid:41)cation
Assets and liabilities are presented in the statement of financial
position based on current and non-current classification.
An asset is classified as current when: it is either expected to
be realised or intended to be sold or consumed in the Group's
normal operating cycle; it is held primarily for the purpose of
trading; it is expected to be realised within 12 months after the
reporting period; or the asset is cash or cash equivalent unless
restricted from being exchanged or used to settle a liability for
at least 12 months after the reporting period. All other assets
are classified as non-current.
A liability is classified as current when: it is either expected
to be settled in the Group's normal operating cycle; it is held
primarily for the purpose of trading; it is due to be settled
within 12 months after the reporting period; or there is no
unconditional right to defer the settlement of the liability
for at least 12 months after the reporting period. All other
liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as
non-current.
(cid:6)as(cid:44) and cas(cid:44) e(cid:55)(cid:60)i(cid:61)alents
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.
For the statement of cash flows presentation purposes, cash
and cash equivalents also includes bank overdrafts, which are
shown within borrowings in current liabilities on the statement
of financial position.
(cid:26)rade and ot(cid:44)er recei(cid:61)a(cid:35)les
Trade receivables are initially recognised at fair value and
subsequently measured at amortised cost using the effective
interest method, less any provision for impairment. Trade
receivables are generally due for settlement within 30 to
60 days of statement date.
Collectability of trade receivables is reviewed on an ongoing
basis. Debts which are known to be uncollectable are written
off by reducing the carrying amount directly. A provision
for impairment of trade receivables is raised when there is
objective evidence that the Group will not be able to collect all
amounts due according to the original terms of the receivables.
Significant financial difficulties of the debtor, probability that
the debtor will enter bankruptcy or financial reorganisation
and default or delinquency in payments (more than 60 days
overdue) are considered indicators that the trade receivable
may be impaired. The amount of the impairment allowance is
the difference between the asset's carrying amount and the
present value of estimated future cash flows, discounted at the
original effective interest rate. Cash flows relating to short-
term receivables are not discounted if the effect of discounting
is immaterial.
Other receivables are recognised at amortised cost, less any
provision for impairment.
In(cid:61)entories
Finished goods are stated at the lower of cost and net realisable
value on an average costing basis. Cost comprises of the
purchase price and associated delivery costs.
Net realisable value is the estimated selling price in the ordinary
course of business less the estimated costs of completion and
the estimated costs necessary to make the sale.
Deri(cid:61)ati(cid:61)e (cid:41)nancial instr(cid:60)ments
The Group enters into a variety of derivative financial
instruments to manage its exposure to interest rate and foreign
exchange risk, including foreign exchange forward contracts and
interest rate swaps. Derivatives are initially recognised at fair
value on the date a derivative contract is entered into and are
subsequently remeasured to their fair value at each reporting
date. The accounting for subsequent changes in fair value
depends on whether the derivative is designated as a hedging
instrument, and if so, the nature of the item being hedged.
Derivatives are classified as current or non-current depending
on the expected period of realisation.
Cash flow hedges
Cash flow hedges are used to cover the Group's exposure
to variability in cash flows that is attributable to particular
risks associated with a recognised asset or liability or a firm
commitment which could affect profit or loss. The effective
portion of the gain or loss on the hedging instrument is
recognised in other comprehensive income through the cash
flow hedges reserve in equity, whilst the ineffective portion
is recognised in profit or loss. Amounts taken to equity are
transferred out of equity and included in the measurement of
the hedged transaction when the forecast transaction occurs.
Cash flow hedges are tested for effectiveness on a regular
basis both retrospectively and prospectively to ensure that
each hedge is highly effective and continues to be designated
as a cash flow hedge. If the forecast transaction is no longer
expected to occur, the amounts recognised in equity are
transferred to profit or loss.
If the hedging instrument is sold, terminated, expires, exercised
without replacement or rollover, or if the hedge becomes
ineffective and is no longer a designated hedge, the amounts
previously recognised in equity remain in equity until the
forecast transaction occurs.
Accent Group Limited Annual Report 2018
30
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 2. Significant accounting policies (continued)
In(cid:61)estments and ot(cid:44)er (cid:41)nancial assets
Investments and other financial assets are initially measured at
fair value. Transaction costs are included as part of the initial
measurement, except for financial assets at fair value through
profit or loss. They are subsequently measured at either amortised
cost or fair value depending on their classification. Classification
is determined based on the purpose of the acquisition and
subsequent reclassification to other categories is restricted.
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.
Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. They are carried at amortised cost using the effective
interest rate method. Gains and losses are recognised in profit
or loss when the asset is derecognised or impaired.
Impairment of financial assets
The Group assesses at the end of each reporting period
whether there is any objective evidence that a financial asset
or group of financial assets is impaired. Objective evidence
includes significant financial difficulty of the issuer or obligor; a
breach of contract such as default or delinquency in payments;
the lender granting to a borrower concessions due to economic
or legal reasons that the lender would not otherwise do; it
becomes probable that the borrower will enter bankruptcy or
other financial reorganisation; the disappearance of an active
market for the financial asset; or observable data indicating that
there is a measurable decrease in estimated future cash flows.
The amount of the impairment allowance for loans and
receivables carried at amortised cost is the difference between
the asset's carrying amount and the present value of estimated
future cash flows, discounted at the original effective interest
rate. If there is a reversal of impairment, the reversal cannot
exceed the amortised cost that would have been recognised had
the impairment not been made and is reversed to profit or loss.
(cid:22)ro(cid:54)ert(cid:64)(cid:84) (cid:54)lant and e(cid:55)(cid:60)i(cid:54)ment
Plant and equipment is stated at historical cost less accumulated
depreciation and impairment. Historical cost includes expenditure
that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off
the net cost of each item of property, plant and equipment
(excluding land) over their expected useful lives as follows:
Plant and equipment
Assets under construction
5 to 8 years
Not depreciated
The residual values, useful lives and depreciation methods are
reviewed, and adjusted if appropriate, at each reporting date.
Depreciation commences once the asset is available for use
as intended.
Plant and equipment under lease are depreciated over the
unexpired period of the lease or the estimated useful life of the
assets, whichever is shorter.
An item of property, plant and equipment is derecognised upon
disposal or when there is no future economic benefit to the
Group. Gains and losses between the carrying amount and the
disposal proceeds are taken to profit or loss.
Intangi(cid:35)le assets
Intangible assets acquired as part of a business combination,
other than goodwill, are initially measured at their fair value at
the date of the acquisition. Intangible assets acquired separately
are initially recognised at cost. Indefinite life intangible assets
are not amortised and are subsequently measured at cost less
any impairment. Finite life intangible assets are subsequently
measured at cost less amortisation and any impairment. The
gains or losses recognised in profit or loss arising from the
derecognition of intangible assets are measured as the difference
between net disposal proceeds and the carrying amount of
the intangible asset. The method and useful lives of finite
life intangible assets are reviewed annually. Changes in the
expected pattern of consumption or useful life are accounted for
prospectively by changing the amortisation method or period.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not
amortised. Instead, goodwill is tested annually for impairment,
or more frequently if events or changes in circumstances
indicate that it might be impaired, and is carried at cost less
accumulated impairment losses. Impairment losses on goodwill
are taken to profit or loss and are not subsequently reversed.
Brands and trademarks
Brands and trademarks are recognised at cost on acquisition.
Brands and trademarks have indefinite useful lives and are
carried at cost less any accumulated impairment loss. Brands
and trademarks are tested for impairment annually and
wherever there is an indication that they may be impaired.
Any impairment is recognised immediately in profit or loss.
Licence fees
The TAF Licence Fee intangible asset arose on the acquisition of
a 249 year royalty-free licence for the use of the TAF branding
and trademarks. This intangible is being amortised on a straight
line basis over the license term.
Distribution rights
Distribution rights arising on the acquisition of Accent Group
are being amortised on a straight line basis over the remaining
term of the respective distribution agreements.
Im(cid:54)airment o(cid:40) non(cid:102)(cid:41)nancial assets
Goodwill and other intangible assets that have an indefinite
useful life are not subject to amortisation and are tested
annually for impairment, or more frequently if events or
changes in circumstances indicate that they might be impaired.
Other non-financial assets are reviewed for impairment
whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. An impairment
loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less
costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to
the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do
not have independent cash flows are grouped together to form
a cash-generating unit.
Accent Group Limited Annual Report 2018
31
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 2. Significant accounting policies (continued)
Trade and other payables
These amounts represent liabilities for goods and services
provided to the Group prior to the end of the financial year
and which are unpaid. Due to their short-term nature they are
measured at amortised cost and are not discounted. The amounts
are unsecured and are usually paid within 30 days of recognition.
Borro(cid:62)ings
Loans and borrowings are initially recognised at the fair
value of the consideration received, net of transaction costs.
They are subsequently measured at amortised cost using the
effective interest method.
Finance costs
Finance costs attributable to qualifying assets are capitalised
as part of the asset. All other finance costs are expensed in
the period in which they are incurred.
Em(cid:54)lo(cid:64)ee (cid:35)ene(cid:41)ts
Short-term employee benefits
Liabilities for wages and salaries and other employee
benefits expected to be settled wholly within 12 months of
the reporting date are measured at the amounts expected
to be paid when the liabilities are settled.
Other long-term employee benefits
Employee benefits not expected to be settled within 12 months
of the reporting date are measured at the present value of
expected future payments to be made in respect of services
provided by employees up to the reporting date. 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 reporting
date on high quality corporate bonds with terms to maturity
and currency that match, as closely as possible, the estimated
future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans
are expensed in the period in which they are incurred.
Share-based payments
Equity-settled share-based compensation benefits are provided
to employees.
Equity-settled transactions are awards of shares, or options
over shares, that are provided to employees in exchange for
the rendering of services.
The cost of equity-settled transactions are measured at fair
value on grant date. Fair value is independently determined
using either a Monte Carlo simulation or the Black-Scholes
option pricing model, as appropriate, that takes into account
the exercise price, the term of the option, the impact of dilution,
the share price at grant date and expected price volatility of
the underlying share, the expected dividend yield and the risk
free interest rate for the term of the option, together with
any market-based performance conditions and non-vesting
conditions that do not determine whether the Group receives
the services that entitle the employees to receive payment.
The cost of equity-settled transactions are recognised as
an expense with a corresponding increase in equity over
the vesting period. The cumulative charge to profit or loss is
calculated based on the grant date fair value of the award, the
best estimate of the number of awards that are likely to vest
and the expired portion of the vesting period. The amount
recognised in profit or loss for the period is the cumulative
amount calculated at each reporting date less amounts
already recognised in previous periods.
If equity-settled awards are modified, as a minimum an expense
is recognised as if the modification has not been made. An
additional expense is recognised, over the remaining vesting
period, for any modification that increases the total fair value
of the share-based compensation benefit as at the date of
modification.
If the non-vesting condition is within the control of the Group
or employee, the failure to satisfy the condition is treated
as a cancellation. If the condition is not within the control of
the Group or employee and is not satisfied during the vesting
period, any remaining expense for the award is recognised over
the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has
vested on the date of cancellation, and any remaining expense
is recognised immediately. If a new replacement award is
substituted for the cancelled award, the cancelled and new
award is treated as if they were a modification.
(cid:10)air (cid:61)al(cid:60)e meas(cid:60)rement
When an asset or liability, financial or non-financial, is measured
at fair value for recognition or disclosure purposes, the fair
value is based on the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and
assumes that the transaction will take place either: in the
principal market, or in the absence of a principal market,
in the most advantageous market.
Fair value is measured using the assumptions that market
participants would use when pricing the asset or liability,
assuming they act in their economic best interests. For
non-financial assets, the fair value measurement is based
on its highest and best use. Valuation techniques that are
appropriate in the circumstances and for which sufficient data
are available to measure fair value, are used, maximising the
use of relevant observable inputs and minimising the use of
unobservable inputs.
Assets and liabilities measured at fair value are classified,
into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements.
Classifications are reviewed at each reporting date and transfers
between levels are determined based on a reassessment of
the lowest level of input that is significant to the fair value
measurement.
For recurring and non-recurring fair value measurements,
external valuers may be used when internal expertise is either
not available or when the valuation is deemed to be significant.
External valuers are selected based on market knowledge and
reputation. Where there is a significant change in fair value
of an asset or liability from one period to another, an analysis
is undertaken, which includes a verification of the major
inputs applied in the latest valuation and a comparison, where
applicable, with external sources of data.
Accent Group Limited Annual Report 2018
32
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 2. Significant accounting policies (continued)
(cid:24)eser(cid:61)es
Foreign currency translation reserve
The reserve is used to recognise exchange differences arising from
the translation of the financial statements of foreign operations to
Australian dollars. It is also used to recognise gains and losses on
hedges of the net investments in foreign operations.
Hedging reserve – cash flow hedges
The reserve is used to recognise the effective portion of the
gain or loss of cash flow hedge instruments that is determined
to be an effective hedge.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits
provided to employees and directors as part of their
remuneration, and other parties as part of their compensation
for services.
Iss(cid:60)ed ca(cid:54)ital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net
of tax, from the proceeds.
Di(cid:61)idends
Dividends are recognised when declared during the
financial year.
B(cid:60)siness com(cid:35)inations
The acquisition method of accounting is used to account
for business combinations regardless of whether equity
instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition-date
fair values of the assets transferred, equity instruments issued
or liabilities incurred by the acquirer to former owners of the
acquiree and the amount of any non-controlling interest in the
acquiree. For each business combination, the non-controlling
interest in the acquiree is measured at either fair value or at the
proportionate share of the acquiree's identifiable net assets.
All acquisition costs are expensed as incurred to profit or loss.
On the acquisition of a business, the Group assesses the
financial assets acquired and liabilities assumed for appropriate
classification and designation in accordance with the
contractual terms, economic conditions, the Group's operating
or accounting policies and other pertinent conditions in
existence at the acquisition-date.
Where the business combination is achieved in stages, the
Group remeasures its previously held equity interest in the
acquiree at the acquisition-date fair value and the difference
between the fair value and the previous carrying amount is
recognised in profit or loss.
Contingent consideration to be transferred by the acquirer
is recognised at the acquisition-date fair value. Subsequent
changes in the fair value of the contingent consideration
classified as an asset or liability is recognised in profit or loss.
Contingent consideration classified as equity is not remeasured
and its subsequent settlement is accounted for within equity.
The difference between the acquisition-date fair value of assets
acquired, liabilities assumed and any non-controlling interest in
the acquiree and the fair value of the consideration transferred
and the fair value of any pre-existing investment in the acquiree
is recognised as goodwill. If the consideration transferred and
the pre-existing fair value is less than the fair value of the
identifiable net assets acquired, being a bargain purchase to the
acquirer, the difference is recognised as a gain directly in profit
or loss by the acquirer on the acquisition-date, but only after a
reassessment of the identification and measurement of the net
assets acquired, the non-controlling interest in the acquiree, if
any, the consideration transferred and the acquirer's previously
held equity interest in the acquirer.
If the initial accounting for a business contribution is incomplete
by the end of the reporting period in which the combination
occurs, the Group reports provisional amounts for items for
which the accounting is incomplete.
Earnings (cid:54)er s(cid:44)are
Basic earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to the owners of Accent Group Limited, excluding
any costs of servicing equity other than ordinary shares, by the
weighted average number of ordinary shares outstanding during
the financial year, adjusted for bonus elements in ordinary
shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into account
the after income tax effect of interest and other financing
costs associated with dilutive potential ordinary shares and
the weighted average number of shares assumed to have been
issued for no consideration in relation to dilutive potential
ordinary shares.
