Accent Group Limited 2022 Annual Report
Accent Group Limited
(AX1) is a market leading
digitally integrated retail and
distribution business in the
performance and lifestyle
market sectors.
760+
RETAIL STORES
36
WEBSITES
26
DIFFERENT
RETAIL BANNERS
18
INTERNATIONAL
BRANDS
9.3m
CONTACTABLE
CUSTOMERS
Contents
2
7
Our Brands
Chairman and Chief Executive Officers’ Report
10 Directors’ Report
19 Auditor’s Independence Declaration
20 Remuneration Report
37
Statement of Profit or Loss and
Other Comprehensive Income
38
Statement of Financial Position
39
Statement of Changes in Equity
40 Statement of Cash Flows
41 Notes to the Financial Statements
76 Directors’ Declaration
77
Independent Auditor’s Report
83
Shareholder Information
85 Corporate Directory
1
Accent Group Limited Annual Report 2022
Our Brands
Skechers is a global leader in lifestyle
and performance footwear. We operate
150 Skechers stores across Australia
and New Zealand.
Platypus has 165 stores across Australia
and New Zealand and is now the
region’s largest multi-branded sneaker
destination offering a wide range of
iconic sneakers from around the world.
Hype DC is the premium destination
for the latest exclusive footwear in
Australia and New Zealand. Opening
our first store in Mosman in June 1998,
Hype DC is the longest-standing,
Australian-owned footwear retailer
with 83 locations and a thriving
e-commerce business.
With 151 stores across Australia and
New Zealand, The Athlete’s Foot is
the region’s largest speciality athletic
footwear retailer, known for its
exceptional in-store customer service
experience and fitting technology.
Launched in 2012, Stylerunner is a cult
online destination for women’s multi-
branded activewear and sneakers.
With over 80 brands and a social media
following of over 600k, Stylerunner
opened its first bricks and mortar store
in 2020 and now operates 20 retail
stores.
The Dr Martens range of footwear was
born in 1960 and is a representation
of rebellion and free-thinking youth
culture. With an expanding store
network, we now operate 19 stores.
2
Accent Group Limited Annual Report 2022 Our Brands
Glue Store is the original ‘House of
Brands’ premium retailer and has 25
stores in Australia and New Zealand.
Curating the ultimate edit of global
street, fashion and sports culture, it
delivers on-trend clothing, shoes and
accessories from an aspirational brand
assortment that empowers individuals
to be fashion leaders and live their
lifestyle.
The Vans brand has been connecting
with youth culture to promote creative
self-expression, authenticity and
progression for over 50 years, while
linking the brand’s deep roots in action
sports with art, music and street culture.
We operate 37 Vans stores.
Merrell is the world’s leading brand of
performance outdoor and adventure
footwear. We operate 14 Merrell stores.
The Trybe is about making kids
footwear fun. With a collection of
footwear and accessories from Nike,
Vans, adidas and more, The Trybe is a
key kids’ destination for the very best
global brands. The Trybe currently has
14 stores.
Inspired by the company’s New
England heritage, Timberland is a
brand true to the outdoor lifestyle. We
operate 8 Timberland stores.
Timberland Pro was born in 1999 and
brings premium and durable products
to professional tradespeople, focusing
on protection, performance and
comfort. The brand is committed to
delivering a greener future by striving
to create net positive emissions by
2030.
3
Accent Group Limited Annual Report 2022 Our Brands
Saucony exists for runners. This focus
and passion drives Saucony to create
the world’s best running shoes and
apparel.
Born in 2010 in Sydney, Australia, Nude
Lucy provides a premium, everyday
wardrobe inspired by an inherently
Australian relaxed way of life. Over a
decade later, it is now firmly established
as a sought-after, trustworthy and
timeless destination for casualwear,
made by women, for women.
SUBTYPE is the future of retail.
SUBTYPE’s unique, conceptual
stores are a cultural hub as well as a
destination for curated sneakers and
contemporary apparel.
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.
We now operate 4 CAT retail stores
in Australia.
HOKA offers consumers performance
enhancing footwear for all terrains,
Established in 2009, HOKA delivers
classic and new styles of running,
walking, trail, hiking shoes and more
in not just the most eye-catching
colours but with the latest technology-
designed shoes that provide ultimate
comfort.
Founded in 2012, ARTICLE ONE’s
philosophy is to provide elevated styles
for the modern-day individual which
form the core of every wardrobe. Every
ARTICLE ONE piece aligns with the
distinctively relaxed and effortless
Australian sensibility through fit,
fabric, subtle detailing and timeless
colour palettes.
4
Accent Group Limited Annual Report 2022 Our Brands
The Alpha range of footwear offers
an extensive range of back to school
footwear. Durability, multifit and
versatility are key to the success of this
brand.
Bold and edgy, Beyond Her is an
Australian fashion label known for
its strong 90’s vibe which combines
modern and vintage designs. A mix
of rough streetwear with elegant and
feminine fits takes you from casual and
workwear to off-duty and party outfits.
From humble beginnings in the UK
to worldwide wardrobe staples and
fashionable activewear, Henley’s offers
authentic and elite sportswear basics
and essentials for everyone, for all four
seasons.
Made with the everyday traveller in
mind, Herschel’s collection of bags
and backpacks have been thoughtfully
designed from scratch. Combining
modern functionality with a touch of
nostalgia, Herschel is renowned for
their practical details: laptop sleeves,
hidden compartments and separated
sections for everything you need.
Established in Dallas, Texas in 1982,
Autry is referred to as ‘the shoe with the
American flag’. Autry Action Shoes are
the ultimate blend of court shoe and
casual sneaker.
FIRST MSE is, a brand that is bold,
confident and the new must-have
addition to the after-dark wardrobe.
With their range of clothing including
dresses and tops, FIRST MSE is all
about clean lines and sleek silhouettes.
5
Accent Group Limited Annual Report 2022 Our Brands
Kappa has a proud history steeped
in footballing tradition. The industry-
leading sports apparel brand was
founded in Italy in 1967, with the famous
Omini logo symbolizing “equality and
mutual support”.
For over 100 years, Superga has been
known for their wide range of classic
sneakers and tennis shoes. Loved
by fashionistas, bloggers and trend-
setters alike, Superga, labelled as ‘the
people’s shoes of Italy’, has paved the
way for casual streetwear.
IN THE NAME OF aka I–T–N–O is a
brand that’s constantly in the know
of the next footwear trend. Founded
in Melbourne and designed for the
ultimate trend setter, ITNO offers
a diverse range of sandals, boots,
sneakers and heels.
Lulu & Rose combines current season
trends with the fun and femininity of
colours and prints. Bringing out the
hottest trends and styles, Lulu & Rose
will keep your outfit on point through all
four seasons.
With soles made from the same
rubber as aircraft tyres, it’s no wonder
Palladium is a go-to sneaker for modern
day explorers. Palladium is known for
combining technological innovation
with their signature ‘light as a feather’
feeling.
Sneaker LAB took its passion for
sneaker culture and matched it with
science, creating a natural cleaning
solution, that works. It is a proudly
South African brand that takes on a
fresh approach to shoe care to more
than 60 countries and counting.
6
Accent Group Limited Annual Report 2022 Chairman and Chief Executive Officers’ Report
FOCUSSED ON
LONG TERM
GROWTH IN
SHAREHOLDER
VALUE
Chairman and Chief
Executive Officers’ Report
Dear fellow Shareholders,
We are pleased to present to you the 2022 Annual
Report for Accent Group Limited (Accent Group,
Group or Company).
It is no surprise that the Company was still trading
through a COVID-19 impacted environment for
much of FY22. Over 50% of the Group’s total store
network, being more than 400 stores, were shut
between the months of July to October due to
government mandated lockdowns, and subsequently
the Omicron variant impacted customer traffic levels
and confidence. The negative impact of this disruption
on sales, gross margin and cost of doing business was
significant, resulting in disappointing financial results
for the year.
Despite the highly disrupted year, we have
continued to invest in and maintain the focus on our
growth initiatives including rolling out new stores,
strengthening our digital capability, expanding
our customer database, growing our distributed
brands, and building on our vertical brands. These
investments have been targeted towards continuing
the Company’s long-term growth trajectory
that has delivered record profits and growing
shareholder returns in four of the last five years. These
achievements build and reinforce the Company’s
strong and defensible market position, as well as
increasing our relevance in our target markets across
Australia and New Zealand. The strategic acquisition
and integration of both Stylerunner and Glue Store
has enabled Accent Group to create a strong entry
foothold into the athleisure and youth apparel
markets. We expect continued growth in sales and
EBIT from these businesses for FY23 and beyond.
In the context of continuing operational challenges
through a difficult trading environment, the Board
acknowledges the resolute dedication, resilience and
loyalty of the Accent Group team.
7
Accent Group Limited Annual Report 2022 Chairman and Chief Executive Officers’ Report
FINANCIAL REVIEW
The Group’s net profit after tax for FY22 was $31.5 million. Your Board has declared a final fully franked dividend of 4.00 cents
per share, which brings the total dividends declared during the year to 6.50 cents per share.
Financials
($ millions)
Total Sales (incl. TAF)1
Accent Group Sales (company owned)
EBITDA
EBIT
NPAT
EPS (cents per share)
Dividends (cents per share)
1
Includes The Athlete’s Foot franchise store sales.
FY22
1,267
1,103
213.6
62.3
31.5
5.81
6.50
FY21
1,138
967.8
242.0
124.9
76.9
14.21
11.25
Growth
11.3%
14.0%
(11.8%)
(50.1%)
(59.1%)
(59.1%)
(42.2%)
8
Accent Group Limited Annual Report 2022 Chairman and Chief Executive Officers’ Report
Customer loyalty programs
continue to be a focus for the
Group, with the launch of both
the Platypus and Hype DC loyalty
programs during the year.
The Group will continue to target
growing profitable digital sales.
Sustainability
We are very pleased to
have released our very first
standalone Sustainability
Report this year.
CONCLUSION
While it is disappointing that FY22
has broken our four-year record
of continuous year on year growth
in profit and shareholder value,
Accent Group remains focussed
on the creation of long-term
growth in shareholder value. Over
the last three years, the Company
has continued to invest in stores,
digital capability, distributed
brands, owned vertical brands and
new businesses, increasing the
scale and customer reach of the
business. Your Board believes that
the Company is well-positioned for
improved sales and profit growth
across Australia and New Zealand
and generating strong long-term
returns for our shareholders.
David Gordon
Chairman
Daniel Agostinelli
Chief Executive Officer
OPERATING REVIEW
Accent Group remains committed
to a long-term strategy of
delivering customers a best in
class integrated digital and instore
experience. Owned sales of $1.1b in
FY22 were up 14% on the prior year
(despite an estimated impact to
retail sales in H1FY22 of c$95m due
to COVID-19 disruption).
Retail & Wholesale
Despite the challenging trading
conditions in FY22, the Group
opened 139 new stores, and closed
15 stores where required rent
outcomes could not be achieved.
Our store development team
continues to prove that they are
best in class. We also identified
stores which could generate
significantly better returns
on investment if transitioned
to other banners. This work
commenced in FY22 and will be
completed in FY23. Glue Store
has been identified as one such
high performing banner, and
we are excited to see what the
acceleration in its growth plan
will yield.
The wholesale business delivered
continued growth in FY22, both
from our existing distributed
brands and new distributed brands
acquired with Glue Store.
Digital & Loyalty
The Group continued its focus on
driving online sales and achieved
total online sales of $263.8 million
in FY22, an increase of 25.7% on
the prior year.
Online sales represented 24.4%
of total retail sales. This digital
growth continues to be facilitated
by the infrastructure that Accent
Group has built over the last
five years, which ensured that a
record number of customers and
deliveries could be managed from
our digital platform, with significant
additional capacity and scalability
still available. The Platypus
webstore was upgraded and
re-platformed, now with
significantly more capability and
functionality, and seven new
websites were launched or re-
platformed.
Over the past year, contactable
customers grew from 8.4 million
to 9.3 million customers. We are
well placed to continue to service
the growing demand for digital
sales from customers with our
market leading, digitally integrated
consumer business, comprising 36
websites, 18 owned and distributed
brands, more than 760 points of
distribution and now more than
9 million contactable customers.
9
Accent Group Limited Annual Report 2022 Directors’ Report
for the year ended 26 June 2022
FY22 DIRECTORS’ REPORT
The Directors present their report, together with the financial statements of the consolidated entity (the Consolidated Entity
or Group) consisting of Accent Group Limited (the Company or Accent Group) and its controlled entities for the year ended
26 June 2022.
1. 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 – Chairman
– Daniel Agostinelli – Chief Executive Officer
– Stephen Goddard
– Michael Hapgood
– Donna Player
– Joshua Lowcock
– Brett Blundy
– Timothy Dodd – alternate Director for Brett Blundy
2. PRINCIPAL ACTIVITIES
Accent Group is a leading digitally integrated consumer business in the retail and distribution sectors of branded performance
and lifestyle footwear, apparel and accessories with over 760 stores across 26 different retail banners and exclusive distribution
rights for 18 international brands across Australia and New Zealand.
The Group’s banners and brands include The Athlete’s Foot (TAF), Platypus Shoes, Hype DC, Skechers, Merrell, CAT, Vans,
Dr. Martens, Saucony, Timberland, Hoka One One, Superga, Kappa, Palladium, Supra, Subtype, The Trybe, Stylerunner,
Glue Store and Autry.
3. DIVIDENDS
Dividends paid or declared by the Company during, and since the end of, the financial year are set out in Note 25 to the Financial
Statements and summarised below:
FY22 final
FY22 interim
FY21 final
FY21 interim
Cents per ordinary share
Total amount ($’000)
4.00
21,675
2.50
13,547
3.25
17,611
8.00
43,349
Payment date
15 September 2022
17 March 2022
16 September 2021
18 March 2021
The total dividend for the financial year ended 26 June 2022 of 6.50 cents per share is a decrease of 42.2% on the previous year.
4. OPERATING AND FINANCIAL REVIEW
The Operating and Financial Review of the Group for the financial year ended 26 June 2022 is provided in the Chairman and
Chief Executive Officer’s Report on page 7 and forms part of this Directors’ Report.
5. MATERIAL BUSINESS RISKS
The Group’s risk management framework enables it to continuously, systematically and actively monitor and manage the
potential risks which may adversely impact the operational and financial performance of its businesses, which in turn may affect
the outcome of an investment in the Group. There is no guarantee that the stated objectives of the Group will be achieved, or that
forward looking statements will be realised. A variety of factors, both Group specific and of a general nature, may impact upon
the Group’s activities and results, including general economic and business conditions, inflation, interest and exchange rates,
consumer confidence, government policies and the trailing effects of the COVID-19 pandemic.
The Group considers the following to be business risks that are likely to have a material effect on its operational and financial
performance. An overview (and not exhaustive list) of mitigation actions taken by the Group is also set out.
10
Accent Group Limited Annual Report 2022 Type and description of risk
Mitigating Actions
Competition
The markets in which the Group operates remain highly
competitive, and any increased competition from new and
existing competitors may lead to price deflation and a decline
in sales and profitability, in particular:
– Entrance of new international competitors
– Aggressive discounting by local competitors
– Growth in international online footwear sites providing
shipping to Australia and New Zealand
– Growth of new local boutique sneaker stores
– Direct to customer and top retailer distribution strategies
of major shoe brands
– Non-traditional retailers selling lifestyle and performance
footwear
– Global luxury brands expanding in the lifestyle footwear
category
Changes in consumer behaviour
The Group is exposed to both the upside and downside of
cycles in consumer spending and demands, given that the
products offered by the Group are discretionary in nature.
Accordingly, customers' preferences, perception of brands,
and demographics are all considered risks, in particular:
– A reduction in consumer spending and demand may lead
to a decline in the Group’s sales and profitability
– Trends in consumers shifting to online shopping drives a
prolonged decline in stores’ like-for-like sales growth
– An acceleration of the online trend drives inaccurate stock
allocations in the short-term
Health and Safety
The Group is committed to the health and safety of its team
members, customers and contractors and places a strong
emphasis on the implementation of work health and safety
standards. However, risks still remain possible, in particular:
– Injury to a customer or a team member in work locations
– Death of a customer or a team member in work locations
– A natural disaster event impacting on the safety of team
members or customers
– External events involving a team member or a member of
the public (e.g. self-harm, public situations) causing trauma,
distress and psychological harm
– Opening new stores to increase market share in Australia
and New Zealand
– Opening new and larger, or upgrading, existing stores in
locales where there is a heavy competitor presence
– Development and execution of new brand formats including
product offerings not limited to performance and youth
lifestyle footwear and apparel
– Significantly enhancing online digital capability and sales
penetration
– Monitoring international markets to identify opportunities
for growth
– Developing a deeper understanding of our customers,
including through application of technological
developments, CRM, and face-to-face engagement in-store
– Managing a diverse portfolio of brands, with appeal to
broader consumer demographic
– Driving store rental reductions at renewal
– Continued investment in store fit-out with each new store
and refurbished stores including new experiential elements
– Development of a forward-looking store performance/
profitability tool
– Continuing to optimise the incremental digital costs for
marketing and distribution
– Closely monitoring and responding quickly to changes in
the economic environment, consumer demand and new
products
– Establishing, regularly updating and implementing a health
and safety management system including resources, training
and procedures
– Investigating every incident to mitigate against reoccurrence
– Implementing learning initiatives and improvements to
create safer work locations
– Creating training modules to ensure that all team members
are inducted in safe work practises
– Developing an auditing program to train leaders to regularly
identify safety risks
– Establishing the Safety Steering Group which meets
regularly to discuss and review incidents
– Engaging with government agencies to ensure legal
compliance
– Engaging third party providers to support team members
with issues that may impact their wellbeing
– Provide First Aid/CPR training to nominated representatives
in offices locations, and Mental Health First aid training to
State and National Managers
11
Directors’ Reportfor the year ended 26 June 2022Accent Group Limited Annual Report 2022 Type and description of risk
Mitigating Actions
Cyber Security and Information Technology
While an increased reliance on information technology
systems maximises the efficiency of the Group’s business
operations, any sustained and unplanned downtime due to
cybersecurity attacks, system failures, network disruptions
and other malicious or non-malicious incidents could have
a material adverse impact on the Group’s reputation, and its
operating and financial performance, in particular:
– Corruption of inventory management software
– External attack on websites
– Internal/external unauthorised access to sensitive
commercial data
– Internal/external unauthorised access to customer data
– Fraudulent email phishing attacks resulting in
compromised infrastructure or systems
Distributed brands and key supplier relationships
The Group enjoys strong partnerships with all major suppliers,
and its regional exclusivity with numerous sought-after brands
is a key distinguishing feature of its product offering. Failing to
maintain good working relationships with key suppliers may
lead to the following risks:
– Loss of a key distributed brand due to poor management,
lack of growth or brand preference to manage the territory
themselves.
– Loss of a key global third party brand due to distribution
pressure from global sneaker retailers
– Substantive change in distribution strategy of a key
supplier resulting in a substantial product ranging change
Sustainability and social responsibility
The sustainability of the Group’s business is impacted by a
number of environmental and social factors. Any actual or
perceived failure to adequately address sustainability related
issues may have an adverse effect on the Group’s reputation,
and operational and financial performance, in particular:
– Identifying issues in its supply chain (including modern
slavery practices)
– Sourcing sustainable materials and packaging
– Implementing product compliant systems to improve
product safety
– Promoting gender equality
– Responding inadequately to increasing demand from
consumers regarding traceability of products and clearer
and more meaningful labelling may lead to reputational
damage and potentially immediate adverse political or
customer actions
– Documented disaster recovery processes (including offsite
information technology back-up infrastructure)
– Implementing improved user access and profiling
– Increasing the frequency of security assessments,
penetration and vulnerability testing using external expert
advisers
– Implementing higher level password security and change
protocols
– Implementing appropriate programs and tools to identify
and formalise the remediation of vulnerabilities
– Reviewing payment card industry compliance
– Exploring and, where appropriate, implementing security
tools based on artificial intelligence
– Increasing sophistication of enterprise password tools and
protocols
– Implementing a thorough, methodical and effective renewal
program for distributed brands
– C-suite engagement with distributed brand principals over
regular periods
– Driving the mix and growth of distributed brands
– Rolling out concept stores for distributed brands
– Opening new store formats to increase category reach,
expanding the Group’s relevance as a distributor or brand
partner.
