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Briscoe Group Limitedannual report 2012
67 stores
in prime
locations
first
choice
for fashion,
cosmetics and
the home
contents
About Myer • 02
2012 Financial Results • 04
From the Chairman • 06
From the CEO • 08
Review of Operations • 10
Sustainability • 18
Board of Directors • 22
Management Team • 24
Corporate Governance
Statement • 26
Directors’ Report • 39
Remuneration Report • 44
Financial Report • 60
Auditor’s Report • 112
Shareholder Information • 115
Corporate Directory
inside back cover
Annual General Meeting
The 2012 Annual General Meeting of
Myer Holdings Limited will be held at
Mural Hall, Level 6, Myer Melbourne,
Bourke Street Mall, Melbourne, Victoria
on Friday, 7 December 2012 at 11am.
Myer Holdings Limited ABN 14 119 085 602
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about myer
Myer is Australia’s largest department store
group, synonymous with style and fashion
for over 100 years.
Our focus on providing inspiration to everyone includes
our customers, our 12,500 team members, our 54,000
shareholders, our 1,200 suppliers globally and the many
communities that we engage with our strong brand.
Myer is a significant employer and has a long history of
philanthropy and local community engagement.
The store network includes a footprint of 67 stores in
prime retail locations across Australia.
The Myer merchandise offer includes 11 core product
categories: Womenswear; Menswear; Miss Shop (Youth);
Childrenswear; Intimate apparel; Beauty, fragrance and
cosmetics; Homewares; Electrical goods; Toys; Footwear,
handbags and accessories; and General merchandise.
Myer’s five-point strategic plan
Myer’s strategy is comprised of five key elements:
1. Optimise our store network
2. Enhance our merchandise offer
3. Improve customer service and efficiency
4. Strengthen our loyalty offer
5. Build a leading omni-channel offer.
Optimise our store network
We have a strong network of 67 stores across the
country, and a strategy to optimise the store network
with a pipeline of new stores, replacement stores,
and refurbishments.
We continue our focus on maximising returns per
square metre.
We recognise that our customers want to be able to
touch and feel products in store, as well as engage with
knowledgeable and helpful staff. Our store network is
integral to delivering a seamless customer experience
across all digital and retail touch points.
Enhance our merchandise offer
We have a focus on inspiring and delighting our
customers with newness and fashionability across
all categories. We want to be the first choice when
shopping for fashion, cosmetics and the home.
The Myer brand offering includes well-known national
brands, Australian and international designers, as well as
57 brands which are owned and distributed exclusively
by Myer, known as ‘Myer Exclusive Brands’.
Our vertically-integrated Myer Exclusive Brand model
of managing the design, development and sourcing of
wanted brands provides us with significant control and
flexibility. This model, together with our two sourcing
offices in Asia, our world-class supply chain, and
updated IT and merchandise systems, delivers speed to
market, and effective inventory control, and gives us a
key competitive advantage.
We also seek to acquire wanted brands where it makes
commercial sense and where the addition of the brand
will further strengthen our merchandise offer.
Improve customer service and efficiency
We have a focus on improving the customer experience
that incorporates a number of service and efficiency
initiatives. Service initiatives include investment in
high service categories at high service times, additional
training and selling skills programs, and enhanced
reward and recognition.
Efficiency initiatives include improving staff availability
at sales points, ensuring more efficient delivery of stock
to the shop floor, and reducing the level of theft and
fraud in our stores.
Strengthen our loyalty offer
The Myer one loyalty program is one of Australia’s
leading loyalty programs, with 4.7 million members and
over 6 million cards in circulation.
Members receive two Shopping Credits for every dollar
spent in Myer stores, with a $20 Myer one rewards
gift card for every 2,000 Shopping Credits. On average,
customers spend 3.8 times the value of their rewards card
on redemption.
With the growth in loyalty programs in Australia, we
are focused on strengthening the Myer one loyalty
program with a number of initiatives to ensure that the
program continues to be leading edge.
Sales using the Myer one card represent approximately
70 percent of total sales. The data from the program
provide insights into customer shopping preferences
and assist in the evaluation of the success of stores,
brands, space, marketing, products and services mix.
rapidly changing
Build a leading omni-channel offer
In a
technology environment,
customers’ shopping preferences continue to evolve.
We are focused on delivering a seamless experience
for our customers, whether in store, online, or on
mobile devices. The right combination of physical
stores and technology, together with the right offer
and fast, efficient fulfilment is critical to our success in
omni-channel retailing.
We are capitalising on our strong brand, depth of offer,
store network and popular loyalty program in order to
become Australia’s leading omni-channel retailer.
increasingly
We
integrate our marketing, balancing
traditional media with innovation and digital marketing
opportunities. Digital marketing and social media are now
part of our everyday marketing focus on all campaigns.
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National store
network
Darwin
Joondalup
Karrinyup
Morley
Perth City
Carousel
Garden City
Fremantle
Nt
SA
WA
vIc
Bendigo
Ballarat
Geelong
Brookside
Indooroopilly
Mt Gravatt
North Lakes
Chermside
Brisbane City
Carindale
Loganholme
Coomera
Pacific Fair
Robina
Cairns
Townsville
Mackay
qld
Maroochydore
Toowoomba
NSW & Act
Dubbo
Orange
Wollongong
Wagga
Albury
Green Hills
Tuggerah
Charlestown
Erina
Shell Harbour
ACT (2 stores)
Woden
Hornsby
Castle Hill
Warringah
Fountain Gate
Launceston
tAS
Hobart
Penrith
Blacktown
Parramatta
Macquarie
Chatswood
Top Ryde
Bankstown
Sydney
City
Bondi
Roselands
Liverpool
Hurstville
Eastgardens
Elizabeth
Tea Tree Plaza
Adelaide City
Marion
Colonnades
Plenty Valley
Miranda
Highpoint
Northland
Melbourne City
Werribee
Doncaster
Eastland
Knox City
Chadstone
Southland
Dandenong
Frankston
Existing stores
Approved new stores
By anticipated opening*
2016
2017
2013
2014
2015
*Financial year
Vision
To be an international-class
retailer providing inspiration
to everyone
2012
financial
results
Our key categories of Miss Shop (Youth),
Womenswear, Menswear and Cosmetics all
performed ahead of last year in sales and
gross profit. The best performing states were
Western Australia and Queensland.
Full year 2012 total sales were $3,119 million. Sales in
our Myer Exclusive Brands grew by over five percent
to $586 million during the year and now represent
19 percent of the sales mix, up from 17.6 percent
in 2011.
The overall strong operating gross profit result reflects
the success of a number of key initiatives including
an improved merchandise mix, an increase in Myer
Exclusive Brands, reduced markdowns, lower shrinkage,
and improved sourcing, as well as the contribution of
sass & bide.
As a result of a shift to brands focused on design, quality,
colour and innovation, we achieved an improved gross
profit margin across the Electrical category. During the
year, we also achieved sales growth in some Electrical
businesses despite ongoing significant price deflation,
particularly
in TVs. However, the category overall
continues to be challenging. The managed exit of white
goods, gaming and consoles, and the rationalisation of
CDs, DVDs and navigation systems, impacted sales by
$31 million during FY2012. This was part of our longer-
term plan to exit categories where we have limited
competitive advantage.
in our overall markdowns
A significant reduction
was achieved in FY2012, benefiting the gross profit
result. While there was price deflation during the year
associated with being more globally competitive,
this was offset by the success of our markdown
reduction program.
As a result of the combined effort across all stores, we
successfully achieved our target of reducing shrinkage
due to theft and fraud to less than one percent of
sales. This result represents global best practice for
department stores.
Our sourcing offices have exceeded our expectations in
their first year of operation, delivering improved margin,
enhanced product quality, and faster speed to market.
operating gross profit margin improved by 150 basis
points (bps) compared to FY2011.
We faced significant additional costs in FY2012, including:
1. Increased
investment
in customer facing hours
totalling $17 million, in addition to $9 million invested
during FY2011; and
2. Increased operational costs including store wages,
penalty rates and loadings, store occupancy (rents,
rates, taxes and utilities), and a full year of operating
costs associated with sass & bide.
In addition to this result there were also some one-
off costs and gains with a negligible net profit after tax
(NPAT) effect. There was a one-off gain of $16.2 million*
relating to the renegotiation of the Adelaide store lease
and the subsequent write-back of a fixed lease rental
increase provision that applied to that store. Offsetting
this were $13.1 million* of one-off costs associated with
the rationalisation of our store portfolio and the full exit
of the CDs and DVDs category. In addition, there was a
one-off cost associated with the restructuring of the
support office which took place in July 2012, amounting
to $3.1 million*.
Strong balance sheet
We maintained our disciplined focus on inventory
management, and overall
inventory was clean at
the end of the period, totalling $385.7 million, up
increased by
1.2 percent. Underlying
0.5 percent to $383 million (adjusted for additional
inventory held for new stores at Mackay, Fountain Gate
and Townsville, additional inventory held for sass & bide
and adjusted for the impact of store closures at Forest Hill
and Tuggeranong).
inventory
Net debt was flat against last year at $383 million, and our
net debt to earnings before interest, tax, depreciation and
amortisation (EBITDA) ratio remained solid at 1.23 times,
well within our covenant of less than 2.5 times.
Growth in operating gross profit was achieved despite
cycling the $17 million of profit underpinning (landlord
contribution) associated with the Melbourne store
rebuild received in FY2011. Excluding this impact, the
We continue to generate strong cash flow, have a stable
balance sheet and there remains significant headroom
in our banking covenants to support our strategic plan
and investment in the future.
*post tax
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280.000000
258.333333
236.666667
215.000000
193.333333
171.666667
150.000000
41.50
39.75
38.00
8.250000
7.041667
5.833333
4.625000
3.416667
2.208333
1.000000
ebit
impacted by
increased costs and
depreciation
3.4
3.2
3.0
2.8
2.6
2.4
2.2
strong
result
reflecting delivery
on key initiatives
2.0
41.3
40.3
170.0
127.5
85.0
42.5
39.6
0.0
39.5
39.2
3.32
3.26
3.28
3.16
3.12
FY08
FY09
FY10
FY11
FY12
Sales ($b)
EBIt margin
(%)
7.2
6.4
8.3
8.2
7.4
213
236
271
259
230
95.8
108.7
168.7
162.7
139.3
FY08
FY09
FY10
FY11
FY12
FY08
FY09
FY10
FY11
FY12
FY08
FY09
FY10
FY11
FY12
Operating gross profit margin (%)
Earnings before interest
and tax (EBIt) ($m)
5
10
0
Net profit after tax ($m)
15
20
25
30
Financial Summary
Sales ($m)
Operating gross profit ($m)
Operating gross profit margin (%)
Cash cost of doing business ($m)
Earnings before interest, tax, depreciation,
amortisation (EBITDA) ($m)
Earnings before interest and tax (EBIT) ($m)
Statutory net profit after tax
(after non-controlling interest) ($m)
Impact of one-off items ($m)
Net profit after tax (NPAT)
(after non-controlling interest) ($m)
FY2012
FY2011
Change (%)
3,119.1
1,288.4
41.31
976.6
3,158.8
1,271.6
40.26
933.7
(1.3)
1.3
+105 bps
4.6
311.8
230.0
139.4
(0.1)
337.9
258.9
159.7
3.0
(7.7)
(11.2)
(12.7)
FY10
FY11
29.0
27.9
0
FY12
5
10
15
23.9
20
25
Earnings per share (cents)
FY10
FY11
FY12
22.0
22.5
19.0
139.3
162.7
(14.3)
Full year dividends (cents)
FY2012 NPAT of $139.3m excludes store closure and restructuring costs of $13.1m (after tax), the cost
of redundancies of $3.1m (after tax) and the gain on the write-back of the fixed lease rental increase
provision of $16.2m (after tax). FY2011 NPAT of $162.7m excludes residual Initial Public Offering (IPO)
costs of $3.5m (after tax), store closure and restructuring costs of $7.6m (after tax), and the profit on
sale of our shareholding in Harris Scarfe of $8.2m (after tax).
from the
chairman
I am pleased to present the 2012 Myer Holdings
Limited Annual Report to our shareholders.
tough consumer environment has been
The
widely reported and these challenging conditions
continue. However, the Myer management team
has
they
have developed which has ensured the business
delivered a solid result.
successfully executed
strategy
the
The Board is confident that the five-point strategy is
the right one to drive the business through the current
cycle and ensure we are well positioned for the future.
Business performance
Total sales for the full year ended 28 July 2012 were
down 1.3 percent to $3,119 million.
In order to meet the changing demands of customers
and rapidly evolving technology, we have exited
some categories and refined our merchandise offer.
Excluding these planned changes, total sales were
down 0.3 percent which is a credible result considering
the continued weak consumer sentiment.
Successful initiatives to refine the merchandise mix,
improve sourcing, optimise promotional effectiveness,
reduce shrinkage and increase the contribution of Myer
Exclusive Brands have combined to deliver a strong
operating gross profit result ahead of last year.
The business is facing a number of increasing costs
relating to employment, occupancy and utilities. As a
result, management has taken steps to rebase the cost
structure of the business, reducing the impact of the
cost pressures. Following our significant recent capital
investment in the business, which underpins our future
growth, depreciation charges have also increased.
We reported a net profit after tax of $139.3 million,
down 14.3 percent on last year, and within guidance
issued to the market in May 2012.
The Board was pleased to determine a fully franked
final dividend of 9 cents per share, taking the full year
dividend to 19 cents per share. The dividend will be paid
on 14 November 2012 to all shareholders registered on
28 September 2012. We remain confident in the strength of
our balance sheet and continued strong cash generation.
Operational highlights
During the year we have continued to enhance our
merchandise offer with a focus on inspiring and delighting
customers. Myer Exclusive Brands now contribute
19 percent of department store sales, represented
across all merchandise categories and price points.
The performance of our two sourcing offices in Asia has
exceeded expectations and supported the continuing
growth of our brands.
Following the success of the sass & bide investment
in 2011, Myer made a number of strategic and
important brand acquisitions which further strengthen
our merchandise offer.
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I am very encouraged by the feedback from customers
and team members on our progress on, and commitment
to, improving customer service.
There is no doubt that consumer preferences are
changing as technology enables access to a proliferation
retailing.
of product, particularly through online
I strongly believe that we are well placed to capitalise on
the strength of the trusted Myer brand, store network,
depth of offer and leading loyalty program to deliver a
leading omni-channel offer in this new environment.
However, to be successful in this, we must continue to
be nimble and adaptable in our approach.
Our people and sustainability
The commitment and focus of our 12,500 team
members is a significant strength of the Myer business.
I am proud that we have continued the philanthropic
heritage on which Myer was built and that we are
committed to communities we serve across the country.
This year, the Myer Stores Community Fund contributed
to over 70 charities nationwide, including The Salvation
Army, the Olivia Newton John Cancer and Wellness
Centre, the Smile Foundation and The Smith Family.
Our whole team is committed to continuing to build
responsible and sustainable business practices. We also
believe in creating a fair and inclusive environment
that embraces diversity at all levels, with a particular
focus on gender diversity. Our workforce gender ratios
continue to reflect this commitment at management,
team member, as well as at Board level.
the Board
During the year, Mr Tom Flood announced his retirement
from the Board after a significant contribution of over
five years of service to Myer. Tom’s considerable retail
experience and guidance over this time was extremely
valuable, and we wish him well for the future.
In August, we announced the appointments of Mr Paul
McClintock AO and Mr Ian Morrice as non-executive
directors to the Myer Board. Mr Rupert Myer AM was
also appointed Deputy Chairman at this time. These
appointments further strengthen the Myer Board with
significant strategic and retail experience.
the future
When the Company was listed in November 2009,
it was predicated on a substantial recovery of Myer.