(cid:11)oods and (cid:25)er(cid:61)ices (cid:26)a(cid:63) (cid:108)(cid:121)(cid:11)(cid:25)(cid:26)(cid:121)(cid:109) and ot(cid:44)er similar ta(cid:63)es
Revenues, expenses and assets are recognised net of the
amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised
as part of the cost of the acquisition of the asset or as part of
the expense.
Receivables and payables are stated inclusive of the amount of
GST receivable or payable. The net amount of GST recoverable
from, or payable to, the tax authority is included in other
receivables or other payables in the statement of financial
position.
Cash flows are presented on a gross basis. The GST
components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the tax
authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount
of GST recoverable from, or payable to, the tax authority.
(cid:24)o(cid:60)nding o(cid:40) amo(cid:60)nts
The Company is of a kind referred to in Corporations
Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to 'rounding-off'. Amounts
in this report have been rounded off in accordance with that
Corporations Instrument to the nearest thousand dollars, or
in certain cases, the nearest dollar.
Accent Group Limited Annual Report 2018
33
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 2. Significant accounting policies (continued)
(cid:18)e(cid:62) Acco(cid:60)nting (cid:25)tandards and Inter(cid:54)retations not (cid:64)et
mandatory or early adopted
Australian Accounting Standards and Interpretations that have
recently been issued or amended but are not yet mandatory,
have not been early adopted by the Group for the annual
reporting period ended 1 July 2018. The Group's assessment of
the impact of these new or amended Accounting Standards and
Interpretations, most relevant to the Group, are set out below.
AASB 9 Financial Instruments
AASB 9 ‘Financial Instruments’ replaces AASB 39 ‘Financial
Instruments: Recognition and Measurement’. The standard is
effective for periods beginning on or after 1 January 2018 and
therefore will be effective in the Group financial statements
in the year ending on or around 30 June 2019. The standard
introduces changes to three key areas: – new requirements for
the classification and measurement of financial instruments;
– a new impairment model based on expected credit losses
for recognising provisions; and – simplified hedge accounting
through closer alignment with an entity’s risk management
methodology. The Group is yet to undertake a detailed
assessment of the impact of AASB 9. However, based on the
entity’s preliminary assessment, the Standard is not expected
to have a material impact on the transactions and balances
recognised in the financial statements from the application
date of 2 July 2018.
AASB 15 Revenue from Contracts with Customers
AASB 15 ‘Revenue from Contracts with Customers’ is effective
for periods beginning on or after 1 January 2018 and therefore
will be effective in the Group financial statements on or around
30 June 2019. The standard establishes a principles-based
approach for revenue recognition and is based on the concept
of recognising revenue for performance obligations only
when they are satisfied and the control of goods or services
is transferred. In doing so, the standard applies a five-step
approach to the timing of revenue recognition and applies to
all contracts with customers, except those in the scope of other
standards. It replaces the separate models for goods, services
and construction contracts under the current accounting
standards. The Group has completed its assessment of the
impact of AASB 15 and based on the straightforward nature of
the Group’s revenue streams with the recognition of the majority
of its revenue at the point of sale and the absence of significant
judgement required in determining the timing of transfer of
control, the adoption of AASB 15 will not have a material impact
on the timing or nature of the Group’s revenue recognition.
AASB 16 Leases
AASB 16 ‘Leases’ is effective for periods beginning on or
after 1 January 2019 and therefore will be effective in the
Group financial statements in the year ended on or around
30 June 2020. The standard introduces a comprehensive model
for the identification of lease arrangements and accounting
treatments for both lessors and lessees and will replace the
current lease accounting requirements. For lessees, AASB 16
removes distinctions between operating leases and finance
leases. These are replaced by a model where a right of use asset
and a corresponding liability are recognised for all leases except
for short-term leases and low value assets. In contrast to lessee
accounting, AASB 16 continues to require a lessor to classify a
lease either as an operating lease or a finance lease. The Group has
established a committee which includes members from finance,
treasury and property functions to oversee the governance
of the implementation of this standard and the financial
implications upon implementation. During the current period
the Group has made progress in a number of areas including the
identification of leases and contracts that could be determined
to include a lease; the collation of lease data required for the
calculation of the impact assessment; identification of areas of
complexity or judgement relevant to the Group; identification of
necessary changes to systems and processes required to enable
reporting and accounting in accordance with AASB 16. From
the work performed to date and based on the undiscounted
lease commitments presented in Note 34, it is anticipated that
implementation of the new standard will have a significant impact
on the reported assets and liabilities of the Group. In addition, the
implementation of the standard will impact the income statement
and classification of cash flows. A reliable estimate of the financial
impact on the Group’s consolidated results is dependent on a
number of unresolved areas, including; choice of transition option
and refinement of approach to discount rates. In addition, the
financial impact is dependent on the facts and circumstances at
the time of transition. For these reasons, it is not yet practicable to
determine a reliable estimate of the financial impact on the Group.
IASB revised Conceptual Framework for Financial Reporting
The revised Conceptual Framework has been issued by the
International Accounting Standards Board ('IASB'), but the
Australian equivalent has yet to be published. The revised
framework is applicable for annual reporting periods beginning
on or after 1 January 2020 and the application of the new
definition and recognition criteria may result in future
amendments to several accounting standards. Furthermore,
entities who rely on the conceptual framework in determining
their accounting policies for transactions, events or conditions
that are not otherwise dealt with under Australian Accounting
Standards may need to revisit such policies. The group will apply
the revised conceptual framework from 1 July 2020 and is yet
to assess its impact.
Note 3. Critical accounting judgements, estimates
and assumptions
The preparation of the financial statements requires
management to make judgements, estimates and assumptions
that affect the reported amounts in the financial statements.
Management continually evaluates its judgements and estimates
in relation to assets, liabilities, contingent liabilities, revenue
and expenses. Management bases its judgements, estimates
and assumptions on historical experience and on other various
factors, including expectations of future events, management
believes to be reasonable under the circumstances. The
resulting accounting judgements and estimates will seldom
equal the related actual results. The judgements, estimates and
assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities
(refer to the respective notes) within the next financial year are
discussed below.
(cid:25)(cid:44)are(cid:102)(cid:35)ased (cid:54)a(cid:64)ment transactions
The Group measures the cost of equity-settled transactions
with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair
value is determined by using either a Monte-Carlo simulation
model or the Black-Scholes model taking into account the terms
and conditions upon which the instruments were granted.
The accounting estimates and assumptions relating to equity-
settled share-based payments would have no impact on the
carrying amounts of assets and liabilities within the next annual
reporting period but may impact profit or loss and equity.
Accent Group Limited Annual Report 2018
34
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 3. Critical accounting judgements, estimates and assumptions (continued)
(cid:22)ro(cid:61)ision (cid:40)or im(cid:54)airment o(cid:40) in(cid:61)entories
The provision for impairment of inventories assessment requires a degree of estimation and judgement. The level of the provision
is assessed by taking into account the recent sales experience, the ageing of inventories and other factors that affect inventory
obsolescence. To the extent that these judgements and estimates prove incorrect, the Group may be exposed to potential additional
inventory write-downs or reversals in future periods.
(cid:11)ood(cid:62)ill and ot(cid:44)er inde(cid:40)(cid:1418)inite li(cid:40)e intangi(cid:35)le assets
The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill and
other indefinite life intangible assets have suffered any impairment, in accordance with the accounting policy stated in Note 2. The
recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require
the use of estimates and assumptions, including estimated discount rates based on the current cost of capital and growth rates of
the estimated future cash flows. There are a number of key estimates made which require significant judgement in determining the
inputs into these models which include:
– Revenue growth;
– Operating margins;
– Royalty rates (used in relief from royalty brand valuation model); and
– Discount rates applied to the projected future cash flows.
Note 4. Operating segments
During the financial year, the Group continued the restructure of its operations which included the integration of the RCG Brands,
Accent and The Athlete’s Foot businesses into a single integrated multi-channel retailer of performance and lifestyle footwear. As
a result of the restructure, the information reviewed and used by the Board of Directors (who are identified as the Chief Operating
Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources was also restructured, with
information used for decision making based on the consolidated Group. Accordingly, reporting of segment information in the format
of that in the year ended 2 July 2017 is no longer appropriate. The operating segment information for the current year is the same
information as provided throughout the financial statements.
The CODM assesses the performance of the operations based on EBITDA (earnings before interest, tax, depreciation and
amortisation) of the Group on a monthly basis. The accounting policies adopted for internal reporting to the CODM are consistent
with those adopted in the financial statements.
Note 5. Revenue
Sales revenue
Sales to customers
Royalties and other franchise related income
Other revenue
Marketing levies received from TAF stores
Interest
Other revenue
Revenue
Consolidated
2018
$'000
2017
$'000
(cid:164)(cid:141)(cid:140)(cid:84)(cid:140)(cid:141)(cid:136)
607,107
16,269
17,120
(cid:164)(cid:142)(cid:136)(cid:84)(cid:165)(cid:139)(cid:135)
624,227
(cid:141)(cid:84)(cid:139)(cid:165)(cid:141)
(cid:165)(cid:135)(cid:139)
(cid:138)(cid:84)(cid:135)(cid:140)(cid:135)
8,371
986
2,569
(cid:136)(cid:136)(cid:84)(cid:138)(cid:139)(cid:136)
11,926
(cid:141)(cid:135)(cid:138)(cid:84)(cid:136)(cid:165)(cid:136)
636,153
Accent Group Limited Annual Report 2018
35
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 6. Other income/(expenses)
Net foreign exchange gain/(loss)
Net gain on disposal of property, plant and equipment
Other income/(expenses)
Note 7. Expenses
Profit before income tax includes the following specific expenses:
Depreciation
Plant and equipment
Amortisation
Licence fee
Distribution rights
Other intangible assets
TAF Partnership store closure
Total amortisation
Total depreciation and amortisation
Impairment of brand names
Hype DC brand name
Write-off of assets
Instride brand
Finance costs
Interest and finance charges paid/payable
Superannuation expense
Defined contribution superannuation expense
Share-based payments expense
Share-based payments expense
Consolidated
2018
$'000
2017
$'000
2
–
2
(65)
14
(51)
Consolidated
2018
$'000
2017
$'000
(cid:137)(cid:136)(cid:84)(cid:139)(cid:142)(cid:136)
18,434
31
2,323
288
–
(cid:137)(cid:84)(cid:164)(cid:139)(cid:137)
(cid:137)(cid:139)(cid:84)(cid:136)(cid:138)(cid:138)
31
2,791
144
265
3,231
21,665
–
9,714
(cid:164)(cid:140)
–
(cid:139)(cid:84)(cid:140)(cid:165)(cid:136)
4,055
(cid:136)(cid:135)(cid:84)(cid:140)(cid:140)(cid:165)
7,159
(cid:136)(cid:84)(cid:142)(cid:139)(cid:142)
344
Accent Group Limited Annual Report 2018
36
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 8. Income tax expense
Income tax expense
Current tax
Deferred tax – origination and reversal of temporary differences
Adjustment recognised for prior periods
Aggregate income tax expense
Deferred tax included in income tax expense comprises:
Increase in deferred tax assets (Note 18)
Increase/(decrease) in deferred tax liabilities (Note 25)
Deferred tax – origination and reversal of temporary differences
Numerical reconciliation of income tax expense and tax at the statutory rate
Profit before income tax expense
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Entertainment expenses
Share-based payments
Sundry items
Adjustment recognised for prior periods
Difference in overseas tax rates
Income tax expense
Amounts charged directly to equity
Deferred tax assets (Note 18)
Deferred tax liabilities (Note 25)
Deferred tax assets not recognised
Deferred tax assets not recognised comprises temporary differences attributable to:
Capital losses
Total deferred tax assets not recognised
Consolidated
2018
$'000
2017
$'000
(cid:137)(cid:138)(cid:84)(cid:138)(cid:139)(cid:140)
21,543
(cid:108)(cid:140)(cid:84)(cid:137)(cid:141)(cid:140)(cid:109)
(cid:108)(cid:136)(cid:84)(cid:136)(cid:140)(cid:137)(cid:109)
(8,716)
(755)
16,918
12,072
(cid:108)(cid:140)(cid:84)(cid:140)(cid:165)(cid:135)(cid:109)
(cid:138)(cid:135)(cid:140)
(7,849)
(867)
(cid:108)(cid:140)(cid:84)(cid:137)(cid:141)(cid:140)(cid:109)
(8,716)
(cid:164)(cid:135)(cid:84)(cid:142)(cid:136)(cid:165)
41,424
(cid:136)(cid:165)(cid:84)(cid:137)(cid:141)(cid:140)
12,427
(cid:164)(cid:139)
(cid:140)(cid:165)(cid:140)
(cid:108)(cid:164)(cid:141)(cid:141)(cid:109)
57
103
319
(cid:136)(cid:165)(cid:84)(cid:137)(cid:139)(cid:141)
12,906
(cid:108)(cid:136)(cid:84)(cid:136)(cid:140)(cid:137)(cid:109)
(cid:108)(cid:136)(cid:141)(cid:141)(cid:109)
(755)
(79)
16,918
12,072
Consolidated
2018
$'000
2017
$'000
(cid:136)(cid:84)(cid:141)(cid:141)(cid:136)
(cid:136)(cid:84)(cid:139)(cid:140)(cid:141)
3,228
–
–
–
Consolidated
2018
$'000
2017
$'000
(cid:141)(cid:84)(cid:136)(cid:142)(cid:142)
(cid:141)(cid:84)(cid:136)(cid:142)(cid:142)
7,198
7,198
The above potential tax benefit, which excludes tax losses, for deductible temporary differences has not been recognised in the
statement of financial position as the recovery of this benefit is uncertain.
Accent Group Limited Annual Report 2018
37
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 9. Current assets – cash and cash equivalents
Cash on hand
Cash at bank
Reconciliation to cash and cash equivalents at the end of the financial year
The above figures are reconciled to cash and cash equivalents at the end of the financial year as
shown in the statement of cash flows as follows:
Balances as above
Bank overdraft (Note 20)
Balance as per statement of cash flows
Note 10. Current assets – trade and other receivables
Trade receivables
Less: Provision for impairment of receivables
Other receivables
Refer to Note 29 for further information on financial instruments.
Note 11. Current assets – inventories
Finished goods held at lower of cost or net realisable value
Note 12. Current assets – derivative financial instruments
Forward foreign exchange contracts – cash flow hedges
Refer to Note 30 for further information on fair value measurement.