– Establishing an Environmental, Social and Governance
(‘ESG’) framework, including the establishment of the ESG
Steering Group
– Increasing its focus on sustainability-related issues by
dedicated role of Group Sustainability Manager and
General Manager – Sourcing and Vertical
– Reporting on the Group’s progress of published targets in
the Sustainability Report annually with regular monitoring
throughout the year
– Reporting annually on the Group’s Modern Slavery
Statement with regular monitoring throughout the year
– Establishing a responsible sourcing framework under which
the Ethical Sourcing Policy was created, to be distributed to
relevant parties in the Group’s vertical products supply chain
– Reviewing the recommendations of the Financial Stability
Board’s Task Force on Climate-related Financial Disclosures
and, if appropriate, provide an analysis of and make
disclosures aligned with, the recommendations
– Commitment for gender equality in leadership roles
as published in the Group’s Sustainability Report and
Corporate Governance Statement annually
12
for the year ended 26 June 2022Directors’ ReportAccent Group Limited Annual Report 2022 Type and description of risk
Mitigating Actions
Legal, Regulatory and Compliance
The Group is required to maintain compliance with all
applicable laws and regulations, including those relating to
consumer protection, product quality, ethical sourcing and
corporate governance. Failure to comply with these laws and
regulations could result in high legal costs, adverse monetary
judgments, regulatory enforcement action and other claims
which could have a material adverse impact on the Group’s
reputation, and operational and financial performance, in
particular:
– Aggressive or poorly controlled tax risk management
leading to misstatements of tax payable
– Lack of focus on supply chain management, resulting in an
inability to meet Modern Slavery regulations requirements
– Poor management of PCI compliance, resulting in
monetary fines and regulatory breaches
– Poor understanding of key pieces of legislation impacting
on the Group’s business leading to regulatory breaches,
significant monetary fines and/or litigious action
Global pandemics
– Establishing policies, procedures and compliance systems
– Establishing a Group-wide Code of Conduct
– Establishing the Whistleblower Policy and dedicated
Whistleblower Protection Officer
– Dedicated in-house legal team
– Regular consultation with professional advisers on key areas
of compliance risk
– Actively monitoring changes to regulations and laws
– Monthly financial and disclosures obligation reporting
– Upweighted focus on tax risk compliance, including the
regular, systematic review of the effectiveness and currency
of the Group’s Tax Risk Management Policy
While the impacts of the COVID-19 pandemic have largely
subsided, it may face altered societal behaviour in relation to
public health concerns (for example to emerging epidemics),
including:
– Timing and nature of government containment measures
(which may again include lockdowns and mandated store
closures impacting profit and cashflow)
– Unforeseeable fluctuations in consumer demand by state,
and even local suburbs impacting profit and cashflow
– Risk of team member or customer infection resulting in
office(s) or store(s) closures
– Relevant health and safety protocols and policies developed
and in place to encourage personal hygiene, physical
distancing and management of mental health
– Required personal protective equipment made available in
all offices and stores
– Increased effectiveness and frequency of office and store
cleaning practices
– Online/digital contingency plans developed and
implemented for potential rolling shutdowns
– Able to quickly adjust marketing plans to support online
trading
– Risk of fines for regulatory breaches of government safe
– Regular monitoring and communication to team members
operating requirements
of government updates and requirements
– Altered consumer behaviour (e.g. long-term shift towards
online shopping or significant reduction in household
spending)
– Factoring in the potential foreseeable impact of health
epidemics into forward sales, costs, inventory and cashflow
plans
6. SUSTAINABILITY
A detailed account of our approach to business sustainability, covering people and safety, ethical sourcing, community and the
environment is contained in the Company’s 2022 Sustainability Report.
13
Directors’ Reportfor the year ended 26 June 2022Accent Group Limited Annual Report 2022 7.
INFORMATION ON DIRECTORS
Name
Particulars
David Gordon
Non-Executive Chairman
Daniel Agostinelli
Chief Executive Officer
Stephen Goddard
Non-Executive Director
David has over 20 years’ experience as a director of both public and private companies
and has spent more than 30 years working in corporate advisory roles to Australian and
international organisations. He brings extensive knowledge of mergers and acquisitions, as
well as capital raisings, IPOs and joint ventures.
David also has a proven track record in guiding businesses to harness their digital asset
capability to successfully explore and grow new markets.
David is the Chairman of the Board of nib Holdings Limited (ASX:NHF) and its health fund
subsidiary, nib Health Funds Limited.
He is also the Chairman of Shippit Pty Limited, General Homecare Holdings Pty Ltd and
Genesis Capital Manager 1 Pty Ltd, and a Non-Executive Director of international
not-for-profit organisation High Resolves Pty Ltd.
David has been a Non-Executive Director of Accent Group since October 2006 and was
appointed Non-Executive Chairman in November 2017.
David is also the Chairman of the People and Remuneration Committee and a member of the
Audit and Risk Committee and Digital Strategy Group.
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.
Stephen is currently the Chairman of the Board and the Remuneration and Nomination
Committee of JB Hi-Fi Limited and a Non-Executive Director and Chairman of the Audit and
Risk Committee of both GWA Group Limited and Nick Scali Limited. Stephen was formerly
the Finance Director and Operations Director for David Jones Limited and the founding
Managing Director of Officeworks.
Stephen was appointed as a Non-Executive Director of Accent Group in November 2017.
Stephen is the Chairman of the Audit and Risk Committee and a member of the People and
Remuneration Committee with extensive retail, finance, and board experience.
Michael Hapgood
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.
Donna Player
Non-Executive Director
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 and is a member
of the Digital Strategy Group.
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 and MySale Group PLC and the
Merchandise Director of Camilla Australia. Donna has a proven track record in developing
and delivering retail strategy and business transformation.
Donna was appointed as a Non-Executive Director in November 2017 and is a member of
the People and Remuneration Committee.
14
for the year ended 26 June 2022Directors’ ReportAccent Group Limited Annual Report 2022 Name
Particulars
Joshua Lowcock
Non-Executive Director
Brett Blundy
Non-Executive Director
Joshua is a recognised expert in digital and media with a career that has spanned Australia,
the US, and China. He brings to Accent Group proven retail expertise at the intersection of
marketing, technology, data, and privacy for clients that have included Woolworths, Walmart,
CVS Health. and several other Fortune 500 companies. Joshua has an MBA from AGSM and
is a Member of the Australian Institute of Company Directors (MAICD).
Joshua is also the New York-based Global Chief Media Officer of Universal McCann (UM)
and a Non-Executive Director of Cashrewards Limited.
Joshua was appointed as a Non-Executive Director of Accent Group in November 2019, is the
Chair of the Digital Strategy Group, and is a member of the Audit & Risk Committee.
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 re-appointed as a Non-Executive Director of Accent Group in April 2021 and is a
member of the Audit and Risk Committee.
Timothy Dodd
Alternate Director for Brett Blundy
Tim joined BBRC in September 2020 and serves as the Global CFO, covering all investments
and operations worldwide. Tim has over 30 years’ experience in financial and operational roles
across the banking, funds management, real estate and investment sectors, and has worked in
both publicly listed and private enterprises in Australia.
Tim was appointed as alternate director for Brett Blundy on 2 June 2021.
8. 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:
Name
Particulars
Matthew Durbin
Alethea Lee
Matthew is Group Chief Financial and Operations Officer, having had his role expanded during
2021 to have oversight of and responsibility for shared services of the Group. He is also a joint
Company Secretary. Matthew is a qualified accountant (FCPA) with 30 years’ 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.
Matthew joined Accent Group in November 2017 and was appointed as the joint Company
Secretary in January 2018.
Alethea is Group General Counsel and joint Company Secretary with over 15 years’
experience in corporate governance, strategic corporate transactions, corporate advisory,
and commercial, consumer and competition law. Prior to joining Accent Group, Alethea held
senior legal and governance positions with Fairfax Media Limited and David Jones Limited.
Alethea joined Accent Group and was appointed as the joint Company Secretary in
June 2021.
15
Directors’ Reportfor the year ended 26 June 2022Accent Group Limited Annual Report 2022 9. BOARD COMPOSITION AND INDEPENDENCE
The Board recognises the importance of having Directors who possess the combined skills, expertise and experience to facilitate
constructive decision making and follow good governance processes and procedures.
The table below outlines the mix of skills and experience considered by the Board to be important for its Directors to collectively
possess. The Board considers that collectively it has an effective blend of these skills to enable it to discharge its duties and
effectively govern the business and add value in driving the Group’s strategy.
Skill
Description
Strategy and planning
Ability to think strategically and identify and critically assess opportunities and threats and
develop effective strategies in the context of changing market conditions.
Operations
A broad range of commercial and business experience in business systems, practices,
improvements, risk and compliance, sales, technology and human resources.
Capital markets and M&A
Finance
Sales and marketing
Expertise in considering and implementing efficient capital management including
alternative capital sources and distributions, yields and markets.
Experience in all aspects of the negotiation, structuring, risk management and assessment of
both acquisitions and divestments.
The ability to analyse financial statements and reporting, critically assess the financial
performance of the group, contribute to budget planning and efficient use of capital
and resources.
Clear understanding of retail selling and marketing, developing and implementing sales and
marketing teams and strategies, recruiting, running and incentivising sales teams, and setting
sales budgets and targets.
Retail experience
(physical and digital)
Experience and broad understanding of the physical and online retail footwear and apparel
industry, including market drivers, risks and trends including policies, competitors, end users,
regulatory policy and framework.
People and performance
Appreciation for the best practices in HR planning and management with familiarity in
employment legislation and labour relations, recruitment, compensation, performance
reviews and conflict management.
Technology, data and privacy Expertise in the area of technology that the group should be aware of and utilising, including
keeping abreast of new and emerging technology.
Governance, compliance and
risk management
Ability to identify key risks to the group in a wide range of areas including legal and regulatory
compliance and monitor risk and compliance management frameworks and systems.
Knowledge and experience in best practice ASX and Corporations Act, governance
structures, policies and processes.
Director independence
Daniel Agostinelli is a full-time executive and therefore not considered independent.
Of the remaining six non-executive Directors, four are considered by the Board to be independent – David Gordon, Donna Player,
Stephen Goddard and Joshua Lowcock.
Notwithstanding the tenure of Mr Gordon, the Board considers him to be independent and the Company is well served by
Mr Gordon’s deep understanding of Accent Group and its business as a result of his longer tenure. Given Mr Gordon’s tenure of
over 10 years, the Board regularly assesses whether he has become too close to management to be considered independent.
The Board regularly conducts such an assessment, and has recently reconfirmed Mr Gordon’s independence, on the basis that
he is non-executive, not a substantial shareholder, conducts himself at arm’s length in his engagement with the Company and
brings his considerable skills and knowledge to bear on matters before the Board. Mr Gordon’s approach to matters of the Board
is always independent in both appearance and in fact.
Mr Hapgood is related to two of the senior executives of the Company and is not considered independent. However, as a
non-executive director, Mr Hapgood is completely independent from the day-to-day operations of the business and therefore
able to bring clarity and independent thought to matters before the Board. Due to his familial links with two executives,
Mr Hapgood does not participate in any Board matters relating to management remuneration other than the CEO.
Mr Blundy is a substantial shareholder and is therefore not considered to be independent. However, as a non-executive director,
he is completely independent from day-to-day operations of the business and therefore able to bring clarity and independent
thought to all matters before the Board. Mr Blundy draws on his considerable skillset to act in the best interests of the
Company and its shareholders.
16
for the year ended 26 June 2022Directors’ ReportAccent Group Limited Annual Report 2022 10. MEETINGS OF DIRECTORS
The following table sets out the number of Directors' meetings (committee meetings) held during the year ended 26 June 2022
and the number of meetings attended by the members of the Board or the relevant committee. During the financial year,
10 Board Meetings (with the June 2022 meeting spanning two whole days), four Audit and Risk Committee meetings, four
People and Remuneration Committee meetings, one Nominations Committee meeting, and four Digital Strategy Group
meetings were held.
Directors have a standing invitation to attend meetings of Board committees of which they are not members. All Directors receive
copies of the agendas, papers and minutes of each Board committee meeting.
Full Board
Held Attended
Audit and Risk
Committee
Held Attended
People and Remuneration
Committee
Held Attended
Digital Strategy
Group
Held Attended
Nominations
Committee
Held Attended
David Gordon
Daniel Agostinelli
Stephen Goddard
Michael Hapgood
Donna Player
Joshua Lowcock
Brett Blundy
Timothy Dodd
10
10
10
10
10
10
10
10
10
10
10
10
10
10
6
4
4
–
4
–
–
4
–
1
4
–
4
–
–
4
–
1
4
–
4
–
4
–
–
–
4
–
4
–
4
–
–
–
4
–
–
4
–
4
–
–
4
–
–
4
–
4
–
–
1
–
1
1
1
1
1
–
1
–
1
1
1
1
1
–
Held: represents the number of meetings held during the time the Director held office.
Given the continuing impact of the COVID19 pandemic on the Company’s operations, the Board continued its increased level of commitment from FY20 into
FY22 with a number of additional Board meetings scheduled to enable the Board to guide the Company and management with decision-making during the
uncertain period.
11. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
In the Directors’ opinion, there have been no significant changes in the state of affairs of the Group during the year.
12. MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
Apart from the dividend declared as disclosed in Note 25 and the matters described above, no other matters or circumstance
have arisen since 26 June 2022 that have 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.
13. LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
All relevant future developments are outlined in the Chairman and Chief Executive Officer’s Report, Section 5 - Material
Business Risks of this report and Section 12 - Matters subsequent to the end of the financial year of this report.
14. ENVIRONMENTAL REGULATION
The operations of the Group are not subject to any particular and significant environmental regulation, and did not incur any
significant liabilities under any environmental legislation during the financial year. Disclosures regarding the Group’s material
sustainability-related issues can be found in its Sustainability Report.
INDEMNITY AND INSURANCE OF OFFICERS
15.
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.
16. PROCEEDINGS ON BEHALF OF THE COMPANY
No proceedings have been brought or intervened in on behalf of the Company with the leave of the court under section 237 of
the Corporations Act 2001. 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.
17. AUDITOR
Deloitte Touche Tohmatsu continues in office in accordance with section 327 of the Corporations Act 2001.
17
Directors’ Reportfor the year ended 26 June 2022Accent Group Limited Annual Report 2022 Directors’ Report
INDEMNITY AND INSURANCE OF AUDITOR
18.
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.
19. NON-AUDIT SERVICES
As set out in Note 29 to the financial statements, the auditor did not provide any non-audit services to the Company during the
financial year.
20.
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.
21. 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.
22. 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 on
page 19.
18
for the year ended 26 June 2022Accent Group Limited Annual Report 2022 Auditor’s Independence Declaration
Deloitte Touche Tohmatsu
ABN 74 490 121 060
477 Collins Street
Melbourne VIC 3000
Tel: +61 3 9671 7000
www.deloitte.com.au
18 August 2022
The Board of Directors
Accent Group Limited
2/64 Balmain Street
Richmond, Victoria 3121
Dear Board Members,
Auditor’s Independence Declaration to 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 report of Accent Group Limited for the year ended 26 June 2022,
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 faithfully
DELOITTE TOUCHE TOHMATSU
Stephen Roche
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
19
Accent Group Limited Annual Report 2022
Remuneration Report
FY22 REMUNERATION REPORT
Letter from the Chair of the People and Remuneration Committee
Dear Shareholders,
On behalf of Accent Group, I am pleased to present the FY22 Remuneration Report outlining the Group’s remuneration strategy
and framework, and decisions taken by the Board in relation to the remuneration of senior executives. This report sets out how the
Board has approached remuneration in the context of the COVID-19-impacted environment in Australia and New Zealand, the
strategies and initiatives taken by management to maintain profitability and growth, and the financial results achieved in FY22,
which as a consequence of the global pandemic were clearly disappointing.
Throughout FY22, across Australia and New Zealand, trade was continuously interrupted by COVID-19-related disruption and
lockdowns. At times, through the months of July to October 2021, more than 400 of the Group’s 700 stores were required to close
due to government-mandated lockdowns, representing more than 50% of the Group’s total store network. In late 2021, the Omicron
variant spread to Australia which resulted in further disruptions to trade. These disrupted trading conditions significantly impacted
the Company’s FY22 financial performance.
Our Business Strategy
Throughout this challenging period, Accent Group continued to invest in the strategic priorities of the business for future growth
and transformation to become a regional leader in the retailing and distribution of performance and lifestyle footwear and apparel/
athleisure. Recognising the importance of its people, the Company continued to keep its permanent employees employed.
The management team maintained its focus and drive and, despite having to navigate the varying geographical and durational
differences in restrictions and lockdowns, opened 139 new stores during the financial year. The Group now operates over 760 stores
across 26 different retail banners with exclusive distribution rights for 18 international brands throughout Australia and New Zealand.
The Glue Store business is now on track, finishing the year with good momentum. The Group continued to invest in increasing the
Company’s strength in the digital space by both enhancing existing and building new webstores. Most notably, there has been a
significant expansion of Accent Group’s owned brands. The Board and management team made a conscious decision to continue
to invest in the growth strategies of the business rather than turning to a short-term, cost-cutting approach which would not be
consistent with the Company’s objectives to grow profits and create long-term shareholder value.
In light of the significant business growth and new businesses added over the last three years, the Company completed and
implemented a structural review in March 2022. This review was undertaken to determine the best structure to drive continued
growth and resulted in the appointment of four divisional CEO roles – Retail Brands, Distributed Brands, Apparel & Vertical Brands,
and New Zealand. Each divisional CEO reports directly to the Group Chief Executive Officer (CEO). Three of the new divisional
roles were filled internally, leveraging the succession of the existing executive team. An extensive search is underway for the role of
Divisional CEO Apparel & Vertical Brands, and in the interim the Group CEO, Daniel Agostinelli will have direct responsibility for this
division.
Our performance
Whilst the Board continues to be pleased with the strategic progress made in the FY22 year, the disappointing operating results
were significantly impacted by the well reported disruption experienced due to COVID-19 related consumer impacts including
significant government mandated store closures and other COVID-19 related consumer impacts.
Although the Group did experience a disappointing decline in the financial performance of the business in FY22 compared to prior
years, with EBIT at $62.3m (down 50.1% on the prior year), the Board still considers that the overall performance of Accent Group
taken over the past 18 years has been commendable. In regularly reviewing its allocation of capital to existing and new businesses
to drive innovation and growth, reduce costs and complexity, and prioritise its resources, Accent Group has focused on growing
long-term shareholder value and delivered shareholders a 10-year compounding total shareholder return of more than 20% per
annum to 26 June 2022.
Continuous Improvement in Remuneration Practices
The Company continues to respond to feedback received from Shareholders and their advisors in relation to the Company’s
remuneration practices.
As stipulated in the prior year, the Board has and will continue to maintain the same level of transparency provided in the
Remuneration Report in relation to STI disclosures. For the FY22 performance period, it is important to note that the primary
financial metric under the STI reverted back to a pure EBIT measure rather than underlying EBIT, which was adopted due to the
COVID-19 pandemic and related government wage subsidies arrangements.
In relation to the Company’s LTI program, the Board still considers that a single metric program, using EPS as the measure, to
be the best approach for the delivery of a scheme that is easy for the Accent Group team to understand and thus creates real
incentive during the year, and that aligns management performance with shareholder value creation.
20
Accent Group Limited Annual Report 202226 June 2022 FY22/FY23 Remuneration Outcomes
The COVID-19 disrupted financial performance of the Company has resulted in the following remuneration outcomes for the KMP
and Directors:
– With respect to FY22, the financial performance hurdles required for the payment of 80% of the FY22 short term incentive
were not achieved, and whilst several of the strategic measures required for the payment of 20% of the short-term incentive
were achieved, the Board determined that in the context of the overall financial results and shareholder outcomes for the year,
no STI would be payable.