Management have recovered the business from a
serious loss making business to a business that is
highly efficient, generating strong cash flow and
profitability. Prospectus forecasts were delivered in 2010
before the onset of significant headwinds, and since
then the business has been adjusted to accommodate
the challenging environment. As a shareholder, I am
disappointed in the current share price; however, the
business will continue to concentrate on delivering
returns that exceed our cost of capital and then ultimately
the share price will begin to reflect our strategy.
focus
on inspiring
& Delighting
customers
Howard McDonald
Chairman
Until 10 October
2012
In August, I announced my intention to retire from the
Board at the conclusion of the October Board meeting.
The timing of my decision follows the extension of the
contract of Myer CEO and Managing Director, Mr Bernie
Brookes, through until August 2014, and a desire to
ensure continuity of Board leadership over the period
to that date and beyond.
The Board took the view in support of the decision
that continuity of Board leadership is appropriate
throughout the CEO succession process and beyond
2014 into the new CEO appointment term, and that a
process of Board succession is equally important.
I am confident that our new Chairman, Paul McClintock,
has the requisite experience to lead Myer forward.
Shareholders will have the opportunity to meet Paul
at our upcoming Annual General Meeting in December
in Melbourne.
I would like to thank the Board, management and all
Myer team members for their support throughout
my time with Myer. I have enjoyed my experience
immensely, and it has been a tremendous honour
to serve an Australian retail business that has been in
existence for over 100 years.
I would also like to express my appreciation for the
support you, our shareholders and customers, have
shown; and I have every confidence I am leaving the
business under good leadership for the future. I look
forward to following Myer’s progress and achievements
in coming years.
Howard Mcdonald
Chairman (until 10 October 2012)
I am delighted to have been chosen as the Company’s
new Chairman to replace Howard McDonald on his
retirement from the Board in October. I have already
had the chance to visit a number of stores and I am
impressed by their presentation, as well as with the
calibre of the management team I have also had the
opportunity to meet.
I believe Myer has an exciting future and I am looking
forward to working with my fellow Directors, Bernie
Brookes and the entire management team to ensure
we capitalise on opportunities to grow the business
and maximise shareholder returns.
I look forward to meeting shareholders at the Annual
General Meeting in December.
paul McClintock
Chairman
From 10 October
2012
Paul Mcclintock
Chairman (from 10 October 2012)
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from
the ceo
The 2012 financial year has been very challenging.
Notwithstanding all the factors thwarting the
retail environment, we have pursued our five-point
strategic plan, which has buffered the business
against the ongoing headwinds, as well as
providing a clear direction for the business for the
future. In addition to outlining our 2012 results,
I also take this opportunity to share my thoughts
on the changing consumer and discretionary
retail landscape in Australia.
Financial result
Total sales for the year ended 28 July 2012 were
$3.12 billion, down 1.3 percent on last year, and down
2.0 percent on a comparable store sales basis. While
reflective of the general economic environment, the
result continues to also be impacted by our planned
category exits and rationalisations in the Electrical
category (whitegoods, consoles and games, CDs, DVDs
and navigation systems).
Our key categories of Miss Shop (Youth), Womenswear,
Menswear and Cosmetics all performed positively
against last year.
The highlight of this year’s result is the strong operating
gross profit, up 1.3 percent to $1.29 billion, reflecting
a number of key achievements. We grew our Myer
Exclusive Brands to 19 percent of sales mix, achieved
our shrinkage target of one percent, reduced our
markdowns and further improved our sourcing.
We reported EBITDA of $311.8 million, down 7.7 percent,
and EBIT of $230.0 million, down 11.2 percent.
We maintained a disciplined focus on costs; however, as
outlined in FY2011, we faced significant additional costs
this year, driven by: increased investment in customer
facing wages; increased depreciation; and ongoing
increased operational costs.
The business delivered NPAT of $139.3 million, down
14.3 percent, a credible result in a tough environment.
These results, particularly the improvement in our gross
profit, demonstrate that our five-point strategy is right
for the business.
A highlight for 2012 was the encouraging results from
our investment in improving customer service, with
additional customer facing hours and a number of
service and efficiency initiatives.
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We have maintained our focus on enhancing our
merchandise offer including strong growth in our Myer
Exclusive Brands. Following the success of our sass & bide
investment, we have continued our strategy to pursue
brands which will strengthen our offer. During the year, we
purchased the well-known Australian brands Trent Nathan,
Bauhaus, and Grab. We have brands we own and develop,
brands we have purchased, and wanted brands for which
we have exclusive distribution rights. Our sourcing offices
in Asia are delivering ahead of expectations, supporting
the growth of our Myer Exclusive Brands through direct
purchasing of product at competitive pricing levels.
During the year, we progressed our plans to build a leading
omni-channel offer. The Myer brand, our store network,
loyalty program and extensive merchandise offer are
significant strengths as we seek to deliver a seamless
experience for our customers across all retail channels.
We opened a new store in Mackay (Queensland).
In September, we opened a new store in Fountain
Gate (Victoria), and will shortly open a store
in
Townsville (Queensland).
Success in an evolving landscape
As I reflect on 2012 and look towards the future, I’d
like to share my thoughts on both the challenges and
opportunities facing discretionary retail in Australia today.
During the past few years, the retail industry has been
under significant pressure. An increasing number of
retailers have been forced into administration as they
falter under the strain of a tough economic cycle,
changing consumer demands and the pressure of
online alternatives in the market.
The industry is faced with a significant challenge.
Consumer confidence is low as customers remain
nervous about domestic and global political uncertainty
and cost of living pressures. They are concerned about
housing values, employment, new taxes and declining
superannuation balances. The uncertainty is causing
consumers to save more than they have in decades.
Consumers are also now more empowered than
ever. International purchasing power has been driven
by the sustained strength of the Australian dollar
and highly transparent pricing and product access
through technology.
They are being offered more choice than ever before
with new international entrants to the Australian market
and the abundance of pure online operators. Consumer
spending overall
is also shifting to services, and
investments in health and lifestyle choices. While the
consumer does not shun traditional retail experiences,
technology savvy customers now expect to be able
to engage with retailers whenever and however
they choose. We are responding to these challenges.
Bernie Brookes
Managing Director
and CEO
repositioning
the business
In addition to these structural changes, cost pressures
including significant increases in employment costs,
escalating rents, and in some cases reduced prices as a
result of global price harmonisation are also impacting
discretionary retailers.
What do I believe discretionary retailers need to do in
the face of these challenges? In order to succeed in this
environment, retailers must remain flexible and adapt
to the changing landscape.
At Myer, we recognise that a significant opportunity
exists to respond and evolve our business to exceed
the expectations of our consumers and to succeed in
a changing world of retail. The traditional retail model,
including the Myer model, must be re-engineered.
We are reframing our business.
The strength of the Myer brand, the depth and breadth
of our offering, our loyalty program and the skills and
dedication of our 12,500 team members across 67 stores
are key to this evolution and central to our omni-
channel strategy. We are committed to continuing to
improve our service to customers with an experienced,
knowledgeable, and incentivised team. We will also
continue to identify and progress new opportunities
through our focus on innovation and in the pursuit of
new business opportunities.
I would like to thank all of our team members for their
hard work and support this last year.
As we look towards 2013, I am encouraged by the
progress we have made and I am certain that we
will continue to deliver on our plans for the business,
generating the success we believe is warranted.
Bernie Brookes
Managing Director and CEO
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12,500
team members in
67 stores are central
to our omni-channel
strategy
Review of
Operations
During the year, we made good progress
on our strategic plan, including a number
of new initiatives.
In a continued challenging retail environment with
subdued consumer confidence, Myer delivered a solid
result and finished the year with three months of positive
comparable store sales growth.
The highlight of this year’s result was the strong
gross profit performance, which reflects a number of
key achievements. We delivered on our objectives,
growing our Myer Exclusive Brands to 19 percent of
sales, achieving our shrinkage target of one percent,
reducing our promotional markdowns and improving
our sourcing.
The progress we made in implementing our five-point
strategic plan clearly supported the profitability of the
business and helped to offset ongoing cost headwinds.
We are encouraged by the continued positive feedback
from customers and team members as we focus on
delivering an inspiring customer solution, with improved
customer service and an enhanced merchandise range.
We have delivered on a number of initiatives to improve
both our loyalty program and omni-channel offer to
reflect changing customer needs in this environment of
rapidly evolving technology.
strong
gross
profit
reflects a number of
key achievements
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optimise
our store
network
We continued with our strategy of
investing in our store network with
new stores and refurbishments.
Represented in
29 of Australia’s
30 largest shopping
centres
Our flagship Myer Melbourne store was recognised
internationally with the Retail Store Design of the
Year award at the 2011 World Retail Congress in
September 2011.
Ensuring we have the appropriate selling floor space
in the best retail locations and maximising space
productivity continues to be a focus across the store
network. Reflecting this strategy, the overall store
footprint will remain broadly at 1.2 million square metres
as we exit some stores as part of lease discussions and
return some floor space to landlords in the context
of refurbishments.
During the year, we opened a new store in Mackay
(Queensland), which has traded well with particularly
strong customer support of our Myer Exclusive Brands.
We recently opened a new store at Fountain Gate
(Victoria), one of Australia’s largest shopping centres
by turnover, and where Myer is the only full-line
department store.
We are looking forward to the imminent opening of
our Townsville (Queensland) store in October 2012,
where the community is eagerly awaiting its first full-
line department store, with the area benefiting from
significant resources industry investment.
During the year, we announced our intention to open a
new store in Darwin (Northern Territory) in 2016.
Stores at Forest Hill
(Victoria) and Tuggeranong
(Australian Capital Territory) were closed during the year
as the leases at these stores expired. All team members
were successfully redeployed to nearby Myer stores.
In September, we announced
the Fremantle
(Western Australia) store lease would not be renewed
notwithstanding constructive discussions with the City
of Fremantle and the landlord. The store is expected to
close in the first half of calendar year 2013.
We also announced the Elizabeth (South Australia) store
lease would not be renewed when the lease expires in
February 2014.
The Fremantle and Elizabeth stores together represent
less than one percent of total sales, and Myer one data
indicate that the majority of customers also shop at
nearby Myer stores.
The refurbishment of our Liverpool (New South Wales)
store delivered a complete refresh of the offer, fixtures
and fittings, as well as a 30 percent reduction in total
space, enabling greater efficiency and productivity.
We also completed a refurbishment of our Carindale
(Queensland) store and relaunched this store in March.
in
We have commenced the refurbishment of our
store
Indooroopilly (Queensland), with scoping
works underway for refurbishments at our stores in
Miranda (New South Wales) and Highpoint (Victoria),
and for a significant upgrade of our store in Adelaide
(South Australia).
The scope of each refurbishment is dependent on the
unique circumstances of the store. In all cases we aim to
refresh the offer with new brands, upgrade the fixtures,
fittings and floorings and ensure an optimal store layout
reflecting the demands of the local demographic.
We were pleased to achieve rent reductions in a handful
of stores during the year. We will continue to review all
new and existing stores to ensure the returns meet our
investment criteria.
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Review of Operations
enhance our
merchanDise
offer
We seek to remain
relevant to
changing customer
preferences
Inspiring and delighting our customers
Our focus remains on being the first choice for
customers when shopping for fashion, cosmetics and
the home. We have the largest range of desired brands
and styles that offer newness, fashionability, quality and
value, with increasing exclusivity.
Our brand hierarchy is split into three segments: Myer
Exclusive Brands, International and National brands,
and Concessions.
Our 57 Myer Exclusive Brands are comprised of brands
developed by Myer, Designers @ Myer, National Brands
owned by Myer, and Licensed National Brands. Myer
Exclusive Brands are represented across a wide range
of price points and all categories. We stretch key brands
into new categories when they are well established and
enjoy strong customer support.
Myer Exclusive Brands deliver a significantly higher
margin through the vertical-integration of design,
development, sourcing, supply chain, and marketing.
Our sourcing offices in Shanghai and Hong Kong were
established in 2011 and are exceeding expectations in
both volume and pricing.
During the year, there were a number of key
developments across all of our range.
The brands that performed well included Wayne by
Wayne Cooper, regatta, Basque, Cue, Blaq, politix,
Ziggy, review, tokito, Lipsy, Miss Shop, Jack Stone,
t.M. Lewin, Mecca Cosmetica, Kit, Benefit, Heritage,
Jane Lamerton Home, Apple, Lego, and KitchenAid.
There was continued strong sales and profit growth
from sass & bide, supported by our customers’ positive
response in 18 of our stores and online. The recent
extension of sass & bide into intimates has been highly
successful with a very positive customer response.
As part of our focus to enhance our merchandise offer,
we look to purchase unique brands that complement
our brand hierarchy, offer compelling return on
investment and add shareholder value. During
2012, we purchased a number of brands, including
trent Nathan (womenswear, menswear and jewellery),
which was recently launched as a department store
exclusive into 34 stores for Spring Summer 2013.
New Myer Exclusive Brands currently being launched
include Material World by Madonna, Fleurette by
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sass & biDe
There was continued
strong sales and profit
growth from sass & bide
Fleur Wood, Grab Denim, Karen Walker Home, and
Australian House and Garden (homewares).
New brands to be shortly introduced include peep
toe, Diesel, Speedo, o.p.I nails, Modern Amusement,
eleven paris and 55DSL. We also have a number of
new International designer brands being launched
including Kenzo, Jil Sander Navy, Alberta Ferretti, and
peter pilotto in womenswear and McQ by Alexander
McQueen, Joseph and Hartford in menswear.
Recent extensions of Myer Exclusive Brands into new
categories include Miss Shop cosmetics and Leona by
Leona edmiston handbags and sleepwear.
Our sourcing offices are integral in supporting the
continued growth in our Myer Exclusive Brands.
As we seek to remain relevant to changing customer
preferences and evolving technology, we have exited a
number of categories during the past three years. These
have included whitegoods, gaming and consoles, and
we have plans to exit CDs and DVDs.
We have refined our offer of TVs and entertainment
goods, focusing on premium product in line with our
focus on leading edge fashionability.
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newness,
fashionability,
quality anD
Value
Review of Operations
improVe
customer
serVice
Building on our initial customer research and
their recent positive feedback, we continued
our investment in improving the customer
experience with a number of service and
efficiency initiatives during the year.
Service initiatives
We continued our targeted and measured investment
in additional customer facing hours in high service
categories during high service times.
We are continually refining new processes and
initiatives to improve our overall engagement with
customers. Some recent examples include an enhanced
commission scheme, enabling stores with new
technology and adjusting resources to meet customer
shopping preferences.
Other service initiatives have included the national
rollout of our profit-based commission scheme to our
Electrical and Furniture team members, additional
staffing in fitting rooms and an improved service model
for Myer Exclusive Brands. An improved and extended
personal shopping service was introduced into more
stores, fostering closer customer relationships and
encouraging increased sales productivity from our
personal shopper consultants.
We continued to focus on improving team member
product knowledge and selling skills. We enhanced
our Reward and Recognition program with almost
1,000 team members now part of our High Performers
Club. These High Performers Club team members
are role models within the broader team, driving
higher standards of customer service, sales, and
product knowledge.
We also continue to grow our team member Customer
Service recognition program, with over 6,000 of our
team members now rewarded. We have also launched
a reward and recognition program for our store support
team members, and both of these programs have been
extended to our Concession partners.
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Efficiency initiatives
A highlight for 2012 was achieving our one percent
shrinkage target following the investment in closed-
circuit-TV and the Company wide efforts of team
members to counter theft and fraud. This is a global
best practice result for department stores.