Note 13. Current assets – other current assets
Prepayments
Other current assets
Accent Group Limited Annual Report 2018
38
Consolidated
2018
$'000
186
(cid:138)(cid:165)(cid:84)(cid:140)(cid:165)(cid:164)
(cid:138)(cid:165)(cid:84)(cid:141)(cid:141)(cid:137)
2017
$'000
191
46,088
46,279
(cid:138)(cid:165)(cid:84)(cid:141)(cid:141)(cid:137)
46,279
–
(597)
(cid:138)(cid:165)(cid:84)(cid:141)(cid:141)(cid:137)
45,682
Consolidated
2018
$'000
(cid:136)(cid:165)(cid:84)(cid:142)(cid:164)(cid:135)
(cid:108)(cid:136)(cid:84)(cid:137)(cid:137)(cid:142)(cid:109)
(cid:136)(cid:141)(cid:84)(cid:141)(cid:138)(cid:136)
639
(cid:136)(cid:165)(cid:84)(cid:138)(cid:141)(cid:135)
2017
$'000
17,732
(1,180)
16,552
3,304
19,856
Consolidated
2018
$'000
2017
$'000
(cid:142)(cid:165)(cid:84)(cid:140)(cid:140)(cid:164)
111,946
Consolidated
2018
$'000
(cid:139)(cid:84)(cid:164)(cid:136)(cid:139)
2017
$'000
–
Consolidated
2018
$'000
(cid:136)(cid:84)(cid:137)(cid:136)(cid:141)
(cid:136)(cid:140)(cid:135)
(cid:136)(cid:84)(cid:138)(cid:164)(cid:141)
2017
$'000
2,383
876
3,259
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 14. Non-current assets – receivables
Loans to outside shareholders in TAF Partnership stores
Consolidated
2018
$'000
(cid:138)(cid:139)(cid:136)
2017
$'000
705
The loans to outside shareholders in TAF Partnership stores are secured over the minority shareholders’ share in the underlying TAF
Partnership store entities.
Note 15. Non-current assets – derivative financial instruments
Forward foreign exchange contracts – cash flow hedges
Refer to Note 30 for further information on fair value measurement.
Note 16. Non-current assets – property, plant and equipment
Plant and equipment – at cost
Less: Accumulated depreciation
Assets under construction – at cost
Consolidated
2018
$'000
(cid:164)(cid:141)(cid:164)
2017
$'000
–
Consolidated
2018
$'000
2017
$'000
(cid:136)(cid:140)(cid:135)(cid:84)(cid:135)(cid:141)(cid:136)
120,445
(cid:108)(cid:141)(cid:141)(cid:84)(cid:135)(cid:165)(cid:139)(cid:109)
(cid:141)(cid:137)(cid:84)(cid:142)(cid:165)(cid:141)
(cid:136)(cid:84)(cid:164)(cid:141)(cid:141)
(cid:141)(cid:139)(cid:84)(cid:164)(cid:164)(cid:139)
(46,947)
73,498
1,302
74,800
(cid:24)econciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
Consolidated
Balance at 26 June 2016
Additions*
Additions through business combinations (Note 37)
Disposals
Exchange differences
Depreciation expense
Balance at 2 July 2017
Additions*
Disposals
Exchange differences
Depreciation expense
(cid:5)alan(cid:36)e a(cid:59) (cid:136) (cid:14)(cid:60)l(cid:64) (cid:137)(cid:135)(cid:136)(cid:165)
Plant and
e(cid:55)(cid:60)i(cid:54)ment
$'000
Assets (cid:60)nder
constr(cid:60)ction
$'000
41,877
39,637
11,747
(1,248)
(81)
(18,434)
73,498
22,771
(1,740)
(51)
(21,491)
(cid:141)(cid:137)(cid:84)(cid:142)(cid:165)(cid:141)
743
559
–
–
–
–
1,302
375
–
–
–
(cid:136)(cid:84)(cid:164)(cid:141)(cid:141)
Total
$'000
42,620
40,196
11,747
(1,248)
(81)
(18,434)
74,800
23,146
(1,740)
(51)
(21,491)
(cid:141)(cid:139)(cid:84)(cid:164)(cid:164)(cid:139)
* Contributions of $7,219,000 (2017: $15,423,000) to store fit-out costs have been received from landlords and suppliers. These amounts have been netted
off against actual fit-out costs incurred by the Group for cash flow disclosure purposes.
Accent Group Limited Annual Report 2018
39
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 17. Non-current assets – intangibles
Goodwill – at cost
Brands and trademarks – at cost
Less: Accumulated impairment
Licence fees – The Athlete's Foot – at cost
Less: Accumulated amortisation
Distribution rights – at cost
Less: Accumulated amortisation
Other intangible assets – The Athlete's Foot – at cost
Less: Accumulated amortisation
Consolidated
2018
$'000
2017
$'000
(cid:137)(cid:142)(cid:138)(cid:84)(cid:142)(cid:141)(cid:140)
294,328
(cid:139)(cid:139)(cid:84)(cid:165)(cid:137)(cid:140)
(cid:108)(cid:142)(cid:84)(cid:141)(cid:136)(cid:139)(cid:109)
(cid:138)(cid:140)(cid:84)(cid:136)(cid:136)(cid:136)
(cid:141)(cid:84)(cid:165)(cid:138)(cid:137)
(cid:108)(cid:137)(cid:164)(cid:140)(cid:109)
(cid:141)(cid:84)(cid:140)(cid:164)(cid:141)
(cid:136)(cid:164)(cid:84)(cid:165)(cid:135)(cid:135)
(cid:108)(cid:165)(cid:84)(cid:164)(cid:142)(cid:135)(cid:109)
(cid:165)(cid:84)(cid:136)(cid:136)(cid:135)
(cid:141)(cid:137)(cid:135)
(cid:108)(cid:139)(cid:138)(cid:137)(cid:109)
288
44,825
(9,714)
35,111
7,832
(234)
7,598
16,800
(6,367)
10,433
432
(144)
288
(cid:138)(cid:139)(cid:140)(cid:84)(cid:135)(cid:140)(cid:136)
347,758
(cid:24)econciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
Consolidated
Goodwill
$'000
Brands and
trademarks
$'000
Licence
fees
$'000
Distri(cid:35)(cid:60)tion
rig(cid:44)ts
$'000
Other
intangi(cid:35)le
assets
$'000
Balance at 26 June 2016
210,455
14,566
Additions
–
–
Additions through business combinations
(Note 37)
Disposals
Impairment of assets
Amortisation expense
Balance at 2 July 2017
Write off of assets
Other
Amortisation expense
(cid:5)alan(cid:36)e a(cid:59) (cid:136) (cid:14)(cid:60)l(cid:64) (cid:137)(cid:135)(cid:136)(cid:165)
7,630
61
–
–
–
13,224
–
–
–
–
(93)
(2,791)
84,138
30,259
(265)
–
–
–
(9,714)
–
294,328
35,111
7,598
10,433
(65)
(288)
–
–
–
–
(cid:137)(cid:142)(cid:138)(cid:84)(cid:142)(cid:141)(cid:140)
(cid:138)(cid:140)(cid:84)(cid:136)(cid:136)(cid:136)
–
–
(31)
(cid:141)(cid:84)(cid:140)(cid:164)(cid:141)
–
–
(2,323)
(cid:165)(cid:84)(cid:136)(cid:136)(cid:135)
Total
$'000
245,875
493
114,397
(265)
(9,714)
(3,028)
347,758
(65)
–
(2,642)
(cid:138)(cid:139)(cid:140)(cid:84)(cid:135)(cid:140)(cid:136)
–
432
–
–
–
(144)
288
–
288
(288)
288
Im(cid:54)airment testing o(cid:40) good(cid:62)ill
The accounting standards state that an impairment test must be performed annually for goodwill. Further, companies must also
assess at each reporting date whether there is any indication that the asset may be impaired and, if so, perform an impairment test.
In the current year, management restructured the business with the eventual goal of achieving a fully integrated wholesale and retail
footwear business. Following these changes, the Chief Operating Decision Makers, being the board of directors, assess the results
of the business and allocate resources on a Group basis. As the divisional operations are no longer monitored as separate businesses
by management, and the synergies within the business are shared between the brands, goodwill is tested and monitored on a
group basis. Consequently, the goodwill that originated from the Accent, The Athlete’s Foot and RCG Brands businesses has been
combined into a single CGU for impairment testing purposes.
Management conduct impairment tests annually (or more frequently if impairment indicators exist) to assess the recoverability
of the carrying value of goodwill and indefinite useful life intangible assets.
Accent Group Limited Annual Report 2018
40
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 17. Non-current assets – intangibles (continued)
The impairment tests at 1 July 2018 were carried out based on value in use calculations. The recoverable amounts were determined
using estimated cash flows that were based on the Groups five year strategic plan which was presented to the Board of Directors
on 1 June 2018. The strategic plan included calculations and assumptions on sales growth, gross margin and cost of doing business
('CODB'). The assumptions were based on past experience and the Company’s forecast operating and financial performance.
The cash flows beyond the five year period have been extrapolated using a steady state 3.0% long term growth rate (2017: 2.5%
to 3.0%). Cash flows were discounted to present value using a mid-point pre-tax discount rate of 10.5%. The discount rate was
derived from the Group’s weighted average cost of capital.
There is no indication of impairment at balance date.
Brand names and trademarks
The Group recognises the following brands and trademarks as indefinite life intangible assets:
Carrying amount of brand names and trademarks:
The Athlete's Foot
Accent Group
Hype DC
Brands and trademarks
Consolidated
2018
$'000
2017
$'000
(cid:138)(cid:84)(cid:139)(cid:164)(cid:164)
(cid:136)(cid:136)(cid:84)(cid:136)(cid:135)(cid:135)
(cid:137)(cid:135)(cid:84)(cid:140)(cid:139)(cid:140)
(cid:138)(cid:140)(cid:84)(cid:136)(cid:136)(cid:136)
3,466
11,100
20,545
35,111
Im(cid:54)airment testing o(cid:40) (cid:35)rands and trademar(cid:48)s
The accounting standards state that an impairment test must be performed annually for indefinite life intangible assets such as
brands and trademarks. Further, companies must also assess at each reporting date whether there is any indication that the asset
may be impaired and, if so, perform an impairment test.
The recoverable amount was determined independently using the Relief from Royalty (‘RFR’) valuation method at acquisition date.
The calculations reflect a five year revenue forecast and requires the use of assumptions, including estimated royalty rates, tax rate,
estimated discount rates and expected useful life.
The five year revenue forecast is based on the Group’s five year strategic plan which was presented to the Board of Directors
on 1 June 2018. The five year strategic plan was based on past experience and the Company’s forecast operating and financial
performance. As part of the impairment test for brand valuation, management assesses the reasonableness of growth rate
assumptions by reviewing revenue projections against actual revenue. Revenue beyond the five year period applied a terminal
growth rate of 2.0% for store revenue growth and 5.0% to 7.5% for online revenue growth.
The royalty rates used in the valuation model are based on rates observed in the market. Royalty rates applied in the valuation model
for the current year were brand specific: Accent Group 2.0%, Hype 2.15% and The Athlete's Foot 2.0% and 6.0% for franchise revenue.
The tax rate applied in the valuation model is based on the corporate tax rate in Australia of 30.0%.
There is no indication of impairment at balance date. In 2017, the Group recognised an impairment against the Hype DC brand of
$9,714,000.
No additional impairment or reversal of impairment was required at 1 July 2018.
Accent Group Limited Annual Report 2018
41
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 18. Non-current assets – deferred tax
Deferred tax asset comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Tax losses
Provision for doubtful debts
Provision for shrinkage and stock obsolescence
Provision for employee entitlements
Other provisions and accrued expenses
Business capital expenditure
Difference in accounting and tax depreciation
Borrowing costs
Landlord and supplier contributions
Other
Amounts recognised in equity:
Derivative financial instruments
Deferred tax asset
Movements:
Opening balance
Credited to profit or loss (Note 8)
Charged to equity (Note 8)
Closing balance
Note 19. Current liabilities – trade and other payables
Trade payables
Goods and services tax payable
Accrued expenses
Other payables
Refer to Note 29 for further information on financial instruments.
Consolidated
2018
$'000
2017
$'000
(cid:136)(cid:140)(cid:137)
(cid:138)(cid:139)(cid:164)
(cid:137)(cid:84)(cid:137)(cid:142)(cid:135)
(cid:138)(cid:84)(cid:140)(cid:138)(cid:136)
238
(cid:136)(cid:141)(cid:141)
6,696
(cid:141)(cid:142)
(cid:141)(cid:84)(cid:142)(cid:139)(cid:140)
(cid:165)(cid:140)(cid:164)
197
337
2,252
1,648
1,453
302
2,362
121
8,200
(100)
(cid:137)(cid:137)(cid:84)(cid:138)(cid:136)(cid:135)
16,772
–
(cid:137)(cid:137)(cid:84)(cid:138)(cid:136)(cid:135)
1,729
18,501
(cid:136)(cid:165)(cid:84)(cid:140)(cid:135)(cid:136)
(cid:140)(cid:84)(cid:140)(cid:165)(cid:135)
(cid:108)(cid:136)(cid:84)(cid:141)(cid:141)(cid:136)(cid:109)
10,652
7,849
–
(cid:137)(cid:137)(cid:84)(cid:138)(cid:136)(cid:135)
18,501
Consolidated
2018
$'000
(cid:138)(cid:142)(cid:84)(cid:141)(cid:137)(cid:135)
3,138
(cid:137)(cid:141)(cid:84)(cid:140)(cid:135)(cid:165)
(cid:136)(cid:135)(cid:84)(cid:140)(cid:142)(cid:142)
(cid:165)(cid:135)(cid:84)(cid:142)(cid:164)(cid:140)
2017
$'000
55,939
4,149
21,586
7,175
88,849
Accent Group Limited Annual Report 2018
42
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 20. Current liabilities – borrowings
Bank overdraft
Bank loans
Working capital facility
Vendor loan notes
(cid:17)o(cid:61)ements in (cid:35)orro(cid:62)ings
Movements in current borrowings during the current financial year is set out below:
Carrying amount at start of the year
Repayments
Amounts transferred from non-current (Note 23)
Carrying amount at end of the year
Consolidated
2018
$'000
–
(cid:142)(cid:84)(cid:140)(cid:135)(cid:135)
2017
$'000
597
4,500
–
10,000
(cid:136)(cid:138)(cid:84)(cid:136)(cid:137)(cid:140)
(cid:137)(cid:137)(cid:84)(cid:164)(cid:137)(cid:140)
–
15,097
Borro(cid:62)ings
$'000
15,097
(15,097)
22,625
22,625
Vendor loan notes
As part of the purchase consideration for Hype DC, the Group issued vendor loan notes to each of the vendors. The vendor loan
notes were issued to each of Daniel Gilbert, Cindy Gilbert and Pittman Pty Ltd in proportion to their shareholding in Hype DC. The
vendor loan notes are unsecured and subordinated to the senior bank debt pursuant to a subordination deed. Interest is paid at
6% per annum. The vendor loan notes were repaid in July 2018 in their entirety.
Refer to Note 23 for further information on assets pledged as security and financing arrangements.
Refer to Note 29 for further information on financial instruments.
Note 21. Current liabilities – derivative financial instruments
Forward foreign exchange contracts – cash flow hedges
Interest rate swap contracts – cash flow hedges
Refer to Note 29 for further information on financial instruments.
Refer to Note 30 for further information on fair value measurement.
Note 22. Current liabilities – provision for income tax
Provision for income tax
Consolidated
2018
$'000
–
(cid:137)(cid:140)(cid:136)
(cid:137)(cid:140)(cid:136)
2017
$'000
5,054
–
5,054
Consolidated
2018
$'000
(cid:136)(cid:135)(cid:84)(cid:139)(cid:142)(cid:141)
2017
$'000
7,990
Accent Group Limited Annual Report 2018
43
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 23. Non-current liabilities – borrowings
Bank loans
Capex facility
Vendor loan notes
(cid:17)o(cid:61)ements in (cid:35)orro(cid:62)ings
Movements in non-current borrowings during the current financial year is set out below:
Carrying amount at start of the year
Repayments
Amounts transferred to current (Note 20)
Carrying amount at end of the year
Refer to Note 29 for further information on financial instruments.