– In relation to FY23, given the challenging trading conditions and resultant financial performance that the Company had to
navigate in the wake of COVID-19, the Board considered it appropriate that no increase be applied to the fixed remuneration
of the CEO, CFOO and the non-executive directors.
–
– In relation to Tranche 2 LTI grants (FY18-FY22) of the Performance Rights Plan, subject to receipt of shareholder approval:
As previously disclosed, the Board exercised its discretion and determined that the EPS performance condition for
50% of the Tranche 2 performance rights had been deemed as met, with the retention condition requiring that
participants had to be employed at the testing date immediately post release of the FY22 financial results.
In recognition of the materially disruptive impact of the COVID-19 global pandemic on the Company’s business
operations, which was beyond the reasonable control of management, the Board has exercised its discretion to defer
the EPS performance condition and the retention condition for the remaining 50% of the Tranche 2 performance rights
to immediately post release of the FY23 financial results.
–
The ASX has issued a waiver from Listing Rule 6.23.3 to allow the Company to exercise its discretion in relation to the Tranche 2
performance rights in the manner described above, provided that the Company obtains shareholder approval for such matters,
which it intends to seek at the 2022 annual general meeting which is expected to be held in November 2022. Please refer to
‘LTI Outcomes FY22’ of Section 2.5 for further information in relation to the Tranche 2 performance rights.
In conclusion, I am pleased to present the Company’s FY22 Remuneration Report which includes significant additional disclosure
compared to prior years.
Yours faithfully,
David Gordon
Chairman of the People and Remuneration Committee
18 August 2022
21
Accent Group Limited Annual Report 202226 June 2022Remuneration Report
FY22 REMUNERATION REPORT
1. REMUNERATION OVERVIEW
1.1. Details of Management Personnel (KMP)
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the
activities of the entire entity, directly or indirectly, including all Directors.
Executive Director
Daniel Agostinelli
Senior Executives
Matthew Durbin
Non-Executive Directors
David Gordon
Michael Hapgood
Stephen Goddard
Donna Player
Joshua Lowcock
Brett Blundy
Timothy Dodd
Group Chief Executive Officer
Group Chief Financial and Operating Officer
Chairman
Director
Director
Director
Director
Director
Alternate Director
1.2. People and Remuneration Committee (PARCO) and Nomination Committee
The Board has established a People and Remuneration Committee (PARCO) which operates under the delegated authority of
the Board of Directors. The following Non-Executive Directors are members of PARCO:
Mr D Gordon
Independent Non-Executive Committee Chair
Mr S Goddard
Independent Non-Executive Director
Ms D Player
Independent Non-Executive Director
PARCO is authorised by the Board to obtain external professional advice, and to secure the attendance of advisers with relevant
experience and expertise when it considers this necessary.
The Group’s remuneration strategy is designed and implemented on behalf of the Board by PARCO. PARCO then makes
recommendations to the Board on matters relating to remuneration for the entities within the Group. PARCO considers
recruitment, retention and termination policies and procedures, non-executive Directors’ remuneration, executive Directors and
senior management 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 Nomination Committee comprises all of the Non-Executive Directors of the Company.
The Nomination Committee is charged with overseeing, monitoring and evaluating Board performance, ensuring
appropriate induction and professional development programs for directors, and succession planning. In addition to making
recommendations to the Board on the above, it is also responsible for recommending to the Board (once identified) the
best-qualified candidates for the Board of Directors.
Use of Remuneration Consultants
1.3.
Where PARCO determines it may benefit from external advice, it may engage directly with a remuneration consultant, who
reports directly to the Committee. In selecting a suitable consultant, the Committee considers potential conflicts of interest and
requires independence from the Group’s KMP as part of their terms of engagement.
22
Accent Group Limited Annual Report 202226 June 2022Remuneration Report 1.4. Board Policies for Determining Remuneration
The Board understands that the performance of the Group is driven through the quality and motivation of its people, including
the CEO and executive team and the approximately 6,500 team members of the Group across Australia and New Zealand.
The Group’s remuneration strategy is designed to attract, motivate and retain high quality and high performing employees,
while ensuring that the interests of employees are in line with the interests of shareholders. Our strategy is guided by our vision
to be the leader in the performance and lifestyle footwear and youth market across Australia and New Zealand, by delivering
world-class customer experiences, and harnessing the power of our people, brands and products. The Board aims to achieve
this by setting market competitive remuneration packages that consist of a mix of fixed remuneration, short-term incentives to
reward annual performance and long-term incentives that align to long term financial performance and long-term shareholder
value creation.
Our remuneration framework is guided by the key principles of alignment with:
– Delivery of long-term returns to shareholders through the delivery of sustainable sales and profit growth across the business
– Delivery of sustainable growth in dividends flowing from the strong cash flows from its defensible and desirable business
– Maintaining a strong, conservatively geared balance sheet
– Adherence to the Group’s Code of Conduct and Company values
– Encouraging a culture of equality and diversity
The Group’s remuneration reviews take place within three months of the end of each financial year. Prior to these reviews, the
CEO makes recommendations to PARCO regarding the remuneration of each of his direct reports and the overall remuneration
framework for all employees. PARCO meets to consider those recommendations, and also discusses and determines the
remuneration of the CEO.
2. REMUNERATION COMPONENTS
The key features of the Executive remuneration structure are outlined below:
Type of remuneration
Fixed remuneration
Short term incentive
Long term incentive
Total Executive Remuneration
Fixed
At risk
How is it set
Fixed remuneration is
set with reference to
market competitive
rates in comparable
ASX listed companies
for similar positions,
adjusted to account for
the experience, ability
and productivity of the
individual employee
Senior executives
participate in the
Group’s STI plan which
is tied directly to the
achievement of profit
growth, either for the
Group as a whole or a
relevant business unit or
both (as the case may be).
Refer to section 2.3 for
further details
How is it delivered
– Base salary
– Superannuation
– Other benefits
(e.g. motor vehicle)
– 100% cash
The Company
has established a
Performance Rights
Plan. There have been
a number of tranches
of performance rights
issued under the plan,
each requiring a target
achievement of 10% (or
greater) compounding
earnings per share
growth over the relevant
performance period.
Refer to section 2.4 for
further details.
– Performance rights
that vest at the end
of the performance
period if vesting
conditions are met
– Escrow periods may
also apply
23
Accent Group Limited Annual Report 202226 June 2022Remuneration Report Type of remuneration
Fixed remuneration
Short term incentive
Long term incentive
Total Executive Remuneration
Fixed
At risk
What is the objective
– Attract and retain key
– Drive annual
talent
– Be competitive
– Support workplace
equality
profit growth and
shareholder returns
– Reward value creation
over a one-year period
whilst supporting the
long-term strategy
– Incentivise desired
behaviours in line
with the Group’s risk
appetite
– Support delivery of
the business strategy
and growth objectives
– Incentivise long-term
value creation
– Drive alignment
of employee and
shareholder interests
2.1. Link between financial performance, shareholder wealth and remuneration
The Group’s executive remuneration is directly related to the performance of the Group, through the linking of incentives to
certain financial measures as detailed previously and shown below.
The financial performance of the Group and shareholder value creation over the last 5 years is also summarised in the table below.
Revenues ($'m) (inc. Franchisees
and Other Income)
EBITDA ($'m)
EBIT ($'m)
Net profit attributable to the owners
of the Company ($'m)
EPS (cents)
Shareholder value created:
Market capitalisation ($'m)
Enterprise value
Movement in enterprise value
during the financial year
Dividends paid during the financial
year
Closing Share Price
DPS (cents)
FY18
FY19
FY20
FY21
FY22
Growth YoY
703.2
88.8
64.7
44.0
8.23
796.8
108.9
80.6
830.1
202.9
94.5
53.9
55.5
10.02
10.28
993.8
242.0
124.9
76.9
14.21
894.8
929.7
749.6
799.1
797.0
828.2
1,496.0
1,563.0
1130.6
213.6
62.3
31.5
5.81
661.1
780.4
405.7
(130.6)
29.1
734.8
(782.7)
CAGR
Last
5 years
12.6%
24.5%
(0.9%)
(8.0%)
(8.3%)
13.8%
(11.8%)
(50.1%)
(59.1%)
(59.1%)
(55.8%)
(50.1%)
(7.3%)
(4.3%)
32.6
1.65
6.75
44.7
1.39
8.25
48.8
1.47
9.25
65.0
2.76
11.25
31.2
1.22
6.5
(52.1%)
(55.8%)
(42.2%)
(1.1%)
(7.3%)
(0.9%)
24
Accent Group Limited Annual Report 202226 June 2022Remuneration Report
KMP remuneration and EPS over the last 5 financial years
The graph below shows the relationship between total KMP remuneration and EPS over the past five years and the relationship
between KMP remuneration and Company performance, specifically, the total aggregate total remuneration of the KMP team for
each year from FY18 to FY22 as set out in the Remuneration Report each year.
)
'
m
$
(
n
o
i
t
a
r
e
n
u
m
e
R
M
P
K
6,500
5,500
4,500
3,500
2,500
1,500
500
-500
15.00
14.00
13.00
12.00
11.00
10.00
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
)
s
t
n
e
c
(
S
P
E
FY18
FY19
FY20
FY21
FY22
Fixed
STI
LTI
EPS
Company financial performance and share price
The long-term effectiveness of the Company’s performance-related remuneration strategy and the strong alignment between
financial performance and executive remuneration is demonstrated by the relative outperformance of the Company’s share price
over the last 10 years.
FY18 to FY22 Revenues ($m)
FY18 to FY22 EBIT ($m)
1,131
994
797
830
703
1,200
1,000
800
600
400
200
0
FY18
FY19
FY20
FY21
FY22
FY18 to FY22 EPS (Cents)
10.02
10.28
8.23
14.21
5.81
16
14
12
10
8
6
4
2
0
125
95
81
65
62
FY18
FY19
FY20
FY21
FY22
(pre
AASB 16)
FY18 to FY22 DPS & EPS (Cents)
14.21
12.50
10.02
10.28
9.25
8.23
8.25
6.75
6.0 5.81
140
120
100
80
60
40
20
0
14
12
10
8
6
4
2
0
FY18
FY19
FY20
FY21
FY22
FY18
FY19
FY20
FY21
FY22
(pre
AASB 16)
Accent Group Limited Annual Report 2022
25
26 June 2022Remuneration Report
Remuneration Report
The following chart demonstrates the outperformance of the Company’s share price relative to the ASX200.
)
1
X
A
o
t
d
e
s
a
b
e
R
,
A
$
(
e
c
i
r
P
e
r
a
h
S
3.50
3.00
2.50
2.00
1.50
0.50
0
+258.8%
-60.7%
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
AX1
ASX200
Remuneration Mix
The total remuneration for the executive KMPs comprises both fixed remuneration and at-risk components in STI and LTI. The
mix shown below indicates the potential remuneration based on the current remuneration as of 26 June 2022 with STI and LTI
presented at maximum or stretch opportunities.
Executive KMP
Daniel Agostinelli
Matthew Durbin
Fixed
Remuneration
33.3%
36%
STI
33.3%
28%
LTI
33.3%
36%
Total
100%
100%
Daniel Agostinelli
Matthew Durbin
33.3%
33.3%
36%
36%
Daniel
Agostinelli
Matthew
Durbin
33.3%
28%
Fixed
STI
LTI
Fixed
STI
LTI
26
Accent Group Limited Annual Report 202226 June 2022
2.2. Fixed Remuneration
Fixed remuneration is set with reference to market competitive rates in comparable ASX listed companies for similar positions,
adjusted to account for the experience, ability and productivity of the individual employee. Fixed remuneration includes base
salary along with any fringe benefits to the employee and statutory superannuation contributions.
To ensure appropriate and competitive remuneration for FY22, PARCO considered the remuneration levels and structures for
the CEO and CFOO with reference to:
– external listed comparable remuneration benchmarks
– the competency and skillsets of the individuals and their performance over the long term
– the scarcity of talent and the importance and value of retaining key executives
– changes in the complexity, organisational structure and geographical spread of the Company
In respect of FY22 and as advised in the FY21 Remuneration Report, having regard to the freeze on fixed remuneration for the
CEO, CFOO and the Board in FY20, the significant growth achieved by the Company over FY20 and FY21 yielding a 38.6%
increase in FY21 of the Group’s net profit after tax, the fixed remuneration for each of the CEO, CFOO and non-executive
directors were increased by 17.2%, 18.2% and 8% respectively.
For FY23, given the challenging trading conditions and resultant financial results that the Company had to navigate in the wake of
COVID-19, the Board considered it appropriate that no increase be applied to the fixed remuneration of the CEO, CFOO and the
non-executive directors.
2.3. STI Plan
Purpose and Objectives
The Group’s STI program is designed to drive the Company’s objective of delivering profit growth and shareholder returns, whilst
also ensuring the achievement of strategic objectives that are aligned with current and future profit growth. Senior executives
have a significant proportion of their STI tied directly to the achievement of profit growth, either for the Group as a whole or a
relevant business unit or both (as the case may be). All STI payments are also subject to an assessment by PARCO of individual
non-financial performance measures related to strategy implementation, leadership and behaviours consistent with the Group’s
values and corporate philosophy.
The Group believes that by implementing the STI program, KMP are best positioned to effectively carry out their duties in
achieving the strategic objectives of the company. The Group also expects KMP to continue to drive the values engrained
within the Group’s culture and Code of Conduct, acting in the best interests of shareholders and other stakeholders and in turn
resulting in greater success for the Group and aligning Group and shareholder value creation moving forward.
27
Accent Group Limited Annual Report 202226 June 2022Remuneration Report Structure
The STI program in FY22 was structured as follows:
Performance period
12 months
FY22 STI Plan Structure
Opportunity
CEO – 100% of fixed remuneration at maximum
CFOO – 75% of fixed remuneration at maximum
How the STI is paid
Cash
Performance measures / KPIs
1. EBIT growth – 80%
2. Measurable strategic objectives – 20%
Performance conditions
How is STI assessed?
What happens when a senior
executive ceases employment?
Malus and Clawback
Is there any STI deferral?
Financial Condition – 80% Weighting
– If the Group’s Year on Year EBIT growth for the year is:
– At 9%: 50% of the maximum award vests.
– In between 9%-10%: straight line vesting occurs.
– At 10% or greater: 100% of the maximum award vests.
Strategic Objectives condition – 20% Weighting
– The STI award is also subject to achieving the following quantitative non-financial
strategic objectives, with equal weighting distributed across the four objectives.
– New Stores: stores opening budget and EBIT performance achieved
– Digital Growth: digital growth % on prior year at or higher than four-wall
growth including new stores
– Accent Lifestyle: achievement of EBIT budget from November 2021 to
June 2022
– Stylerunner: open 28 stores by June 2022
PARCO reviews the CEO’s performance against the performance targets and
objectives set for that year. The CEO assesses the performance of the senior executive
team, with the CEO having oversight of his direct reports and the day-to-day functions
of the Company.
The performance assessment of the CEO and other senior executives are reviewed by
PARCO and then recommended for Board approval.
If the senior executive’s employment is terminated for cause, no STI will be paid.
If the senior executive resigns or is considered a good leaver prior to the completion
of the performance period, the STI may be granted on a pro rata basis in relation to the
period of service completed, subject to the discretion of the Board and conditional
upon the individual performance of the senior executive.
In the event of serious misconduct or a material misstatement in the Group’s
financial statements, the Board may cancel the STI payment and may also claw
back STI payments paid in previous financial years, to the extent this can be done in
accordance with the law.
The STI awards are currently delivered fully in cash and vest at the end of the one-year
period, subject to the achievement of the performance conditions. The Board
periodically reviews the appropriateness of a deferral of a portion of the STI into
equity. After this year’s review, the Board determined that a deferral is currently
not appropriate for the Group in light of the size of the Group and the KMP team,
as well as the CEO’s current equity ownership in the Company consisting of
18,000,224 shares which represent 3.3% of issued capital and an interest in a
further 8,536,061 performance rights through the Performance Rights Plan (PRP).
The Board is of the view the that objectives of a deferral (i.e. retention and risk
management) are currently satisfied through the KMPs’ participation in the PRP
which vests progressively between FY22-FY25 and existing share ownership.
28
Accent Group Limited Annual Report 202226 June 2022Remuneration Report STI outcomes FY22
The FY22 year has been a challenging year for the Group. Revenue was up 13.8%, EBIT down 50.1% and EPS down 59.1%.
Financial Condition
80% of award based on the achievement of the target Group EBIT growth: Not Achieved
EBIT Growth
(50.1%)
EBIT decreased from FY21 and as a result did not meet the 9% growth required for the payment of any of this component.
Strategic Objectives
While several of the strategic objectives outlined below were achieved, in the context of the challenging environment and overall
performance, the Board determined that it was not appropriate to pay any STI component against these measures.
Objective
Outcomes
Achieved
New Stores: stores opening budget and EBIT/sales
performance achieved
– 139 new stores opened
Digital Growth: digital sales growth % on prior year at or higher
than store sales growth including new stores
– Digital sales growth of 25.7%
Accent Lifestyle: achievement of budgeted EBIT from
November 2021 to June 2022
– Budget not achieved
Stylerunner: open 28 stores by June 2022
– Not achieved
The table below sets out the performance of the CEO and CFOO in relation to the STI program:
Y
Y
N
N
CEO – Daniel Agostinelli
CFOO – Matthew Durbin
Financial
Performance
target
Target Group
EBIT
Growth >9%
Target Group
EBIT
Growth >9%
Performance
outcome
Strategic
objectives
outcome
Maximum STI
available
Achievement*
FY21
FY22
EBIT decline of
50%
Partially
achieved
100% of fixed
remuneration
EBIT decline of
50%
Partially
achieved
75% of fixed
remuneration
100%
100%
0%
0%
* Achievement represents the amount achieved as a percentage of the maximum available
As stated above, no STI award was made to the Group CEO and CFOO for FY22.
2.4. LTI Plan
Purpose and Objectives
The Company has implemented an LTI program through the Performance Rights Plan (PRP).
The objectives of this plan are:
– to drive long term value creation for shareholders
– to attract, motivate and retain key employees, and for them to share in the value created for all shareholders of the Company.
The PRP operates under the rules most recently approved by shareholders at the Company's 2019 Annual General Meeting.
As of 26 June 2022, there are 35,593,732 rights issued under the PRP which remain outstanding.
The current Tranches 2-5 of the PRP have a single performance measure and for Target performance requiring the
achievement of 10% or greater compounding earnings per share growth over the relevant performance period. The Board
periodically evaluates the impact and relevance of this performance measure and considers it to be effective in achieving
the stated objectives since the plan has been successful in driving strong performance since its inception in FY17.
29
Accent Group Limited Annual Report 202226 June 2022Remuneration Report Structure
During FY22, a new issue of Performance Rights was made (Tranche 6) with the structure set out below:
FY22 LTI Plan (Tranche 6) Structure
Performance/ vesting period
4 years from FY22-FY25 plus a one-year escrow period to the end of FY26 following
the completion of the performance period
Opportunity
Instrument
Performance metric
Vesting condition
Rationale for the performance metric
and condition
What happens when a KMP ceases
employment?
Malus and clawback
Dividends and voting rights
Re-testing
Change of Control provision
– CEO – 100% of fixed remuneration
– CFOO – 100% of fixed remuneration
Performance Rights
Compound earnings per share (EPS) growth over 4 years (100%)
50% of award opportunity vesting at Threshold - 9% ADEPS1 growth
100% of award opportunity vesting at Target - 11% ADEPS growth
150% of award opportunity vesting at Stretch - 16% ADEPS growth
Straight line vesting occurs between 9% and 16%
No portion of an award will vest if compound ADEPS growth is less than 9%.
Awards are also subject to a service condition requiring the participant to remain
employed by the Group until the end of the vesting period (four years in total)
In consultation with shareholders, advisors and other market participants, and based on
a benchmark review of relevant ASX listed companies, the Board has determined that
EPS growth is a widely used and well understood indicator of company performance
and a long-term driver of shareholder value creation through the link to share price and
dividend growth.