Over 5,000 people were referred to police in line with
Myer’s zero-tolerance policy in relation to shoplifting
over the past 12 months. Controlling stock
loss
and regular stocktake counting has also resulted in
more accurate control of inventory and improved
merchandise availability for customers.
We continued our program of clustering and
consolidating point-of-sale (POS), and this has now
been implemented in 25 stores. Our customers have
provided positive feedback that there has been an
improvement in staff availability at sale points.
We implemented a new seasonal management and
replanning tool for improved store wage management.
We are improving the ‘floor ready’ standard of our
merchandise, which involves delivering stock to the
shop floor with reduced packaging, and ensuring that it
is pre-hung, security-tagged and price-ticketed, freeing
up team members to serve customers.
The customer and team member feedback in response
to our focus on improving customer service has
been very encouraging. All of our team members are
to be commended for their commitment during a
challenging year.
We will continue to refine our customer service and
initiatives throughout 2013. We believe
efficiency
that service and the right merchandise mix are the
key differentiators in an environment of increasing
online competition.
myer one
phone app
Our new MYER one
smart phone app
will deliver digital
rewards cards
strengthen
our loyalty
program
Our MYER one loyalty program with
4.7 million members is one of Australia’s
most successful programs, and represents
a key strategic advantage.
During the year, we signed up over 500,000 new
members, representing an increase of 12 percent
compared to the previous year.
We have significantly improved our digital communication
with members with a program of more targeted emails.
This improved weekly email now includes personalised
updates and targeted offers for Myer one members.
We now have the email addresses of 2 million Myer
one members and over 3 million mobile phone
numbers. Our store teams continue their focus on
registering additional member email addresses, as this
represents a low-cost opportunity to communicate
with our customers with targeted and relevant offers.
During 2012, we delivered approximately $50 million
in rewards gift cards to Myer one members, and the
redemption rate continues to be on average 3.8 times
the value of the rewards gift card.
Our new Myer one smart phone application (app) is
in the final stages of testing. This app delivers digital
rewards gift cards that can be redeemed directly from
the smart phone.
We continued to build on our Myer one affiliates
program and now have over 480 partners across
1,720 locations around the country.
The Myer Visa card continued to be popular with our
customers, and we have a number of initiatives in
development to further strengthen our offers in relation
to financial and corporate services.
Our Myer one loyalty program provides us with a key
competitive advantage as we build a leading omni-
channel offer, giving us incredible insight into our
customer preferences.
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builD
a leaDing
omni-channel
offer
Consumer expectations and preferences
have changed significantly in recent
years, driven by new technology.
Focused on
delivering a seamless
customer experience
We are well positioned to capitalise on our strong brand,
store network, extensive merchandise offer, and loyalty
program as we build a leading omni-channel offer.
investments
Our previous
in our merchandise
management system, POS system, and supply chain
have set the foundations for effective inventory and
order management. This provides us with a significant
competitive advantage in the development of our
omni-channel offer.
retailing has emerged globally
Omni-channel
in
recent times. Omni-channel for Myer is defined by the
increasing expectation by our customers to interact
with us in a multitude of ways, driven by their time
constraints, and the desire for convenience, choice,
immediacy, and research, all enabled by technology.
Our customers now expect a consistent and seamless
experience whether they are in stores, on our website,
using a smartphone, experiencing our marketing and
promotional activity or speaking with our customer
service centre.
Our online sales more than doubled and the rate of
growth has accelerated. With over 14 million unique visits
to the myer.com.au website during the year, we believe
this represents a significant opportunity for the business.
We are making good progress on redeveloping our
myer.com.au website, built on the WebSphere platform.
We have successfully
implemented a significant
number of enhancements, both visible to customers
and behind the scenes, with a strong pipeline of
future improvements.
improvements
Key
inspirational
homepage design, a one-page check out, customer
ratings and reviews, and enhanced conversion tactics.
included a new
The early availability of our Stocktake Sale online
delivered our biggest ever sales day online.
We continue to increase the number of stock keeping
units (skus) with 30,000 now online, all showcased with
improved imagery and product information, ratings and
reviews, and enhanced search capability to improve the
customer experience.
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We are increasingly focused on integrated marketing,
balancing traditional media with innovation and digital
marketing opportunities. Digital marketing and social
media are part of our everyday marketing approach. We
are encouraged by the increasing engagement of our
customers across multiple social media channels.
Rich and engaging video content is being created
across our business to support advertising and
marketing campaigns, and to connect our designers
and new brands with our customers. During the year,
we increasingly used video on our website to stream
our fashion season launch parades and to provide
behind the scenes insight into our campaigns.
We will continue to implement a significant pipeline
of enhancements for our website, building on the
merchandise offer and site functionality, including
Myer one personalisation.
We recognise that our customers want to be able to
touch and feel products in store as well as engage with
knowledgeable and helpful staff. We are focused on
delivering a seamless customer experience across all
digital and retail touch points, and our e-commerce,
loyalty program and stores network are integral to the
success of this strategy.
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oVer
14 million
unique Visits
to the myer
website
last year
Sustainability
At Myer we are committed to
responsible business operations
and development. Our sustainability
strategy is built on four key pillars –
people, community, business
and environment.
community
Myer is committed to our local communities
and maintaining strong relationships with
local communities remains an important
element of our sustainability strategy.
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charity and philanthropy
Many of our team members are engaged with their local
communities through their active involvement with the
Myer Stores Community Fund. The Fund contributes to
children’s, youth, men’s and women’s health charities and
in 2012 raised over $1.2 million through initiatives and
events including our annual Precious Metal Ball. The Fund
has contributed to over 70 charities nationwide including
The Salvation Army, the Olivia Newton John Cancer and
Wellness Centre, the Smile Foundation and The Smith
Family. In 2012, the Fund also provided relief to a number
of community services in the lead up to Christmas.
local community engagement
Our stores connect with their customers and local
communities by building positive brand awareness,
customer recognition and loyalty through public events
and sponsorships including Chinese New Year celebrations
in our Melbourne store and partnerships with the
Melbourne Zoo and the Melbourne Symphony Orchestra.
We have also provided customers opportunities to
attend complimentary fashion and beauty styling
workshops, and meet our ambassadors at family
fun days to celebrate new store openings and store
refurbishment launches. In 2012, community events
were held at Carindale (Queensland), Eastland (Victoria),
Liverpool (New South Wales) and Mackay (Queensland).
When we launched the 2012 Autumn Winter season,
in-store fashion parades attracted a high level of interest
and attendance from customers.
This year, we continued our partnership with Vision
Australia’s Carols by Candlelight, as well as supporting
Christmas activities around the country including the
Myer Brisbane Christmas Parade and Pantomime, the
Myer Hobart Christmas Pageant and the Myer Hobart
Carols by the Bay. We were pleased to celebrate the
56th anniversary of the Myer Christmas Windows, with
installations in Melbourne and Brisbane stores.
Myer also helped raise funds to benefit a number
of charity groups, such as the Might and Power Race
Day in Sydney in July 2012 in support of the Cerebral
Palsy Alliance.
To help our team members further connect with
their communities, we have introduced a Volunteer
Leave policy that provides one day paid leave per year
to work in the community with charity groups or
local organisations.
people
Myer is one of the largest private sector employers
in Australia, with over 12,500 team members
throughout the country. We are committed to
offering a supportive, challenging, and rewarding
workplace, and enabling our people to contribute
and develop to their full potential. During the
year, we were recognised as the Australian
Retail Association – Australian Retail Employer
of the Year.
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safety
performance
– (ltIFR)
Recruitment, learning and development
Myer continues to recruit and develop team members
who are engaged and passionate about retail. We
provide opportunities for career development and
reward
for performance. Regular appraisals and
two-way feedback are a key part of performance
measurement and goal setting.
Myer supports individual learning and development
through a variety of channels. In stores, we develop high
potential team members through structured and self-
driven development plans. We have piloted learning
programs in our stores with a combined Certificate II
and III in Retail which provides future leaders with core
retail skills.
In 2012, Myer team members were finalists
in
national retail awards including the National Retail
Association Young Retailer of the Year and the Joe Berry
Australian Retail Industry Executive Award for emerging
young leaders.
Advancing diversity
The aim of our revised Diversity Policy is to create and
maintain an inclusive and collaborative workplace
culture, with a focus on gender diversity. More detailed
information about Myer’s measurable objectives for
diversity is provided on page 36 of this report.
Myer also supports initiatives to present Indigenous
Australians with opportunities in retail employment,
signing the Australian Employment Covenant (AEC)
during the year.
Benefits and rewards
We provide team members with the opportunity to
balance work and family responsibilities, including
graduated return to work from parental leave. We have
a calendar of social, community and sporting events
for our support office to help promote a healthy work-
life balance. As part of our commitment to creating a
supportive work environment for our people, we have
introduced ‘Lifestyle Leave’, giving permanent salaried
team members the option of greater periods of leave
offset by an adjustment to pay.
We recognise and celebrate performance with a number of
formal rewards programs. These form part of our employee
value proposition and demonstrate our commitment to
both attracting and retaining team members, as well as
recognising contribution to the business.
The annual Myer Inspirational People Awards recognise
the contributions of individuals and teams. This year
we presented the inaugural award for ‘Environmental
Sustainability Passion’ to the Myer Dandenong store
team
improving paper,
cardboard and plastic recycling.
for their efforts towards
to
Our CEO’s High Performers Club and Service Heroes
programs provide opportunities
reward and
recognise store team members for their efforts. In 2012,
we inducted more than 300 team members into the
High Performers Club where members generate the
highest individual sales performance in stores. We have
extended our Service Heroes program to recognise
those who provide superior service in non-customer
facing roles.
The Myer 25 Year Club recognises the loyalty and
achievements of our longstanding team members, with
166 new members inducted this year. Approximately
1,400 team members, past and present, attended
25 Year Club celebrations.
Safety
We want our stores to be a safe environment for
customers to shop, and for team members to be able to
do their job safely at all times. Safety is a key performance
measure across the business. Myer trains team members
in safe work practices including manual handling,
hazard identification and incident reporting, first aid and
emergency procedures. A number of stores took part in
Safe Work Australia Week during October 2011.
In 2012, all our safety measures delivered improved
results on last year. The hours lost associated with injury
reduced by more than 18 percent. Our Lost Time Injury
Frequency Rate (LTIFR) declined 5 percent from last year
to 10.9.
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Sustainability
business
We consider the ethical and social
implications of our business decisions, and
aim to meet the reasonable expectations
of all our stakeholders including customers,
investors, suppliers and the community.
Ethical sourcing
Ethical sourcing is an integral component of our
sustainability strategy. In 2011, we endorsed our formal
Ethical Sourcing Policy, and in 2012, implemented an
audit program to support the policy. Myer is working
collaboratively with suppliers to ensure compliance and
improvement is achieved.
Fair trading
We are committed to ensuring our team members deal
with customers and suppliers in a responsible manner
at all times. Myer’s fair trading compliance program is
maintained to ensure it is consistent with the principles
of the Australian Standard for Compliance Programs
(AS3806) and relevant consumer laws and associated
regulations. Our training programs have been updated
to incorporate the new Australian Consumer Law. We
seek to ensure our advertising claims are clear and
accurate for our customers.
Product responsibility
Myer is focused on ensuring our merchandise is safe,
meets safety and labelling standards, and is suitable for
its purpose and intended function. We have a team of
merchandise compliance specialists who seek to ensure
products comply with relevant regulatory requirements.
We also have a robust compliance program comprising
ongoing and specialised buyer education and training,
and mandatory standards, tools and guidelines.
We have a comprehensive program of product testing,
audits and
inspection processes, where selected
products are sent to accredited laboratories for testing,
subjected to in-house technical audits, store-based
inspections at our distribution centres, or
audits,
through our overseas sourcing offices. During 2012,
we inspected and assessed thousands of products for
compliance with safety and quality requirements.
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Governance
We aim for integrity in all interactions with customers,
stakeholders, government, team members and the
community, and to maintain appropriate governance
standards in our business dealings. All Myer team
members, Directors and contractors must comply with
Myer’s Code of Conduct. Our commitment to Corporate
Governance is described in the Corporate Governance
Statement on pages 26 to 38 of this report.
supplier
relationships
Supplier relations
We are committed to developing positive and
productive
and having
responsible and ethical dealings with our suppliers. The
annual Myer Supplier of the Year Awards is a celebration
of the important contribution our suppliers make to
the business. The event provides the opportunity for
us to formally recognise our top performing suppliers
for outstanding support in helping us to achieve our
business goals. In December 2011, De’Longhi was
named as Myer Supplier of the Year. Sustainability and
community initiatives are also recognised at the Awards.
Chanel Australia received the award for ‘Outstanding
Community Support by a Supplier’.
enVironment
At Myer we remain committed to
minimising the impact of our operations
on the environment and integrating
environmental sustainability and
accountability throughout our business.
2012
Cardboard
4,106
tonnes
Recycled
carDboarD
recycling
– tonnes
Fy09
Fy10
Fy11
Fy12
3,867
3,899
3,852
4,106
2012
Plastic
439
tonnes
Recycled
plastic
recycling
– tonnes
Fy09
239
Fy10
Fy11
Fy12
469
380
439
Waste management and recycling
focus on recycling and waste
We continue to
management in our stores and support office, including
reuse and recycling of paper, cardboard, plastic, toner
cartridges, hangers, security hard tags, e-waste and
textiles. We report on the collection of paper-based and
plastic recyclable materials, with a steady increase in the
amount of total recyclables over the past four years.
Our merchandise protection hard tag reuse and recycle
program has also provided significant environmental
benefits, with tags reused up to 12 times. Since the
program began in 2010, approximately 122 tonnes of
tags have been sorted, enabling reuse by our suppliers.
During 2012, we offered customers a service to recycle
their old mattress when purchasing a new mattress
from Myer. Approximately 1,500 mattresses were saved
from landfill and recycled as a result of the program.
delivering floor ready merchandise
Improving the ‘floor ready’ state of our merchandise,
including having garments pre-hung, folded and tagged,
improves efficiency and has positive environmental
impacts, including reducing packaging materials. In July
2012, 60 percent of our signed suppliers complied with
our ‘floor ready’ standards, compared to 33 percent in
July 2011.
commitment to the Australian
Packaging covenant
Myer has adopted the Australian Packaging Covenant
(APC) Sustainable Packaging Guidelines and principles
of product stewardship. As part of our commitment
to the APC, we are focused on measuring packaging
waste associated with our Myer Exclusive Brands, and
taking steps to either eliminate or minimise waste by
optimising reuse and the recyclability of packaging.
This
is achieved principally through modification
of packaging design. We have a packaging and
recycling workgroup for identifying and implementing
sustainable packaging solutions.
Supply chain initiatives
Supply chain initiatives have resulted in the delivery of
environmental benefits.
third-party central
returns centre processes
Our
soiled or damaged merchandise, preparing
it for
on-selling to alternative markets. During 2012, 278
tonnes of merchandise was on-sold. A program to
recycle redundant store fixtures was also introduced.
Additionally, our supply chain function has focused on
improvements in international container utilisation and
efficiencies in transport.
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boarD of Directors
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howard mcDonald
Chairman (until 10 October 2012)
Independent non-executive director
Member of the Board since 6 November
2006, retired 10 october 2012
Non-executive Chairman since 4 August 2009
Member – Human resources and
remuneration Committee
Chair – Nomination Committee
Howard brings significant retail and fashion
experience to Myer, with 36 years of experience
in consumer goods industries.