(cid:26)otal sec(cid:60)red lia(cid:35)ilities
The total secured liabilities (current and non-current) are as follows:
Bank overdraft
Bank loans
Working capital facility
Capex facility
Consolidated
2018
$'000
(cid:140)(cid:136)(cid:84)(cid:135)(cid:135)(cid:135)
–
–
(cid:140)(cid:136)(cid:84)(cid:135)(cid:135)(cid:135)
2017
$'000
60,500
15,000
13,125
88,625
Borro(cid:62)ings
$'000
88,625
(15,000)
(22,625)
51,000
Consolidated
2018
$'000
–
(cid:164)(cid:135)(cid:84)(cid:140)(cid:135)(cid:135)
–
–
(cid:164)(cid:135)(cid:84)(cid:140)(cid:135)(cid:135)
2017
$'000
597
65,000
10,000
15,000
90,597
Assets (cid:54)ledged as sec(cid:60)rit(cid:64)
The senior bank debt made available by National Australia Bank and Bank of New Zealand is secured by cross-guarantees and
all assets of Accent Group Limited and each of its wholly-owned subsidiaries, excluding TAF Partnership Stores Pty Limited
(refer to Note 38 for a list of wholly-owned subsidiaries). Total secured assets amounted to $602,683,000 at 1 July 2018
(2017: $612,000,000).
(cid:10)inancing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Accent Group Limited Annual Report 2018
44
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 23. Non-current liabilities – borrowings (continued)
Total facilities available
Bank overdraft
Bank loans
Working capital facility
Capex facility
Bank guarantee and letters of credit
Used at the reporting date
Bank overdraft
Bank loans
Working capital facility
Capex facility
Bank guarantee and letters of credit
Unused at the reporting date
Bank overdraft
Bank loans
Working capital facility
Capex facility
Bank guarantee and letters of credit
Consolidated
2018
$'000
2017
$'000
(cid:136)(cid:135)(cid:84)(cid:164)(cid:135)(cid:135)
(cid:164)(cid:136)(cid:84)(cid:135)(cid:135)(cid:135)
(cid:138)(cid:135)(cid:84)(cid:135)(cid:135)(cid:135)
(cid:136)(cid:140)(cid:84)(cid:135)(cid:135)(cid:135)
(cid:138)(cid:138)(cid:84)(cid:138)(cid:135)(cid:135)
10,600
70,000
30,000
15,000
23,300
(cid:136)(cid:139)(cid:142)(cid:84)(cid:142)(cid:135)(cid:135)
148,900
–
(cid:164)(cid:135)(cid:84)(cid:140)(cid:135)(cid:135)
–
–
(cid:142)(cid:84)(cid:139)(cid:135)(cid:136)
597
65,000
10,000
15,000
11,793
(cid:164)(cid:142)(cid:84)(cid:142)(cid:135)(cid:136)
102,390
(cid:136)(cid:135)(cid:84)(cid:164)(cid:135)(cid:135)
(cid:140)(cid:135)(cid:135)
(cid:138)(cid:135)(cid:84)(cid:135)(cid:135)(cid:135)
(cid:136)(cid:140)(cid:84)(cid:135)(cid:135)(cid:135)
23,899
(cid:141)(cid:142)(cid:84)(cid:142)(cid:142)(cid:142)
10,003
5,000
20,000
–
11,507
46,510
The Company refinanced its existing debt facilities on 17 August 2018, in advance of its maturity. The new $154,825,000 facility, to
be provided by NAB and HSBC, is split between $76,125,000 of senior debt, $58,700,000 multi option facility and $20,000,000 of
permitted indebtedness not yet drawn down.
Note 24. Non-current liabilities – derivative financial instruments
Interest rate swap contracts – cash flow hedges
Refer to Note 29 for further information on financial instruments.
Refer to Note 30 for further information on fair value measurement.
Consolidated
2018
$'000
(cid:136)(cid:165)(cid:139)
2017
$'000
710
Accent Group Limited Annual Report 2018
45
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 25. Non-current liabilities – deferred tax
Deferred tax liability comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Unealised foreign currency exchange
Difference in accounting and tax depreciation
Trademarks, brand names and distribution rights
Other
Amounts recognised in equity:
Derivative financial instruments
Deferred tax liability
Movements:
Opening balance
Charged/(credited) to profit or loss (Note 8)
Charged to equity (Note 8)
Additions through business combinations (Note 37)
Closing balance
Note 26. Equity – issued capital
Ordinary shares – fully paid
Less: Treasury shares
Consolidated
2018
$'000
2017
$'000
9
(cid:137)(cid:84)(cid:135)(cid:140)(cid:139)
(cid:136)(cid:136)(cid:84)(cid:142)(cid:137)(cid:141)
–
–
829
12,624
232
(cid:136)(cid:138)(cid:84)(cid:142)(cid:142)(cid:135)
13,685
(cid:136)(cid:84)(cid:139)(cid:140)(cid:141)
–
(cid:136)(cid:140)(cid:84)(cid:139)(cid:139)(cid:141)
13,685
(cid:136)(cid:138)(cid:84)(cid:164)(cid:165)(cid:140)
(cid:138)(cid:135)(cid:140)
(cid:136)(cid:84)(cid:139)(cid:140)(cid:141)
–
7,314
(867)
–
7,238
(cid:136)(cid:140)(cid:84)(cid:139)(cid:139)(cid:141)
13,685
2018
Shares
Consolidated
2017
Shares
2018
$'000
2017
$'000
(cid:140)(cid:139)(cid:136)(cid:84)(cid:141)(cid:142)(cid:136)(cid:84)(cid:137)(cid:137)(cid:139)
542,291,224
391,896
392,747
(cid:108)(cid:164)(cid:84)(cid:135)(cid:139)(cid:135)(cid:84)(cid:135)(cid:135)(cid:135)(cid:109)
(9,501,665)
(cid:108)(cid:139)(cid:84)(cid:142)(cid:137)(cid:138)(cid:109)
(7,437)
(cid:140)(cid:138)(cid:140)(cid:84)(cid:141)(cid:140)(cid:136)(cid:84)(cid:137)(cid:137)(cid:139)
532,789,559
(cid:138)(cid:165)(cid:164)(cid:84)(cid:142)(cid:141)(cid:138)
385,310
Accent Group Limited Annual Report 2018
46
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 26. Equity – issued capital (continued)
(cid:17)o(cid:61)ements in ordinar(cid:64) s(cid:44)are ca(cid:54)ital
Details
Balance
Treasury shares – loans repaid
Treasury shares – loans repaid
Exercise of options
Date
27 June 2016
6 July 2017
6 July 2017
27 July 2016
Issue of shares on acquisition of Hype DC Pty Limited
4 August 2016
36,842,105
Shares
Iss(cid:60)e (cid:54)rice
$'000
490,304,120
233,333
500,000
445,000
$0.490
$0.520
$0.570
$1.708
$0.570
$0.490
$0.520
$0.400
$0.660
$0.490
$0.690
$0.730
$0.570
319,319
114
260
254
62,926
171
16
130
280
264
595
46
365
570
31 August 2016
26 September 2016
26 September 2016
28 September 2016
15 December 2016
1 March 2017
1 March 2017
1 March 2017
2 March 2017
300,000
33,333
250,000
700,000
400,000
1,215,001
66,667
500,000
1,000,000
2 July 2017
532,789,559
385,310
24 August 2017
06 February 2018
02 March 2018
02 March 2018
02 March 2018
27 March 2018
27 March 2018
12 May 2018
18 May 2018
29 May 2018
29 May 2018
29 May 2018
29 May 2018
29 May 2018
(cid:136) (cid:14)(cid:60)l(cid:64) (cid:137)(cid:135)(cid:136)(cid:165)
466,667
500,000
868,332
83,333
100,000
73,333
10,000
200,000
50,000
160,000
66,667
83,333
50,000
250,000
(cid:140)(cid:138)(cid:140)(cid:84)(cid:141)(cid:140)(cid:136)(cid:84)(cid:137)(cid:137)(cid:139)
$0.490
$0.730
$0.490
$0.590
$0.520
$0.730
$0.590
$0.600
$0.590
$0.490
$0.690
$0.590
$0.590
$0.520
229
365
425
49
52
54
6
120
30
78
46
49
30
130
(cid:138)(cid:165)(cid:164)(cid:84)(cid:142)(cid:141)(cid:138)
Exercise of options
Treasury shares – loans repaid
Treasury shares – loans repaid
Treasury shares – loans repaid
Treasury shares – loans repaid
Employee Share Scheme – loans repaid
Employee Share Scheme – loans repaid
Employee Share Scheme – loans repaid
Exercise of options
Balance
Employee Share Scheme – loans repaid
Employee Share Scheme – loans repaid
Employee Share Scheme – loans repaid
Employee Share Scheme – loans repaid
Treasury shares – loans repaid
Employee Share Scheme – loans repaid
Employee Share Scheme – loans repaid
Treasury shares – loans repaid
Employee Share Scheme – loans repaid
Employee Share Scheme – loans repaid
Employee Share Scheme – loans repaid
Employee Share Scheme – loans repaid
Employee Share Scheme – loans repaid
Treasury shares – loans repaid
(cid:5)alan(cid:36)e
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to
the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the Company does not
have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall
have one vote.
(cid:26)reas(cid:60)r(cid:64) s(cid:44)ares
During the year, no shares were issued to employees under the Employee Share Scheme (2017: nil). Details of the scheme are set
out in Note 43.
The shares issued have been deducted from equity as the scheme is treated as an in-substance option and accounted for as a
share-based payment.
(cid:25)(cid:44)are (cid:35)(cid:60)(cid:64)(cid:102)(cid:35)ac(cid:48)
There is no current on-market share buy-back.
(cid:6)a(cid:54)ital ris(cid:48) management
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total
borrowings less cash and cash equivalents.
Accent Group Limited Annual Report 2018
47
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 27. Equity – non-controlling interest
Issued capital
Retained profits
Note 28. Equity – dividends
Di(cid:61)idends
Dividends paid during the financial year were as follows:
Final dividend for the year ended 2 July 2017 (2017: 26 June 2016) of 3.00 cents (2017: 3.00 cents)
per ordinary share
Interim dividend for the year ended 1 July 2018 (2017: 2 July 2017) of 3.00 cents (2017: 3.00 cents)
per ordinary share
Dividends paid to non-controlling interests
Consolidated
2018
$'000
(cid:139)(cid:142)(cid:142)
(cid:139)(cid:141)(cid:139)
(cid:142)(cid:141)(cid:138)
2017
$'000
1,225
512
1,737
Consolidated
2018
$'000
2017
$'000
16,269
16,239
16,269
16,239
81
83
32,619
32,561
In respect of the financial year ended 1 July 2018, the directors recommended the payment of a final dividend of 3.75 cents per
share franked to 100% at 30% corporate income tax rate to be paid on 27 September 2018 to the registered holders of fully paid
ordinary shares as at 13 September 2018.
(cid:10)ran(cid:48)ing credits
Consolidated
2018
$'000
2017
$'000
Franking credits available for subsequent financial years based on a tax rate of 30%
(cid:137)(cid:142)(cid:84)(cid:165)(cid:137)(cid:139)
18,117
New Zealand imputation credits available to New Zealand residential shareholders amount to NZ$1,819,000.
Note 29. Financial instruments
(cid:10)inancial ris(cid:48) management o(cid:35)(cid:47)ecti(cid:61)es
The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate
risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses derivative financial
instruments such as forward foreign exchange contracts to hedge foreign currency exposures and interest rate swaps to hedge
interest rate exposures. Derivatives are exclusively used for hedging purposes, i.e. not as trading or other speculative instruments.
The Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity
analysis in the case of interest rate, foreign exchange and other price risks and ageing analysis for credit risk.
Risk management is carried out by senior finance executives ('finance') under policies approved by the Board of Directors ('the
Board'). These policies include identification and analysis of the risk exposure of the Group and appropriate procedures, controls
and risk limits. Finance identifies, evaluates and hedges financial risks within the Group's operating units. Finance reports to the
Board on a periodic basis.
Market risk
Foreign currency risk
The Group undertakes certain transactions denominated in foreign currencies that are different to the functional currency of the
respective entities undertaking the transactions, hence exposure to exchange rate fluctuations arise. The Group manages these risks
through forward currency contracts (refer below). The main exposure relates to inventory purchases which are usually denominated
in US Dollars.
Accent Group Limited Annual Report 2018
48
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 29. Financial instruments (continued)
The Group's exposure to foreign currency risk as at the end of the reporting period, expressed in Australian dollars, is shown below:
Consolidated
(cid:10)oreign (cid:6)(cid:60)rrenc(cid:64) (cid:24)is(cid:48)
US dollars
New Zealand dollars
Assets
2018
$'000
2017
$'000
Liabilities
2018
$'000
2017
$'000
(cid:140)(cid:84)(cid:141)(cid:138)(cid:135)
(cid:139)(cid:136)(cid:84)(cid:136)(cid:140)(cid:142)
(cid:139)(cid:164)(cid:84)(cid:165)(cid:165)(cid:142)
–
310
310
(cid:137)(cid:140)(cid:84)(cid:142)(cid:164)(cid:138)
(cid:141)(cid:84)(cid:137)(cid:138)(cid:135)
33,193
25,550
–
25,550
Foreign currency sensitivity analysis (assessed by management based on 10% movement)
Consolidated
(cid:10)oreign (cid:6)(cid:60)rrenc(cid:64) (cid:25)ensiti(cid:61)it(cid:64) Anal(cid:64)sis
US dollars
New Zealand dollars
Profit or loss
2018
$'000
2017
$'000
Equity
2018
$'000
(cid:136)(cid:139)(cid:137)
–
(cid:136)(cid:139)(cid:137)
–
31
31
(cid:108)(cid:164)(cid:84)(cid:135)(cid:141)(cid:137)(cid:109)
(cid:108)(cid:138)(cid:84)(cid:135)(cid:165)(cid:139)(cid:109)
(cid:108)(cid:142)(cid:84)(cid:136)(cid:140)(cid:164)(cid:109)
2017
$'000
2,555
–
2,555
The majority of US dollar sensitivity impacts Equity as a result of the fact that a high percentage of US Dollar foreign currency
liabilities are hedged as at 1 July 2018 and 2 July 2017 respectively (refer below).
In management’s opinion, the above sensitivity analysis is not fully representative of the inherent foreign exchange risk as the year
end exposure does not necessarily reflect the exposure during the course of the year.
In addition, the Group includes certain subsidiaries whose functional currencies are different to the Group’s presentation currency
of Australian Dollars. As stated in the Group’s Accounting Policies Note 2, on consolidation the assets and liabilities of these entities
are translated into Australian dollars at exchange rates prevailing on the balance date. The income and expenses of these entities are
translated at the average exchange rates for the year. Exchange differences arising are classified as equity and are transferred to a
foreign exchange translation reserve. The main operating entities outside of Australia are based in New Zealand. The Group’s future
reported profits could therefore be impacted by changes in rates of exchange between the Australian Dollar and the New Zealand
Dollar.
As noted above the Group manages its foreign currency risk through forward currency contracts.