Earnings per share growth represents a transparent and well understood metric for both
shareholders and management that is not subject to market outcomes but rather is a
direct outcome of the strategic and operational efforts of the management team over
time. ADEPS also incorporates all the aspects of the Company’s financial performance
that are within management’s control.
Tranche 6 of the LTI requires a minimum 9% compound ADEPS growth and delivers
increasing outcomes as compound ADEPS growth factor exceeds 9% up to a stretch
target of 16%.
If the KMP’s employment is terminated for cause, or due to resignation, all unvested
Performance Rights will lapse, unless the Board determines otherwise. In all other
circumstances, unless the Board decides otherwise, a pro-rata portion of the
KMP’s Performance Rights, calculated in accordance with the proportion of the
performance period that has elapsed, will remain on foot, subject to the performance
condition as set by the Board. If and when the Performance Rights vest, shares will be
allocated in accordance with the plan rules and any other condition of the grant.
In the event of fraud, dishonesty, gross misconduct, acts of harassment or
discrimination or a material misstatement or omission in the Company’s financial
statements, the Board may deem any unvested Performance Rights and/or any
vested and unexercised Performance Rights of the participant to have lapsed.
Performance rights do not confer on the holder any entitlement to any dividends or other
distributions by the Group or any right to attend or vote at any general meeting of the
Group.
Awards are tested once, at the end of the performance period of four years. There is
no further retesting of the performance conditions.
In the event of a Change of Control (including a takeover scheme or arrangement
or winding up of the company), Performance Rights automatically and immediately
vest from the date of the event in the proportion that the Group’s share price has
increased since the date of grant of the Performance Rights.
The Board may determine that all or a specified amount of the participant’s remaining
unvested Performance Rights automatically and immediately vest.
30
Accent Group Limited Annual Report 202226 June 2022Remuneration Report LTI Outcomes FY22
CEO & CFOO FY22 Long Term Incentive
PARCO recommended the issuance of performance rights under the PRP to the CEO and CFOO with a performance date of
September 2025 (Tranche 6 detailed above). This new issuance of Performance Rights to the CEO was approved by Shareholders
at the Company’s Annual General Meeting on 19 November 2021.
CEO and CFOO Long Term Incentive
No performance rights vested FY22. Please refer to below for further detail.
Tranche 2 FY18-FY22 of the PRP
The FY18-FY22 performance rights plan (Tranche 2, issued in December 2017), included the following performance and
retention conditions:
– a performance condition that at least 10% compound EPS growth per annum be achieved over the performance period
FY18-FY22; and
– a retention condition that the participant had to be employed at the testing date immediately post release of the FY22
financial results.
As previously disclosed, in the early stages of the pandemic, in consideration of the financial performance achieved to that
point and to provide some certainty for the LTI participants during a highly uncertain period, the Board exercised its discretion
and determined that the EPS performance condition for 50% of the Tranche 2 performance rights had been deemed as met
given that the EPS target had been achieved in calendar year 2019. These performance rights were still subject to the retention
condition that the participant had to be employed at the testing date immediately post release of the FY22 financial results.
On this basis, 50% of the Tranche 2 performance rights issued to the CEO and CFO are expected to vest on 19 August 2022,
subject to receipt of shareholder approval.
The Board considers that the Tranche 2 performance rights plan allocation has been extremely effective in driving shareholder
value, with the Company achieving 21.1% per annum compound ADEPS growth in the first 4 years of the PRP to 27 June 2021.
This growth was significantly ahead of the required growth of 10% per annum and represented a considerable achievement by
KMP (and others) in reaching that level of growth over the relatively short period. The Company’s management accounts at that
time supported the position that the Company would likely have exceeded the EPS required to trigger vesting of the Tranche
2 performance rights in 2022 but for the materially disruptive impact of the COVID-19 global pandemic on the Company’s
operations, an event beyond the reasonable control of KMP.
In consideration of the above, coupled with the freeze on fixed remuneration and the non-payment of any STI component
for KMP in relation to FY22, the Board intends (subject to receipt of shareholder approval as described below) to exercise its
discretion under the Plan Rules to defer the testing date of the performance condition and the retention condition to immediately
post release of the FY23 financial results for the remaining 50% of the Tranche 2 performance rights. That is, subject to receipt
of shareholder approval as described below, provided that the participant is still employed at the new testing date, 50% of the
performance rights will vest if the Company achieves EPS of at least 10.94 cents (equivalent to 10% compounding ADEPS growth
per annum from FY18-FY22 which was the original performance condition) in FY23.
These performance rights continue to be subject to all other relevant plan rules. The Board has taken the view that deferring
the testing period for the remaining Tranche 2 performance rights, rather than for all the remaining rights to lapse, both rewards
KMP for their significant work and achievements and serves as a powerful retention incentive (ensuring that retention is not
compromised by an event beyond their reasonable control). The Board considers the value of the Tranche 2 performance rights
to still be at risk for the deferred year due to those performance rights remaining subject to the original ADEPS performance
condition and retention condition.
31
Accent Group Limited Annual Report 202226 June 2022Remuneration Report The ASX has issued a waiver from Listing Rule 6.23.3 to allow the Company to exercise its discretion in relation to the Tranche
2 performance rights in the manner described above (among other things) provided that the Company obtains shareholder
approval for such matters. The Company intends to seek shareholder approval at its 2022 annual general meeting which is
expected to be held in November 2022.
KMP
Daniel Agostinelli
Matthew Durbin
Subject to receipt of
shareholder approval:
Total Tranche 2
performance rights
issued (December
2017)
50% of tranche 2
performance rights
expected to vest
immediately post
release of FY22
financial results
50% of tranche
2 rights – testing
date deferred to
immediately post
release of the FY23
financial results
5,500,000
2,750,000
3,000,000
1,500,000
2,750,000
1,500,000
Employee Share Scheme (ESS)
The PRP replaced the Employee Share Scheme (ESS), which was implemented during FY13. As of 26 June 2022, all shares under
the ESS have vested and none remain outstanding.
2.5. Other Information
Key terms of executive employment contracts
The remuneration and other terms of employment of the CEO and CFOO are set out in individual employment contracts that are
not fixed-term contracts.
Name
Notice period/termination payment
Daniel Agostinelli
Matthew Durbin
12 months’ notice by either party (or payment in lieu)
6 months’ notice by either party (or payment in lieu)
2.6. Non-Executive Directors Remuneration
On an annual basis, PARCO considers the fees payable to Non-Executive Directors. When considering the level of fees, the
Committee undertakes a review of benchmark fees paid by similar organisations and may access independent advice as well
as drawing on the knowledge and experience of its members. PARCO 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.
The aggregate fee limit of $1,200,000 was approved by shareholders at the 2019 AGM. There was no increase to Non-Executive
Directors’ remuneration in FY21 and the fees remained at the levels set from 1 December 2019.
Non-executive directors were awarded an 8% increase in fees for FY22, with a freeze on the fees for FY23. Prior to this increase,
the last fee increase was implemented in 2019.
32
Accent Group Limited Annual Report 202226 June 2022Remuneration Report 3. REMUNERATION OF KEY MANAGEMENT PERSONNEL
3.1. Table of remuneration to KMP
Short-term benefits
Post
employment
benefits
Share–based
payments
Year
Cash salary
and fees
Cash
bonuses*
$
Other
monetary
$
Leave
benefits
$
Super–
annuation
$
Equity–
settled**
$
Total
$
2022
269,500
2021
250,000
2022
2021
2022
2021
116,100
107,991
113,763
110,399
2022
108,000
2021
2022
2021
2022
2021
2022
2021
100,457
118,800
110,000
118,800
20,778
–
–
2022 1,379,008
–
–
–
–
–
–
–
–
–
–
–
–
–
–
-
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
27,500
25,000
11,610
10,259
–
–
10,800
9,543
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
297,000
275,000
127,710
118,250
113,763
110,399
118,800
110,000
118,800
110,000
118,800
20,778
–
–
117
93,492
27,500 1,160,402 2,660,519
2021
1,175,317
1,280,0001
21,297
2022
586,589
-
2021
494,862
412,5002
-
-
79,683
35,911
30,138
25,000
1,242,359
3,823,656
27,500
508,677
1,158,677
25,000
474,240
1,436,740
2022 2,810,560
-
117
129,403
104,910 1,669,079 4,714,069
2021
2,369,804
1,692,500
21,297
109,821
94,802
1,716,599
6,004,823
Non-executive Directors
D Gordon
S Goddard
M Hapgood
D Player
J Lowcock
B Blundy
T Dodd
Executive Directors
and other KMP
D Agostinelli
M Durbin
Total
*
**
Cash bonuses relate to STI bonuses issued on the basis of the achievement of relevant performance measures for the year ended 26 June 2022 and were
approved by PARCO and the Board in August 2022 (no cash bonuses were awarded for FY22).
Share based payments represent performance rights. The fair value of performance rights is measured at grant date and progressively allocated to profit
and loss over the vesting 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.
1 Mr Agostinelli’s cash bonus is equal to 100% of his fixed pay, comprising cash salary and fees, superannuation and leave benefits.
2 Mr Durbin’s cash bonus is equal to 75% of his fixed pay, comprising cash salary and fees, superannuation and leave benefits.
33
Accent Group Limited Annual Report 202226 June 2022Remuneration Report 3.2. Performance Rights Plan (PRP)
The table below sets out the details of all Performance Rights for unvested plans issued under the Company’s PRP:
Issue
Number
of Rights Grant Date
Vesting Date
condition % Achieved
Vesting
Number
of rights
exercised
Number of
rights cancelled
Current
balance
50% post release of
FY22 financial results
Tranche 2 32,050,000
3 Oct 17
50% post release of
FY23 financial results 1
ADEPS hurdle2
To be
determined
0 (12,350,000)5 19,700,000
50% post release of
FY22 financial results
Tranche 3
1,699,863 30 Nov 19
50% post release of
FY23 financial results 1
ADEPS hurdle3
Tranche 4
3,684,912 30 Nov 19
1 Jul 24 ADEPS hurdle2
To be
determined
To be
determined
Tranche 5
6,645,416 18 Nov 20
Tranche 6
5,471,635 27 Sep 21
Total
49,551,826
1 Sep 24 ADEPS hurdle
– sliding scale
To be
determined
1 Sep 25 ADEPS hurdle
– sliding scale
To be
determined
0
0
0
0
(213,382)5
1,486,481
(415,030)4
3,269,882
(568,709)
6,076,707
(410,973)4 5,060,662
0 (13,958,094) 35,593,732
1
As noted above, the Board exercised its discretion and determined that the EPS performance condition for 50% of the Tranche 2 performance rights had
been deemed as met and intends to exercise its discretion to defer the testing date for the remaining 50% of the Tranche 2 performance rights by one year
to immediately post release of FY23 financial results. These discretions will take effect subject to receipt of shareholder approval
2 The EPS hurdle for Tranches 2 and 4 is an annual growth in adjusted diluted earnings per share of at least 10% p.a. over the relevant performance period
Tranche 3 was issued in FY20 and did not include any rights issued to KMPs. Tranche 3 participants were not included in Tranche 2, and the EPS hurdles
3
and vesting of these two tranches are aligned. The Board has determined that the Tranche 3 performance rights will be treaded on the same basis as
Tranche 2 performance rights, which will require shareholder approval.
4 Number of rights cancelled includes unvested portion and rights of departed employees.
5 Number of rights cancelled represents rights of departed employees.
The table below sets out the detailed conditions for each tranche of performance rights for unvested plans:
Issue
Current
Balance
ADEPS Hurdle – Expressed as CAGR
over the performance period
Retention condition
Threshold –
50% of
award
Target –
100% of
award
Stretch –
150% of
award
Tranche 2
19,700,0001
NA
10%
NA
Tranche 3
1,486,4812
Tranche 4
3,269,882
Tranche 5
6,076,707
Tranche 6
5,060,662
Total
35,593,732
NA
NA
8%
9%
10%
10%
10%
11%
NA
NA
50% must be employed on the date immediately
following release of the FY22 financial results
50% must be employed on the date immediately
following release of the FY23 financial results
50% must be employed on the date immediately
following release of the FY22 financial results
50% must be employed on the date immediately
following release of the FY23 financial results
Must be employed and not have resigned at 1 July 24
15%
Must be employed and not have resigned at 1 September 24
16% Must be employed and not have resigned at 1 September 25
1
2
As noted above, the Board exercised its discretion and determined that the EPS performance condition for 50% of the Tranche 2 performance rights
had been deemed as met; and intends to exercise its discretion to defer the testing date for the remaining 50% of the Tranche 2 performance rights from
September 2022 to September 2023. These discretions will take effect subject to receipt of shareholder approval.
Tranche 3 was issued in FY20 and did not include any rights issued to KMPs. Tranche 3 participants were not included in Tranche 2, and the EPS hurdles
and vesting of these two tranches are aligned. The Board is considering treating Tranche 3 performance rights on the same basis as the intended
treatment of Tranche 2 performance rights, which will require shareholder approval.
34
Accent Group Limited Annual Report 202226 June 2022Remuneration Report
Performance rights of the CEO and CFOO
The Performance Rights of the CEO and CFOO under the PRP are set below:
CEO – Daniel Agostinelli
Tranche 1
Tranche 2
Tranche 3
Tranche 4
Tranche 5
Tranche 6
Total
CFOO – Matthew Durbin
Tranche 1
Tranche 2
Tranche 3
Tranche 4
Tranche 5
Tranche 6
Total
Balance as at
27 June 2021
Granted
during the
year
Vested during
the year
Forfeited
during the
year
Balance as at
26 June 2022
Value at grant
date
–
5,500,000
–
795,031
1,222,930
1,018,100
8,536,061
–
3,000,000
–
341,615
525,478
441,176
4,308,269
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5,500,000
$3,060,156
–
–
795,031
$1,056,119
1,222,930
$1,638,692
1,018,100
$1,761,313
8,536,061
$7,516,280
–
–
3,000,000
$1,583,750
–
–
341,615
$453,801
525,478
$704,126
441,176
$763,264
4,308,269 $3,504,941
Refer to section 2.2 above for the proportion of the CEO and CFOO’s remuneration that represents the PRP allocation for the
year ended 26 June 2022.
3.3. Employee Share Scheme (ESS)
All unvested ordinary shares of Accent Group Limited under the ESS have vested as at the date of this report as follows:
Grant date
02/03/2016
Total
Expiry date
Vesting date Exercise price
Number under
option
28/02/2022 31 August 2021
$1.49
200,000
200,000
35
Accent Group Limited Annual Report 202226 June 2022Remuneration Report Remuneration Report
4. SHAREHOLDINGS OF KMP
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 related parties, is set out below:
Name
Daniel Agostinelli
Matthew Durbin
David Gordon
Stephen Goddard
Donna Player
Michael Hapgood
Joshua Lowcock
Brett Blundy
Timothy Dodd
Total
Balance at
start of year*
Additions
Disposals
17,838,224
162,000
90,000
10,000
2,599,034
50,000
50,000
7,500,000
18,105
–
–
–
–
–
98,542,751
8,959,712
8,141
21,905
126,696,255
–
–
–
–
–
–
–
–
–
Balance at
end of year
18,000,224
100,000
2,599,034
50,000
50,000
7,500,000
18,105
107,502,463
30,046
135,849,872
*
Balance at the start of the year' is balance as at date of appointment for Directors appointed during the financial year and excludes the balance of
Directors who resigned during the year (see below).
This Directors’ Report and Remuneration 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
David Gordon
Chairman
18 August 2022
36
Accent Group Limited Annual Report 202226 June 2022
Statement of Profit or Loss and Other Comprehensive Income
for the year ended 26 June 2022
Revenue
Interest revenue
Expenses
Cost of sales
Distribution
Marketing
Occupancy
Employee expenses
Other
Depreciation, amortisation and impairment
Finance costs
Profit before income tax expense
Income tax expense
Profit after income tax expense for the year
Other comprehensive income
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
Total comprehensive income for the year
Profit for the year is attributable to:
Owners of Accent Group Limited
Total comprehensive income for the year is attributable to:
Owners of Accent Group Limited
Basic earnings per share
Diluted earnings per share
Note
6
Consolidated
26 Jun 2022
$'000
27 Jun 2021
$'000
1,129,797
992,754
786
997
(504,992)
(425,079)
(51,266)
(37,959)
(51,431)
(44,500)
(17,581)
(11,059)
(234,516)
(186,002)
(56,446)
(46,140)
(151,289)
(117,110)
(16,470)
(14,903)
46,592
110,999
(15,128)
(34,076)
31,464
76,923
7,364
(1,803)
5,561
37,025
(6,480)
6,725
245
77,168
31,464
31,464
76,923
76,923
37,025
37,025
Cents
5.81
5.59
77,168
77,168
Cents
14.21
13.66
7
7
7
8
38
38
37
Accent Group Limited Annual Report 2022 Statement of Financial Position
as at 26 June 2022
Consolidated
Note
26 Jun 2022
$'000
27 Jun 2021
$'000
9
10
11
12
13
14
15
11
16
12
17
18
19
20
21
22
12
20
19
21
22
12
23
24
49,734
47,303
241,631
8,349
13,569
8,592
6,011
34,084
39,732
216,881
9,300
–
4,808
–
375,189
304,805
139,188
299,884
12,346
374,741
1,383
13,103
840,645
1,215,834
115,527
271,348
16,993
372,723
81
30,699
807,371
1,112,176
143,148
149,446
11,089
15,595
19,884
123,406
-
-
8,784
19,218
40,000
106,811
2,622
13,282
313,122
340,163
857
4,593
149,132
307,904
-
462,486
775,608
440,226
659
4,208
61,125
277,015
26
343,033
683,196
428,980
390,926
390,616
36,653
12,647
26,024
12,340
440,226
428,980
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Lease receivable
Derivative financial instruments
Other current assets
Current tax receivable
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Lease receivable
Intangibles
Derivative financial instruments
Net deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Deferred revenue
Provisions
Borrowings
Lease liabilities
Derivative financial instruments
Provision for income tax
Total current liabilities
Non-current liabilities
Provisions
Deferred revenue
Borrowings
Lease liabilities
Derivative financial instruments
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
The above statement of financial position should be read in conjunction with the accompanying notes
38
Accent Group Limited Annual Report 2022 Statement of Changes in Equity
for the year ended 26 June 2022
Consolidated
Foreign
currency
translation
reserve
$'000
Hedging
reserve - cash
flow
hedges
$'000
Share-based
payments
reserve
$'000
Issued
capital
$'000
Retained
earnings
$'000
Total equity
$'000
Balance at 29 June 2020
389,600
2,787
4,683
11,002
441
408,513
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
Dividends paid (Note 25)
Balance at 27 June 2021
-
-
-
-
1,016
-
-
-
6,725
(6,480)
6,725
(6,480)
-
-
-
76,923
76,923
-
245
76,923
77,168
-
-
-
-
-
-
7,307
-
-
-
-
7,307
1,016
(65,024)
(65,024)
390,616
9,512
(1,797)
18,309
12,340
428,980
Consolidated
Foreign
currency
translation
reserve
$'000
Hedging
reserve - cash
flow
hedges
$'000
Share-based
payments
reserve
$'000
Issued
capital
$'000
Retained
earnings
$'000
Total equity
$'000
Balance at 28 June 2021
390,616
9,512
(1,797)
18,309
12,340
428,980
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
Dividends paid (Note 25)
Balance at 26 June 2022
-
-
-
-
310
-
-
-
(1,803)
7,364
(1,803)
7,364
-
-
-
31,464
31,464
-
5,561
31,464
37,025
-
-
-
-
-
-
5,068
-
-
-
-
(31,157)
12,647
5,068
310
(31,157)
440,226
390,926
7,709
5,567
23,377
The above statement of changes in equity should be read in conjunction with the accompanying notes
39
Accent Group Limited Annual Report 2022 Statement of Cash Flows
for the year ended 26 June 2022
Cash flows from operating activities
Receipts from customers and franchisees (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Interest and other finance costs paid
Interest on lease liabilities
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Payment for purchase of businesses, net of cash acquired
Payments for property, plant and equipment
Payments for intangibles
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares, net of transaction costs
Proceeds from borrowings
Repayment of borrowings
Payments for debt transaction costs
Payment of lease liabilities
Dividends paid
Net cash used in financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the financial year
Consolidated
Note
26 Jun 2022
$'000
27 Jun 2021
$'000
37
34
16
25
1,247,779
1,102,053
(1,072,871)
(876,050)
-
(3,647)
(11,495)
(19,420)
140,346
(2,704)
(38,809)
(7,088)
61
(2,614)
(10,814)
(53,227)
159,409
(12,996)
(26,241)
(5,430)
(48,601)
(44,667)
310
1,016
357,125
85,000
(288,250)
(70,000)
(984)
(113,084)
(31,157)
(76,040)
15,705
34,084
(55)
-
(86,806)
(65,024)
(135,814)
(21,072)
54,912
244
49,734
34,084
The above statement of cash flows should be read in conjunction with the accompanying notes
40
Accent Group Limited Annual Report 2022 Notes to the Financial Statements
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's functional and presentation currency.