Howard was previously Managing Director
of the Just Group, from December 1997 to
repositioned
September 2006, where he
and expanded the Group. In 2001, he led the
Just Jeans Group into Australia’s first public
to private management buyout and in May
2004 Just Group was re-listed on the ASX. Just
Group is the largest specialty apparel retailer
in Australasia with over 800 stores. Its stable of
brands includes Just Jeans, Jay Jays, Jacqui E,
Portmans, Peter Alexander Sleepwear and Dotti.
Prior to this, Howard held a number of roles
within the Pacific Dunlop Group across Footwear,
Clothing and Textiles, and Corporate, including
head of Corporate Affairs for Pacific Dunlop
where he sat on the Management Boards.
Howard’s time at Pacific Dunlop culminated
in the role of Managing Director of Pacific
Brands Clothing.
Howard holds a Bachelor of Economics degree
from Monash University and is a Fellow of the
Institute of Company Directors.
Australian
Howard resides in Victoria and is 62 years of age.
Other current directorships
Howard is currently Chairman of Rodd & Gunn
Australia Limited (a Myer supplier) and Rodd &
Gunn New Zealand Limited.
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paul mcclintock AO
Chairman (from 10 October 2012)
Independent non-executive director
Member of the Board since 8 August 2012
Appointed Chairman 10 october 2012
Chair – Nomination Committee
(from 10 october 2012)
Paul has considerable experience as a director,
having held significant chairman and advisory
positions across a broad range of industries, as
well as government.
He is a professional Board member and is highly
regarded for his wide and varied experience.
From 2000 to 2003 he was Secretary to Cabinet
and Head of the Cabinet Policy Unit, reporting
to the Prime Minister on Cabinet process and
long-term policy formulation.
Paul’s former Board positions include Chairman
Intoll,
of Symbion Health, Affinity Health,
Plutonic Resources and Ashton Mining, and
director of US based Homestake Mining. He was
also Chairman of the Expert Panel of the Low
Emissions Technology Demonstration Fund and
the Woolcock Institute of Medical Research.
Paul graduated in Arts and Law from the University
of Sydney and is an honorary fellow of the
Faculty of Medicine of that University. He resides
in New South Wales and is 63 years of age.
Other current directorships
Paul is Chairman of Medibank Private Limited,
the COAG Reform Council, Thales Australia,
I-Med Network and the Institute of Virology,
and a director of Perpetual Limited. He is also
a member of the Advisory Board of the NSW
Public Service Commission. He has announced
his intention to retire from the COAG Reform
Council and Perpetual Limited.
03
rupert myer AM
Deputy Chairman
Independent non-executive director
Member of the Board since 12 July 2006
Appointed Deputy Chairman 8 August 2012
Member – Audit, Finance and risk Committee
Member – Human resources and
remuneration Committee
Member – Nomination Committee
Rupert serves as a non-executive Chairman
and director of a number of public, private and
government entities. His background includes
serving in roles in the retail and property
sector, investment, family office and wealth
management services and community sector.
Rupert holds a Bachelor of Commerce
(Honours) degree
from the University of
Melbourne and a Master of Arts from the
University of Cambridge and is a Fellow of the
Australian Institute of Company Directors. He
became a Member of the Order of Australia in
January 2005 for service to the arts, for support
of museums, galleries and the community
through a range of philanthropic and service
organisations. Rupert resides in Victoria and is
54 years of age.
Other current directorships
is a director of The Myer Family
Rupert
is
Company Ltd and AMCIL Limited. He
Chairman of the Australia Council, Chairman
of The Opera Australia Capital Fund Limited
and Chairman of Kaldor Public Arts Projects.
He serves as a member of the Felton Bequests’
Committee, as a board member of Jawun
Indigenous Corporate Partnerships, The
–
Myer Foundation and
the University of
Melbourne Faculty of Business and Economics
Advisory Board.
04
bernie brookes
Chief Executive Officer and Managing Director
Member of the Board since 12 July 2006
Bernie was appointed Chief Executive Officer
and Managing Director of the Myer Group on
2 June 2006.
Since his appointment, Bernie has been
responsible for the turnaround and rebuilding of
the Myer business. He has led the development
and implementation of the Myer five-point
strategic plan, repositioning the business to meet
today’s challenges and investing for the future.
Bernie has spent over 35 years working within
the retail industry in local and international roles
in India and China.
Prior to joining Myer, Bernie was in a series of
executive roles with Woolworths and was a
chief architect of Woolworths’ Project Refresh,
reducing costs by more than $5 billion over
five years and reinvested the savings back into
the business. His Woolworths experience also
included a variety of general management
positions in three states across the Buying, IT,
Marketing and Operations departments.
Bernie has also held a number of roles as president
and executive of various industry organisations
including the Retail Traders Association
in
Queensland and Victoria and President of the
Queensland Grocery Association. He has assisted
on a number of charitable and government
ventures and committees. Bernie is currently
patron of the Australian Joe Berry Memorial
Award and the Australian representative judge
of the World Retail Awards.
Bernie holds a Bachelor of Arts degree
and a Diploma of Education from Macquarie
University. Bernie resides in Victoria and New
South Wales and is 52 years of age.
Other current directorships
Bernie is a director of the Advisory Board of
The Salvation Army.
05
anne brennan
Independent non-executive director
Member of the Board since 16 September 2009
Chair – Audit, Finance and risk Committee
Member – Human resources and remuneration
Committee
Member – Nomination Committee
Anne brings to the Myer business strong
financial credentials and business experience.
in a variety of senior
Anne has worked
management roles in both large corporates
and professional services firms.
During Anne’s executive career, she was the
CFO at CSR and the Finance Director at the
Coates Group. Prior to her executive roles,
Anne was a partner in three professional
services firms: KPMG, Arthur Andersen and
Ernst & Young. She has more than 20 years
experience in audit, corporate finance and
transaction services. Anne was also a member
of the national executive team and a board
member of Ernst & Young.
Anne holds a Bachelor of Commerce
(Honours) degree from University College
Galway. She is a Fellow of the Institute of
Chartered Accountants in Australia and a
Fellow of the Australian Institute of Company
Directors. Anne resides in New South Wales
and is 52 years of age.
Other current directorships
is currently a director of Argo
Anne
Investments Limited, Charter Hall Group, Echo
Entertainment Group Limited, Nufarm Limited,
Rabobank Australia
Rabobank
New Zealand and Cuscal Limited. She has
announced her intention to retire from the
Board of Cuscal Limited.
Limited,
06
chris froggatt
Independent non-executive director
Member of the Board since 9 December 2010
Chair – Human resources and remuneration
Committee
Member – Nomination Committee
Chris was appointed as a non-executive
director of Myer Holdings Limited in December
2010. Chris has a broad industry background,
including consumer branded products, retailing
and hospitality, and covering industries such as
beverage, food and confectionery through her
appointments at Britvic, Whitbread, Diageo
and Mars.
She has over 20 years’ executive experience
as a human resources specialist in leading
international companies, including Brambles
Industries plc and Brambles Industries Ltd,
Whitbread Group plc, Diageo plc, Mars Inc.
and Unilever NV. Chris has recently served
on the Boards of Britvic plc and Sports Direct
International plc and as an
independent
trustee director of Berkeley Square Pension
Trustee Company Limited.
Chris holds a Bachelor of Arts (Honours) in
English Literature from the University of Leeds
(UK). Chris is a Fellow of the Chartered Institute
of Personnel Development and a member of
the Australian Institute of Company Directors.
Chris resides in New South Wales and is 54
years of age.
Other current directorships
Chris currently serves on the Board of
Goodman Fielder Limited and is currently
a director on the Board of the Australian
Chamber Orchestra.
07
peter hay
Independent non-executive director
Member of the Board since 3 February 2010
Member – Audit, Finance and risk Committee
Peter has a strong background in company
law and
investment banking work, with
particular expertise in relation to mergers
and acquisitions. He has also had significant
involvement in advising governments and
government-owned enterprises. Peter was the
Chief Executive of law firm Freehills (2000 to
2005), where he had been partner since 1977.
Peter holds a Law Degree from the University
of Melbourne and is a Fellow of the Australian
Institute of Company Directors. Peter resides in
Victoria and is 62 years of age.
Other current directorships
Peter is currently Chairman of Lazard Pty Ltd’s
Advisory Board, and a director of Alumina
Limited (since 2002). He is a director of
Australia and New Zealand Banking Group
Limited (since 2008), and a director of GUD
Holdings Limited (since 2009). Peter is also a
member of the Australian Institute of Company
Directors’ Corporate Governance Committee
(since 2012) and a part-time member of the
Takeovers Panel (since 2009).
Peter is also a director of Epworth Foundation
(since 2008) and Landcare Australia Ltd
(since 2008).
08
ian morrice
Independent non-executive director
Member of the Board since 8 August 2012
Ian has over three decades of strong, international
retail experience and strategic understanding of
the retail sector.
He has held significant retail roles, including
most recently as Group CEO and Managing
Director, The Warehouse Group Limited (NZ)
from 2004 to 2011. Ian has previously held
senior retail roles for some of the UK’s leading
retailers including Managing Director, B & Q
Warehouse (United Kingdom), Retail Director,
Woolworths (United Kingdom) and senior
roles with the Dixons Group (United Kingdom).
Ian holds a Masters of Business Administration
from Cranfield University School of Management
in the UK. He resides in Auckland, New Zealand
and is 51 years of age.
Other current directorships
Ian is currently a director of Metcash Limited
and an adviser to the Board of the Spotlight
group of companies.
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greg travers
Executive General Manager Business Services
and Office of the CEO
Greg was appointed Myer’s Director of
Strategic Planning and Human Resources in
June 2006 and then EGM Business Services
in November 2010. In August 2012, he was
also appointed to lead the Office of the CEO.
In his role, Greg is responsible for the Office
of the CEO, which is focused on the review
and delivery of new business opportunities,
the development of Myer‘s strategic planning
framework, Myer’s program management
office and business efficiency objectives.
He also oversees Myer’s Human Resources,
Risk and Safety and Corporate Affairs.
Greg has over 30 years of experience including
with WMC Resources Ltd, Pratt Group and BHP.
01
bernie brookes
Chief Executive Officer and Managing Director
03
mark goddard
Executive General Manager Retail Development
Mark was appointed Executive General Manager
Retail Development in March 2012. In his role
Mark is responsible for driving Myer’s omni-
channel strategy which includes e-commerce,
loyalty, and retail commercial services, as well as
all parts of Myer’s Information Technology.
Mark is a highly experienced retailer, most
recently in the role of CEO at Spotlight, and
was previously General Manager Merchandise
at Kmart, and Acting Managing Director Kmart,
and he has also held senior management
positions at British Home Stores & Mothercare
in the UK and Country Road in Australia.
Bernie was appointed Chief Executive Officer
and Managing Director of Myer in June 2006.
In his role, Bernie has been responsible for the
transition of Myer following the separation
from the Coles Group, rebuilding the Myer
business under private ownership and now
leading Myer as an ASX-listed public company.
Bernie has spent over 36 years working within
the retail industry in local and international roles.
02
mark ashby
Chief Financial Officer
Mark was appointed Chief Financial Officer
(CFO) of Myer in January 2008. As CFO, Mark’s
responsibilities cover all accounting, treasury
taxation, compliance and
management,
internal audit and procurement aspects of
the business.
Prior to joining Myer, Mark was CFO of Mitre
10, the Finance Director of Motorola and a
Finance Director in a number of domestic
and international organisations in retail and
technology. Mark is a fellow of CPA Australia
and a member of the Australian Institute of
Company Directors.
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timothy clark
Group General Manager Property,
Store Development and Services
Tim has 29 years of retail experience and was
appointed Director of IT in June 2006. Tim was
responsible for IT separation of Myer from
Coles Myer, including the replacement of
Myer’s merchandise, POS/EFT, supply chain,
CCTV, and payroll systems.
Tim was appointed as GGM Property, Store
Development and Services
January
2011 and is responsible for Myer’s property
network, including new stores, in-store design
developments,
store
refurbishments and facilities management.
Tim has also held executive roles at both
Gazman Menswear and Crown Ltd.
space productivity,
in
06
Judy coomber
Group General Manager Merchandise
Judy has over 30 years of retail experience
and was appointed GGM Merchandise in
December 2010, with some adjustments
to her portfolio in September 2011. Judy is
responsible for overseeing all areas of the
Womenswear, Miss Shop, Childrenswear,
Intimates, Shoes and Accessories businesses
as well as Cosmetics, Global Sourcing Offices,
Quality Assurance, Quality Control and
Concessions. At Myer, Judy has held a number
of roles within stores and in the buying office.
Judy has also held senior merchandising
roles at Roger David, Hallensteins and the
Sportsgirl/Sportscraft Group. Judy is a former
non-executive director of Ezibuy, the largest
mail order business in Australasia.
07
megan foster
Group General Manager Marketing
and Brand Development
Megan was appointed GGM Marketing and
Brand Development
in November 2010.
Megan
is responsible for advertising and
direct marketing, visual merchandising, public
relations and events, Emporium magazine,
myer.com.au creative, and social media, as well
as brand strategy.
Megan has 22 years of retail experience and
joined Myer in June 2006 as a management
In April 2008, Megan was
consultant.
appointed to the role of Director Store
Concepts and Design and as part of this role
oversaw the redevelopment of the flagship
Myer Melbourne store.
08
adam stapleton
Group General Manager Merchandise
Adam has 17 years of industry experience.
Adam was appointed to the role of GGM
Merchandise in December 2010 with some
adjustments to his portfolio in September
2011. Adam is responsible for the Men’s, Home,
Furniture, Entertainment, General Merchandise
and Toys businesses as well as International
and Domestic Logistics, Merchandise Planning
and Store and Business Support. Adam
joined Myer in 2003, and has held a number
of positions
including National Manager
of Advertising and Loyalty and General
Manager Marketing.
Prior to
for
a number of organisations across a diverse
range of industries, including Kodak, Accenture
and ANZ.
joining Myer, Adam worked
09
louise tebbutt
Group General Manager Human Resources,
Risk and Safety
Louise was appointed to the role of GGM
Human Resources, Risk and Safety in August
2012, after leading the Human Resources
function as General Manager and has over
industry experience. Louise
17 years of
for all aspects of Myer’s
is
responsible
including organisational
human resources
recruitment and
development,
training,
and employee
relations, as well having
accountability for risk and safety for the
organisation. Louise joined Myer from the
Coles Group in 2006, where she held senior
roles in a number of businesses including
Coles Supermarkets and Target.
is a director of the Myer Stores
Louise
Community Fund and Chair of the Myer
Superannuation Policy Committee.
10
tony sutton
General Manager Store Operations
Tony oversees the operations of the Myer
store network, including our customer service
strategy, and has a focus on operational
efficiencies. Tony was appointed to
lead
the Stores team, on an interim basis, on 18
September 2012.
Tony is a career retailer, and joined Myer in
1992. He has worked cross functionally in a
number of roles, including store management,
merchandise and marketing. He has held a
number of senior roles in store management,
including his most recent role leading the
State General Manager stores team for the
past two years.
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marion rodwell
General Counsel and Company Secretary
litigation
Marion is the Company Secretary of the
Company. Marion was appointed Group
General Counsel and Company Secretary in
2008. Marion has over 20 years of corporate,
and governance
commercial,
experience. Prior to joining Myer, Marion held
General Counsel and Company Secretary roles
in the financial services, gaming and retail
industries, including with Tattersall’s and IOOF.
Marion holds a Bachelor of Laws and a Bachelor
of Economics from Monash University, and is a
member of the Law Institute of Victoria and
the Australian Corporate Lawyers Association.