The maturity, settlement amounts and the average contractual exchange rates of the Group's outstanding forward foreign exchange
contracts at the reporting date were as follows:
(cid:5)(cid:60)(cid:64) (cid:27)(cid:25) (cid:38)olla(cid:56)s
Maturity:
0 – 3 months
3 – 6 months
6 – 12 months
> 12 months
Price risk
The Group is not exposed to any significant price risk.
Sell Australian dollars
Average exchange rates
2018
$'000
2017
$'000
2018
2017
(cid:139)(cid:136)(cid:84)(cid:142)(cid:137)(cid:142)
(cid:138)(cid:164)(cid:84)(cid:135)(cid:164)(cid:138)
(cid:138)(cid:138)(cid:84)(cid:139)(cid:136)(cid:142)
(cid:136)(cid:137)(cid:84)(cid:165)(cid:135)(cid:139)
39,151
(cid:130)(cid:135)(cid:87)(cid:141)(cid:140)(cid:165)(cid:140)
$0.7179
26,772
85,318
(cid:130)(cid:135)(cid:87)(cid:141)(cid:141)(cid:164)(cid:140)
$0.7470
(cid:130)(cid:135)(cid:87)(cid:141)(cid:141)(cid:165)(cid:136)
$0.7501
–
(cid:130)(cid:135)(cid:87)(cid:141)(cid:165)(cid:136)(cid:135)
$0.0000
Accent Group Limited Annual Report 2018
49
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 29. Financial instruments (continued)
Interest rate risk
The Group's main interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group
to interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The Group maintains
approximately 58% of long-term borrowings at fixed rates using interest rate swaps to achieve this when necessary.
As at the reporting date, the Group had the following cash and cash equivalents, variable rate borrowings and interest rate swap
contracts outstanding:
Consolidated
Bank loans
Interest rate swap*
Working capital facility
Capex facility
Net exposure to cash flow interest rate risk
* For the interest rate swaps outstanding at 1 July 2018:
2018
2017
(cid:29)eig(cid:44)ted
a(cid:61)erage
interest rate
%
(cid:138)(cid:87)(cid:165)(cid:136)(cid:166)
(cid:139)(cid:87)(cid:139)(cid:137)(cid:166)
–
–
(cid:29)eig(cid:44)ted
a(cid:61)erage
interest rate
%
3.99%
4.42%
3.22%
3.22%
Balance
$'000
(cid:108)(cid:164)(cid:135)(cid:84)(cid:140)(cid:135)(cid:135)(cid:109)
(cid:138)(cid:140)(cid:84)(cid:137)(cid:140)(cid:135)
–
–
(cid:108)(cid:137)(cid:140)(cid:84)(cid:137)(cid:140)(cid:135)(cid:109)
Balance
$'000
(65,000)
40,000
(10,000)
(15,000)
(50,000)
– Outstanding interest rate swap contracts maturity is May 2020
– Average contracted fixed interest rate of 4.42% is inclusive of the margin applicable to the variable rate borrowings
– Notional principal value is $35,250,000
– Fair value at 1 July 2018 is $434,593 (liability) (2 July 2017 is $710,000 (liability))
Sensitivity impact of interest rate changes has not been shown as a 0.5% change in interest rates would have an immaterial profit
or loss impact based on the net exposure to cash flow interest rate risk at balance date.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The
Group has a strict code of credit, including obtaining agency credit information, confirming references and setting appropriate credit
limits. The Group obtains guarantees where appropriate to mitigate credit risk. The maximum exposure to credit risk at the reporting
date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the
statement of financial position and notes to the financial statements. The Group does not hold any collateral.
Impairment of receivables
The Group has recognised a loss of $194,000 (2017: $234,000) in profit or loss in respect of impairment of receivables for the year
ended 1 July 2018.
Movements in the provision for impairment of receivables are as follows:
Opening balance
Additional provisions recognised
Receivables written off during the year as uncollectable
Closing balance
Consolidated
2018
$'000
(cid:136)(cid:84)(cid:136)(cid:165)(cid:135)
(cid:136)(cid:142)(cid:139)
(cid:108)(cid:136)(cid:139)(cid:140)(cid:109)
1,229
2017
$'000
1,125
55
–
1,180
Accent Group Limited Annual Report 2018
50
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 29. Financial instruments (continued)
Past due but not impaired
Customers with balances past due but without provision for impairment of receivables amount to $670,898 as at 1 July 2018
($1,720,000 as at 2 July 2017).
The Group did not consider a credit risk on the aggregate balances after reviewing the credit terms of customers based on recent
collection practices.
The ageing of the past due but not impaired receivables are as follows:
30 to 90 days overdue
Over 90 days overdue
Consolidated
2018
$'000
(cid:140)(cid:142)(cid:140)
(cid:141)(cid:164)
(cid:164)(cid:141)(cid:136)
2017
$'000
1,280
440
1,720
(cid:16)i(cid:55)(cid:60)idit(cid:64) ris(cid:48)
Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents) and
available borrowing facilities to be able to pay debts as and when they become due and payable.
The Group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously
monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
Financing arrangements
Unused borrowing facilities at the reporting date:
Bank overdraft
Bank loans
Working capital facility
Capex facility
Bank guarantee and letters of credit
Consolidated
2018
$'000
(cid:136)(cid:135)(cid:84)(cid:164)(cid:135)(cid:135)
(cid:140)(cid:135)(cid:135)
(cid:138)(cid:135)(cid:84)(cid:135)(cid:135)(cid:135)
(cid:136)(cid:140)(cid:84)(cid:135)(cid:135)(cid:135)
23,899
(cid:141)(cid:142)(cid:84)(cid:142)(cid:142)(cid:142)
2017
$'000
10,003
5,000
20,000
–
11,507
46,510
Accent Group Limited Annual Report 2018
51
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 29. Financial instruments (continued)
Remaining contractual maturities
The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The tables have been
drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities
are required to be paid, and therefore these totals may differ from their carrying amount in the statement of financial position.
(cid:29)eig(cid:44)ted
a(cid:61)erage
interest rate
%
1 year or less
$'000
Between
1 and 2 years
$'000
Between
2 and 5 years
$'000
(cid:19)(cid:61)er (cid:140) (cid:64)ears
$'000
(cid:24)emaining
contract(cid:60)al
mat(cid:60)rities
$'000
–
–
(cid:138)(cid:142)(cid:84)(cid:141)(cid:137)(cid:135)
(cid:136)(cid:135)(cid:84)(cid:140)(cid:142)(cid:142)
–
–
(cid:138)(cid:87)(cid:165)(cid:136)(cid:166)
(cid:136)(cid:136)(cid:84)(cid:164)(cid:141)(cid:141)
(cid:140)(cid:137)(cid:84)(cid:141)(cid:137)(cid:136)
(cid:164)(cid:87)(cid:135)(cid:135)(cid:166)
(cid:136)(cid:138)(cid:84)(cid:136)(cid:140)(cid:138)
(cid:141)(cid:140)(cid:84)(cid:136)(cid:139)(cid:142)
–
(cid:140)(cid:137)(cid:84)(cid:141)(cid:137)(cid:136)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(cid:138)(cid:142)(cid:84)(cid:141)(cid:137)(cid:135)
(cid:136)(cid:135)(cid:84)(cid:140)(cid:142)(cid:142)
(cid:164)(cid:139)(cid:84)(cid:138)(cid:142)(cid:165)
(cid:136)(cid:138)(cid:84)(cid:136)(cid:140)(cid:138)
(cid:136)(cid:137)(cid:141)(cid:84)(cid:165)(cid:141)(cid:135)
(cid:139)(cid:138)(cid:140)
(cid:108)(cid:140)(cid:84)(cid:139)(cid:139)(cid:137)(cid:109)
(cid:108)(cid:140)(cid:84)(cid:135)(cid:135)(cid:141)(cid:109)
(cid:29)eig(cid:44)ted
a(cid:61)erage
interest rate
%
1 year
or less
$'000
Between
1 and 2 years
$'000
Between
2 and 5 years
$'000
(cid:19)(cid:61)er
5 years
$'000
(cid:24)emaining
contract(cid:60)al
mat(cid:60)rities
$'000
Interest rate swaps net settled
(cid:139)(cid:87)(cid:139)(cid:137)(cid:166)
(cid:137)(cid:140)(cid:136)
(cid:136)(cid:165)(cid:139)
Forward foreign exchange contracts net
settled
Total derivatives
–
(cid:108)(cid:139)(cid:84)(cid:141)(cid:136)(cid:137)(cid:109)
(cid:108)(cid:139)(cid:84)(cid:139)(cid:164)(cid:136)(cid:109)
(cid:108)(cid:141)(cid:138)(cid:135)(cid:109)
(cid:108)(cid:140)(cid:139)(cid:164)(cid:109)
–
–
55,939
7,175
615
7,087
10,322
483
3.22%
3.99%
3.22%
3.22%
6.00%
–
–
–
–
–
–
11,881
53,001
–
483
–
15,483
13,913
95,534
–
–
12,364
68,484
–
–
–
–
–
–
–
–
–
–
–
55,939
7,175
615
71,969
10,322
16,449
13,913
176,382
710
5,054
5,764
De(cid:56)i(cid:61)ati(cid:61)es
Interest rate swaps net settled
Forward foreign exchange contracts net
settled
Total derivatives
–
–
–
5,054
5,054
710
–
710
–
–
–
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above.
Accent Group Limited Annual Report 2018
52
(cid:6)onsolidated (cid:103) (cid:137)(cid:135)(cid:136)(cid:165)
(cid:18)on(cid:102)(cid:38)e(cid:56)i(cid:61)a(cid:59)i(cid:61)es
Non-interest bearing
Trade payables
Other payables
Interest-bearing – variable
Term loans
Interest-bearing – fixed rate
Vendor loan notes
Total non-derivatives
De(cid:56)i(cid:61)a(cid:59)i(cid:61)es
(cid:6)onsolidated (cid:103) (cid:137)(cid:135)(cid:136)(cid:141)
(cid:18)on(cid:102)(cid:38)e(cid:56)i(cid:61)ati(cid:61)es
Non-interest bearing
Trade payables
Other payables
Interest-bearing – variable
Bank overdraft
Term loans
Working capital facility
Capex facility
Interest-bearing – fixed rate
Vendor loan notes
Total non-derivatives
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 29. Financial instruments (continued)
(cid:6)a(cid:54)ital ris(cid:48) management
The Group manages its capital to ensure that all the entities within the Group are able to continue as going concerns while
maximising the return to stakeholders through the optimisation of the debt and equity balance.
The capital structure of the Group consists of cash and cash equivalents, trade and other receivables, inventories, intangibles
and net working capital. The equity attributable to equity holders of the parent entity comprises issued capital, reserves and
accumulated losses.
Management effectively manage the Group’s capital by assessing the Group’s financial risks and adjusting the Group’s capital
structure in response to changes in these risks and in the market. These responses include the management of debt levels,
distributions to shareholders and share issues.
None of the Group entities are subject to externally-imposed capital requirements.
The capital risk management policy has not changed since the 2 July 2017 year.
Note 30. Fair value measurement
(cid:10)air (cid:61)al(cid:60)e (cid:44)ierarc(cid:44)(cid:64)
The following tables detail the Group's assets and liabilities, measured or disclosed at fair value, using a three level hierarchy, based
on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) 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
(cid:6)onsolidated (cid:103) (cid:137)(cid:135)(cid:136)(cid:165)
Assets
Forward foreign exchange contracts – cash flow hedges
Total assets
Liabilities
Interest rate swap contracts – cash flow hedges
Total liabilities
(cid:6)onsolidated (cid:103) (cid:137)(cid:135)(cid:136)(cid:141)
Liabilities
(cid:16)e(cid:61)el (cid:136)
$'000
(cid:16)e(cid:61)el (cid:137)
$'000
(cid:16)e(cid:61)el (cid:138)
$'000
Total
$'000
–
–
–
–
5,290
5,290
435
435
–
–
–
–
(cid:16)e(cid:61)el (cid:136)
$'000
(cid:16)e(cid:61)el (cid:137)
$'000
(cid:16)e(cid:61)el (cid:138)
$'000
5,290
5,290
435
435
Total
$'000
5,054
710
5,764
Forward foreign exchange contracts – cash flow hedges
Interest rate swap contracts – cash flow hedges
Total liabilities
–
–
–
5,054
710
5,764
–
–
–
There were no transfers between levels during the financial year.
The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair values due
to their short-term nature.
The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market interest
rate that is available for similar financial liabilities.
Accent Group Limited Annual Report 2018
53
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 30. Fair value measurement (continued)
Val(cid:60)ation tec(cid:44)ni(cid:55)(cid:60)es (cid:40)or (cid:40)air (cid:61)al(cid:60)e meas(cid:60)rements categorised (cid:62)it(cid:44)in le(cid:61)el (cid:137) and le(cid:61)el (cid:138)
The fair values of the above financial assets and financial liabilities are determined using the following valuation techniques:
Forward foreign exchange contracts – Discounted cash flow
Future cash flows are estimated based on forward exchange rates (from observable forward exchange rates at the end of the
reporting period) and contract forward rates, discounted at a rate that reflects the credit risk of various counterparties.
Interest rate swap contracts – Discounted cash flow
Future cash flows are estimated based on forward interest rates (from observable yield curves at the end of the reporting period)
and contract interest rates, discounted at a rate that reflects the credit risk of various counterparties.
Note 31. Key management personnel disclosures
(cid:6)om(cid:54)ensation
The aggregate compensation made to directors and other members of key management personnel of the Group is set out below:
Short-term employee benefits
Post-employment benefits
Share-based payments
Consolidated
2018
$'000
(cid:164)(cid:84)(cid:140)(cid:138)(cid:136)
112
(cid:140)(cid:165)(cid:141)
2017
$'000
4,477
168
49
(cid:141)(cid:84)(cid:137)(cid:138)(cid:135)
4,694
Note 32. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by Deloitte Touche Tohmatsu, the auditor
of the Company:
Audit services – Deloitte Touche Tohmatsu
Audit or review of the financial statements
Other services – Deloitte Touche Tohmatsu
Acquisition due diligence
Consolidated
2018
$'000
2017
$'000
(cid:139)(cid:140)(cid:138)
480
–
(cid:139)(cid:140)(cid:138)
110
590
Accent Group Limited Annual Report 2018
54
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 33. Contingent liabilities
The Group has bank guarantees outstanding as at 1 July 2018 of $1,959,874 (2017: $4,133,064). The Group also has open letters
of credit of $7,441,483 (2017: $7,651,710). These guarantees and letters of credit entered into in relation to the debts of its
subsidiaries. The Athletes Foot has entered into operating lease commitments with landlords in its capacity as head lessor for stores
operated by the franchisees. However, the franchisees have simultaneously undertaken to meet the rental commitments through
back-to-back licence agreements. In addition, some franchisees have provided bank guarantees (generally for a maximum period of
three months’ rent) and in some instances personal guarantees to the landlords of the properties. The Company and its subsidiaries
would become liable in the event of a default by any franchisee. The maximum possible exposure would be $55,291,644 (2017:
$55,200,000) and comprises:
De(cid:40)a(cid:60)l(cid:59) (cid:35)(cid:64) (cid:40)(cid:56)an(cid:36)(cid:44)isee
Maximum possible exposure comprising:
Less than one year
Between one and five years
More than five years
Total maximum exposure
This cumulative above amount would arise only in the event that all franchisees defaulted at the same time.