Accent 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:
2/64 Balmain Street
Richmond VIC 3121
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.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 18 August 2022. The directors
have the power to amend and reissue the financial statements.
NOTE 2. BASIS OF PREPARATION
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').
The financial statements have been prepared under the historical cost convention, except for, where applicable, derivative
financial instruments which have been fair valued at balance date and share-based payments which have been measured at fair
value at grant date.
Critical accounting estimates
The preparation of consolidated financial statements requires the Group to make estimates and judgements that affect the
application of policies and reported amounts. The estimates which could cause a significant risk of causing a material adjustment
to the carrying amount of assets and liabilities within the next 12 months are disclosed in the following notes:
– Note 10
– Note 14
– Note 15
– Note 16
– Note 34
Inventories
Property, plant and equipment
Right-of-use-assets
Intangibles
Business combinations
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Accent Group Limited as at
26 June 2022 and the results of all subsidiaries for the year then ended. A list of subsidiaries at year end is contained in Note 35.
Supplementary information about the parent entity is disclosed in Note 33.
In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profits
and losses resulting from intragroup transactions have been eliminated. Subsidiaries are consolidated from the date on which
control is obtained to the date on which control is disposed. The acquisition of subsidiaries is accounted for using the acquisition
method of accounting.
If 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.
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 the
income statement.
41
for the year ended 26 June 2022Accent Group Limited Annual Report 2022 NOTE 2. BASIS OF PREPARATION (CONTINUED)
Foreign operations
The functional currencies of overseas subsidiaries are listed in Note 35. The assets and liabilities of overseas subsidiaries are
translated into Australian dollars at the rate as at reporting date and the income statements are translated at the average
exchange rates for the year. The exchange differences arising on the retranslation are taken directly to a separate component of
equity.
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.
Comparatives have been reclassified where appropriate to ensure consistency and comparability with the current period.
NOTE 3. ACCOUNTING POLICIES
Significant and other accounting policies adopted in the preparation of the financial statements are provided throughout the
notes. These policies have been consistently applied to all the years presented, unless otherwise stated.
NOTE 4. NEW OR AMENDED ACCOUNTING STANDARDS AND INTERPRETATIONS 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.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
New and revised Standards and amendments thereof and Interpretations effective for the current year that are relevant to the
Group include:
– AASB 2020-8 Interest Rate Benchmark Reform – Phase 2
– AASB 2021-3 Covid-19 Related Rent Concessions beyond 30 June 2021.
Except for the adoption of AASB 2021-3, the above standards and interpretations have not led to any changes to the Group's
accounting policies or had any other material impact on the financial position or performance of the Group.
COVID-19 related rent concessions
In the prior year, the Group adopted AASB 2020-4 Amendments to Australian Accounting Standards – Covid-19 Related Rent
Concessions that provided practical relief in accounting for rent concessions occurring as a direct consequence of COVID-19,
by introducing a practical expedient. This practical expedient was available to rent concessions for which any reduction in lease
payments affected payments originally due on or before 30 June 2021.
In April 2021, the AASB issued AASB 2021-3 Amendments to Australian Accounting Standards – Covid-19 Related Rent
Concessions beyond 30 June 2021 that extends the practical expedient to apply to rent concessions for which any reduction in
lease payments affected payments originally due on or before 30 June 2022.
In the current financial year, the Group has applied AASB 2021-3 where the following conditions were met:
– The change in lease payments were substantially the same or less than the payments prior to the rental concession;
– The reductions only affect payments which fall due before 30 June 2022; and
– There has been no substantive change in the terms and conditions of the lease.
The Group has recognised $5,145,261 of COVID-19 rental concessions (2021: $8,689,657). These rental concessions met the
conditions of the practical expedient in the year ended 26 June 2022.
The rental concessions have been accounted for as a reduction in Occupancy expenses in the statement of profit and loss and
partially offset the sales impact of mandated store closures throughout the reporting period.
NOTE 5. OPERATING SEGMENTS
The Group is required to determine and present its operating segments based on the way in which financial information is
organised and reported to the chief operating decision-makers (CODM’s). The CODM’s have been identified as the Board of
Directors on the basis they make the key operating decisions of the Group and are responsible for allocating resources and
assessing performance.
Key internal reports received by the CODM’s, primarily the management accounts, focus on the performance of the Group as a
whole. The CODM’s assess the performance of the Group based on a measure of EBIT (earnings before interest and tax) prior to
the impact of AASB 16 Leases and non-operating intercompany charges.
42
Notes to the Financial Statementsfor the year ended 26 June 2022Accent Group Limited Annual Report 2022 NOTE 5. OPERATING SEGMENTS (CONTINUED)
The Group has considered its internal reporting framework, management and operating structure and the Directors’ conclusion
is that the Group has one operating segment.
The Group’s New Zealand operations generated revenue in excess of 10% of the total Group’s revenue. As a result, the Group
recognises two geographical areas, Australia and New Zealand.
The following is an analysis of the Group’s revenue and non-current assets. The geographical split for intangible assets is not
available and has not been disclosed.
26 June 2022
27 June 2021
Australia
$'000
New Zealand
$'000
Group
$'000
Australia
$'000
New Zealand
$'000
Group
$'000
Sales to customers
972,492
130,996
1,103,488
844,107
123,648
967,755
Other geographical information:
Additions to property, plant and
equipment
NOTE 6. REVENUE
59,525
8,876
68,401
49,464
7,077
56,541
Sales revenue
Sales to customers
Royalties and other franchise related income
Other revenue
Marketing levies received from TAF stores
Other revenue
Revenue
Consolidated
26 Jun 2022
$'000
27 Jun 2021
$'000
1,103,488
967,755
14,264
1,117,752
13,924
981,679
9,723
2,322
12,045
8,928
2,147
11,075
1,129,797
992,754
Recognition and measurement
The major sources of the Group’s revenue are from sales to customers, royalties and other franchise related income received from
TAF stores. The Group’s revenue is principally generated on a ‘point in time’ basis.
Sales to customers
Sales to customers of goods comprise the sale of branded performance and lifestyle footwear, apparel and accessories to
customers outside the Group less discounts, markdowns, loyalty scheme vouchers and an appropriate deduction for actual and
expected returns. Sales to customers is stated net of tax. Revenue is recognised when performance obligations are satisfied,
goods are delivered to the customer and the control of goods is transferred to the buyer.
Gift cards are considered a prepayment for goods to be delivered in the future. The Group has an obligation to transfer the goods
in the future, creating a performance obligation. The Group recognises deferred revenue when the gift card is purchased and
recognises revenue when the customer redeems the gift card and the Group fulfills the performance obligation.
Royalties and other franchise related income
Franchise royalty fee income is earned based upon a percentage of sales that has occurred and is recognised on an
accrual basis.
Franchise establishment fees are recognised as income over the term of the Franchise Agreement. Franchise establishment
fees are recognised on an ‘over time’ basis.
Marketing levies
Marketing levies are recognised in the period the sales are recorded by 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 network. Expenses in relation to the
marketing of TAF stores are recorded within advertising and promotion expenses in profit or loss. In any given year, a deficit in
the marketing fund will need to be recouped in the following year and any surplus in the marketing fund will need to be spent in
the subsequent year.
43
Notes to the Financial Statementsfor the year ended 26 June 2022Accent Group Limited Annual Report 2022 Notes to the Financial Statements
NOTE 7. EXPENSES
Profit before income tax includes the following specific expenses:
Depreciation
Right of use assets
Plant and equipment
Total depreciation
Amortisation
Licence fee
Distribution rights
Re-acquired rights
Software
Total amortisation
Impairment of assets
Impairment charge – right of use assets
Impairment charge/(reversal) – property, plant and equipment
Total impairment
Total depreciation, amortisation and impairment
Finance costs
Interest and finance charges paid/payable on borrowings
Interest and finance charges paid/payable on lease liabilities
Finance costs expensed
Leases
Variable lease payments
Consolidated
26 Jun 2022
$'000
27 Jun 2021
$'000
98,654
39,311
137,965
78,415
31,378
109,793
32
1,141
434
3,967
5,574
3,476
4,274
7,750
151,289
4,199
12,271
16,470
32
2,323
160
2,723
5,238
2,163
(84)
2,079
117,110
3,153
11,750
14,903
35,313
24,739
During the year, the Group recognised $5,145,261 (2021: $8,689,657) of COVID-19 related rental
concessions from landlords. These concessions are included as a reduction in occupancy expense
in the statement of profit or loss.
Share-based payments expense
5,068
7,307
Employee expenses
Government wage subsidies are recorded as a reduction in employee expenses on the statement of profit or loss.
During the year, the Group received wage subsidies and resurgence support payments of $1,304,279 in New Zealand as a result of
COVID-19 mandated store closures. These payments, in total, were remitted to eligible team members during the year. The Group
did not apply for, nor was it eligible to receive, any wage subsidies in Australia.
In the comparative period, the Group recognised government grants under the Australian JobKeeper program of $24,513,000.
All of the JobKeeper funds were utilised to keep team members employed during the various government mandated store
closures due to COVID-19 related lockdowns.
44
for the year ended 26 June 2022Accent Group Limited Annual Report 2022 NOTE 8. INCOME TAX EXPENSE
Income tax expense
Current tax
Deferred tax
Adjustment recognised for prior periods – Deferred tax
Adjustment recognised for prior periods – Current tax
Adjustment recognised for prior periods
Aggregate income tax expense
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 recognised directly to equity
Tax effect of hedges in reserves
Deferred tax assets not recognised
Deferred tax assets not recognised comprises temporary differences attributable to:
Capital losses
Total deferred tax assets not recognised
Consolidated
26 Jun 2022
$'000
27 Jun 2021
$'000
6,621
8,512
6,423
(6,428)
42,087
(7,098)
–
–
–
(913)
15,128
34,076
46,592
13,977
110,999
33,300
33
1,521
(195)
24
2,192
(120)
15,336
35,396
(5)
(203)
(913)
(407)
15,128
34,076
(3,156)
(318)
7,199
7,199
7,199
7,199
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.
Recognition and measurement
Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to taxation authorities at the
tax rates and tax laws enacted or substantively enacted by the balance sheet date.
Deferred tax
Deferred tax is accounted for using the balance sheet liability method, providing for temporary differences between the carrying
amounts of assets and liabilities under financial reporting and taxation purposes. Deferred tax is measured at the rates that
are expected to apply in the period in which the liability is settled or asset realised, based on tax rates enacted or substantively
enacted at the reporting date.
Deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a
business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit or in
relation to the initial recognition of goodwill.
45
Notes to the Financial Statementsfor the year ended 26 June 2022Accent Group Limited Annual Report 2022 NOTE 8. INCOME TAX EXPENSE (CONTINUED)
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which
the deductible temporary differences or unused tax losses and tax offsets can be utilised. Deferred tax assets are reduced to the
extent that it is no longer probable that the related tax benefit will be realised.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Group
intends to settle its current tax assets and liabilities on a net basis.
Tax consolidation
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.
NOTE 9. TRADE AND OTHER RECEIVABLES
Trade receivables
Less: Allowance for expected credit losses
Other receivables
Movement in the allowance for credit losses were as follows:
Carrying value at beginning of year
Allowance for credit losses recognised
Receivables written off during the year as uncollectable
Allowances for expected credit losses at year end
Set out below is the information about the credit risk exposure on the Group’s trade receivables.
Consolidated
26 Jun 2022
$'000
27 Jun 2021
$'000
46,010
38,282
(1,238)
(1,291)
44,772
2,531
47,303
36,991
2,741
39,732
Consolidated
26 Jun 2022
$'000
27 Jun 2021
$'000
(1,291)
(205)
258
(1,101)
(273)
83
(1,238)
(1,291)
2022
Current
Under one month
One to two months
Two to three months
Over three months
Carrying
amount
$'000
22,701
17,221
3,507
1,081
1,500
46,010
Expected
credit
loss rate
%
Expected
credit loss
$'000
1.8%
0.6%
2.5%
10.9%
34.7%
409
103
88
118
520
1,238
46
Notes to the Financial Statementsfor the year ended 26 June 2022Accent Group Limited Annual Report 2022 NOTE 9. TRADE AND OTHER RECEIVABLES (CONTINUED)
2021
Current
Under one month
One to two months
Two to three months
Over three months
Carrying
amount
$'000
29,728
5,390
2,228
473
463
38,282
Expected
credit
loss rate
%
Expected
credit loss
$'000
2.6%
2.0%
9.0%
17.8%
27.1%
773
108
201
84
125
1,291
Recognition and measurement
Trade receivables
Trade receivables generally have terms of between 30 to 60 days. They are recognised at amortised cost less allowance
for expected credit losses (‘ECL’). Customers who wish to trade on credit terms are subject to extensive credit verification
procedures. Receivable balances are monitored on an ongoing basis and the ECL recognised is based on management’s
expectation of losses without regard to whether an impairment event exists.
Other receivables
Other receivables include rebates receivable from suppliers and fit-out contributions from landlords which are considered fully
recoverable and therefore no allowance has been made.
Impairment of trade receivables
Collectability and impairment of trade receivables is assessed on an ongoing basis at an individual customer level by a centralised
accounts receivable function. The Group has established a provision matrix that is based on average write-offs as a proportion of
average debt over a period of 24 months. The historical loss rates are adjusted for current and forward-looking information where
significant.
NOTE 10. INVENTORIES
Finished goods (at lower of cost or net realisable value)
Goods in transit
Consolidated
26 Jun 2022
$'000
27 Jun 2021
$'000
193,575
48,056
241,631
177,304
39,577
216,881
Recognition and measurement
Finished goods are valued at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the
ordinary course of business less costs to sell. Cost comprises of the purchase price on a weighted average basis and logistic
expenses incurred in bringing the inventories to their present location and condition.
Determining the net realisable value of inventories relies on key assumptions that require the use of management judgement.
An inventory provision is booked for cases where the realisable value from the sale of inventory is estimated to be lower than the
inventory carrying value. Management’s estimate of the inventory provision is based on historical finished goods sold below cost
over a 24 month period and inventory write-off transactional data over a 12 month period.
The provision for write-down of inventories to net realisable value amounted to $11,225,068 (2021: $9,955,509) at 26 June 2022.
47
Notes to the Financial Statementsfor the year ended 26 June 2022Accent Group Limited Annual Report 2022 NOTE 11. LEASE RECEIVABLE
Current
Lease receivable
Non-Current
Lease receivable
Consolidated
26 Jun 2022
$'000
27 Jun 2021
$'000
8,349
9,300
12,346
16,993
The Group sub-leases property leases to TAF franchises. The Group has classified these sub-leases as a finance lease, because
the sub-lease is substantially on the same terms as the head lease.
The following table sets out the maturity analysis of lease receivables, showing the undiscounted lease payments to be received
after the reporting date.
Consolidated
Less than one year
One to five years
More than five years
Total undiscounted lease payments
Discounted using the Group’s incremental borrowing rate
Total lease receivable
of which are:
Current lease receivables
Non-current lease receivables
NOTE 12. DERIVATIVE FINANCIAL INSTRUMENTS
Forward foreign exchange contracts - receivable
Total derivative financial instruments receivable - current
Forward foreign exchange contracts - receivable
Interest rate swap contracts – receivable
Total derivative financial instruments receivable – non-current
Forward foreign exchange contracts – payable
Total derivative financial instruments payable - current
Interest rate swap contracts – payable
Total derivative financial instruments payable – non-current
$'000
9,157
13,080
12
22,249
(1,554)
20,695
8,349
12,346
Consolidated
26 Jun 2022
$'000
27 Jun 2021
$'000
13,569
13,569
–
1,383
1,383
–
–
–
–
–
–
81
–
81
2,622
2,622
26
26
Foreign exchange forward contracts are held as hedging instruments against forecast purchases in USD. The notional amount for
the contracts held at 26 June 2022 totalled $USD160,462,427 (27 June 2021: $USD153,885,715). The average rate of the forward
contracts is 0.74 (2021: 0.75).
The net gain or loss recognised as other comprehensive income is equal to the change in fair value of the hedging instruments.
There is no ineffectiveness recognised in profit or loss.
Recognition and measurement
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. Derivatives
are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
48
Notes to the Financial Statementsfor the year ended 26 June 2022Accent Group Limited Annual Report 2022
NOTE 12. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
When a cash flow hedge is discontinued, any cumulative gain or loss on the hedging instrument recognised in other
comprehensive income is retained in equity until the forecast transaction occurs.
NOTE 13. OTHER CURRENT ASSETS
Prepayments
Other current assets
Consolidated
26 Jun 2022
$'000
27 Jun 2021
$'000
8,142
450
8,592
4,180
628
4,808
Prepayments represent general prepaid expenses, largely insurance premiums and license fees for the Group’s
eCommerce platforms.
NOTE 14. PROPERTY, PLANT AND EQUIPMENT
Plant and equipment - at cost
Less: Accumulated depreciation and impairment
Assets under construction - at cost
Consolidated
26 Jun 2022
$'000
27 Jun 2021
$'000
316,747
257,589
(191,265)
(151,782)
125,482
105,807
13,706
139,188
9,720
115,527
Reconciliations
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 28 June 2020
Additions
Transfer
Additions through business combinations (Note 34)
Disposals
Exchange differences
Impairment reversal
Depreciation expense
Balance at 27 June 2021
Additions4
Transfer
Additions through business combinations (Note 34)
Disposals
Exchange differences
Impairment charge
Depreciation expense
Balance at 26 June 2022
Plant and
equipment
$'000
Assets under
construction
$'000
88,049
44,453
3,638
963
(17)
15
84
(31,378)
105,807
54,347
9,720
–
(506)
(301)
(4,274)
(39,311)
2,233
11,125
(3,638)
–
–
–
–
–
9,720
14,054
(9,720)
–
(348)
–
–
–
Total
$'000
90,282
55,578
–
963
(17)
15
84
(31,378)
115,527
68,401
–
–
(854)
(301)
(4,274)
(39,311)
125,482
13,706
139,188
4 Landlord contributions to store fit-out costs have been netted off against actual fit-out costs incurred for cash flow disclosure purposes.
49
Notes to the Financial Statementsfor the year ended 26 June 2022Accent Group Limited Annual Report 2022 NOTE 14. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Recognition and measurement
The carrying value of property, plant and equipment is measured as the cost of the asset, less accumulated depreciation, and
impairment.
Depreciation and amortisation
Items of property, plant and equipment are depreciated on a straight-line basis over the expected useful lives. Most of the
property, plant and equipment represents leasehold improvements which are amortised over the period of the lease. As at
26 June 2022, the average lease term is 5 years. Assets under construction are not depreciated.
Derecognition
An item of property, plant and equipment is derecognised when it is sold or otherwise disposed of, or when its use is expected to
bring no future economic benefits. Any gain or loss between the carrying amount and the disposal proceeds are included in the
income statement in the period the item is derecognised.
Impairment
Refer to Note 15 for details on impairment testing.