In 2010, Marion was awarded ACLA Australian
Corporate Lawyer of the Year.
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Corporate GovernanCe Statement
Introduction
The Board of the Company is committed to achieving the highest
standards of corporate governance. The Board is concerned to
ensure that the Group is properly managed to protect and enhance
shareholder interests, and that the Company, its directors, officers
and employees operate in an appropriate environment of
corporate governance.
The Board has adopted a corporate governance framework
comprising principles and policies that are consistent with the
ASX Corporate Governance Council’s Corporate Governance Principles
and Recommendations with 2010 Amendments (2nd Edition)
(ASX Principles). This framework is designed to promote responsible
management and assists the Board to discharge its corporate
governance responsibilities on behalf of the Company’s shareholders.
The Group regularly reviews its policies and charters to ensure that
they remain consistent with the Board’s objectives, current laws and
best practice. The policies and charters referred to in this statement
are available from the Corporate Governance page in the Investor
Centre section of Myer’s website (www.myer.com.au/investor).
This statement outlines the Group’s main corporate governance
practices and policies in place throughout the financial year and
at the date of this report. It is structured as follows:
›
›
›
›
›
› diversity at Myer.
the Board and management;
Board composition and director tenure;
the Board Committees;
risk management;
key governance policies; and
The Company has followed the recommendations set out in the ASX
Principles during the reporting period. The table on page 38 indicates
where specific ASX Principles are discussed in this statement.
Part 1 – The Board and management
Relevant documents
– available from myer.com.au/investor
›
› Nomination Committee Charter
Board Charter and relationship with management
1.1 Role and responsibilities of the Board
The Board has ultimate responsibility for setting policy regarding the
business and affairs of the Company for the benefit of shareholders
and other stakeholders.
The role of the Board includes:
›
representing and serving the interests of shareholders by
overseeing and appraising the Company’s strategies, policies
and performance. This includes overseeing the financial and
human resources the Company has in place to meet its
objectives and reviewing management performance;
› protecting and optimising Company performance and
building sustainable value for shareholders in accordance
with any duties and obligations imposed on the Board by
law and the Company’s Constitution and within a framework
of prudent and effective controls that enable risk to be
assessed and managed;
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›
›
setting, reviewing and ensuring compliance with the Company’s
values and governance framework (including establishing and
observing high ethical standards); and
ensuring that shareholders are kept informed of the Company’s
performance and major developments affecting its state of affairs.
The Board has adopted the ‘Board Charter and relationship with
management’ (Board Charter) to provide a framework for its effective
operation. The Board Charter outlines the manner in which the Board’s
constitutional powers and responsibilities will be exercised and
discharged, having regard to principles of good corporate governance,
best practice and applicable laws.
The Board Charter clearly sets out the roles, responsibilities and
functions of the Board, including those matters specifically
reserved for the Board or the Board Committees. In addition,
the Board Charter addresses:
›
›
the role and responsibilities of the Chairman and the CEO;
the relationship and interaction between the Board and
management; and
› delegation by the Board to Board Committees and management.
As set out in the Board Charter, the responsibilities of the
Board include:
› monitoring corporate performance and the implementation
›
of strategy and policy;
selecting, appointing and evaluating the performance of,
determining the remuneration of, and planning the succession
of the CEO;
› on recommendation of the CEO, selecting, appointing and
reviewing the performance of the Chief Financial Officer (CFO)
and other senior executives;
contributing to and approving management’s development
of corporate strategy, including setting performance objectives
and approving operating budgets;
reviewing, ratifying and monitoring systems of risk management
and internal control and ethical and legal compliance;
approving major capital expenditure, acquisitions and divestments,
and monitoring capital management;
›
›
›
› monitoring and reviewing management processes; and
› developing and reviewing corporate governance principles
and policies.
In respect of diversity, the Board’s responsibilities include:
›
›
reviewing and approving the Company’s diversity policy; and
establishing measurable objectives for achieving diversity across
the Group, and annually assessing both the objectives and progress
towards achieving them.
1.2 The Chairman, CEO and management
The roles of Chairman and CEO are separate, and the Board Charter
sets out responsibilities for each office. The roles of Chairman and
CEO are not exercised by the same individual. The Board Charter
states that the Chairman should be an independent non-executive
director. Howard McDonald (Chairman until 10 October 2012) and
Paul McClintock AO (Chairman from 10 October 2012) are both
independent non-executive directors.
The Chairman’s responsibilities include:
representing the Board to shareholders;
›
› providing leadership to the Board and Myer;
›
› promoting constructive and respectful relationships between
ensuring that the Board operates efficiently and effectively; and
the Board and management.
The management of the Company is conducted by, or under
the supervision of, the CEO as directed by the Board. The CEO is
responsible for implementing the strategic objectives, plans and
budgets approved by the Board. The Board approves corporate
objectives for the CEO to satisfy and, in conjunction with the CEO,
develops the duties and responsibilities of the CEO.
Management is accountable to the Board, and is required to
provide the Board with information in a form, timeframe and quality
that enables the Board to discharge its duties effectively. Directors
are entitled to request additional information at any time that they
consider appropriate.
The Nomination Committee (and formerly the Nomination and
Remuneration Committee) assists in developing and implementing
plans for identifying, assessing and enhancing director competencies.
As part of this development, in August 2011, the directors participated
in a workshop specifically tailored for the Company in relation to
corporate governance.
The Human Resources and Remuneration Committee assists in the
review and recommendation of arrangements for directors, the CEO
and executives in relation to remuneration and benefits, and reviews
the performance of those individuals and the reward interface.
The Committee also reviews all significant human resource issues,
including development and succession planning.
Review of senior executives
The Human Resources and Remuneration Committee is responsible
for the review of the senior management assessment processes from
time to time to ensure that they remain consistent with the Board’s
overall objectives for the business.
1.3 Performance assessments
Review of the Board, Board Committees
and individual directors
The Board recognises that regular reviews of its effectiveness and
performance are key to the improvement of the governance of
the Company. Accordingly, the Board, with the assistance of the
Nomination Committee as required, has committed to an annual
review and evaluation of the performance of the Board, the Board
Committees and each individual Director.
The review and evaluation undertaken in the reporting period is
described below.
The Board and each Board Committee conducted a review of their
effectiveness and performance in September 2011. During the
reporting period, the Board and each Board Committee also reviewed
and updated their respective Charters. In addition, the Board assessed
the relationship and interaction between the Board and management.
In September 2011, the Chairman conducted the annual review of
individual directors. Each director completed a Board review and
assessment document, and met privately with the Chairman to
discuss the assessment. In addition to the annual review, the
Chairman regularly provides informal feedback to individual directors.
A formal performance evaluation and assessment of the effectiveness
of the Board, the Board Committees and individual directors was
conducted during January to March 2012 by an external adviser
with corporate governance expertise. The results of the review were
discussed in detail with the Board, and action items identified are
being addressed as part of a process of ongoing communication
between the Board and management.
In May 2012, the Board approved the establishment of two Board
Committees – the Human Resources and Remuneration Committee
and the Nomination Committee – to replace the existing Nomination
and Remuneration Committee. The establishment of two separate
committees was considered appropriate from a governance
perspective, and recognises the different functions performed by each
committee. Each new committee has adopted a new written Charter.
All senior executives undergo a performance and development review
on an annual basis. This review process involves the following:
›
each senior executive is assessed against a set of key performance
criteria. These criteria include both financial and non-financial
performance measures;
at the end of each financial year, all senior executives meet with
their manager to discuss their performance over the previous year;
and
›
› upon the completion of the performance appraisal meeting, each
senior executive is provided with feedback on their performance
and a rating is determined based on that performance. As well as
the review of performance, where appropriate, a development plan
is also agreed to support the ongoing contribution of the executive
to the needs of the business.
A performance evaluation for senior executives which accords
with the process described above has taken place during this
reporting period.
It is the role of the Board to review the performance of the CEO and
to review the assessments made by the CEO of the performance
of his direct reports. On 10 August 2011, the Company announced
the renewal of Bernie Brookes’ contract as the Company’s CEO and
Managing Director until 31 August 2014. An important component
of this decision was the Board’s assessment of Mr Brookes’
performance as CEO.
1.4 Remuneration arrangements
The remuneration of each director is set out in the Remuneration
Report, which forms part of the Directors’ Report and is presented
on pages 44 to 59.
The Company distinguishes the structure of non-executive directors’
remuneration from that of executive directors and senior executives.
The Company does not have any schemes for retirement benefits for
non-executive directors.
Please refer to the Remuneration Report for further information.
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1.5 Board and Board Committee meetings
The number of meetings of the Board and of each Board Committee held during the period ended 28 July 2012, and the number of meetings
attended by each director and committee member are set out in the Directors’ Report, at page 40.
1.6 Independent professional advice
Under the Board Charter, the Board collectively and each director individually are entitled to seek independent professional advice at the
Company’s expense in connection with their duties and responsibilities, subject to the approval of the Chairman or the Board.
Under their respective Charters, each of the Board Committees is entitled to seek independent professional advice on any matter pertaining
to the powers, duties or responsibilities of the committee.
1.7 Company Secretary
The Company Secretary has an important role in supporting the effectiveness of the Board by monitoring that Board policy and procedures
are followed, and co-ordinating the completion and despatch of Board agendas and materials in a timely manner. All directors have direct access
to the Company Secretary.
The Company Secretary is also responsible for communication with regulatory bodies and the ASX, and all statutory and other filings.
Marion Rodwell is the Company Secretary of the Company. Her experience and qualifications are set out on page 25 of this Annual Report.
Part 2 – Board composition and director tenure
Relevant documents – available from myer.com.au/investor
›
› Nomination Committee Charter
Board Charter and relationship with management
2.1 Composition of the Board
As at the date of this Report, the Board comprises eight directors. The majority of the Board are independent non-executive directors.
Name
Howard McDonald
Paul McClintock AO
Rupert Myer AM
Bernie Brookes
Anne Brennan
Chris Froggatt
Peter Hay
Ian Morrice
Position
Chairman until 10 October 2012
Independent Non-Executive Director
Chairman from 10 October 2012
Independent Non-Executive Director
Deputy Chairman from 8 August 2012
Independent Non-Executive Director
CEO and Managing Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Appointed
6 November 20061
8 August 2012
12 July 2006
12 July 2006
16 September 2009
9 December 2010
3 February 2010
8 August 2012
1 H McDonald was appointed a director on 6 November 2006, and Chairman on 4 August 2009.
Tom Flood retired from the Board with effect from 11 April 2012. Paul McClintock AO and Ian Morrice were appointed as directors on 8 August 2012.
All other directors served as directors for the entire reporting period.
Howard McDonald will retire from the Board at the conclusion of the Board meeting on 10 October 2012, and will be succeeded as Chairman
by Paul McClintock AO at that time.
Details of the skills, qualifications, experience, expertise and special responsibilities of each current director are set out on pages 22 to 23 of this
Annual Report.
2.2 Skills, experience, expertise and diversity of directors
The Board, together with the Nomination Committee, determines the size and composition of the Board, subject to the Company’s Constitution.
The Company’s Constitution states that the minimum number of directors is four and the maximum is fixed by the directors, but may not be
more than 12.
The Board, together with the Nomination Committee, reviews the composition of the Board and the skills and experience represented by
the directors on the Board, and determines whether the composition and mix of those skills remain appropriate for the Company’s strategy.
Additional information about the Nomination Committee’s responsibilities in relation to the size and composition of the Board is set out at
section 3.4.
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Corporate Governance Statement continued
The Board recognises that a Board comprising directors with a
diverse range of backgrounds, skills and experience facilitates robust
discussion and decision-making, and enables the Board to discharge its
responsibilities effectively. It is intended that the Board will comprise a
majority of independent non-executive directors and over time comprise
directors from a diverse range of backgrounds, with complementary skills
and experience. This will ensure that the composition of the Board reflects
a range of expertise, experience and diversity appropriate to the Group’s
business and strategies.
On 8 August 2012, the Company appointed two new independent
non-executive directors, Mr Paul McClintock AO and Mr Ian Morrice.
Mr McClintock has considerable experience as a director, having
held significant chairman and advisory positions across a broad
range of industries, as well as government. Mr McClintock succeeded
Mr Howard McDonald as Chairman of the Board from 10 October
2012. Mr Morrice has strong, international expertise and strategic
understanding of the retail sector. The appointment of these two
new directors complements the existing diverse skills and experience
of the Myer Board.
The range of backgrounds, skills and expertise currently represented
on the Board includes experience in senior roles in retail, hospitality,
finance, government, human resources, law, and mergers and
acquisitions, as well as qualifications across a range of fields, including
business administration, commerce, law and the humanities. The
directors also have expertise in brand building and marketing, as well
as having international experience.
2.3 Appointment of new directors and re-election
of directors
The Company’s policy and procedure for selection and appointment
of new directors and re-election of directors is set out in the
Nomination Committee Charter.
When identifying potential candidates for Board appointment, factors
that may be considered include:
›
the skills, experience, expertise and personal qualities that will best
complement Board effectiveness;
the capability of the candidate to devote the necessary time and
commitment to the role; and
›
› potential conflicts of interest and independence.
Mr McClintock and Mr Morrice will each offer themselves for election
by the Company’s shareholders at the 2012 AGM.
There is no specific term of office for non-executive directors.
In accordance with the ASX Listing Rules and the Company’s
Constitution, all non-executive directors must retire from office no
later than the third AGM following their last election. Where eligible, a
director may stand for re-election. The CEO will not retire by rotation.
Prior to each AGM, the Board determines whether to recommend to
shareholders to vote in favour of the election of any new director and
the re-election of each director standing for re-election.
Induction and education
New directors are provided with a letter of appointment setting out
the Company’s expectations, their responsibilities and rights and the
terms and conditions of their tenure.
All new directors and senior executives participate in an induction
program. New directors receive an induction appropriate to their
experience to enable them to actively participate in decision-making
as soon as possible, including familiarisation with the operation of the
Board and its Committees and financial, strategic, operations and risk
management issues. In addition, the Company arranges continuing
education and training for the directors.
The Nomination Committee is responsible for ensuring that an
effective induction process is in place for any newly appointed
director, and to regularly review its effectiveness.
2.4 Directors’ independence
The Board considers the independence of its non-executive directors
each year.
Guidelines and materiality thresholds
for determining independence
The Board Charter sets out guidelines and materiality thresholds that
the Board has adopted to assist in determining the independence
of directors.
The Board only considers directors to be independent where they
are independent of management and free of any business or other
relationship that could materially interfere with, or could reasonably
be perceived to interfere with, the exercise of their unfettered and
independent judgement.
The identification of potential director candidates may be assisted by
the use of external search organisations as appropriate. All directors are
consulted and provided with detailed information about potential new
directors. Any new appointment is approved by the Board in accordance
with the Company’s Constitution. Any new directors appointed by the
Board must retire and offer themselves for election by the Company’s
shareholders at the next Annual General Meeting (AGM).
As a guideline for determining the independence of directors, the
Board has regard to the relationships set out in Box 2.1 of the ASX
Principles. In general, directors will be considered to be independent
if they are not members of management and they:
›
are not a substantial shareholder of the Company, or an officer of,
or otherwise associated directly with, a substantial shareholder
of the Company;
The Board invested a number of months in identifying, selecting and
appointing each of Mr McClintock and Mr Morrice as new directors of
the Company. In respect of each appointment, the Board undertook a
formal selection process and engaged an executive search firm to assist
in this process. The Board considered the requisite criteria for potential
director candidates, including formal qualifications and expertise, and
the mix of experience, personal qualities and diversity that would best
complement the Board’s existing diverse skills and experience, thus
ensuring that the Board continues to operate and discharge its duties
effectively. The Board also considered the independence and potential
conflicts of interests of potential director candidates.