Note 34. Commitments
Consolidated
2018
$'000
2017
$'000
(cid:136)(cid:139)(cid:84)(cid:139)(cid:135)(cid:140)
(cid:138)(cid:164)(cid:84)(cid:139)(cid:136)(cid:165)
(cid:139)(cid:84)(cid:139)(cid:164)(cid:142)
(cid:140)(cid:140)(cid:84)(cid:137)(cid:142)(cid:137)
16,750
34,700
3,750
55,200
Capital commitments
Committed at the reporting date but not recognised as liabilities, payable:
Property, plant and equipment
Lease commitments – operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
More than five years
Consolidated
2018
$'000
2017
$'000
(cid:165)(cid:84)(cid:137)(cid:164)(cid:135)
18,509
(cid:164)(cid:142)(cid:84)(cid:165)(cid:141)(cid:164)
63,099
(cid:136)(cid:142)(cid:138)(cid:84)(cid:137)(cid:139)(cid:165)
187,312
(cid:137)(cid:141)(cid:84)(cid:136)(cid:135)(cid:142)
32,418
(cid:137)(cid:142)(cid:135)(cid:84)(cid:137)(cid:138)(cid:138)
282,829
Operating lease commitments includes contracted amounts for various retail outlets and corporate headquarters under non-
cancellable operating leases expiring within one to five years with, in some cases, options to extend. The leases have various
escalation clauses. On renewal, the terms of the leases are renegotiated.
Accent Group Limited Annual Report 2018
55
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 35. Related party transactions
(cid:22)arent entit(cid:64)
Accent Group Limited is the parent entity.
(cid:25)(cid:60)(cid:35)sidiaries
Interests in subsidiaries are set out in Note 38.
(cid:15)e(cid:64) management (cid:54)ersonnel
Disclosures relating to key management personnel are set out in Note 31 and the remuneration report included in the
directors' report.
Entities associated (cid:62)it(cid:44) (cid:48)e(cid:64) management (cid:54)ersonnel
Rivan Pty Limited, a shareholder, is a company associated with David Gordon. 2 Como Pty Limited, a shareholder, is a company
associated with Daniel Agostinelli. BBRC International Pte Ltd, a shareholder, is a company associated with Brett Blundy. Tidereef
Pty Limited, a shareholder, is a company associated with Ivan Hammerschlag. Omniday Pty Limited, a shareholder, is a company
associated with Michael Hirschowitz. Rastana Holdings Pty Limited, a shareholder, is a company associated with Hilton Brett..
(cid:26)ransactions (cid:62)it(cid:44) related (cid:54)arties
The following transactions occurred with related parties:
Retail Oasis Pty Limited, a company associated with Stephen Kulmar, provided consultancy services to the Company's
subsidiaries amounting to $12,000 (2017: $8,777). These services were provided on an arm's length basis.
Loan repayments paid/(received) from directors:
– Stephen Kulmar
– Daniel Gilbert*
* Vendor loans provided by shareholders of Hype DC as part of acquisition consideration.
(cid:16)oans to(cid:99)(cid:40)rom related (cid:54)arties
The following balances are outstanding at the reporting date in relation to loans with related parties:
Loans to/(from) key management personnel:
– Ivan Hammerschlag (interest free)*
– Craig Thompson (interest free)***
– Daniel Gilbert (interest at 6% per annum)**
Consolidated
2018
$'000
2017
$'000
–
–
–
(6)
4,594
4,588
Consolidated
2018
$'000
2017
$'000
–
–
(cid:108)(cid:139)(cid:84)(cid:140)(cid:142)(cid:139)(cid:109)
(cid:108)(cid:139)(cid:84)(cid:140)(cid:142)(cid:139)(cid:109)
78
(200)
(4,594)
(4,716)
*
Under the EOP approved by the shareholders at the Extraordinary General Meeting held on 19 December 2006, the Company provided loans to option
recipients in respect of the option fees payable for the right to acquire the options.
** Relates to vendor finance component of Hype DC acquisition.
*** Relates to vendor finance component of Accent acquisition outstanding at balance date. Loan is repayable at call.
Accent Group Limited Annual Report 2018
56
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 36. Parent entity information
Set out below is the supplementary information about the parent entity.
(cid:25)tatement o(cid:40) (cid:54)ro(cid:41)t or loss and ot(cid:44)er com(cid:54)re(cid:44)ensi(cid:61)e income
Profit / (Loss) after income tax
Other comprehensive income for the year, net of tax
Total comprehensive income
(cid:25)tatement o(cid:40) (cid:41)nancial (cid:54)osition
Total current assets
Total non-current assets
Total assets
Total current liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Hedging reserve – cash flow hedges
Share-based payments reserve
Accumulated losses
Total equity
Parent
2018
$’000
2017
$’000
(cid:138)(cid:164)(cid:84)(cid:141)(cid:139)(cid:139)
(1,129)
–
–
(cid:138)(cid:164)(cid:84)(cid:141)(cid:139)(cid:139)
(1,129)
Parent
2018
$’000
2017
$’000
(cid:164)(cid:135)(cid:84)(cid:142)(cid:165)(cid:142)
55,025
(cid:138)(cid:141)(cid:141)(cid:84)(cid:141)(cid:140)(cid:142)
380,957
(cid:139)(cid:138)(cid:165)(cid:84)(cid:141)(cid:139)(cid:165)
435,982
(cid:138)(cid:139)(cid:84)(cid:141)(cid:141)(cid:135)
(cid:164)(cid:137)(cid:84)(cid:142)(cid:140)(cid:139)
(cid:142)(cid:141)(cid:84)(cid:141)(cid:137)(cid:139)
(cid:138)(cid:139)(cid:136)(cid:84)(cid:135)(cid:137)(cid:139)
29,928
73,493
103,421
332,561
(cid:138)(cid:165)(cid:164)(cid:84)(cid:142)(cid:141)(cid:138)
385,310
–
(cid:164)(cid:84)(cid:135)(cid:136)(cid:138)
(954)
4,065
(cid:108)(cid:140)(cid:136)(cid:84)(cid:142)(cid:164)(cid:137)(cid:109)
(55,860)
(cid:138)(cid:139)(cid:136)(cid:84)(cid:135)(cid:137)(cid:139)
332,561
(cid:6)ontingent lia(cid:35)ilities
The parent entity had no contingent liabilities as at 1 July 2018 and 2 July 2017, other than those disclosed in Note 33, which apply
to Accent Group Limited as parent of the Group.
(cid:6)a(cid:54)ital commitments (cid:103) (cid:22)ro(cid:54)ert(cid:64)(cid:84) (cid:54)lant and e(cid:55)(cid:60)i(cid:54)ment
The parent entity had no capital commitments for property, plant and equipment as at 1 July 2018 and 2 July 2017.
(cid:25)igni(cid:41)cant acco(cid:60)nting (cid:54)olicies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in Note 2, except for the following:
– Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
– Investments in associates are accounted for at cost, less any impairment, in the parent entity.
– Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an indicator
of an impairment of the investment.
Accent Group Limited Annual Report 2018
57
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 37. Business combinations
2018
There were no new business combinations in the year.
2017
Hype DC Pty Limited
On 4 August 2016, the Group completed the acquisition of 100% of the ordinary shares of Hype DC Pty Limited, an Australian
retailed of branded athleisure and style footwear, for the total consideration transferred of $109,853,000. Goodwill of $84,107,000
was recognised on acquisition.
The acquired business contributed revenues of $120,284,602 and profit after tax of $4,757,880 to the Group for the period from
4 August 2016 to 2 July 2017. If the acquisition occurred on 27 June 2016, the full year contributions would have been revenues
of $131,111,341 and profit after tax of $5,676,500.
Details of the acquisition are as follows:
Cash and cash equivalents
Inventories
Property, plant and equipment
Hype DC brand name
Trade and other payables
Provision for income tax
Deferred tax liability
Employee benefits
Other current liabilities
Lease liability
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
Cash paid or payable to vendor
Accent Group Limited shares issued to vendor
Vendor note
Interest paid to vendors
Acquisition costs expensed to profit or loss in prior year
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred
Less: cash and cash equivalents
Less: payments to be made in future periods
Less: shares issued by Company as part of consideration
Net cash used
Accent Group Limited Annual Report 2018
58
(cid:10)air (cid:61)al(cid:60)e
$'000
2,846
10,964
11,747
30,259
(14,914)
(1,055)
(7,238)
(1,057)
(1,015)
(4,822)
25,715
84,138
109,853
33,425
62,926
13,125
377
109,853
700
Consolidated
2018
$'000
2017
$'000
–
–
–
–
–
109,853
(2,846)
(13,502)
(62,926)
30,579
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 38. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with
the accounting policy described in Note 2:
Ownership interest
Name
(cid:22)rinci(cid:54)al (cid:54)lace o(cid:40) (cid:35)(cid:60)siness(cid:99)(cid:6)o(cid:60)ntr(cid:64) o(cid:40) incor(cid:54)oration
The Athlete's Foot Australia Pty Limited
Australia
TAF Constructions Pty Limited[a]
RCG Brands Pty Limited
RCG Retail Pty Limited
TAF eStore Pty Limited[a]
TAF Partnership Pty Ltd[a]
TAF Rockhampton Pty Ltd[b]
TAF Eastland Pty Ltd[b]
TAF The Glen Pty Ltd[b]
TAF Hornsby Pty Ltd[b]
TAF Hobart Pty Ltd[b]
TAF Booragoon Pty Ltd[b]
Accent Group Limited[c]
Platypus Shoes Limited[d]
Accent Footwear Limited[d]
Hype DC Limited[d]
Accent Brands Pty Limited[c]
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
New Zealand
New Zealand
New Zealand
Australia
Platypus Shoes (Australia) Pty Limited[c]
Australia
42K Pty Ltd[e]
RCG Grounded Pty Ltd
Australia
Australia
RCG Accent Group Holdings Pty Limited Australia
Hype DC Pty Ltd
Australia
[a] Indirectly held through The Athlete's Foot Australia Pty Ltd
[b] Indirectly held through TAF Partnership Stores Pty Ltd
[c] Indirectly held through RCG Accent Group Holdings Pty Ltd
[d] Indirectly held through Accent Group Limited (New Zealand)
[e] Indirectly held through Accent Brands Pty Ltd
2018
%
100%
100%
100%
100%
100%
100%
80%
80%
60%
80%
80%
60%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2017
%
100%
100%
100%
100%
100%
100%
80%
80%
60%
80%
80%
60%
100%
100%
100%
–
100%
100%
100%
100%
100%
100%
Accent Group Limited Annual Report 2018
59
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 39. Deed of cross guarantee
The following entities are party to a deed of cross guarantee, entered into on 23 February 2017, under which each company
guarantees the debts of the others:
Accent Group Limited (formerly known
as RCG Corporation Limited)
(ACN 108 096 251)
RCG Brands Pty Ltd
(ACN 125 433 972)
The Athlete's Foot Australia Pty Limited
(ACN 001 777 582)
RCG Retail Pty Ltd
(ACN 144 955 117)
RCG Accent Group Holdings Pty Ltd
(ACN 613 017 422)
Hype DC Pty Limited
(ACN 081 432 313)
TAF Partnership Stores Pty Ltd
(ACN 164 791 048)
TAF eStore Pty Ltd
(ACN 158 031 040)
T.A.F Constructions Pty Ltd
(ACN 097 684 430)
Accent Brands Pty Ltd
(ACN 001 742 552)
Platypus Shoes (Australia) Pty Ltd
(ACN 122 726 907)
42K Pty Limited
RCG Grounded Pty Ltd
(ACN 169 043 145)
(ACN 611 621 482)
By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare financial statements and
directors' report under Corporations Instrument 2016/785 issued by the Australian Securities and Investments Commission.
The above companies represent a 'Closed Group' for the purposes of the Corporations Instrument, and as there are no other parties
to the deed of cross guarantee that are controlled by Accent Group Limited, they also represent the 'Extended Closed Group'.
Set out below is a consolidated statement of profit or loss and other comprehensive income and statement of financial position
of the 'Closed Group'.