NOTE 15. RIGHT-OF-USE ASSETS
Buildings - right-of-use
Less: Accumulated depreciation and impairment
Consolidated
26 Jun 2022
$'000
27 Jun 2021
$'000
559,511
428,577
(259,627)
(157,229)
299,884
271,348
Reconciliations
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 28 June 2020
Additions
Additions through business combinations (Note 34)
Disposals
Exchange differences
Impairment of assets
Depreciation expense
Balance at 27 June 2021
Additions
Additions through business combinations (Note 34)
Disposals
Exchange differences
Impairment of assets
Depreciation expense
Balance at 26 June 2022
50
Buildings
$'000
232,998
108,940
10,606
(647)
29
(2,163)
(78,415)
271,348
130,333
793
–
(460)
(3,476)
(98,654)
299,884
Notes to the Financial Statementsfor the year ended 26 June 2022Accent Group Limited Annual Report 2022 NOTE 15. RIGHT-OF-USE ASSETS (CONTINUED)
Recognition and measurement
A right-of-use asset is recognised at the commencement date of a lease. The Group leases land and buildings for its offices and
retail stores under agreements with an average term of 5 years. The right-of-use asset is measured initially at cost based on the
value of the associated lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date
net of any lease incentives received and any initial direct costs incurred.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease. Right-of use assets are subject
to impairment or adjusted for any remeasurement of lease liabilities.
The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms
of 12 months or less and leases of low-value assets. Short term lease payments of $1,651,600 (2021: $327,183) were expensed to
profit or loss as incurred within occupancy expense. The remaining contractual commitment for short term leases is $1,693,141
(2021: $721,526).
Impairment of property, plant and equipment and right-of-use assets
For impairment testing purposes the Group has determined that each store is a separate Cash Generating Unit (CGU). Each
CGU is tested for impairment at the balance sheet date if any indicators of impairment have been identified.
The value in use of each CGU is calculated based on the Groups latest full year forecast for FY23. Cash flows beyond year one
represent the Groups five-year strategy which was presented to the Board on 31 May 2022. Growth rates were applied to store
generated sales and click and dispatch and click and collect sales. Gross profit margins were assumed to remain in line with the
forecasted FY23 margins and all operating expenses of each CGU were considered variable to sales. Cash flows were discounted
to present value using a mid-point after-tax discount rate of 9.1% (2021: 8.2%).
For the central business district (CBD) stores, the cash flows used within the impairment model are based on the historic
performance of each CBD location and knowledge of the current market, together with the Group’s views on the future
achievable growth. For each store, cash flows year on year represented achievable growth to return to pre COVID-19 trading
levels. Where management believed the current trading performance and future expectations of the store did not support
the growth, the growth rate was adjusted accordingly. Cash flows were discounted to present value using a mid-point after-tax
discount rate of 9.1% (2021: 8.2%).
During the year, the Group commenced the transition of PIVOT stores into other retail banners within the Group. As part of
the transition, an impairment charge was recognised against property, plant and equipment for assets which are not able to be
redeployed to alternative retail banners. For impairment testing purposes, cash flow projections were based on the full year
forecast for FY23 and the Groups five-year strategy, the results of which are reviewed by the Board. The cash flows included
capital expenditure required to transition each store into a new retail banner. Cash flows were discounted to present value using a
mid-point after-tax discount rate of 10.1% which incorporates CGU specific risk.
The Group has recognised a total impairment charge of $7,749,522 as disclosed in Note 7 (2021: $2,079,442).
The cash flows used within the impairment models are based on assumptions which are sources of estimation uncertainty and
movements in these assumptions could lead to further impairment. The key assumptions in the value in use calculations are
growth rates of sales, gross profit margins and the after-tax discount rate.
Management has performed sensitivity analysis on the key assumptions in the impairment models using reasonably possible
changes in these key assumptions across the store portfolio. These reasonable possible changes do not lead to a significant
increase in the impairment charge.
51
Notes to the Financial Statementsfor the year ended 26 June 2022Accent Group Limited Annual Report 2022
NOTE 16. 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
Re-acquired rights
Less: Accumulated amortisation
Other intangible assets - The Athlete's Foot - at cost
Less: Accumulated amortisation
Software
Less: Accumulated amortisation
Consolidated
26 Jun 2022
$'000
27 Jun 2021
$'000
319,187
319,022
44,825
44,825
(9,714)
(9,714)
35,111
7,832
(392)
7,440
35,111
7,832
(360)
7,472
16,800
16,800
(16,800)
(15,659)
–
1,659
(927)
732
720
1,141
1,308
(493)
815
720
(720)
(720)
–
–
23,302
15,460
(11,031)
(6,298)
12,271
9,162
374,741
372,723
52
Notes to the Financial Statementsfor the year ended 26 June 2022Accent Group Limited Annual Report 2022 Notes to the Financial Statements
NOTE 16. INTANGIBLES (CONTINUED)
Reconciliations
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
Distribution
rights
$'000
Re-acquired
rights
$'000
Software
$'000
Total
$'000
Balance at 28 June 2020
311,529
35,111
7,504
3,464
975
Additions
Additions through business
combinations (Note 34)
Other1
Exchange differences
Amortisation expense
–
8,935
(1,444)
2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6,455
5,430
365,038
5,430
–
–
–
8,935
(1,444)
2
(32)
(2,323)
(160)
(2,723)
(5,238)
Balance at 27 June 2021
319,022
35,111
7,472
1,141
Additions
Additions through business
combinations (Note 34)
Other2
Exchange differences
Amortisation expense
–
1,397
(1,199)
(33)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(32)
(1,141)
Balance at 26 June 2022
319,187
35,111
7,440
–
815
–
163
188
–
9,162
7,088
372,723
7,088
–
–
(12)
1,560
(1,011)
(45)
(434)
732
(3,967)
(5,574)
12,271
374,741
1
2
During the year ended 27 June 2021, the Group retrospectively adjusted the provisional amounts recognised for a business combination to reflect new
information obtained. The retrospective adjustment relates to recognising a deferred tax asset for the termination payments of TAF franchise agreements
that were acquired in the last 12 months. The corresponding impact is a reduction to goodwill.
During the year ended 26 June 2022, the Group retrospectively adjusted the provisional amounts recognised for a business combination to reflect new
information obtained.
Recognition and measurement
Goodwill
Goodwill acquired in a business combination is initially measured at cost. Cost is measured as the cost of the business
combination minus the net fair value of the acquired and identifiable assets, liabilities and contingent liabilities. Following initial
recognition, goodwill is measured at cost less any accumulated impairment losses.
Brands and trademarks
Brands and trademarks are recognised at cost in a business combination. Brands and trademarks have indefinite useful lives.
This assessment reflects management's intention to continue to utilise these intangible assets in the foreseeable future.
Each period, the useful life of these assets is reviewed to determine whether events and circumstances continue to support an
indefinite useful life assessment for the assets.
Computer software and Software-as-a-Service (SaaS) arrangements
SaaS arrangements are arrangements in which the Group does not currently control the underlying software used in the
arrangement. Costs incurred to configure or customise SaaS arrangements that result in the creation of a resource which is
identifiable, and where the Group has the power to obtain the future economic benefits flowing from the underlying resource and
to restrict the access of others to those benefits, such costs are recognised as a separate intangible software asset and amortised
over the useful life of the software on a straight-line basis. The amortisation is reviewed at least at the end of each reporting period
and any changes are treated as changes in accounting estimates.
Software
Useful life
Finite (up to 4 years)
53
for the year ended 26 June 2022Accent Group Limited Annual Report 2022 Notes to the Financial Statements
NOTE 16. INTANGIBLES (CONTINUED)
Other intangible assets
Intangible assets with finite lives are amortised on a straight-line basis over their useful lives and tested for impairment whenever
there is an indication that they may be impaired. The amortisation period and method is reviewed at each financial year-end.
A summary of the useful lives of other intangible assets is as follows:
License fees
Distribution rights
Re-acquired rights
Useful life
Finite (up to 249 years)
Finite (up to 7 years)
Finite (up to 8 years)
Impairment testing of goodwill
Goodwill is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be
impaired.
The impairment test as at 26 June 2022 was carried out based on value in use calculations for the Group’s one operating segment.
The recoverable amount was determined using estimated cash flows that were based on the Groups five-year strategic plan
which was presented to the Board of Directors on 31 May 2022. The strategic plan includes calculations and assumptions on sales
growth, gross margin and cost of doing business ('CODB'). The assumptions are based on historical performance and knowledge
of the current market, together with the Group’s views on the future achievable growth. The cash flows include ongoing capital
expenditure required to maintain the store network but exclude any growth capital initiatives not committed. The cash flows
beyond the five-year period have been extrapolated using a steady state 1.0% long term growth rate (2021: 1.0%). Cash flows were
discounted to present value using a mid-point after-tax discount rate of 11.0% (2021: 9.8%).
Management has performed sensitivity analysis on the key assumptions used in the impairment model. Management has
considered possible changes in key assumptions that would cause the carrying amount of goodwill to exceed the value in use.
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
Platypus
Hype DC
Brands and trademarks
Consolidated
26 Jun 2022
$'000
27 Jun 2021
$'000
3,466
11,100
3,466
11,100
20,545
20,545
35,111
35,111
Impairment testing of brands and trademarks
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.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The
recoverable amount was determined independently using the Relief from Royalty (‘RFR’) valuation method. 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 was based on the Group’s five-year strategic plan which was presented to the Board of Directors
on 31 May 2022. The five-year strategic plan was based on historical performance and knowledge of the current market, together
with the Group’s views on the future achievable growth. The revenue forecast is split between bricks and mortar and digital and
excludes any store network growth initiatives that have been built into the strategic plan. Revenue beyond the five-year period
applied a terminal growth rate to bricks and mortar and a terminal growth rate to digital revenue.
The royalty rates used in the valuation model were brand specific and based on rates observed in the market. The royalty rates
across all brands ranged between 3.5% to 5.25%. The TAF brands royalty rate was in line with current franchise agreements.
The tax rate applied in the valuation model is based on the corporate tax rate in Australia of 30.0% and the after tax discount rate
used is 12.8% (2021: 11.7%).
54
for the year ended 26 June 2022Accent Group Limited Annual Report 2022 NOTE 16. INTANGIBLES (CONTINUED)
Management has performed sensitivity analysis on the key assumptions in the impairment model using possible changes in these
key assumptions.
The Group has concluded that no impairment is required based on expected performance and current market and economic
conditions. A material change in market and economic conditions may increase the risk of impairment for Hype DC in future
periods, however there is no reasonably possible change in key assumptions that could result in an impairment for the other
brands.
NOTE 17. NET DEFERRED TAX
Net deferred tax comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Allowance for expected credit losses
Provision for shrinkage and stock obsolescence
Provision for employee entitlements
Other provisions and accrued expenses
Difference in accounting and tax depreciation
Landlord and supplier contributions
Net lease liability/(right-of-use asset)
Trademarks, brand names and distribution rights
TAF franchisee surrender payments
Other
Amounts recognised directly to equity
Tax effect of hedges in reserves
Net Deferred tax asset
NOTE 18. TRADE AND OTHER PAYABLES
Trade payables
Goods and services tax payable
Accrued expenses
Other payables
Consolidated
26 Jun 2022
$'000
27 Jun 2021
$'000
354
3,441
4,678
10,539
(17,262)
15,978
6,679
285
2,995
5,996
3,207
5,400
15,525
6,109
(10,557)
(10,949)
-
1,639
15,489
968
393
29,929
(2,386)
13,103
770
30,699
Consolidated
26 Jun 2022
$'000
27 Jun 2021
$'000
56,244
6,810
61,415
18,679
76,631
5,740
46,905
20,170
143,148
149,446
Trade payables and accruals represent liabilities for goods and services provided to the Group prior to the end of financial year
which are unpaid. Other payables represent goods receipted that have not been invoiced as at 26 June 2022. Trade and other
payables are stated at amortised cost. The amounts are unsecured and are usually settled within 30 to 60 days of recognition.
55
Notes to the Financial Statementsfor the year ended 26 June 2022Accent Group Limited Annual Report 2022
Notes to the Financial Statements
NOTE 19. DEFERRED REVENUE
Current
Gift cards
Other deferred revenue
Non-current
Other deferred revenue
Consolidated
26 Jun 2022
$'000
27 Jun 2021
$'000
4,324
6,765
11,089
4,593
15,682
4,354
4,430
8,784
4,208
12,992
Deferred revenue relates to unredeemed gift cards, loyalty program liabilities, and unused supplier contributions for fixtures,
fittings and point of purchase. These contributions will be utilised for future store openings and refurbishments.
NOTE 20. PROVISIONS
Current
Employee benefits
Other provisions
Non-Current
Employee benefits
Consolidated
26 Jun 2022
$'000
27 Jun 2021
$'000
13,063
2,532
15,595
857
16,452
17,215
2,003
19,218
659
19,877
Recognition and measurement
Employee benefits
Liabilities for annual leave, bonuses 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.
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.
Provisions
Provisions are recognised when the Group has a present (legal or constructive) obligation as a result of a past event, it is probable
the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The
amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the
reporting date.
56
for the year ended 26 June 2022Accent Group Limited Annual Report 2022 NOTE 21. BORROWINGS
Current
Secured
Bank loans
Working capital facility
Capitalised debt transaction costs
Non-Current
Secured
Bank loans
Capitalised debt transaction costs
Movements in borrowings
Movements in borrowings during the current financial year is set out below:
Carrying amount at start of the year
Repayments
Additional loans
Capitalised debt transaction costs
Carrying amount at end of the year
Consolidated
26 Jun 2022
$'000
27 Jun 2021
$'000
-
5,000
20,000
35,000
(116)
-
19,884
40,000
150,000
61,125
(868)
-
149,132
61,125
Borrowings
$'000
101,125
(288,250)
357,125
(984)
169,016
On 15 December 2021, the Group successfully completed an upsize and extension of its existing debt facilities that were due to
mature in August 2023. The new debt facilities have a combination of three and five year tenure, expiring between December 2024
and December 2026.The weighted average interest rate on these financing facilities is 1.90%.
The Group has entered into an interest rate swap contract to mitigate the risk of changing interest rates on the variable rate debt
held. The interest rate swap contract matures in August 2023.
Recognition and measurement
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortised cost.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at
least 12 months after the reporting date and intends to do so.
The Group monitors compliance with its financial covenants on a monthly basis and reports compliance on a monthly basis to the
banks. The Group has complied with all such requirements.
Assets pledged as security
The senior bank debt is secured by cross-guarantees and all assets of Accent Group Limited and each of its wholly-owned
subsidiaries. Total secured assets amounted to $884,574,000 at 26 June 2022 (27 June 2021: $814,535,000).
57
Notes to the Financial Statementsfor the year ended 26 June 2022Accent Group Limited Annual Report 2022 NOTE 21. BORROWINGS (CONTINUED)
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Total facilities
Bank overdraft
Bank loans
Working capital facility
Bank guarantee and letters of credit
Used at the reporting date
Bank overdraft
Bank loans
Working capital facility
Bank guarantee and letters of credit
Unused at the reporting date
Bank overdraft
Bank loans
Working capital facility
Bank guarantee and letters of credit
NOTE 22. LEASE LIABILITIES
Current
Lease liability
Non-current
Lease liability
Consolidated
Less than one year
One to five years
More than five years
Total undiscounted lease liabilities
Total Liabilities included in the statement of financial position
Current lease liabilities
Non-current lease liabilities
58
Consolidated
26 Jun 2022
$'000
27 Jun 2021
$'000
3,800
150,000
5,700
66,125
129,350
98,250
24,750
18,650
307,900
188,725
-
-
150,000
66,125
20,000
35,000
20,524
190,524
16,054
117,179
3,800
5,700
-
-
109,350
63,250
4,226
117,376
2,596
71,546
Consolidated
26 Jun 2022
$'000
27 Jun 2021
$'000
123,406
106,811
307,904
277,015
$'000
135,984
309,193
15,212
460,389
431,310
123,406
307,904
Notes to the Financial Statementsfor the year ended 26 June 2022Accent Group Limited Annual Report 2022
Notes to the Financial Statements
NOTE 22. LEASE LIABILITIES (CONTINUED)
Recognition and measurement
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value
of the lease payments to be made over the term of the lease, discounted using the Group's incremental borrowing rate. Leases
are entered into for varying terms and rent reviews are based on CPI increases or fixed increases. Variable lease payments are
expensed in the period in which they are incurred.
The carrying amount of a lease liability is remeasured if there is a change in the lease payments arising from a change in an index
or a rate used and a change in lease term. Most of the Group’s leases do not contain renewal or extension options. When a lease
liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of
the right-of-use asset is fully written down.
NOTE 23. EQUITY - ISSUED CAPITAL
Ordinary shares - fully paid
Less: Treasury shares
Consolidated
26 Jun 2022
Shares
27 Jun 2021
Shares
26 Jun 2022
$'000
27 Jun 2021
$'000
541,866,715
541,866,715
390,926
390,926
–
(200,000)
–
(310)
541,866,715
541,666,715
390,926
390,616
Ordinary shares
Ordinary shares are classified as equity and entitle the holder to participate in dividends and the proceeds on the winding up of
the 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.
Treasury shares
No shares were issued to employees under the Employee Share Scheme (27 June 2021: nil). During the year, employee loan
repayments reduced the number of treasury shares under the Employee Share Scheme. Details of the scheme are set out in
Note 39.
Share buy-back
There is no current on-market share buy-back.
Movements in ordinary share capital
Details
Balance
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
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
Employee Share Scheme - loans repaid
Employee Share Scheme - loans repaid
Employee Share Scheme - loans repaid
Employee Share Scheme - loans repaid
Balance
Employee Share Scheme - loans repaid
Balance
Date
Shares
Issue price
$'000
540,516,713
389,600
250,000
250,000
100,000
100,000
33,333
33,334
66,666
33,333
33,333
33,334
33,334
66,668
66,667
50,000
$0.730
$0.730
$0.730
$1.010
$1.140
$1.140
$1.010
$0.730
$1.140
$0.730
$1.140
$1.140
$1.140
$1.140
183
183
73
101
38
38
67
24
38
24
38
76
76
57
541,666,715
200,000
$1.490
541,866,715
390,616
310
390,926
28 June 2020
30 June 2020
30 June 2020
01 September 2020
02 September 2020
25 September 2020
01 October 2020
14 October 2020
23 October 2020
03 November 2020
24 November 2020
26 November 2020
02 February 2021
04 February 2021
23 February 2021
27 June 2021
24 January 2022
26 June 2022
59
for the year ended 26 June 2022Accent Group Limited Annual Report 2022 Notes to the Financial Statements
NOTE 24. EQUITY - RESERVES
Foreign currency translation reserve
Hedging reserve - cash flow hedges
Share-based payments reserve
Consolidated
26 Jun 2022
$'000
27 Jun 2021
$'000
7,709
5,567
23,377
36,653
9,512
(1,797)
18,309
26,024
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial
statements of foreign subsidiaries.
Hedging reserve - cash flow hedges
Changes in the fair value of derivative financial instruments that are designated and effective as hedges of future cash flows are
recognised in other comprehensive income with the remaining change in fair value recognised in the hedging reserve.
Any ineffective portion is recognised immediately in the statement of profit and loss.
Share-based payments reserve
The share-based payments reserve is used to recognise the value of equity-settled share-based payments provided to
employees, including key management personnel, as part of their remuneration.
NOTE 25. EQUITY - DIVIDENDS
Dividends
Dividends paid during the financial year were as follows:
Consolidated
26 Jun 2022
$'000
27 Jun 2021
$'000
Final dividend for the year ended 27 June 2021 of 3.25 cents (2020: 4.00 cents) per ordinary share
17,611
21,675
Interim dividend for the year ended 26 June 2022 of 2.50 cents (2021: 8.00 cents) per ordinary
share
13,546
31,157
43,349
65,024
In respect of the financial year ended 26 June 2022, the directors recommended the payment of a final fully franked dividend of
4.00 cents per share to be paid on 15 September 2022 to the registered holders of fully paid ordinary shares as at 1 September 2022.
Franking credits
Consolidated
26 Jun 2022
$'000
27 Jun 2021
$'000
Franking credits available for subsequent financial years based on a tax rate of 30%
39,058
37,399
New Zealand imputation credits available to New Zealand residential shareholders amount to NZ$7,596,743 (27 June 2021:
NZ$6,569,688).
NOTE 26. FINANCIAL INSTRUMENTS
Financial risk management objectives
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.