› have not, within the last three years, been employed in an
›
›
executive capacity by the Company or another Group member;
except in connection with reorganisations within the Group,
have not within the last three years been a principal or employee
of a material professional adviser or a material consultant to the
Company or another Group member;
are not a material supplier to, or customer of the Company or
another Group member or an officer of or otherwise associated
directly or indirectly with a material supplier or customer of the
Company; and
› have no material contractual relationship with the Company or
another Group member, other than as a director of the Company.
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The Board considers thresholds of materiality for the purposes of
assessing ‘independence’ on a case-by-case basis, having regard
to both quantitative and qualitative principles. Without limiting
the Board’s discretion, the Board has adopted the following
quantitative guidelines:
›
The Board will determine the appropriate base to apply
(e.g. revenue, equity or expenses) in the context of each situation.
In general, the Board will consider an affiliation with a business
that accounts for less than 5 percent of the relevant base to be
immaterial for the purposes of determining independence. Where
this threshold is exceeded, the Board will review the materiality
of the particular circumstance with respect to the independence
of the particular director.
The Board will review any holding of 5 percent or more of the
Company’s shares, and will generally consider a holding of
10 percent or more of the Company’s shares to be material.
›
›
The Board will also undertake a qualitative assessment of
independence, which is an overriding requirement for independence.
Specifically, the Board will consider whether there are any factors
or considerations which may mean that the director’s interest,
business or relationship (even if it does not trigger the quantitative
requirements discussed above) could, or could reasonably be
perceived to, materially interfere with the director’s ability to act
in the best interests of the Company.
Assessment of the independence of the Company’s directors
The Board currently comprises eight directors, seven of whom
are non-executive directors. At the date of signing the Directors’
Report, it is the Board’s view that each of its non-executive directors
is independent.
Directors did not participate in deliberations about or vote in relation
to their own independence.
Details of the relationships affecting director independence and
independent status are set out below.
Part 3 – Board Committees
Board Charter and relationship with management
Relevant documents
– available from myer.com.au/investor
›
› Audit, Finance and Risk Committee Charter
› Human Resources and Remuneration Committee Charter
› Nomination Committee Charter
3.1 Introduction
The Board has established three committees to streamline the
discharge of its duties and responsibilities, and to allow detailed
consideration of complex matters.
In May 2012, the Board approved the establishment of two Board
Committees – the Human Resources and Remuneration Committee
and the Nomination Committee – to replace the existing Nomination
and Remuneration Committee. The Nomination and Remuneration
Committee had been in existence since the public listing of the
Company in 2009. The establishment of two separate committees
was considered appropriate from a governance perspective, and
recognises the different functions performed by each committee.
The current Board Committees are:
›
›
›
the Audit, Finance and Risk Committee;
the Human Resources and Remuneration Committee; and
the Nomination Committee.
Each Board Committee has a written Charter that sets out its role and
responsibilities, composition and membership requirements, and the
manner in which the committee is to operate.
Each Charter requires that the committee consist only of non-
executive directors, with a majority of independent directors. The
current members of all three Board Committees are all independent
non-executive directors.
Howard McDonald
Mr McDonald was appointed a director of the Company in November
2006 and Chairman in August 2009.
Details of committee members’ attendance at committee meetings
(including at meetings of the former Nomination and Remuneration
Committee) are set out in the Directors’ Report at page 40.
Mr McDonald is currently the Chairman and a shareholder of Rodd
& Gunn Australia Limited, a Myer supplier. For the financial year
ended 28 July 2012, the percentage of the Group’s total sales value
represented by Rodd & Gunn was less than 0.5 percent. The total sales
are significantly below the relevant quantitative materiality threshold
adopted by the Board as a guideline for director independence.
Consistent with the Board Charter, in addition to this quantitative
assessment, the Board has also considered qualitative factors
relevant to Mr McDonald’s independence. Having considered these
quantitative and qualitative principles, the Board considers that
Mr McDonald’s relationship with Rodd & Gunn is not material to
his independence. The Board has therefore determined that
Mr McDonald is an independent director.
Appropriate governance arrangements are also in place to ensure
that Mr McDonald does not participate in any deliberations or matters
brought before the Board that relate directly to Rodd & Gunn. If the
Board were to consider such matters, Mr McDonald would leave the
Board meeting.
All directors are invited to attend committee meetings.
Non-committee members, including members of management,
may also attend all or part of a meeting of the committee at the
invitation of the committee chair.
3.2 Audit, Finance and Risk Committee
Composition
The current composition of the Audit, Finance and Risk Committee is:
Chair
Members
Anne Brennan
Peter Hay (from 16 May 2012)
Rupert Myer AM
Tom Flood was a member of the Committee until his retirement as
a director on 11 April 2012.
All Committee members are financially literate and have an
appropriate understanding of the industries in which the Group
operates. The Chair of the Committee is an independent non-
executive director, and is not the Chair of the Board.
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Corporate Governance Statement continued
Role and responsibilities
The Committee’s key responsibilities and functions are to:
› oversee the Company’s relationship with the external auditor
and the external audit function generally;
› oversee the Company’s relationship with the internal auditor
and the internal audit function generally;
› oversee the preparation of financial statements and reports;
› oversee the Company’s financial controls and systems; and
› manage the process of identification and management of risk.
Further information about the Company’s risk management
framework, external auditor, internal audit and Board assurances
on financial reporting risks is set out in Part 4.
Rights of access and authority
The Committee has rights of access to management and to auditors
(external and internal) without management present, and rights to
seek explanations and additional information from both management
and auditors. Whilst the internal audit function reports to senior
management, it is acknowledged that the internal auditors also
report directly to the Committee.
In addition, the Committee is entitled to seek independent
professional advice (discussed at section 1.6 above)
3.3 Human Resources and Remuneration Committee
Composition
The current composition of the Human Resources and Remuneration
Committee is:
Chair
Members
Chris Froggatt
Anne Brennan
Howard McDonald
(until 10 October 2012)
Rupert Myer AM
Howard McDonald will retire from the Committee upon his retirement
from the Board on 10 October 2012.
Role and responsibilities
The responsibilities of the Committee include:
›
›
›
›
to review and recommend arrangements for the CEO, executives
reporting to the CEO, and senior management;
to review major changes and developments in the Company’s
remuneration, recruitment, retention and termination policies
and procedures for senior management, remuneration policies,
superannuation arrangements, human resource practices and
employee relations strategies for the Group;
to review the senior management performance assessment
processes, and the annual results of those assessments;
in respect of the Company’s employee equity incentive plans, to:
– review and recommend to the Board any major changes
or developments;
– review and determine performance hurdles, eligibility criteria,
and terms of offers; and
– administer the operation of the plans;
›
›
›
›
›
to review and recommend to the Board the remuneration
arrangements for the Chairman and the non-executive directors;
to review and recommend to the Board the remuneration report;
to review and facilitate shareholder and other stakeholder
engagement in relation to the Company’s remuneration policies
and practices;
at least annually, to review and report on the relative proportion
of women and men in the workforce at all levels of Myer; and
to review remuneration by gender and consider whether any pay
gap exists as a result of gender difference and where relevant
provide any recommendations to the Board.
Remuneration policy
In discharging its responsibilities, the Committee must have regard
to the following policy objectives:
›
to ensure that the Company’s remuneration structures are
equitable and aligned with the long-term interests of the Company
and its shareholders;
to attract and retain skilled executives;
to structure short and long-term incentives that are challenging
and linked to the creation of sustainable shareholder returns; and
to ensure that any termination benefits are justified and appropriate.
›
›
›
Access to senior executives
In addition to access to independent advisers (discussed at section
1.6 above), the Committee may seek input from senior executives
of the Company on remuneration policies, subject to the principle
that no senior executive should be directly involved in deciding their
own remuneration.
3.4 Nomination Committee
Composition
The current composition of the Nomination Committee is:
Chair
Members
Howard McDonald
(until 10 October 2012)
Paul McClintock AO
(from 10 October 2012)
Anne Brennan
Chris Froggatt
Rupert Myer AM
Howard McDonald will retire as Chair of the Committee upon his
retirement from the Board on 10 October 2012.
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Role and responsibilities
The responsibilities of the Committee include:
›
to review and recommend to the Board the size and composition
of the Board, including the succession of the Chairman and CEO,
and whether Board succession plans are in place to maintain an
appropriate mix of skills, experience, expertise and diversity on
the Board;
to review and recommend to the Board the criteria for Board
membership, including assessment of necessary and desirable
competencies of Board members to maintain an appropriate mix
of skills, experience, expertise and diversity on the Board;
to assist the Board to assess the performance of the Board, its
committees and individual directors, and in developing and
implementing plans for identifying, assessing and enhancing
director competencies; and
to ensure that an effective induction process is in place for any
newly appointed director and regularly review its effectiveness.
›
›
›
3.5 Previous Board Committee – Nomination and
Remuneration Committee
The composition of the previous Nomination and Remuneration
Committee (which was replaced by the Human Resources and
Remuneration Committee and the Nomination Committee in
May 2012) was as follows:
Chair
Members
Chris Froggatt
Anne Brennan
Howard McDonald
Rupert Myer AM
The role and responsibilities of the Nomination and Remuneration
Committee have been transferred to either the Human Resources and
Remuneration Committee or the Nomination Committee.
Part 4 – Risk management
Relevant documents
– available from myer.com.au/investor
›
› Audit, Finance and Risk Committee Charter (including External
Risk Management Policy
Audit Policy)
4.1 Recognition and management of risk
The Company recognises risk management as an integral component
of good corporate governance and fundamental in achieving its
strategic and operational objectives.
The Board is ultimately responsible for identifying and assessing
internal and external risks that may impact the Company in achieving
its strategic objectives. The Board is responsible for determining
the Company’s risk appetite, overseeing the development and
implementation of the risk management framework and maintaining
an adequate monitoring and reporting mechanism.
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The Board has delegated coordination of risk oversight to the Audit,
Finance and Risk Committee. The Committee’s risk management
responsibilities are to review and report to the Board as to whether:
the Company’s ongoing risk management program effectively
›
identifies all areas of potential risk;
adequate policies and procedures have been designed and
implemented to manage identified risks;
a regular program of audits is undertaken to test the adequacy
of and compliance with prescribed policies; and
›
›
› proper remedial action is undertaken to redress areas of weakness.
The Company has adopted a Risk Management Policy that applies to
all Group employees, and to contractors and consultants working on
behalf of the Group. Management monitor and report on material risks
identified through the internal and external audit process.
4.2 Risk management framework
The Company has adopted an enterprise-wide framework that
incorporates a system of risk oversight, risk management and internal
control designed to identify, assess, monitor and manage risks
consistent with AS/NZS ISO 31000:2009 Risk Management Principles
and Guidelines and provides Myer management with a consistent
approach to recognising and managing risks. The Company applies
risk management in a well-defined, integrated framework that
promotes awareness of risks and an understanding of the Company’s
risk tolerances. This enables a systematic approach to risk identification
and leverage of any opportunities, and provides treatment strategies
to manage, transfer and avoid risks.
The Board reviews and approves the risk management framework
and risk appetite on an annual basis.
4.3 External auditor
The Audit, Finance and Risk Committee is responsible for overseeing
the Company’s External Audit Policy. The Committee has the
responsibility and authority for the appointment, removal or
re-appointment and remuneration of the external auditor, as well
as evaluating its effectiveness and independence.
The Committee reviews the appointment of the external auditor
annually. In addition, the Committee reviews and assesses the
independence of the external auditor, including any relationships with
the Company or any other entity that may impair, or appear to impair,
the external auditor’s independent judgement or independence in
respect of the Company.
The external audit engagement partner is required to rotate at least
once every five years. PricewaterhouseCoopers (PwC) was reappointed
as the external auditor in 2009.
The external auditor will attend the AGM and be available to answer
shareholder questions about the conduct of the audit and the
preparation and content of the Auditor’s Report.
4.4 Internal audit
A separate internal audit division has been established and is overseen
by an Assurance Manager who reports through to the CFO and liaises
directly with the Audit, Finance and Risk Committee.
The internal audit division carries out regular systematic monitoring
of control activities and reports to relevant business unit management
and the Audit, Finance and Risk Committee.
Corporate Governance Statement continued
4.5 Board assurances on financial reporting risks
The Board has received assurance from the CEO and the CFO that
the declaration provided in accordance with section 295A of the
Corporations Act is founded on a sound system of risk management
and internal compliance and control systems, and that the systems
are operating effectively in all material respects in relation to financial
reporting risks.
The Code encourages employees to report unethical practices, or
breaches of the Code, Company policies or the law. The Company
has ‘whistleblower’ protections for those who report unacceptable
behaviour in good faith.
The Company regularly reviews the Code, and adopted a revised
Code in August 2011. Team members are required to undertake
training and acknowledge acceptance of the Code on an annual basis.
The CEO and the CFO made declarations to the Board (among other
things) to the following effect:
›
that, in their opinion, the Group’s financial statements and notes
for the financial year give a true and fair view of the financial
position and the performance of the Company and the Group
and are in accordance with the Corporations Act and relevant
accounting standards;
that the above statement is founded on a sound system of risk
management and internal compliance and control systems which
implement the policies adopted by the Board (either directly or
through delegation to senior executives); and
that the Company’s risk management and internal compliance and
control systems, to the extent that they relate to financial reporting,
are operating efficiently and effectively in all material respects.
›
›
Part 5 – Key governance policies
Relevant documents
– available from myer.com.au/investor
› Code of Business Conduct
› Continuous Disclosure Policy
› Guidelines for Dealing in Securities
›
Shareholder Communication Strategy
5.1 Code of Business Conduct
The Company is committed to the highest level of integrity and ethical
standards in all business practices. All Group employees, directors
and contractors must comply with the Company’s Code of Business
Conduct (Code). The Code applies to all business activities and
dealings with employees, customers, suppliers, shareholders and other
external stakeholders. The objectives of the Code are to:
› provide clear guidance on and benchmarks for appropriate
›
›
professional and ethical behaviour;
reinforce the requirement for compliance with Company policies
and legal requirements;
support Myer’s business reputation through the behaviour of its
people; and
› make directors and team members aware of their responsibilities
and consequences if they breach the Code.
The Code outlines how the Group expects its directors and employees
to behave and conduct business in a range of circumstances,
including actual or potential conflicts of interest. The Code requires
awareness of, and compliance with, laws and regulations relating to
the Group’s operations, including fair trading, occupational health
and safety, equal opportunity and anti-discrimination, privacy,
employment practices and securities trading.
5.2 Continuous disclosure
The Company’s policy is to strictly comply with its obligations under
the Corporations Act and the ASX Listing Rules to keep the market
fully informed of information which may have a material effect on
the price or value of the Company’s shares. The Company discharges
these obligations by releasing information in ASX announcements
and by disclosure of other relevant documents to shareholders
(eg, annual reports).
The Company’s Continuous Disclosure Policy is designed to ensure
the timely release of material price-sensitive information to the
market. This policy establishes procedures to ensure that directors and
management are aware of the Company’s disclosure obligations and
procedures, and have accountability for the Company’s compliance
with those obligations.
The Company provides continuous disclosure training to all directors
and senior management. It is a standing agenda item at all Board
meetings, Board Committee meetings and senior management
meetings to consider whether any matters reported to or discussed
at the meeting should be disclosed to the market pursuant to the
Company’s continuous disclosure obligations.