(cid:25)tatement o(cid:40) (cid:54)ro(cid:40)it or loss and ot(cid:44)er com(cid:54)re(cid:44)ensi(cid:61)e income
Revenue
Other income/(expenses)
Finished goods used
Changes in inventories of finished goods
Employee benefits expense
Depreciation and amortisation expense
Impairment of brand name
Write off of assets
Rental expense on operating leases
Advertising and promotion expenses
Travel and telecommunication expenses
Warehousing and freight expenses
Other expenses
Finance costs
(cid:22)(cid:56)o(cid:40)i(cid:59) (cid:35)e(cid:40)o(cid:56)e in(cid:36)o(cid:49)e (cid:59)a(cid:63) e(cid:63)(cid:54)ense
Income tax expense
(cid:22)(cid:56)o(cid:40)i(cid:59) a(cid:40)(cid:59)e(cid:56) in(cid:36)o(cid:49)e (cid:59)a(cid:63) e(cid:63)(cid:54)ense
Other comprehensive income for the year, net of tax
(cid:26)o(cid:59)al (cid:36)o(cid:49)(cid:54)(cid:56)e(cid:44)ensi(cid:61)e in(cid:36)o(cid:49)e (cid:40)o(cid:56) (cid:59)(cid:44)e (cid:64)ea(cid:56)
Accent Group Limited Annual Report 2018
60
2018
$’000
2017
$’000
(cid:164)(cid:138)(cid:139)(cid:84)(cid:137)(cid:165)(cid:139)
576,253
2
14
(cid:108)(cid:137)(cid:140)(cid:164)(cid:84)(cid:141)(cid:139)(cid:164)(cid:109)
(290,462)
(cid:108)(cid:137)(cid:135)(cid:84)(cid:137)(cid:136)(cid:165)(cid:109)
33,408
(cid:108)(cid:136)(cid:138)(cid:141)(cid:84)(cid:165)(cid:164)(cid:138)(cid:109)
(121,949)
(cid:108)(cid:137)(cid:137)(cid:84)(cid:136)(cid:135)(cid:140)(cid:109)
(19,702)
–
(cid:108)(cid:164)(cid:140)(cid:109)
(cid:108)(cid:141)(cid:140)(cid:84)(cid:137)(cid:140)(cid:141)(cid:109)
(cid:108)(cid:136)(cid:140)(cid:84)(cid:140)(cid:142)(cid:137)(cid:109)
(cid:108)(cid:140)(cid:84)(cid:164)(cid:136)(cid:136)(cid:109)
(cid:108)(cid:137)(cid:135)(cid:84)(cid:136)(cid:164)(cid:141)(cid:109)
(cid:108)(cid:137)(cid:139)(cid:84)(cid:137)(cid:140)(cid:165)(cid:109)
(cid:108)(cid:139)(cid:84)(cid:140)(cid:164)(cid:164)(cid:109)
(cid:140)(cid:136)(cid:84)(cid:165)(cid:138)(cid:165)
(9,714)
–
(64,896)
(19,388)
(4,011)
(17,647)
(21,300)
(3,218)
37,388
(cid:108)(cid:136)(cid:139)(cid:84)(cid:138)(cid:139)(cid:142)(cid:109)
(10,825)
(cid:138)(cid:141)(cid:84)(cid:139)(cid:165)(cid:142)
(cid:164)(cid:84)(cid:139)(cid:140)(cid:140)
(cid:139)(cid:138)(cid:84)(cid:142)(cid:139)(cid:139)
26,563
–
26,563
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 39. Deed of cross guarantee (continued)
E(cid:55)(cid:60)it(cid:64) (cid:103) acc(cid:60)m(cid:60)lated losses
Accumulated losses at the beginning of the financial year
Profit after income tax expense
Dividends paid
Accumulated losses at the end of the financial year
Statement of financial position
(cid:6)(cid:60)(cid:56)(cid:56)en(cid:59) asse(cid:59)s
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Other current assets
(cid:18)on(cid:102)(cid:36)(cid:60)(cid:56)(cid:56)en(cid:59) asse(cid:59)s
Receivables
Other financial assets
Property, plant and equipment
Intangibles
Deferred tax
(cid:26)o(cid:59)al asse(cid:59)s
(cid:6)(cid:60)(cid:56)(cid:56)en(cid:59) lia(cid:35)ili(cid:59)ies
Trade and other payables
Borrowings
Derivative financial instruments
Provision for income tax
Employee benefits
Deferred lease incentives
(cid:18)on(cid:102)(cid:36)(cid:60)(cid:56)(cid:56)en(cid:59) lia(cid:35)ili(cid:59)ies
Borrowings
Derivative financial instruments
Deferred tax
Employee benefits
Deferred lease incentives
(cid:26)o(cid:59)al lia(cid:35)ili(cid:59)ies
(cid:18)e(cid:59) asse(cid:59)s
(cid:9)(cid:55)(cid:60)i(cid:59)(cid:64)
Issued capital
Reserves
Accumulated losses
(cid:26)o(cid:59)al e(cid:55)(cid:60)i(cid:59)(cid:64)
Accent Group Limited Annual Report 2018
61
2018
$’000
(cid:108)(cid:139)(cid:139)(cid:84)(cid:137)(cid:164)(cid:140)(cid:109)
(cid:138)(cid:141)(cid:84)(cid:139)(cid:165)(cid:142)
(cid:108)(cid:138)(cid:137)(cid:84)(cid:140)(cid:138)(cid:165)(cid:109)
(cid:108)(cid:138)(cid:142)(cid:84)(cid:138)(cid:136)(cid:139)(cid:109)
2017
$’000
(38,351)
26,563
(32,477)
(44,265)
2018
$’000
2017
$’000
(cid:137)(cid:142)(cid:84)(cid:142)(cid:140)(cid:142)
–
41,033
7,119
(cid:142)(cid:136)(cid:84)(cid:141)(cid:137)(cid:165)
101,663
(cid:139)(cid:84)(cid:164)(cid:136)(cid:139)
1,162
–
3,207
(cid:136)(cid:137)(cid:141)(cid:84)(cid:139)(cid:164)(cid:138)
153,022
(cid:138)(cid:139)(cid:136)
(cid:164)(cid:141)(cid:164)
705
–
(cid:164)(cid:142)(cid:84)(cid:141)(cid:142)(cid:165)
69,749
(cid:138)(cid:139)(cid:137)(cid:84)(cid:142)(cid:135)(cid:137)
345,462
(cid:137)(cid:135)(cid:84)(cid:165)(cid:139)(cid:136)
(cid:139)(cid:138)(cid:139)(cid:84)(cid:140)(cid:140)(cid:165)
(cid:140)(cid:164)(cid:137)(cid:84)(cid:135)(cid:137)(cid:136)
17,073
432,989
586,011
(cid:141)(cid:164)(cid:84)(cid:140)(cid:165)(cid:140)
(cid:137)(cid:137)(cid:84)(cid:164)(cid:137)(cid:140)
(cid:137)(cid:140)(cid:136)
(cid:142)(cid:84)(cid:141)(cid:140)(cid:141)
(cid:140)(cid:84)(cid:142)(cid:135)(cid:140)
(cid:164)(cid:84)(cid:165)(cid:141)(cid:139)
80,980
15,097
5,054
7,882
4,771
4,949
(cid:136)(cid:137)(cid:136)(cid:84)(cid:142)(cid:142)(cid:141)
118,733
(cid:140)(cid:136)(cid:84)(cid:135)(cid:135)(cid:135)
88,625
(cid:136)(cid:165)(cid:139)
(cid:136)(cid:140)(cid:84)(cid:139)(cid:139)(cid:141)
(cid:164)(cid:139)
(cid:136)(cid:141)(cid:84)(cid:139)(cid:138)(cid:164)
(cid:165)(cid:139)(cid:84)(cid:136)(cid:138)(cid:136)
(cid:137)(cid:135)(cid:164)(cid:84)(cid:136)(cid:137)(cid:165)
(cid:138)(cid:140)(cid:140)(cid:84)(cid:165)(cid:142)(cid:138)
710
13,685
540
21,585
125,145
243,878
342,133
(cid:138)(cid:165)(cid:138)(cid:84)(cid:137)(cid:164)(cid:140)
382,859
(cid:136)(cid:136)(cid:84)(cid:142)(cid:139)(cid:137)
(cid:108)(cid:138)(cid:142)(cid:84)(cid:138)(cid:136)(cid:139)(cid:109)
3,539
(44,265)
(cid:138)(cid:140)(cid:140)(cid:84)(cid:165)(cid:142)(cid:138)
342,133
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 40. Reconciliation of profit after income tax to net cash from operating activities
Profit after income tax expense for the year
Adjustments for:
Depreciation and amortisation
Impairment of Hype DC brand name
Write-off of assets
Share-based payments
Foreign exchange differences
Rental expenses
Change in assets and liabilities:*
Receivables
Inventories
Trade creditors and provisions
Tax assets and liabilities
Net cash from operating activities
Consolidated
2018
$’000
2017
$’000
(cid:139)(cid:139)(cid:84)(cid:135)(cid:135)(cid:135)
29,352
(cid:137)(cid:139)(cid:84)(cid:136)(cid:138)(cid:138)
21,665
–
(cid:164)(cid:140)
(cid:136)(cid:84)(cid:142)(cid:139)(cid:142)
(cid:140)(cid:136)
(cid:108)(cid:141)(cid:84)(cid:138)(cid:136)(cid:139)(cid:109)
9,714
–
344
65
–
(cid:138)(cid:84)(cid:141)(cid:139)(cid:135)
5,353
(cid:136)(cid:138)(cid:84)(cid:138)(cid:142)(cid:135)
(22,460)
(cid:108)(cid:141)(cid:84)(cid:137)(cid:136)(cid:142)(cid:109)
(cid:108)(cid:137)(cid:84)(cid:141)(cid:137)(cid:141)(cid:109)
(cid:141)(cid:135)(cid:84)(cid:135)(cid:164)(cid:165)
8,403
(7,017)
45,419
* Changes in assets and liabilities are net of those acquired in the acquisition of Hype DC Pty Limited in the comparative period.
Note 41. Changes in liabilities arising from financing activities
Consolidated
Balance at 26 June 2016
Net cash from financing activities
Changes through business combinations
(Note 37)
Balance at 2 July 2017
Net cash used in financing activities
Balance at 1 July 2018
Bank
loans
$'000
(cid:29)or(cid:48)ing ca(cid:54)ital
facility
$'000
Capex
facility
$'000
Vendor loan
notes
$'000
40,000
25,000
–
65,000
(4,500)
60,500
5,000
5,000
–
10,000
(10,000)
–
5,000
10,000
–
15,000
(15,000)
–
–
13,125
13,125
–
–
13,125
Total
$'000
50,000
40,000
13,125
103,125
(29,500)
73,625
Accent Group Limited Annual Report 2018
62
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 42. Earnings per share
Profit after income tax
Non-controlling interest
Profit after income tax attributable to the owners of Accent Group Limited
Consolidated
2018
$'000
2017
$'000
(cid:139)(cid:139)(cid:84)(cid:135)(cid:135)(cid:135)
29,352
(cid:108)(cid:139)(cid:138)(cid:109)
(195)
(cid:139)(cid:138)(cid:84)(cid:142)(cid:140)(cid:141)
29,157
(cid:18)(cid:60)m(cid:35)er
(cid:18)(cid:60)m(cid:35)er
Weighted average number of ordinary shares used as the denominator in calculating basic
earnings per share
(cid:140)(cid:138)(cid:138)(cid:84)(cid:165)(cid:139)(cid:141)(cid:84)(cid:165)(cid:139)(cid:136) 526,571,720
Adjustments for calculation of diluted earnings per share:
Options and loan funded shares
(cid:137)(cid:84)(cid:137)(cid:136)(cid:140)(cid:84)(cid:140)(cid:165)(cid:138)
4,270,982
Weighted average number of ordinary shares used as the denominator in calculating diluted
earnings per share
(cid:140)(cid:138)(cid:164)(cid:84)(cid:135)(cid:164)(cid:138)(cid:84)(cid:139)(cid:137)(cid:139) 530,842,702
Basic earnings per share
Diluted earnings per share
Note 43. Share-based payments
(cid:19)(cid:54)tion (cid:22)lans
Cents
Cents
8.23
(cid:165)(cid:87)(cid:137)(cid:135)
5.54
5.49
Employee Option Plan
Options issued under the Employee Option Plan ('EOP') convert into one ordinary share in the Company on exercise. In addition to
the exercise price of each option, an option fee is payable for all options. The option fee varies depending on the date on which the
options were issued, but have all been calculated with reference to the Volume Weighted Average Price of Accent Group shares on
the ASX for the seven days leading up to the date on which the options were issued.
Employee Share Scheme
Shares have been issued under the Accent Group Employee Share Scheme ('ESS') and are held in escrow until certain vesting
conditions are met. The shares were issued at market value at the date of the offer and the Company has provided employees with
a limited recourse loan to acquire the shares. Interest on the loan is equivalent to the value of franked dividends paid in respect of
the shares. The shares are treated in substance as options and accounted for as share-based payments.
Set out below are summaries of options granted under the plans:
2018
Grant date
Expiry date
Exercise price
27/08/2015
27/08/2018
27/08/2015
27/08/2018
$0.400
$0.589
Balance at
the start of
the year
350,000
200,000
28/02/2013
28/08/2018
$0.490
2,488,332
03/12/2013
03/06/2019
$0.690
133,333
02/10/2014
30/03/2020
$0.590
1,360,000
30/03/2015
30/09/2020
$0.730
220,000
27/05/2015
30/09/2020
$0.730
2,250,000
27/05/2015
30/09/2020
$1.010
500,000
28/08/2015
30/08/2020
$1.140
1,600,000
13/05/2016
28/02/2021
$1.490
400,000
9,501,665
Balance at
the end of
the year
–
–
993,333
66,666
1,083,334
146,667
1,750,000
500,000
–
–
–
–
–
–
Granted
Exercised
Expired/
forfeited/other
–
–
(350,000)
(200,000)
–
–
–
–
–
–
–
–
–
–
–
(1,494,999)
(66,667)
(276,666)
(73,333)
(500,000)
–
–
–
(500,000)
1,100,000
–
400,000
(2,411,665)
(1,050,000)
6,040,000
Accent Group Limited Annual Report 2018
63
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 43. Share-based payments (continued)
2017
Grant date
Expiry date
Exercise price
Balance at the
start of the year
Granted
Exercised
Expired/
forfeited/other
Balance at the
end of the year
24/08/2011
24/08/2016
$0.570
1,745,000
12/01/2015
28/08/2018
$0.345
700,000
27/08/2015
27/08/2018
$0.400
1,100,000
27/08/2015
27/08/2018
28/02/2013
28/08/2018
03/12/2013
03/06/2019
$0.589
$0.490
$0.690
600,000
3,969,999
200,000
02/10/2014
30/03/2020
$0.590
1,360,000
30/03/2015
30/09/2020
$0.730
220,000
27/05/2015
30/09/2020
$0.730
2,900,000
27/05/2015
30/09/2020
$1.010
500,000
28/08/2015
30/08/2020
$1.140
1,600,000
13/05/2016
28/02/2021
$1.490
400,000
15,294,999
–
–
–
–
–
–
–
–
–
–
–
–
–
(1,745,000)
–
–
–
–
(1,481,667)
(66,667)
–
–
–
–
(700,000)
(750,000)
350,000
(400,000)
200,000
–
–
–
–
2,488,332
133,333
1,360,000
220,000
(500,000)
(150,000)
2,250,000
–
–
–
–
–
–
500,000
1,600,000
400,000
(3,793,334)
(2,000,000)
9,501,665
The weighted average share price during the financial year was $1.092 (2017: $1.146).
The weighted average remaining contractual life of options outstanding at the end of the financial year was 1.8 years
(2017: 2.6 years).
(cid:22)er(cid:40)ormance rig(cid:44)ts
On 14 October 2016, the Board approved a performance rights plan called the RCG Performance Rights Plan ('PRP'). The PRP has been
introduced following a review by the Board of the existing remuneration arrangements of the Company. The Board intends for the PRP
to replace the ESS.
The objective of the PRP is to align the interests of employees of the Group with those of the shareholders and provide employees of
the Group who are considered to be key to the future success of the Company with an opportunity to receive shares in order to reward
and retain the services of those persons and recognise the employees of the Group for their contribution to the future success of the
Company.
Eligibility and grant of performance rights
The Board may, from time to time, grant performance rights to an employee of the Group who the Board determines to be eligible
to participate in the PRP, this may include an executive director of the Company, but may not include a non-executive director of
the Company. The performance rights granted are under the terms and conditions of the PRP and may include additional terms and
conditions, including any performance conditions, as the Board determine. The Board may only grant performance rights where an
employee continues to satisfy any relevant conditions imposed by the Board.
Vesting of performance rights
Vesting of performance rights are subject to prescribed performance conditions. Performance rights granted during the year ended
1 July 2018 are subject to an adjusted diluted earnings per share (‘ADEPS’) performance condition. For the performance rights to
vest, the Company’s compound ADEPS must equal or exceed 10%.
The ADEPS performance conditions are measured over a five-year period and vesting is subject to the recipients of the performance
rights remaining in employment with the Company.
Accent Group Limited Annual Report 2018
64
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 43. Share-based payments (continued)
Lapsing of performance rights
An unvested performance right will lapse in various prescribed circumstances, unless the Board determines otherwise. Such
circumstances include:
– the circumstances specified by the Board on or before the grant of the performance right;
– if a participant ceases to be an employee and/or director of a Group company for any reason or they cease to satisfy any other
relevant conditions imposed by the Board at the time of the grant of the performance rights;
– failure to meet the performance conditions attaching to the performance right or any performance condition no longer, in the
opinion of the Board, being capable of being satisfied in accordance with their terms; and
– in in the opinion of the Board a participant acts fraudulently or dishonestly, is in breach of their material duties or obligations to
any Group company, has committed an act of harassment or discrimination or has done any act which has brought the Group or
any Group company into disrepute.
The Group recognises the fair value at the grant date of equity settled shares above as an employee benefit expense proportionally
over the vesting period with a corresponding increase in equity. Fair value is measured at grant date using Monte-Carlo simulation
and Binomial option pricing models where applicable.
Non-market vesting conditions are determined with reference to the underlying financial or non-financial performance measures to
which they relate.