60
for the year ended 26 June 2022Accent Group Limited Annual Report 2022 NOTE 26. FINANCIAL INSTRUMENTS (CONTINUED)
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 has transactional foreign currency exposures arising from the purchase of inventory denominated in US dollars. To
minimise the impact of changes in the Australian Dollar/US Dollar exchange rate on profit and loss, the Group enters into forward
exchange contracts in accordance with its Board-approved foreign exchange hedging policy.
The Group's exposure to foreign currency risk as at the end of the reporting period, expressed in Australian dollars, is shown
below:
Consolidated
Forward contracts
Foreign currency trade payables
Transactional foreign exchange risk
26 Jun 2022
27 Jun 2021
US dollar
transactional
exposure
$'000
Australian
dollar
equivalent
$'000
US dollar
transactional
exposure
$'000
Australian
dollar
equivalent
$'000
160,462
16,067
176,529
217,723
23,258
240,981
153,886
27,689
181,575
204,998
36,461
241,459
The sensitivity of the Group's transactional foreign currency risk exposure is estimated by assessing the impact that a 10% increase
and 10% decrease in the Australian Dollar/US Dollar exchange rate would have on profit and equity of the Group at the reporting
date.
26 Jun 2022
27 Jun 2021
Movement
in Australian
dollar US
dollar
exchange rate
%
Increase/
(decrease) in
profit or loss
$'000
Increase/
(decrease)
in other
comprehensive
income
$'000
Movement
in Australian
dollar US
dollar
exchange rate
%
Increase/
(decrease) in
profit or loss
$'000
Increase/
(decrease)
in other
comprehensive
income
$'000
10%
(10%)
10%
(10%)
–
-
239
(292)
(4,589)
26,453
1,875
(2,292)
10%
(10%)
10%
(10%)
–
-
455
(556)
(14,545)
12,535
2,860
(3,495)
Forward Contracts
Trade Payables
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.
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:
Buy US dollars
Maturity:
0 - 3 months
3 - 6 months
6 - 12 months
> 12 months
Sell Australian dollars
Average exchange rates
26 Jun 2022
$'000
27 Jun 2021
$'000
26 Jun 2022
27 Jun 2021
79,721
64,040
73,962
–
94,957
54,013
50,853
5,175
0.7356
0.7263
0.7486
–
0.7429
0.7506
0.7674
0.7730
61
Notes to the Financial Statementsfor the year ended 26 June 2022Accent Group Limited Annual Report 2022 NOTE 26. FINANCIAL INSTRUMENTS (CONTINUED)
Translational Foreign Currency Risk
The Group includes certain subsidiaries whose functional currencies are different to the Group’s presentation currency of
Australian Dollars. As stated in 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.
26 Jun 2022
27 Jun 2021
NZ dollar
translational
exposure
$'000
Australian
dollar
equivalent
$'000
NZ dollar
translational
exposure
$'000
Australian
dollar
equivalent
$'000
New Zealand dollar net assets
22,832
20,823
29,492
27,481
The sensitivity of the Group's translational foreign currency risk exposure is estimated by assessing the impact that a 10% increase
and 10% decrease in the Australian Dollar / NZ Dollar exchange rate would have on profit and equity of the Group at the reporting
date.
26 Jun 2022
27 Jun 2021
Movement
in Australian
dollar NZ
dollar
exchange rate
%
Increase/
(decrease)
in other
comprehensive
income
$'000
Movement
in Australian
dollar NZ
dollar
exchange rate
%
Increase/
(decrease)
in other
comprehensive
income
$'000
10%
(10%)
(1,893)
2,314
10%
(10%)
(2,498)
3,053
New Zealand dollar net assets
Price risk
The Group is not exposed to any significant price risk.
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 has entered into an interest rate swap contract to mitigate the risk of changing interest rates on the variable rate debt
held. The interest rate swap contract matures in August 2023.
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
26 Jun 2022
27 Jun 2021
Weighted
average
interest rate
%
Weighted
average
interest rate
%
Balance
$'000
1.90%
(170,000)
1.84%
48,750
1.61%
1.93%
Net exposure to cash flow interest rate risk
(121,250)
Balance
$'000
(101,125)
56,250
(44,875)
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.
62
Notes to the Financial Statementsfor the year ended 26 June 2022Accent Group Limited Annual Report 2022 NOTE 26. FINANCIAL INSTRUMENTS (CONTINUED)
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 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.
Liquidity risk
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
Working capital facility
Bank guarantee and letters of credit
Consolidated
26 Jun 2022
$'000
27 Jun 2021
$'000
3,800
109,350
4,226
117,376
5,700
63,250
2,596
71,546
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.
Consolidated - 26 Jun 2022
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Lease liabilities
Interest-bearing - variable
Term loans
Working capital facility
Total non-derivatives
Derivatives
Weighted
average
interest rate
%
1 year or less
$'000
Between
1 and 2 years
$'000
Between
2 and 5 years
$'000
Over 5 years
$'000
Remaining
contractual
maturities
$'000
–
–
–
56,244
18,679
–
–
–
–
–
–
56,244
18,679
135,984
115,234
193,959
15,212
460,389
1.78%
2.79%
–
20,000
–
–
150,000
–
–
–
150,000
20,000
230,907
115,234
343,959
15,212
705,312
Interest rate swaps net settled
1.84%
–
(1,383)
Forward foreign exchange contracts net
settled
Total derivatives
–
(13,569)
(13,569)
–
(1,383)
–
–
–
–
–
–
(1,383)
(13,569)
(14,952)
63
Notes to the Financial Statementsfor the year ended 26 June 2022Accent Group Limited Annual Report 2022 NOTE 26. FINANCIAL INSTRUMENTS (CONTINUED)
Consolidated - 27 Jun 2021
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Lease liabilities
Interest-bearing - variable
Term loans
Working capital facility
Total non-derivatives
Derivatives
Weighted
average
interest rate
%
1 year
or less
$'000
Between
1 and 2 years
$'000
Between
2 and 5 years
$'000
Over
5 years
$'000
Remaining
contractual
maturities
$'000
–
–
–
76,631
20,170
121,471
–
–
–
–
–
–
76,631
20,170
102,864
176,588
16,723
417,646
1.68%
1.47%
5,000
10,000
51,125
35,000
–
–
–
–
66,125
35,000
258,272
112,864
227,713
16,723
615,572
Interest rate swaps net settled
1.93%
–
Forward foreign exchange contracts net
settled
Total derivatives
–
(2,622)
(2,622)
–
81
81
(26)
–
(26)
–
–
–
(26)
(2,541)
(2,567)
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above.
Capital risk management
The Group manages its capital to ensure that all the entities within the Group are able to continue as going concern 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.
NOTE 27. FAIR VALUE MEASUREMENT
The only financial assets or financial liabilities carried at fair value are interest rate swaps and foreign currency forward contracts.
All these instruments are Level 2 financial instruments because, unlike Level 1 financial instruments, their measurement is derived
from inputs other than quoted prices that are observable for the assets or liabilities, either directly or indirectly.
Valuation techniques for fair value measurements
The fair values are determined using the valuation techniques below. The fair value was obtained from third party valuations.
Forward foreign exchange contracts
The fair value was obtained from third party valuations derived from discounted cash flow forecasts of forward exchange rates at
the end of the reporting period and contract exchange rates.
Interest rate swap contracts
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.
There were no transfers between levels during the year.
The carrying amount of other financial assets and financial liabilities recorded in the financial statements approximate their fair
values.
64
Notes to the Financial Statementsfor the year ended 26 June 2022Accent Group Limited Annual Report 2022 Notes to the Financial Statements
NOTE 28. KEY MANAGEMENT PERSONNEL DISCLOSURES
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
26 Jun 2022
$'000
27 Jun 2021
$'000
2,940,080
4,193,422
104,910
94,802
1,669,079
1,716,599
4,714,069
6,004,823
NOTE 29. 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 Group:
Audit services - Deloitte Touche Tohmatsu
Audit or review of the financial statements
Other services - Deloitte Touche Tohmatsu
Other consulting services
Consolidated
26 Jun 2022
$'000
27 Jun 2021
$'000
653,248
560,680
–
–
653,248
560,680
NOTE 30. CONTINGENT LIABILITIES
The Group has bank guarantees outstanding as at 26 June 2022 of $3,693,060 (27 June 2021: $4,208,739). The Group also
has open letters of credit of $16,830,874 (27 June 2021: $11,845,474). These guarantees and letters of credit are in favour of
international stock suppliers and landlords where parent guarantees cannot be negotiated.
NOTE 31. COMMITMENTS
Consolidated
26 Jun 2022
$'000
27 Jun 2021
$'000
Capital commitments
Committed at the reporting date but not recognised as liabilities, payable:
Property, plant and equipment
18,156
29,645
The commitment amounts disclosed above represent the maximum amounts that the Group is obliged to pay and exclude
Landlord contributions to store fit-out costs.
NOTE 32. RELATED PARTY TRANSACTIONS
Parent entity
Accent Group Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in Note 35.
Key management personnel
Disclosures relating to key management personnel are set out in Note 28 and the remuneration report included in the
directors' report.
65
for the year ended 26 June 2022Accent Group Limited Annual Report 2022 NOTE 32. RELATED PARTY TRANSACTIONS (CONTINUED)
Entities associated with key management personnel
Rivan Pty Limited, a shareholder, is a company associated with David Gordon.
2 Como Pty Ltd, a shareholder, is a company associated with Daniel Agostinelli.
BBRC International Pte Ltd, a shareholder, is a company associated with Brett Blundy.
Placed Pty Ltd is a company associated with Daniel Agostinelli and Brett Blundy.
Aventus Kotara South Pty Ltd is a company associated with Brett Blundy.
Musician Pty Ltd, a shareholder, is a company associated with Matthew Durbin.
Milner York Pty Ltd ATF Milner York Family Trust, a shareholder, is a company associated with Joshua Lowcock.
Lyneliz Pty Ltd is a company associated with Daniel Agostinelli.
Retail Reality Pty Ltd is a company associated with Daniel Agostinelli.
Boxed to Go (JOA5 Investments Pty Ltd) is a company associated with Daniel Agostinelli.
Transactions with related parties
The following transactions occurred with related parties:
Placed Pty Ltd, a company associated with Daniel Agostinelli and Brett Blundy, provided recruitment services to the Group
amounting to $150,858 (27 June 2021: $140,722).
Aventus Kotara South Pty Ltd, a company associated with Brett Blundy, is the landlord of the Skechers Kotara outlet and the
TAF Kotara retail premises.
Retail Reality Pty Ltd, a company associated with Daniel Agostinelli, provided mystery shopping services to the Group amounting
to $7,968 (27 June 2021: $40,737).
Lyneliz Pty Ltd, a company associated with Daniel Agostinelli, provided storage services to the Group amounting to $60,000
(27 June 2021: $40,355).
Boxed to Go (JOA5 Investments Pty Ltd), a company associated with Daniel Agostinelli, provided corporate gift boxes to the
Group amounting to $47,855 (27 June 2021: $0).
Loans to/from related parties
There were no loans to/from related parties outstanding at the reporting date.
NOTE 33. PARENT ENTITY INFORMATION
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Profit after income tax
Other comprehensive income for the year, net of tax
Total comprehensive income
Statement of financial position
Total current assets
Total non-current assets
Total assets
Total current liabilities
Total non-current liabilities
Total liabilities
Net assets
66
Parent
26 Jun 2022
$'000
27 Jun 2021
$'000
36,142
41,563
–
–
36,142
41,563
Parent
26 Jun 2022
$'000
27 Jun 2021
$'000
154,222
374,767
528,989
16,551
152,255
168,806
360,183
61,156
376,484
437,640
23,487
64,333
87,820
349,820
Notes to the Financial Statementsfor the year ended 26 June 2022Accent Group Limited Annual Report 2022 NOTE 33. PARENT ENTITY INFORMATION (CONTINUED)
Equity
Issued capital
Share-based payments reserve
Accumulated losses
Total equity
Parent
26 Jun 2022
$'000
27 Jun 2021
$'000
390,926
23,377
390,616
18,309
(54,120)
(59,105)
360,183
349,820
The financial information for the parent entity has been prepared on the same basis as the consolidated financial statements,
except as set out below.
– Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
– Dividends received from subsidiaries are recognised in the parent entity’s profit or loss.
NOTE 34. BUSINESS COMBINATIONS
26 June 2022
During the year to 26 June 2022, the Group completed the acquisition of 5 TAF stores. The total consideration transferred for
these acquisitions was $2,763,682. Goodwill of $1,396,985 was recognised on acquisition.
Details of the business combinations are as follows:
Inventories
Other current assets
Right-of-use assets
Net deferred tax assets
Provisions
Deferred revenue
Lease liability
Net assets acquired
Reacquired rights
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
Cash paid or payable to vendor
Outstanding debts/loans forgiven
Details of the cash flow movement relating to the acquisition are as follows:
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred
Less: outstanding debts/loans forgiven
Net cash used
67
Provisional
fair value
$'000
773
5
793
627
(41)
(161)
(793)
1,203
163
1,397
2,763
2,704
59
2,763
Provisional
fair value
$'000
2,763
(59)
2,704
Notes to the Financial Statementsfor the year ended 26 June 2022Accent Group Limited Annual Report 2022 Notes to the Financial Statements
NOTE 34. BUSINESS COMBINATIONS (CONTINUED)
The fair value of assets acquired, liabilities and contingent liabilities assumed are initially estimated by the Group taking
into consideration all available information at the reporting date. Fair value adjustments on the finalisation of the business
combination accounting is retrospective, where applicable, to the period the combination occurred and may have an impact on
the assets and liabilities, depreciation and amortisation reported.
27 June 2021
During the year to 27 June 2021, the Group completed the acquisition of Glue Store retail business and the wholesale and
distribution brands business of Next Athleisure Pty Ltd (NAL), a leading Australian youth apparel, shoe and accessory retailer
offering an aspirational range spanning global street, fashion and sport cultures. In addition to this, the Group acquired lifestyle
womenswear brand, Exie and 1 TAF store. The total consideration transferred for these acquisitions was $14,065,544. Goodwill of
$8,934,926 was recognised on acquisition.
Details of the provisional assets and liabilities acquired are as follows:
Cash and cash equivalents
Inventories
Other current assets
Trade and other receivables
Property, plant and equipment
Right-of-use assets
Net deferred tax
Trade and other payables
Provisions
Deferred revenue
Other current liabilities
Lease liability
Net assets acquired
Reacquired rights
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
Cash paid or payable to vendor
Outstanding debts
Payments to be made in future periods
Details of the cash flow movement relating to the acquisition are as follows:
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred
Add: outstanding debts
Less: payments to be made in future periods
Net cash used
68
Fair value
$'000
-
15,904
1
6,688
963
10,606
2,975
(16,679)
(1,377)
(493)
-
(13,457)
5,131
-
8,935
14,066
12,996
(30)
1,100
14,066
Fair value
$'000
14,066
30
(1,100)
12,996
for the year ended 26 June 2022Accent Group Limited Annual Report 2022 NOTE 35. 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:
Name
Principal place of business/Country of incorporation
Ownership interest
26 Jun 2022
%
27 Jun 2021
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
The Athlete's Foot Australia Pty Ltd
TAF Constructions Pty Ltd(a)
RCG Brands Pty Ltd
RCG Retail Pty Ltd
TAF eStore Pty Ltd(a)
TAF Partnership Stores 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 Ltd(c)
Platypus Shoes Ltd(d)
Accent Footwear Ltd(d)
Hype DC Ltd(d)
TAF New Zealand Ltd(d)
Accent Brands Pty Ltd(c)
Platypus Shoes (Australia) Pty Ltd(c)
42K Pty Ltd(e)
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
Australia
Australia
Australia
Accent Store Development Pty Ltd(f)
Australia
RCG Accent Group Holdings Pty Ltd
Australia
Hype DC Pty Ltd
Subtype Pty Ltd
Pivot Store Pty Ltd
Accent Lifestyle Pty Ltd
Accent Active Pty Ltd
Subtype Limited(d)
Accent Active (NZ) Limited
Accent Lifestyle (NZ) Limited
Australia
Australia
Australia
Australia
Australia
New Zealand
New Zealand
New Zealand
(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 Ltd (New Zealand)
(e) Indirectly held through Accent Brands Pty Ltd
(f) This company was renamed during the year ended 26 June 2022 (previously RCG Grounded Pty Ltd)
69
Notes to the Financial Statementsfor the year ended 26 June 2022Accent Group Limited Annual Report 2022 NOTE 36. DEED OF CROSS GUARANTEE
The following entities are party to a deed of cross guarantee under which each company guarantees the debts of the others:
Accent Group Ltd
RCG Brands Pty Ltd
The Athlete's Foot Australia Pty Ltd
RCG Retail Pty Ltd
RCG Accent Group Holdings Pty Ltd
Hype DC Pty Limited
TAF Partnership Stores Pty Ltd
TAF eStore Pty Ltd
T.A.F Constructions Pty Ltd
Accent Group Pty Ltd
Platypus Shoes (Australia) Pty Ltd
42K Pty Ltd
Accent Store Development Pty Ltd
Subtype Pty Ltd
Pivot Store Pty Ltd
Accent Lifestyle Pty Ltd
Accent Active Pty Ltd
(ACN 108 096 251)
(ACN 125 433 972)
(ACN 001 777 582)
(ACN 144 955 117)
(ACN 613 017 422)
(ACN 081 432 313)
(ACN 164 791 048)
(ACN 158 031 040)
(ACN 097 684 430)
(ACN 001 742 552)
(ACN 122 726 907)
(ACN 169 043 145)
(ACN 611 621 482)
(ACN 628 866 419)
(ACN 634 893 691)
(ACN 636 815 284)
(ACN 637 053 028)
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 subsidiaries and Accent Group Limited together referred to as the ‘Closed Group’ either originally entered the Deed
on 23 February 2017 or have subsequently joined the Deed.
Set out below is a consolidated statement of profit or loss and other comprehensive income and statement of financial position of
the 'Closed Group'.
Statement of profit or loss and other comprehensive income
Revenue
Other income
Interest revenue
Cost of sales
Distribution expense
Marketing expense
Occupancy expense
Employee expenses
Other expenses
Depreciation, amortisation and impairment expense
Finance costs
Profit before income tax expense
Income tax expense
Profit after income tax expense
Other comprehensive income
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
Total comprehensive income for the year
70
26 Jun 2022
$'000
27 Jun 2021
$'000
997,793
859,796
11,976
786
5,146
998
(444,670)
(370,690)
(45,243)
(45,066)
(16,723)
(33,017)
(31,668)
(10,027)
(215,719)
(171,465)
(44,882)
(34,284)
(135,888)
(105,945)
(14,650)
47,714
(12,364)
35,350
8,141
–
8,141
43,491
(13,421)
95,423
(28,413)
67,010
(6,480)
6,725
245
67,255
Notes to the Financial Statementsfor the year ended 26 June 2022Accent Group Limited Annual Report 2022 Notes to the Financial Statements
NOTE 36. DEED OF CROSS GUARANTEE (CONTINUED)
Statement of financial position
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Lease receivable
Derivative financial instruments
Other current assets
Current tax receivable
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Lease receivable
Intangibles
Derivative financial instruments
Net deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Deferred revenue
Provisions
Borrowings
Lease liabilities
Derivative financial instruments
Provision for income tax
Total current liabilities
Non-current liabilities
Provisions
Deferred revenue
Borrowings
Lease liabilities
Derivative financial instruments
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
71
26 Jun 2022
$'000
27 Jun 2021
$'000
37,558
63,466
20,525
38,357
212,328
190,905
8,349
13,569
5,565
7,326
9,300
–
4,059
–
348,161
263,146
114,989
261,023
12,346
374,748
1,383
10,390
774,879
98,881
236,309
16,993
371,644
81
30,038
753,946
1,123,040
1,017,092
131,008
130,459
9,974
14,061
19,884
109,817
-
-
7,948
18,497
40,000
98,104
2,622
12,023
284,744
309,653
857
3,800
149,132
659
3,385
61,125
264,498
239,947
-
418,287
703,031
418,235
26
305,142
614,795
402,297
390,926
390,616
37,584
(8,501)
24,375
(12,694)
418,235
402,297
for the year ended 26 June 2022Accent Group Limited Annual Report 2022 NOTE 37. CASH FLOW INFORMATION
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
Share-based payments
Provision for asset impairment
Foreign exchange differences
Net gain on lease modifications
Other non-cash items
Change in assets and liabilities, net of the effect from acquisition of businesses
Receivables
Inventories
Trade creditors and provisions
Tax assets and liabilities
Net cash from operating activities
NOTE 38. EARNINGS PER SHARE
Profit after income tax
Profit after income tax attributable to the owners of Accent Group Limited
Consolidated
26 Jun 2022
$'000
27 Jun 2021
$'000
31,464
76,923
143,539
115,031
5,068
7,750
301
(1,751)
(2,333)
(11,350)
(23,977)
(7,295)
(1,070)
7,307
2,079
(15)
-
4,136
(80)
(71,871)
46,106
(20,207)
140,346
159,409
Consolidated
26 Jun 2022
$'000
27 Jun 2021
$'000
31,464
31,464
76,923
76,923
Number
Number
Weighted average number of ordinary shares used as the denominator in calculating basic earnings
per share
541,750,781 541,430,396
Adjustments for calculation of diluted earnings per share:
Options and loan funded shares
Performance rights
–
200,000
21,186,481
21,497,379
Weighted average number of ordinary shares used as the denominator in calculating diluted
earnings per share
562,937,262
563,127,775
Basic earnings per share
Diluted earnings per share
Recognition and measurement
Cents
Cents
5.81
5.59
14.21
13.66
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.