All general managers and divisional heads are required to have
appropriate procedures in place within their areas of responsibility
to ensure that all relevant information is reported to them immediately
to be considered in accordance with the Continuous Disclosure Policy.
The Company has established a Continuous Disclosure Committee,
which is comprised of the CEO, the CFO and the General Counsel
and Company Secretary. The role of the Continuous Disclosure
Committee is to:
›
review all potentially material price-sensitive information
of which management or the Board become aware;
› determine whether any of that information is required to be
›
›
disclosed to the ASX;
co-ordinate the actual form of disclosure with the relevant
members of management; and
review and respond to any infringement notice or written
statement of reasons issued to the Company by ASIC.
All deliberations of the Committee are shared without delay with the
Chairman or, in the Chairman’s absence, the Chair of the Audit, Finance
and Risk Committee.
The Company has nominated the Company Secretary as the person
with the primary responsibility for all communication with the ASX.
The Board regularly reviews the Continuous Disclosure Policy, and
adopted a revised policy in July 2012.
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5.3 Securities trading
The Company’s Guidelines for Dealing in Securities (Guidelines)
apply to all directors and employees of the Group. The purpose
of the Guidelines is to:
›
explain the types of conduct prohibited under the Corporations
Act in relation to dealing in securities; and
establish a best practice procedure for dealing in the
Company’s securities.
›
As an overriding principle, directors, employees and their associates
must not deal in the Company’s securities if they are in possession
of price sensitive or ‘inside’ information.
In addition, directors, specified senior executives and their associates
(Relevant Persons) must not deal in the Company’s securities during
‘blackout periods’. ‘Blackout periods’ include periods prior to the release
of the Company’s half year and full year results.
Relevant Persons are permitted to deal in the Company’s securities
during certain ‘trading windows’, subject to complying with
notification requirements. ‘Trading windows’ include periods following
the release of the Company’s half year and full year results, and the
AGM. Outside of ‘trading windows’, Relevant Persons may only deal in
the Company’s securities in exceptional circumstances and subject to
obtaining prior approval.
The Guidelines prohibit directors, senior executives and their closely
related parties from entering into hedging arrangements with respect
to securities in the Company (including any shares, options and rights).
Hedging arrangements include entering into transactions in financial
products that operate to limit the economic risk associated with
holding Company securities.
The Board regularly reviews the Guidelines, and adopted a revised
policy effective from 1 August 2012.
5.4 Shareholder communication
The Company aims to ensure that shareholders are kept informed of
all major developments affecting the state of affairs of the Company.
The Company aims to promote communication with shareholders and
to encourage effective participation at general meetings. Additionally,
the Company recognises that potential investors and other interested
stakeholders may wish to obtain information about the Company.
The Company’s Shareholder Communication Strategy sets out how
the Company communicates information to shareholders and other
stakeholders through a range of forums and publications.
One of the Company’s key communication tools is the Myer
website (www.myer.com.au). The Company has a dedicated
Investor Centre section of its website (www.myer.com.au/investor).
The Investor Centre includes information about the Company
relevant to shareholders, including:
›
›
the Company’s ASX announcements;
key corporate governance documents (including Board and Board
Committee Charters, and key policies);
financial reports and investor presentations; and
information about the Company’s AGM (including the Notice of
Meeting, and a webcast of the meeting).
›
›
The Company provides a telephone helpline facility and an online email
enquiry service to assist shareholders with any queries. Information is
also communicated to shareholders via periodic mail-outs, or by email
to shareholders who have provided their email address.
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Part 6 – Diversity at Myer
Relevant documents
– available from myer.com.au/investor
› Diversity Policy
Myer’s Diversity Policy outlines our approach to creating and
maintaining an inclusive and collaborative workplace culture. The
Diversity Policy sets out Myer’s diversity principles. In this context,
diversity covers gender, age, ethnicity, cultural background, language
and disability.
›
Key principles
Myer’s approach to diversity is underpinned by key principles including:
› maintaining a safe and inclusive working environment that is
respectful of individual differences and attributes (including
family responsibilities);
eliminating artificial barriers to career progression by providing
support and mentoring, and by developing flexible work practices
to meet the differing needs of employees in the context of
business requirements;
recruiting and retaining a skilled and diverse workforce;
employing a fair and effective process for appointment to roles
based on relative ability, performance and potential; and
fostering a culture, including through education and training,
that rewards people for furthering diversity.
›
›
›
Diversity objectives
Myer’s diversity objectives are to ensure that Myer:
› has an inclusive workplace where every individual can shine
regardless of gender, cultural identity, age, disability, work style
or approach;
leverages the value of diversity for all our stakeholders to deliver
the best customer experience, improved financial performance
and a stronger corporate reputation; and
continues to take a leadership position on diversity practices.
›
›
To achieve these objectives Myer:
› has determined measurable objectives for achieving gender
diversity. The Board has endorsed these objectives and both
the objectives and progress in achieving them will be assessed
annually;
› will assess pay equity on an annual basis;
› will encourage and support the application of workplace flexibility
policy into practice across the business; and
› will meet our commitment to the Australian Employment
Covenant to assist Indigenous Australians to access employment.
Female representation
As at 28 July 2012, the proportion of women employed by Myer was
as follows:
Board of Directors
Leadership roles
Total Myer workforce
33.3%
60.2%
78.7%
Corporate Governance Statement continued
The following charts outline female leadership representation, as defined by the Equal Opportunity for Woman in the Workplace Agency (EOWA),
across Myer, which is also included in the Company’s annual report to EOWA.
Women in leadership positions at Myer as at 28 July 2012
27%
3 females
Women in Strategic leadership
41%
34 females
Women in Business/Functional leadership
62%
80%
553 females
Women in Operational leadership
9,433 females
Women in Self-leadership
Women in leadership positions at Myer as at 30 July 2011
31%
4 females
Women in Strategic leadership
39%
33 females
Women in Business/Functional leadership
63%
79%
539 females
Women in Operational leadership
9,745 females
Women in Self-leadership
Myer’s approach to diversity
Our approach to diversity includes the following elements –
meritocracy, fairness and equality, contribution to commercial success,
and that it is in everyone’s interest that we meet our objectives.
›
Over the past year Myer has taken the following steps in relation to
meeting our diversity objectives including:
›
responsibility for diversity has been included in the Board Charter
(Board diversity), the Nomination Committee Charter (Board
diversity) and the Human Resources and Remuneration Committee
Charter (diversity at all levels of the Company below Board level); and
the Board has formally adopted a policy in relation to diversity at all
levels from the Board down. The policy is available in the Corporate
Governance section of the Myer website. This action reinforces
the principles and practices Myer has had in place for a number
of years. The formalisation of these now provides the framework
for measurable objectives to be established and reviewed by
the Board.
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The Board has also now established measurable objectives for achieving gender diversity at all levels of the Company, as outlined below.
FY2012 and FY2013 Measurable Objectives
Objective
Progress
Myer aims to maintain the proportion
of female candidates identified in
succession plans with the proportion of
females relative to the overall employee
population at each job grade level. We
aim to ensure that within each job grade
level there are a proportionate number
of senior women who are ready to move
into leadership roles.
Myer aims to maintain a return rate
of more than 70 percent for team members
returning from parental leave.
Myer aims for senior managers to meet or
formally contact women on parental leave
at least quarterly.
The career development plans of all female middle management employees are assessed
annually to ensure their appropriateness in developing and retaining Myer’s female talent.
Currently females represent 27.1 percent of the Strategic Leadership, 41 percent of the
Business/Function Leadership and 62 percent of the Operation Leadership population. Females
represent 40 percent of the ‘Top Talent Group’ following the succession planning process. At
store level females represent 36.5 percent of those identified as having potential for further
leadership positions.
Myer is committed to ensuring that any team member returning to work after a period of
parental leave can do so under a graduated return program. Regardless of any other business
need, returning team members have a minimum six-month period of graduated return to enable
their reintroduction to the work place.
During the reporting period, 158 women commenced parental leave of which 72.7 percent
participated in the paid parental leave scheme. During the reporting period 84 percent of team
members returned to work from previous parental leave periods.
Myer has had a formal ‘keeping in touch’ program in place since 2010 which continues to
apply. It aids both employees and managers with the transition to and back from parental
leave, and specifically provides flexibility for women to determine the level of contact they
wish to be maintained while on parental leave. This has meant women set contact levels they
were comfortable with, which may have been greater or less than quarterly dependent upon
their wishes.
Myer aims to maintain gender balance
in its Managers in Training Programs
to facilitate the creation of a pool of
qualified female candidates for Manager
role opportunities.
The Management Development Program (MDP) and Graduate Development Program (GDP)
continue to be our two main internal development programs for entry-level management
positions. The programs are aimed at recognising and rewarding internal team members by
supporting their career goals, as well as assisting, retaining and promoting entry level female
team members through comprehensive training and skills development.
During the reporting period 59 percent of participants in the MDP were female with 50 percent
being promoted to store management salaried positions.
At the start of the reporting period there were 10 participants in the GDP with 90 percent being
women. During the reporting period all female participants were promoted to salaried positions
within the national support office.
Our Merchandise In Training Program is our key middle management program, which has
continued throughout the reporting period and is aimed at developing team members for senior
roles within our Merchandise areas.
During the reporting period 89 percent of the participants in this program were female.
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Corporate Governance Statement continued
Flexible Arrangements and Parental Leave
Diversity has always been valued and encouraged at Myer. With a workforce comprising predominantly female team members. Myer was proud
to be the first major Australian retailer to introduce paid parental leave in 2009 and has maintained this level of support in addition to more
recent federal government initiatives regarding parental leave. The nature of retail requires Myer to have a flexible and responsive workforce that
is available to meet the variable shopping habits of our customers. This flexibility has afforded team members the opportunity to balance work
and family responsibilities, including graduated return to work from parental leave whilst establishing a long and fulfilling career at Myer.
We recognise that periods of parental leave represent an interruption in career progression. To this end Myer has introduced a number of
initiatives to encourage our team members to return to work and to enable them to balance their family and work responsibilities.
Myer offers flexible work arrangements for all team members returning from parental leave. This includes targeted support in special
circumstances to help balance life priorities with work and to manage careers including: compressed work weeks (where employees work the
usual number of hours in fewer days), flexible start and finish times, job sharing, telecommuting, part time work arrangements, and unpaid leave
for any purpose.
Indigenous participation
During FY2012, Myer signed the Australian Employment Covenant (AEC) – a private sector program aimed at improving Indigenous participation
through employment opportunities. Myer has committed to increase its number of Indigenous employees and we are in the process of
developing a plan in regard to this commitment. A significant number of Myer managers have attended information sessions in relation to the AEC.
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Compliance with ASX Principles
The table below is provided to facilitate understanding of the Company’s compliance with the recommendations in the ASX Principles
and indicates where each recommendation is discussed in this statement.*
Recommendation
principle 1 – lay solid foundations for management and oversight
Reference in Corporate
Governance Statement
1.1 Disclose the functions reserved to the Board and those delegated to senior executives
1.2 Disclose the process for evaluating the performance of senior executives
See sections 1.1 and 1.2.
See section 1.3.
principle 2 – Structure the Board to add value
2.1 A majority of the Board should be independent directors
2.2 The chair should be an independent director
2.3 The roles of chair and CEO should not be exercised by the same individual
2.4 The Board should establish a nomination committee
2.5 Disclose the process for evaluating the performance of the Board,
its committees and individual directors
principle 3 – promote ethical and responsible decision-making
3.1 Establish a code of conduct which sets out the Company’s key rules, values and guidelines to
guide the directors, the CEO, the CFO and any other senior executives
3.2 Establish and disclose a diversity policy which requires the Board to establish measurable
objectives for achieving gender diversity for the Board
3.3 Disclose the Company’s measurable objectives for achieving gender diversity set by the Board
and progress towards achieving them
3.4 Disclose the proportion of women employees in the whole organisation, in senior executive
positions and on the Board
principle 4 – Safeguard integrity in financial reporting
4.1 Establish an audit committee
4.2 The audit committee should have at least three members, consist only of non-executive
directors (a majority of whom should be independent) and be chaired by an independent chair
who is not the chair of the Board
4.3 The audit committee should have a formal charter
Principle 5 – Make timely and balanced disclosure
5.1 Establish and disclose a policy to ensure compliance with ASX Listing Rule disclosure
requirements and accountability at a senior executive level for that compliance
Principle 6 – Respect the rights of shareholders
6.1 Establish and disclose a shareholder communications policy
Principle 7 – Recognise and manage risk
See sections 2.1 and 2.4.
See sections 1.2 and 2.1.
See sections 1.2 and 2.1.
See sections 1.5, 3.1 and 3.4.
See section 1.3.
See section 5.1.
See section 6.
See section 6.
See section 6.
See sections 1.5, 3.1 and 3.2.
See sections 1.5, 3.1 and 3.2.
See section 3.1.
See section 5.2.
See section 5.4.
7.1 Establish and disclose policies for the oversight and management of material business risks
See sections 4.1 and 4.2.
7.2 The Board should require management to design and implement risk management and internal
control systems to manage material business risks and to report on whether those risks are
being managed effectively
7.3 Disclose whether the Board has received assurance from the CEO and the CFO that the
declaration provided in accordance with s295A of the Corporations Act is founded on a sound
system of risk management and internal control that is operating effectively in all material
respects in relation to financial reporting risks
Principle 8 – Remunerate fairly and responsibly
8.1 Establish a remuneration committee
8.2 The remuneration committee should have at least three members, a majority of whom are
independent, and be chaired by an independent chair
8.3 Distinguish the structure of non-executive directors’ remuneration from that of executive
directors and senior executives
See sections 4.2, 4.4 and 4.5.
See section 4.5.
See sections 3.1 and 3.3.
See sections 3.1 and 3.3.
See section 1.4 and the
Remuneration Report.
* The table includes all recommendations in the ASX Principles and Recommendations other than the ‘Guide to Reporting’ recommendations.
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Corporate Governance Statement continued
DireCtorS’ report
Your directors present their report on the consolidated entity consisting of the Company and the entities it controlled (collectively referred
to as the Group) at the end of, or during, the period ended 28 July 2012.
1. Directors
The following persons were directors of the Company during the financial year and/or up to the date of this Directors’ Report:
Director
Position
Howard McDonald
Paul McClintock AO
Rupert Myer AM
Bernie Brookes
Anne Brennan
Tom Flood
Chris Froggatt
Peter Hay
Ian Morrice
Chairman until 10 October 2012
Independent Non-Executive Director
Chairman from 10 October 2012
Independent Non-Executive Director
Deputy Chairman from 8 August 2012
Independent Non-Executive Director
CEO and Managing Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Date appointed as Director
6 November 20061
8 August 2012
12 July 2006
12 July 2006
16 September 2009
17 March 20092
9 December 2010
3 February 2010
8 August 2012
1 Howard McDonald was appointed a director on 6 November 2006, and Chairman on 4 August 2009.
2 Tom Flood was appointed a director of Myer Pty Ltd in 2007.
Tom Flood retired as a director with effect from 11 April 2012. Paul McClintock AO and Ian Morrice were appointed as directors on
8 August 2012. All other directors served as directors of the Company for the whole financial year and until the date of this Directors’ Report.
Howard McDonald will retire from the Board at the conclusion of the Board meeting on 10 October 2012 (the date of this Directors’ Report),
and will be succeeded as Chairman by Paul McClintock AO at that time.
Details of the qualifications, experience and special responsibilities of each current director are set out on pages 22 to 23 of this Annual Report.
2. Directorships of other listed companies
The following table shows, for each person who served as a director during the financial year and/or up to the date of this Directors’ Report,
all directorships of companies that were listed on the ASX, other than the Company, since 31 July 2009, and the period for which each
directorship has been held.