Key inputs to the pricing models include:
Share price at grant date
Volatility
Dividend yield
Risk-free interest rate
Share price at grant date
Volatility
Dividend yield
Risk-free interest rate
Set out below are summaries of the performance rights granted:
(cid:136) (cid:14)(cid:60)l(cid:64) (cid:137)(cid:135)(cid:136)(cid:165)
(cid:130)(cid:135)(cid:87)(cid:165)(cid:135)
(cid:137)(cid:140)(cid:87)(cid:135)(cid:166)
(cid:141)(cid:87)(cid:140)(cid:166)
(cid:136)(cid:87)(cid:140)(cid:135)(cid:166)
(cid:137) (cid:14)(cid:60)l(cid:64) (cid:137)(cid:135)(cid:136)(cid:141)
$1.47
44.0%
5.0%
1.95%
2018
Grant date
11/01/2017
03/10/2017
27/12/2017
20/06/2018
2017
Grant date
11/01/2017
Expiry date
Balance at the
start of the year
Granted
Exercised
Expired/
forfeited/other
Balance at the
end of the year
09/11/2019
(cid:137)(cid:84)(cid:136)(cid:136)(cid:142)(cid:84)(cid:138)(cid:136)(cid:140)
–
–
–
–
(cid:136)(cid:142)(cid:84)(cid:139)(cid:140)(cid:135)(cid:84)(cid:135)(cid:135)(cid:135)
(cid:136)(cid:137)(cid:84)(cid:137)(cid:135)(cid:135)(cid:84)(cid:135)(cid:135)(cid:135)
(cid:139)(cid:135)(cid:135)(cid:84)(cid:135)(cid:135)(cid:135)
(cid:137)(cid:84)(cid:136)(cid:136)(cid:142)(cid:84)(cid:138)(cid:136)(cid:140)
(cid:138)(cid:137)(cid:84)(cid:135)(cid:140)(cid:135)(cid:84)(cid:135)(cid:135)(cid:135)
–
–
–
–
–
(cid:108)(cid:142)(cid:135)(cid:165)(cid:84)(cid:141)(cid:164)(cid:138)(cid:109)
(cid:136)(cid:84)(cid:137)(cid:136)(cid:135)(cid:84)(cid:140)(cid:140)(cid:137)
(cid:108)(cid:137)(cid:84)(cid:140)(cid:135)(cid:135)(cid:84)(cid:135)(cid:135)(cid:135)(cid:109)
(cid:136)(cid:164)(cid:84)(cid:142)(cid:140)(cid:135)(cid:84)(cid:135)(cid:135)(cid:135)
(cid:108)(cid:140)(cid:84)(cid:140)(cid:135)(cid:135)(cid:84)(cid:135)(cid:135)(cid:135)(cid:109)
(cid:164)(cid:84)(cid:141)(cid:135)(cid:135)(cid:84)(cid:135)(cid:135)(cid:135)
–
(cid:139)(cid:135)(cid:135)(cid:84)(cid:135)(cid:135)(cid:135)
(cid:108)(cid:165)(cid:84)(cid:142)(cid:135)(cid:165)(cid:84)(cid:141)(cid:164)(cid:138)(cid:109)
(cid:137)(cid:140)(cid:84)(cid:137)(cid:164)(cid:135)(cid:84)(cid:140)(cid:140)(cid:137)
Balance at the
start of the year
Granted
Exercised
Expired/
forfeited/other
Balance at the
end of the year
–
–
2,119,315
2,119,315
–
–
–
–
2,119,315
2,119,315
30/10/2022
30/10/2022
30/10/2022
Expiry date
09/11/2019
The weighted average remaining contractual life of performance rights outstanding at the end of the financial year was 4.2 years
(2017: 2.5 years).
Accent Group Limited Annual Report 2018
65
— NOTES TO THE FINANCIAL STATEMENTS —
For the year ended 1 July 2018
Note 44. Events after the reporting period
The following significant events have arisen since the end of the financial year:
Vendor loan notes repayment
As part of the purchase consideration for Hype DC, the Company issued vendor loan notes to each of the vendors in proportion to
their shareholding in Hype DC. The vendor loan notes of $13,125,000 which were due to be repaid by 4 August 2018 were repaid
in full on 13 July 2018 from existing NAB facilities.
Release of Shares from Escrow
As part of the acquisition of Hype DC Pty Ltd by the Company under a share sale and purchase deed dated 4 July 2016, the
Company issued 36,842,105 fully paid ordinary shares to the shareholders of Hype DC Pty Ltd, subject to an escrow period of
2 years. On 4 August 2018 these fully paid ordinary shares were released from Escrow.
De(cid:35)t (cid:10)acilit(cid:64) (cid:24)e(cid:41)nancing
The Company refinanced its existing debt facilities on 17 August 2018, in advance of its maturity. The Company has taken advantage
of favourable loan market conditions to refinance the existing $149,900,000 facility provided by NAB. The new $154,825,000
facility, to be provided by NAB and HSBC, is split between $76,125,000 of senior debt, $58,700,000 multi-option facility and
$20,000,000 of permitted indebtedness not yet drawn down. The new facility has a combination of three and five year tenure with
maturity dates of August 2021 and August 2023.
Apart from the dividend declared as disclosed in Note 28 and matters noted above, no other matter or circumstance has arisen since
1 July 2018 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the
Group's state of affairs in future financial years.
Accent Group Limited Annual Report 2018
66
— DIRECTORS' DECLAR ATION —
For the year ended 1 July 2018
In the directors' opinion:
– the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations
Regulations 2001 and other mandatory professional reporting requirements;
– the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in Note 2 to the financial statements;
– the attached financial statements and notes give a true and fair view of the Group's financial position as at 1 July 2018
and of its performance for the financial year ended on that date;
– there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable; and
– at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group
will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross
guarantee described in Note 39 to the financial statements.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
Da(cid:61)id (cid:11)ordon
Chairman
28 August 2018
Melbourne
Accent Group Limited Annual Report 2018
67
— INDEPENDENT AUDITOR’S REPORT —
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1220 Australia
DX 10307SSE
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
www.deloitte.com.au
Independent Auditor’s Report to the Members of
Accent Group Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Accent Group Limited (the “Company”) and its subsidiaries
(the “Group”) which comprises the consolidated statement of financial position as at 1 July 2018,
the consolidated income statement, the consolidated statement of profit or loss and other
comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, and notes to the financial statements, including a
summary of significant accounting policies and other explanatory information, and the directors’
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 1 July 2018 and of its
financial performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have
also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has
been given to the directors of the Company, would be in the same terms if given to the directors as
at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited.
69
Accent Group Limited Annual Report 2018
68
— INDEPENDENT AUDITOR’S REPORT —
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report for the current period. These matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Key Audit Matter
How the scope of our audit responded to the
Key Audit Matter
In conjunction with our valuation specialists, our
procedures included, but were not limited to:
Assessing the basis of allocation of goodwill
and indefinite useful life intangible assets to
identified CGUs or CGU groups;
Evaluating the principles and integrity of the
models used by management to calculate the
value-in-use of the CGUs or CGU groups and
the brand names to ensure they comply with
the applicable accounting standards;
the cash
Challenging management with respect to the
revenue growth rates and operating margins
underlying
to
determine whether they are reasonable and
supportable based on historical performance,
management’s strategic growth plans for the
CGUs, and other known industry factors;
forecasts
flow
Assessing the reasonableness of the basis
adopted by management in determining the
other key inputs and assumptions underlying
the calculations in the models including:
Royalty rates; and
o
o Discount rates
Performing sensitivity analysis on the key
model inputs and assumptions; and
Assessing
disclosures
statements.
appropriateness of
the
in Note 17 to the
the
financial
Carrying value of goodwill and
indefinite useful life intangible assets
Goodwill and indefinite useful life intangible
assets
(principally brand names) of
$345.1m have been recognised in the
consolidated statement of financial position
as a consequence of acquisitions undertaken
in the past periods.
In the current year, management has
continued to restructure the business with
the eventual goal of achieving a fully
integrated wholesale and retail footwear
business. Following these changes, the
Chief Operating Decision Makers, being the
board of directors, assess the results of the
business and allocate resources on a Group
basis.
As the divisional operations are no longer
monitored as separate businesses by
management, and the synergies within the
business are shared between the brands,
goodwill is monitored on a group basis.
Consequently the goodwill that originated
from the Accent, The Athlete’s Foot and RCG
Brands businesses has been combined into
testing
a single CGU
purposes.
impairment
for
Management conducts impairment tests
annually (or more frequently if impairment
indicators exist) to assess the recoverability
of the carrying value of goodwill and
indefinite useful life intangible assets. This is
performed through value-in-use discounted
cash flow models.
As disclosed in Note 3 to the financial
statements, there are a number of key
estimates made which require significant
judgement in determining the inputs into
these models which include:
Revenue growth;
Operating margins;
Royalty rates (used in the relief from
royalty brand valuation model); and
Discount rates applied to the projected
future cash flows.
70
Accent Group Limited Annual Report 2018
69
— INDEPENDENT AUDITOR’S REPORT —
Key Audit Matter
How the scope of our audit responded to the
Key Audit Matter
Valuation of inventory and provision for
impairment of inventories
The Group has recognised $98.6m in
inventories on the consolidated statement of
financial position as at 1 July 2018.
Our audit procedures included, but were not limited
to:
to
in Note 3
Inventories are recognised net of a provision
for impairment where the net realisable
value of inventories is less than cost. As
disclosed
financial
statements, this assessment requires a
degree of estimation and judgement. The
level of the provision is assessed by taking
into account the recent sales experience, the
ageing of inventories, and broader industry
and other factors that affect inventory
obsolescence.
the
To the extent that these judgements and
estimates prove incorrect, the Group may be
exposed to potential additional inventory
write-downs or reversals in future periods.
Testing on a sample basis inventory items in
each significant component and comparing the
selected items to their current selling prices;
Challenging management’s estimate of the
provision by considering, amongst others, the
following sources of information to assess net
realisable value:
o
o
o
o
Aging of inventory;
Actual losses incurred in the financial
period due to inventory sold below cost
and inventory written off;
Inventory not sold during the period; and
The likelihood of current inventory to
become aged and/or impaired in the
future based on internal and external
industry factors.
Recalculating the inventory provision to test
compliance with the Group’s accounting policy
and
Assessing
disclosures
statements.
appropriateness of
the
in Note 11 to the
the
financial
Other Information
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 1 July 2018, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If,
based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of
the financial report that gives a true and fair view and is free from material misstatement, whether
due to fraud or error.
71
Accent Group Limited Annual Report 2018
70
— INDEPENDENT AUDITOR’S REPORT —
In preparing the financial report, the directors are responsible for assessing the ability of the Group
to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to liquidate the Group or to
cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as
intentional omissions,
involve collusion,
fraud may
misrepresentations, or the override of internal control.
forgery,
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial
report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express an opinion on the financial report.
We are responsible for the direction, supervision and performance of the Group’s audit. We
remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
72
Accent Group Limited Annual Report 2018
71
— INDEPENDENT AUDITOR’S REPORT —
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 14 to 20 of this Report for the year
ended 1 July 2018.
In our opinion, the Remuneration Report of Accent Group Limited, for the year ended 1 July 2018,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
David White
Partner
Chartered Accountants
Sydney, 28 August 2018
73
Accent Group Limited Annual Report 2018
72
— SHAREHOLDER INFORMATION —
The shareholder information set out below was applicable as at 2 August 2018.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Holding less than a marketable parcel
Equity security holders
(cid:26)(cid:62)ent(cid:64) largest (cid:55)(cid:60)oted e(cid:55)(cid:60)it(cid:64) sec(cid:60)rit(cid:64) (cid:44)olders
The names of the twenty largest security holders of quoted equity securities are listed below:
BBRC INTERNATIONAL PTE LTD (BB FAMILY INTERNATIONAL A/C)
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
CRAIG JOHN THOMPSON
BNP PARIBAS NOMS PTY LTD (DRP)
CITICORP NOMINEES PTY LIMITED
DANIEL GILBERT
JAMES WILLIAM DUELL
MICHAEL JOHN HAPGOOD
CINDY GILBERT
PITTMAN PTY LIMITED (THE PITT FAMILY A/C)
NATIONAL NOMINEES LIMITED
RIVAN PTY LTD (DAVID GORDON SUPER FUND A/C)
AUTHENTICS AUSTRALIA PTY LTD (AUTHENTICS AUSTRALIA A/C)
VAMICO PTY LIMITED (VAMICO A/C)
GRAHGER CAPITAL SECURITIES PTY LTD
GRAHGER RETAIL SECURITIES PTY LTD
MR GEOFFREY WILLIAM WEBSTER
UBS NOMINEES PTY LTD
LYMGRANGE PTY LIMITED
(cid:18)(cid:60)m(cid:35)er
of holders
of ordinary
shares
884
2,227
1,355
2,069
186
6,721
168
Ordinary shares
(cid:18)(cid:60)m(cid:35)er (cid:44)eld
97,539,693
86,880,241
43,982,877
35,428,562
28,979,375
20,957,242
15,394,737
14,571,425
14,571,425
12,894,737
11,052,631
9,284,456
6,599,034
3,364,694
3,050,000
3,000,000
3,000,000
1,505,642
1,501,573
1,500,000
% of total
shares
iss(cid:60)ed
18.00
16.04
8.12
6.54
5.35
3.87
2.84
2.69
2.69
2.38
2.04
1.71
1.22
0.62
0.56
0.55
0.55
0.28
0.28
0.28
415,058,344
76.61
Accent Group Limited Annual Report 2018
73
— SHAREHOLDER INFORMATION —
Substantial holders
Substantial holders in the Company are set out below:
BBRC International Pte Ltd
Craig John Thompson
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
(cid:18)(cid:60)m(cid:35)er (cid:44)eld
97,539,693
35,428,562
% of total
shares
iss(cid:60)ed
18.00
6.54
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall
have one vote.
There are no other classes of equity securities.
Restricted securities
Class
Ordinary shares subject to the RCG Employee Share Scheme restrictions
Securities subject to voluntary escrow
Class
Expiry date
(cid:18)(cid:60)m(cid:35)er
of shares
Various
6,040,000
Expiry date
(cid:18)(cid:60)m(cid:35)er
of shares
Ordinary shares issued in connection with the acquisition of Hype DC
4 August 2018 36,842,105
Accent Group Limited Annual Report 2018
74
Directors
— CORPOR ATE DIRECTORY —
David Gordon – Chairman
Daniel Agostinelli – Chief Executive Officer
Brett Blundy
Stephen Goddard
Michael Hapgood
Stephen Kulmar
Donna Player
Joint company secretaries
Matthew Durbin
Celesti Harmse
Registered office and principal
place of business
2/64 Balmain Street
Richmond VIC 3121
Telephone: 03 9427 9422
Email: investors@accentgr.com.au
Share register
Computershare Investor Services Pty Limited
Auditor
GPO Box 2975
Melbourne VIC 3001
Telephone: 1300 850 505
Deloitte Touche Tohmatsu
Grosvenor Place
225 George Street
Sydney NSW 2000
Bankers
National Australia Bank
Stock exchange listing
Accent Group Limited shares are listed on the
Australian Securities Exchange (ASX code: AX1)
Website
www.accentgr.com.au
Corporate Governance Statement
www.accentgr.com.au/for-investors/corporate-governance
Accent Group Limited Annual Report 2018
75
Accent Group Limited
(ABN: 85 108 096 251)
2/64 Balmain Street, Richmond VIC 3121
+61 2 8310 0000
(cid:62)(cid:62)(cid:62)(cid:87)a(cid:36)(cid:36)en(cid:59)g(cid:56)(cid:87)(cid:36)o(cid:49)(cid:87)a(cid:60)