72
Notes to the Financial Statementsfor the year ended 26 June 2022Accent Group Limited Annual Report 2022 NOTE 39. SHARE-BASED PAYMENTS
Option Plans
Employee Share Scheme
Shares under the Accent Group Employee Share Scheme ('ESS') 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 as in substance options and accounted for as share-based payments.
Set out below are the outstanding options granted under each plan.
26 Jun 2022
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
13/05/2016
28/02/2022
$1.490
200,000
-
(200,000)
-
-
27 Jun 2021
Grant date
Expiry date
Exercise price
Balance at the
start of the year
Granted
Exercised
Expired/
forfeited/other
27/05/2015
30/09/2020
27/05/2015
30/09/2020
28/08/2015
30/08/2020
13/05/2016
28/02/2022
$0.730
$1.010
$1.140
$1.490
666,667
166,666
316,669
200,000
1,350,002
-
-
-
-
-
(666,667)
(166,666)
(316,669)
-
(1,150,002)
–
-
-
-
-
Balance at
the end of
the year
-
-
–
200,000
200,000
The weighted average share price during the financial year was $0 (27 June 2021: $1.490) as all shares under the ESS have vested
as at 26 June 2022.
The weighted average remaining contractual life of options outstanding at the end of the financial year was 0 years (2021: 0.2 years)
as all shares under the ESS have vested as at 26 June 2022.
Performance rights
On 14 October 2016, the Board approved a performance rights plan called the RCG Performance Rights Plan ('PRP'). The PRP was
introduced following a review by the Board of the existing remuneration arrangements of the Company. The PRP replaces 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. The number of equity instruments that are
expected to vest is based on management’s assessment of the likelihood of the vesting conditions attached to the equity
instruments being satisfied. The key vesting conditions that are assessed are earnings per share targets and required service
periods. If the performance condition is met, 100% of the performance rights vest. If the performance condition is not met,
none of the performance rights vest unless the Board determines otherwise.
Recognition and measurement
The Group recognises the fair value at the grant date of equity settled shares as an expense with a corresponding increase in equity
over the vesting period. 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. Vesting is also subject to the recipients of the performance rights remaining in employment with the
Company.
73
Notes to the Financial Statementsfor the year ended 26 June 2022Accent Group Limited Annual Report 2022 NOTE 39. 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
– if 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.
Performance rights outcomes
In 2020 the Board exercised its discretion and determined that the performance condition for 50% of the performance rights
granted in 2017 had been met and would therefore vest on 19 August 2022. These performance rights are still subject to the
recipients remaining in employment with the Group. For the remaining 50%, on 31 May 2022, the Board exercised its discretion
and deferred the vesting period by 12 months. These Performance Rights continue to be subject to all other relevant plan
rules. The ASX has confirmed that the Company will now require shareholder approval in relation to the proposed changes to
performance rights issued in 2017.
More information is available in relation to the outcomes of performance rights within the Remuneration Report.
Set out below are summaries of the performance rights granted:
26 Jun 2022
Grant date
Expiry date
30/10/2022
30/10/2022
30/10/2022
30/11/2022
30/11/2024
31/08/2024
01/09/2025
03/10/2017
27/12/2017
20/06/2018
30/11/2019
30/11/2019
30/11/2020
28/06/2021
27 Jun 2021
Balance at
the start of
the year
12,800,000
6,700,000
400,000
1,597,379
3,361,931
6,563,251
Granted
Exercised
Expired/
forfeited/other
Balance at
the end of
the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12,800,000
(200,000)
6,500,000
-
(110,898)
(92,049)
(486,544)
400,000
1,486,481
3,269,882
6,076,707
(410,973)
5,060,662
(1,300,464)
35,593,732
-
5,471,635
31,422,561
5,471,635
Grant date
Expiry date
Balance at the
start of the year
Granted
Exercised
Expired/
forfeited/other
Balance at the
end of the year
03/10/2017
27/12/2017
20/06/2018
30/11/2019
30/11/2019
30/11/2020
30/10/2022
30/10/2022
30/10/2022
30/11/2022
30/11/2024
31/08/2024
16,700,000
6,700,000
400,000
1,684,863
3,577,253
-
-
-
15,000
107,659
-
6,645,416
29,062,116
6,768,075
-
-
-
-
-
-
-
(3,900,000)
12,800,000
-
-
(102,484)
(322,981)
6,700,000
400,000
1,597,379
3,361,931
(82,165)
6,563,251
(4,407,630)
31,422,561
The weighted average remaining contractual life of performance rights outstanding at the end of the financial year was 1.26 years
(2021: 1.95 years).
NOTE 40. SUMMARY OF OTHER SIGNIFICANT ACCOUNTING POLICIES
Significant and other accounting policies adopted in the preparation of the financial statements are provided throughout the
notes. These policies have been consistently applied to all the years presented, unless otherwise stated.
74
Notes to the Financial Statementsfor the year ended 26 June 2022Accent Group Limited Annual Report 2022 NOTE 40. SUMMARY OF OTHER SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the 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.
Business combinations
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.
Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions
will be complied with. When the grant relates to an expense item, it is recognised as a reduction of the expense to which it relates.
Dividends
Dividends are recognised when declared during the financial year.
Goods and Services Tax ('GST') and other similar taxes
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.
NOTE 41. EVENTS AFTER THE REPORTING PERIOD
Apart from the dividend declared as disclosed in Note 25 and the matters described above, no other matters or circumstances
have arisen since 26 June 2022 that have 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.
75
Notes to the Financial Statementsfor the year ended 26 June 2022Accent Group Limited Annual Report 2022 Directors' Declaration
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 disclosed in Note 2 of the financial statements;
– the attached financial statements and notes give a true and fair view of the Group's financial position as at 26 June 2022 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 36 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
David Gordon
Chairman
18 August 2022
Melbourne
76
for the year ended 26 June 2022Accent Group Limited Annual Report 2022
Independent Auditor’s Report
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Deloitte Touche Tohmatsu
477 Collins Street
ABN 74 490 121 060
Melbourne VIC 3000
477 Collins Street
Tel: +61 3 9671 7000
Melbourne VIC 3000
www.deloitte.com.au
Tel: +61 3 9671 7000
Fax: +61 3 9671 7001
www.deloitte.com.au
18 August 2022
Independent Auditor’s Report to the Members of Accent
The Board of Directors
Accent Group Limited
Group Limited
2/64 Balmain Street
Richmond, Victoria 3121
RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
Opinion
We have audited the financial report of Accent Group Limited (the “Company”) and its subsidiaries (the “Group”)
Dear Board Members,
which comprises the consolidated statement of financial position as at 26 June 2022, 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,
Auditor’s Independence Declaration to Accent Group Limited
including a summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration
including:
of independence to the directors of Accent Group Limited.
• Giving a true and fair view of the Group’s financial position as at 26 June 2022 and of their financial
As lead audit partner for the audit of the financial report of Accent Group Limited for the year ended 26 June 2022,
I declare that to the best of my knowledge and belief, there have been no contraventions of:
• Complying with Australian Accounting Standards and the Corporations Regulations 2001.
performance for the year then ended; and
Basis for Opinion
(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.
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 & Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are
Yours faithfully
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
DELOITTE TOUCHE TOHMATSU
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Stephen Roche
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
77
Accent Group Limited Annual Report 2022
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.
KKeeyy AAuuddiitt MMaatttteerr
ssccooppee
tthhee
HHooww
tthhee KKeeyy AAuuddiitt MMaatttteerr
ooff
oouurr
aauuddiitt
rreessppoonnddeedd
ttoo
CCaarrrryyiinngg vvaalluuee ooff HHYYPPEE BBrraanndd
Our audit procedures included, but were not limited to:
life
Following the acquisition of the HYPE
business on 4 August 2016, the Group
recognised an
intangible
indefinite
asset relating to the HYPE Brand totalling
$30.2m. This was subsequently impaired
by $9.7m in the year ended 2 July 2017
based on the current and forecast trading
performance of the HYPE business at that
time. As at 26 June 2022, the carrying value
of the HYPE Brand is $20.5m and forms part
of intangibles totalling $374.7m in the
financial
statement
consolidated
position.
of
Management conducts an impairment test
annually (or more frequently if impairment
indicators exist) to assess the recoverability
of the carrying value of the HYPE Brand.
This is performed through a Relief from
Royalty discounted cash flow model.
As disclosed in Note 16, there are a number
of key estimates made which require
significant judgement in determining the
inputs
into this discounted cash flow
model, which include:
•
•
Revenue growth;
Royalty rates; and
• Discount rates applied to the projected
future cash flows.
Management is also required to determine
whether there should be any reversal of the
historical impairment recognised of $9.7m
as part of its impairment assessment.
• Understanding
the Group’s process and
relevant
controls related to its impairment assessment of the HYPE
brand;
•
•
•
•
Evaluating the principles and integrity of the Relief from
Royalty discounted cash flow model used by management to
ensure it complies with the relevant accounting standards;
Challenging management with respect to the revenue
growth rates underlying the cash flow forecast to determine
whether they are reasonable and supportable based on
historical performance, management’s strategic growth
plans for the brand, and other known industry factors;
Evaluating the impact of COVID-19 on the Group’s future
trading performance;
Engaging our valuation
the
reasonableness of the basis adopted by management in
inputs and assumptions
determining the other key
underlying the calculations in the models including:
to assess
specialists
o Evaluating the royalty rate used by comparison to the
market data on similar brand’s royalty rates; and
o Evaluating the discount rate used by assessing the cost
of capital of the Group and comparison to market data.
•
Performing sensitivity analysis on the key model inputs and
assumptions.
We also assessed the appropriateness of the disclosures in Note
16 to the financial statements.
78
Independent Auditor’s ReportAccent Group Limited Annual Report 2022
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PPrroovviissiioonn ffoorr iimmppaaiirrmmeenntt ooff iinnvveennttoorriieess
Our audit procedures included, but were not limited to:
As at 26 June 2022, the Group has
recognised $241.6m in inventories in the
statement of financial position as disclosed
in Note 10.
Inventories are recognised net of a
provision for impairment where the net
realisable value of inventories is less than
cost. The level of the provision is assessed
by taking into account the anticipated level
of sales and margins based on historical
finished goods sold below cost over a 24-
month period and inventory written-off
transactional data over a 12-month period,
the quality of inventory held at balance
date and the broader market conditions.
To the extent that these judgements and
estimates prove incorrect, the Group may
to potential additional
be exposed
inventory write-downs or reversals
in
future periods.
• Understanding the Group’s processes and relevant controls
related to the determination of the inventory provision;
•
Challenging management’s estimate of the provision by
considering, amongst others, the following sources of
information to assess net realisable value:
o Actual losses incurred in the previous 24 months due to
inventory being sold below cost and inventory written
off;
Inventory not sold during the period; and
o
o The likelihood of current inventory becoming impaired
in the future based on internal and external factors,
including the impact of COVID-19.
Assessing the reasonableness of the basis adopted by
management in determining the provision calculations;
Recalculating the inventory provision to test compliance
with the Group’s accounting policy.
•
•
We also assessed the appropriateness of the disclosures in Note
10 to the financial statements.
CCOOVVIIDD--1199 RReenntt ccoonncceessssiioonnss
Our audit procedures included, but were not limited to:
As disclosed in Note 4 to the financial
statements, the Group has negotiated rent
concessions with its landlords. Of these
negotiated rent concessions, $5.1m has
reduction of
been
occupancy expenses in the statement of
profit or loss.
recognised as a
recognition of COVID-19
The
concessions is significant because:
rent
•
•
•
The rent concessions have a significant
impact on profit or loss and, in certain
circumstances, lease liabilities;
The Group entered into a number of
agreements, each with different terms
and conditions; and
The timing of when the agreements
were reached could have a significant
impact on the profit or loss.
• Understanding
the Group’s process and
relevant
controls related to the identification and accounting for rent
concessions;
•
•
•
Reviewing agreements and other relevant documentation
between the Group and its landlords to identify the terms
and conditions of the amended lease agreements and the
date at which agreement was reached between the two
parties;
Assessing whether any conditions contained within the
agreements with the Group’s landlords had been met as at
26 June 2022;
Testing on sample basis, the accounting treatment of rent
concessions to the underlying agreements; and
• Obtaining direct confirmation from a sample of landlords of
the timing, nature and amount of rent concessions provided
to the Group where agreements had been reached with
landlords outside of
lease
agreements.
formal concessions
to
We also assessed the appropriateness of the disclosures included
in Note 4 to the financial statements.
79
Independent Auditor’s ReportAccent Group Limited Annual Report 2022
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eeqquuiippmmeenntt aanndd rriigghhtt--ooff--uussee aasssseettss
As disclosed in Note 15 to the financial
statements, the Group has determined that
each store is a separate Cash Generating
Unit (“CGU”). Management has assessed
the recoverable amount of each CGU as at
26 June 2022 using the value-in-use
method based on the Groups latest FY23
forecasts and five-year strategy forecast
presented to the Board over each CGU’s
lease period.
As disclosed in Note 15, there are a number
of key estimates made which require
significant judgement in determining the
inputs
into this discounted cash flow
models, which include:
•
Revenue growth; and
• Discount rate applied to the projected
future cash flows.
To the extent that these judgements and
estimates prove incorrect, the Group may
to potential additional
be exposed
impairment provisions.
Other Information
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Our audit procedures included, but were not limited to:
• Understanding
controls related to
individual stores;
its
the Group’s process and
relevant
impairment assessment of the
•
•
•
•
Evaluating the principles and integrity of the value-in-use
discounted cash flow models used by management to
ensure it complies with the relevant accounting standards;
Challenging management with respect to the revenue
growth rates underlying the cash flow forecast to determine
whether they are reasonable and supportable based on
historical performance, and other known industry factors;
Evaluating the impact of COVID-19 on the Group’s future
trading performance; and
specialists
to assess
Engaging our valuation
the
reasonableness of the basis adopted by management in
inputs and assumptions
determining the other key
underlying the calculations
including,
evaluating the discount rate used by assessing the cost of
capital of the Group and comparison to market data.
in the models
We also assessed the appropriateness of the disclosures in Note
15 to the financial statements.
The directors are responsible for the other information. The other information comprises the Directors’ Report
and Shareholder Information, which we obtained prior to the date of this auditor’s report, and also includes the
following information which will be included in the Group’s annual report (but does not include the financial report
and our auditor’s report thereon): Chairman and Chief Executive Officer’s Report, which is expected to be made
available to us after that date.
Our opinion on the financial report does not cover the other information and we do not and will not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information identified
above and, in doing so, consider whether the other information is materially inconsistent with the financial report
or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we
have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude
that there is a material misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.
When we read Chairman and Chief Executive Officer’s Report, if we conclude that there is a material misstatement
therein, we are required to communicate the matter to the directors and use our professional judgement to
determine the appropriate action.
80
Independent Auditor’s ReportAccent Group Limited Annual Report 2022
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.
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 fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• 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
81
Independent Auditor’s ReportAccent Group Limited Annual Report 2022
be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards
applied.
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.
RReeppoorrtt oonn tthhee RReemmuunneerraattiioonn RReeppoorrtt
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 20 to 36 of the Directors’ Report for the year ended
26 June 2022..
In our opinion, the Remuneration Report of the Group, for the year ended 26 June 2022, 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
Stephen Roche
Partner
Chartered Accountants
Melbourne, 18 August 2022
82
Independent Auditor’s ReportAccent Group Limited Annual Report 2022 Shareholder Information
The shareholder information set out below was applicable as at 8 August 2022.
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
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
BBRC INTERNATIONAL
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CRAIG JOHN THOMPSON
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
BNP PARIBAS NOMS PTY LTD
JAMES WILLIAM DUELL
MR DANIEL JOHN GILBERT
MRS CINDY GILBERT
NATIONAL NOMINEES LIMITED
HIT GROUP LIMITED
WASHINGTON H SOUL PATTINSON AND COMPANY LIMITED
BNP PARIBAS NOMINEES PTY LTD
RIVAN PTY LTD
PITTMANN PTY LIMITED
TOM HADLEY ENTERPRISES PTY LTD
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
MR GEOFFREY WILLIAM WEBSTER
MR TERRY SPYRIDES
ROANNE PTY LTD
Number
of holders
of ordinary
shares
4,368
6,161
2,519
3,510
283
16,841
1,179
Ordinary shares
Number held
107,502,463
58,904,948
32,518,614
29,992,966
22,391,283
20,241,757
12,500,000
11,000,000
11,000,000
10,228,206
7,500,000
5,204,971
3,026,346
2,599,034
2,410,000
1,500,000
1,484,668
1,295,642
1,150,000
1,102,400
% of total
shares
issued
19.84
10.87
6.00
5.54
4.13
3.74
2.31
2.03
2.03
1.89
1.38
0.96
0.56
0.48
0.44
0.28
0.27
0.24
0.21
0.20
343,553,298
63.40
83
Accent Group Limited Annual Report 2022 Shareholder Information
SUBSTANTIAL HOLDERS
Substantial holders in the Company are set out below:
BBRC International
Craig John Thompson
VOTING RIGHTS
The voting rights attached to ordinary shares are set out below:
Ordinary shares
All ordinary shares carry one vote per share without restriction.
There are no other classes of equity securities.
Ordinary shares
Number held
107,502,463
32,518,614
% of total
shares
issued
19.84
6.00
84
Accent Group Limited Annual Report 2022 DIRECTORS
Corporate Directory
David Gordon - Chairman
Daniel Agostinelli - Chief Executive Officer
Stephen Goddard
Michael Hapgood
Donna Player
Joshua Lowcock
Brett Blundy
Timothy Dodd – alternate Director for Brett Blundy
JOINT COMPANY SECRETARIES
Matthew Durbin
Alethea Lee
REGISTERED OFFICE AND PRINCIPAL
PLACE OF BUSINESS
SHARE REGISTER
AUDITOR
BANKERS
2/64 Balmain Street
Richmond VIC 3121
Telephone: +61 3 9427 9422
Facsimile: +61 3 9427 9622
Email: investors@accentgr.com.au
Computershare Investor Services Pty Limited
Level 4
60 Carrington Street
Sydney NSW 2000
Telephone: 1300 787 272
Deloitte Touche Tohmatsu
477 Collins Street
Melbourne VIC 3000
National Australia Bank
Hongkong and Shanghai Banking Corporation
Australia and New Zealand Banking Group
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/investor/investor-information
85
Accent Group Limited Annual Report 2022 Accent Group Limited
(ABN: 85 108 096 251)
2/64 Balmain Street, Richmond VIC 3121
+61 3 9427 9422
www.accentgr.com.au