Director
Howard McDonald
Paul McClintock AO
Rupert Myer AM
Bernie Brookes
Anne Brennan
Tom Flood
Chris Froggatt
Peter Hay
Ian Morrice
Listed entity
Nil
Intoll Management Limited (formerly Macquarie Infrastructure
Investment Management Limited)
Perpetual Limited
AMCIL Limited
Period directorship held
–
May 2003 – December 2010
April 2004 – present
January 2000 – present
Diversified United Investment Limited
November 2002 – January 2012
Nil
Charter Hall Group
Nufarm Limited
Argo Investments Limited
Echo Entertainment Group Limited
Nil
Goodman Fielder Limited
Alumina Limited
–
October 2010 – present
February 2011 – present
September 2011 – present
March 2012 – present
–
August 2009 – present
December 2002 – present
Australia and New Zealand Banking Group Limited
November 2008 – present
GUD Holdings Limited
Metcash Limited
May 2009 – present
June 2012 – present
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3. Meetings of directors and Board committees
The number of meetings of the Board and of each Board committee held during the period ended 28 July 2012, and the numbers of meetings
attended by each director is set out below.
All directors are invited to attend Board committee meetings. Most Board committee meetings are attended by all directors.
Director
Howard McDonald
Rupert Myer AM
Bernie Brookes
Anne Brennan
Tom Flood**
Chris Froggatt
Peter Hay
Meetings of
Directors
Audit, Finance
& Risk Committee
Nomination
& Remuneration
Committee*
Human Resources
& Remuneration
Committee*
Nomination
Committee*
A
13
13
13
13
10
13
12
B
13
13
13
13
10
13
13
A
–
4
–
4
4
–
–
B
–
4
–
4
4
–
–
A
6
6
–
6
–
6
–
B
6
6
–
6
–
6
–
A
1
1
–
1
–
1
–
B
1
1
–
1
–
1
–
A
1
1
–
1
–
1
–
B
1
1
–
1
–
1
–
Notes:
A = Number of meetings attended.
B = Number of meetings held during the time the director held office or was a member of the committee during the year.
* On 16 May 2012, the Board approved the establishment of two Board committees – the Human Resources and Remuneration Committee and the Nomination Committee –
to replace the existing Nomination and Remuneration Committee.
** Tom Flood retired as a director on 11 April 2012.
4. Directors’ relevant interests in shares
The following table sets out the relevant interests that each director has in the Company’s ordinary shares as at the date of this Directors’ Report.
No director has a relevant interest in a related body corporate of the Company.
Director
Howard McDonald
Paul McClintock AO
Rupert Myer AM
Bernie Brookes
Anne Brennan
Chris Froggatt
Peter Hay
Ian Morrice
Ordinary shares
Options
2,074,390
106,000
733,999
10,004,399
53,658
10,040
12,195
82,000
Nil
Nil
Nil
Performance
rights
Nil
Nil
Nil
7,380,394
2,058,383
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Tom Flood retired as a director of the Company with effect from 11 April 2012. At the date of his retirement, Mr Flood had a relevant interest
in 400,000 ordinary shares in the Company.
5. Company Secretary
Marion Rodwell is the Company Secretary of the Company. She was appointed Group General Counsel and Company Secretary in 2008.
Ms Rodwell’s experience and qualifications are set out on page 25 of this Annual Report.
6. Principal activities
During the financial year, the principal activity of the Group was the operation of the Myer department store business.
7. Review of operations
A detailed review of the Group’s operations for the financial year and the results of those operations is set out on pages 2 to 21
of this Annual Report.
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Directors’ Report continued
8. Business strategies and future developments
11. Dividends
A summary of the Group’s strategic plan is set out on page 2 of
this Annual Report.
The following dividends have been paid to shareholders during the
financial year:
Discussion of the Group’s business strategies and comments on
the likely developments in the Group’s operations are included
on pages 4 to 16.
More detailed information relating to the Group’s business strategies,
likely developments in the Group’s operations, the expected future
results of those operations, and the Group’s prospects for future
financial years has not been included in this Directors’ Report.
The directors believe that the inclusion of such information would
be likely to result in unreasonable prejudice to the Group.
2011 Final Dividend
Final dividend for the period ended 30 July 2011 of
11.5 cents per fully paid ordinary share, fully franked,
paid on 16 November 2011
2012 Interim Dividend
Interim dividend for the period ended 28 July 2012
of 10 cents per fully paid ordinary share, fully franked,
paid on 10 May 2012
$m
67,068
58,336
9. Significant changes in the state of affairs
The following significant changes to the Group’s state of affairs have
occurred since the commencement of the financial year:
›
›
a continuing challenging retail environment;
the appointment of Mr Paul McClintock AO as a new non-executive
director who will be appointed as Chairman of the Company from
10 October 2012, and the appointment of Mr Ian Morrice as a new
non-executive director;
the opening of our new stores in Mackay (Queensland) in October
2011 and Fountain Gate (Victoria) in September 2012 and the
closure of our stores in Forest Hill (Victoria) and Tuggeranong
(Australian Capital Territory) as the leases to those stores expired;
the first full year of sass & bide;
the first full year of operation of the Myer global sourcing offices
in Shanghai and Hong Kong; and
the continued strengthening of our merchandise offer with
the acquisition of a number of brands, including Trent Nathan,
Bauhaus and Grab.
›
›
›
›
These matters are discussed on pages 4 to 16 of this Annual Report.
Other than the above, there were no significant changes in the state
of affairs of the Group during the financial year or up to the date of
this Directors’ Report.
10. Matters subsequent to the end of the financial year
No matter or circumstance has arisen since the end of the financial
year which has not been dealt with in this Directors’ Report
or the Financial Report, that has significantly affected, or may
significantly affect:
(a) the Group’s operations in future financial years;
(b) the results of those operations in future financial years; and
(c) the Group’s state of affairs in future financial years.
In addition to the above dividends, since the end of the financial year,
the Board of Directors has determined a final fully franked dividend
of 9 cents per fully paid share, to be paid on 14 November 2012.
Further information regarding dividends is set out in the Financial
Report (at note 23).
12. Options and performance rights granted
over unissued shares
The Myer Equity Incentive Plan (MEIP) operates for selected senior
executives and has been in operation since December 2006. Under
the MEIP, the Company has granted eligible executives ‘options’ and
‘performance rights’ over unissued ordinary shares of the Company,
subject to certain vesting conditions. Each option or performance
right entitles the holder to acquire one ordinary fully paid share in the
Company (subject to the adjustments outlined below).
Options
No options were granted under the MEIP in the financial year ended
28 July 2012 and no options have been granted since the end of the year.
The following table sets out the details of options that have been
granted under the MEIP over unissued shares of the Company and
that remain on issue as at the date of this Directors’ Report:
Date options
granted
Expiry date
23 January 2008
21 December 2012
17 December 2008
24 October 2013
30 June 2009
24 October 2014
6 November 2009
31 December 2012
6 November 2009
31 December 2013
6 November 2009
31 December 2013
Closing balance
Exercise
price of
options
Number of
options
$3.00
$2.14
$2.34
$4.10
$5.74
$4.10
5,913,180
2,712,063
2,828,900
2,100,841
2,227,723
5,152,671
20,935,378
The number of shares that option holders are entitled to receive on
the exercise of an option, or the exercise price of those options, may
be adjusted in a manner consistent with the ASX Listing Rules if:
›
there is a pro-rata issue of shares to the Company’s shareholders
(such as a bonus issue); or
any reconstruction of the capital of the Company (such as a
subdivision or return of capital).
›
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If the manner of adjustment is not prescribed by the ASX Listing
Rules, the Board can determine the adjustment to ensure that
option holders are not advantaged or disadvantaged as a result
of any such capital action.
Further information about options granted under the MEIP is
included in the Remuneration Report.
On exercise of securities granted under the MEIP, shares may be
transferred from the Trust to the relevant participants or the Company
may issue fully paid ordinary shares directly to MEIP participants.
During the period, 481,205 shares were transferred from the
Trust to participants on the exercise of options under the MEIP, as
detailed below.
Performance rights
During the financial year, the Company granted 5,651,786 performance
rights. No performance rights have been granted since the end of the
financial year ended 28 July 2012.
Following a review of the Company’s remuneration structure in 2011, the
Board revised the Company’s long term incentive plan for selected senior
executives. During the financial year, 3,593,403 performance rights were
granted under the MEIP (instead of options) to selected senior executives.
In addition, Mr Brookes was granted 2,058,383 performance rights as
a long term incentive component of Mr Brookes’ remuneration
package when the Company renewed Mr Brookes’ contract as Myer’s
CEO and Managing Director. The performance rights were granted
to Mr Brookes following approval by shareholders at the Company’s
2011 AGM.
The following table sets out the details of performance rights that
have been granted under the MEIP and that remain on issue as at
the date of this Directors’ Report:
Date options
granted
1 December 2006
1 August 2007
17 December 2008
Exercise price
of options
Number of shares
provided on
exercise of options
$0.01
$1.27
$2.14
316,809
120,396
44,000
481,205
In addition, the following fully paid ordinary shares of the Company
were issued during the period ended 28 July 2012 on the exercise
of options held by two directors of the Company, Tom Flood and
Howard McDonald.
Date options
granted
1 August 2007
Exercise price
of options
$1.27
Number of shares
provided on
exercise of options
36,667
36,667
Date
performance
rights granted
21 October 2011
(grant to senior
executives)
9 December 2012
(grant to CEO)
Closing balance
Expiry date
Issue
price
Number of
performance
rights
Post balance date events
Since 28 July 2012:
› no further shares of the Company have been issued to, or
otherwise acquired by the Trust;
31 October 2014
31 October 2014
Nil
Nil
3,043,782
2,058,383
5,102,165
› no further shares of the Company held by the Trust have been
transferred to participants on the exercise of options granted under
the MEIP; and
› no further shares of the Company have been issued to MEIP
participants on the exercise of options granted under the MEIP.
A holder of a performance right may only participate in new issues of
securities of the Company if the performance right has been exercised,
if participation is permitted by its terms and the shares in respect of
the performance right have been allocated and transferred to the
performance right holder before the record date for determining
entitlements to the new issue.
Further information about performance rights granted under the
MEIP (including the performance conditions attached to those
performance rights) is included in the Remuneration Report.
13. Shares issued on the exercise of options and
performance rights
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Options
From time to time, the Company issues fully paid ordinary shares in the
Company to the Myer Equity Plans Trust (the Trust) for the purposes of
meeting anticipated exercises of securities granted under the MEIP.
During the period ended 28 July 2012, 200,000 fully paid ordinary
shares of the Company were issued to the Trust for this purpose.
To calculate the issue price of shares issued to the Trust, the Company
uses the 7-Day Volume Weighted Average Share Price of the
Company’s shares as at the close of trading on the date of issue.
The Trust held 25,200 fully paid ordinary shares of the Company
as at 29 July 2012.
Performance rights
No performance rights were eligible to vest or be exercised during
the financial year or up to the date of this Directors’ Report.
14. Remuneration Report
The Remuneration Report, which comprises part of this Directors’
Report, is presented separately on pages 44 to 59.
15. Indemnification and insurance of directors and officers
The Company’s Constitution requires the Company to indemnify
current and former directors, alternate directors, executive officers
and officers of the Company on a full indemnity basis and to the full
extent permitted by law against all liabilities incurred as an officer of
the Group, except to the extent covered by insurance. Further, the
Company’s Constitution permits the Company to maintain and pay
insurance premiums for director and officer liability insurance,
to the extent permitted by law.
Consistent with (and in addition to) the provisions in the Company’s
Constitution outlined above, the Company has also entered into deeds
of access, indemnity and insurance with all directors of the Company
which provide indemnities against losses incurred in their role as
directors, subject to certain exclusions, including to the extent that
Directors’ Report continued
such indemnity is prohibited by the Corporations Act or any other
applicable law. The deeds stipulate that the Company will meet the full
amount of any such liabilities, costs and expenses (including legal fees).
During the financial year the Company paid insurance premiums for
a directors’ and officers’ liability insurance contract that provides cover
for the current and former directors, alternate directors, secretaries and
executive officers of the Company and its subsidiaries. The directors
have not included details of the nature of the liabilities covered in
this contract or the amount of the premium paid, as disclosure is
prohibited under the terms of the contract.
16. Proceedings on behalf of the Company
No person has applied to the court under section 237 of the
Corporations Act for leave to bring proceedings on behalf of the
Company, or to intervene in any proceedings to which the Company
is a party, for the purpose of taking responsibility on behalf of the
Company for all or part of those proceedings.
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.
17. Environmental regulation
The Group is subject to and has complied with the reporting and
compliance requirements of both the Energy Efficiency Opportunities
Act 2006 (Cth) and the National Greenhouse and Energy Reporting Act
2007 (Cth) (NGER Act). No environmental breaches have been notified
to the Group by any government agency.
The Energy Efficiency Opportunities Act 2006 requires the Group to
assess its energy usage, including the identification, investigation
and evaluation of energy saving opportunities, and to report publicly
on the assessments undertaken, including action the Group intends
to take as a result of such assessments. As required under this Act,
the Group registered with the Department of Resources, Energy and
Tourism as a participant entity and is due to submit its fifth public
report for financial year 2012 by 31 December 2012. Additionally,
Myer is required to submit its second cycle Assessment Plan on
31 December 2012. The Group has published its EEO public reports on
the Investor Centre section of its website, www.myer.com.au/investor
(under Reporting – Sustainability).
The NGER Act requires the Group to report its annual greenhouse gas
emissions and energy use. The Group has implemented systems and
processes for the collection and calculation of the data required, and
is due to submit its fourth report to the Greenhouse and Energy Data
Officer by 31 October 2012, in compliance with the requirements of
the NGER Act.
18. Non-audit services
The Company may decide to employ its external auditor on
assignments additional to its statutory audit duties where the
auditor’s expertise and experience with the Company and/or
the Group are important.
Details of the amounts paid or payable to the auditor (PwC) for audit
and non-audit services provided during the year are set out in the
Financial Report (at note 25).
The Board has considered the position and, in accordance with advice
received from the Audit, Finance and Risk Committee, is satisfied that
the provision of the non-audit services is compatible with the general
standard of independence for auditors imposed by the Corporations
Act. The directors are satisfied that the provision of non-audit services
by the auditor did not compromise the auditor independence
requirements of the Corporations Act for the following reasons:
›
all non-audit services have been reviewed by the Audit, Finance
and Risk Committee to ensure they do not impact on the
impartiality and objectivity of the auditor; and
› none of the services undermine the general principles relating
to auditor independence as set out in APES 110 Code of Ethics for
Professional Accountants.
19. Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under
section 307C of the Corporations Act is set out on page 114 of this
Annual Report.
20. Rounding of amounts
The Group has taken advantage of ASIC Class Order 98/100 relating
to the ‘rounding off’ of amounts in the Directors’ Report. Amounts in
the Directors’ Report have been rounded off to the nearest thousand
dollars, or in certain cases, to the nearest dollar.
This Directors’ Report is made in accordance with a resolution
of directors.
Howard McDonald
Chairman
Melbourne, 10 October 2012
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remuneration report
The remuneration structure strives to achieve a balance between
retaining, motivating and rewarding individual performance and
ensuring a robust linkage to overall Company performance and
shareholder returns.
This year’s outcomes
In terms of the year just completed, the performance of individual
executives was good in difficult market conditions.
Base salaries were reviewed and generally any increases applied were
modest, particularly in light of the market comparator roles.
The executives performed well against the targets set and most of
their KPIs were met; however, given the overall profit achieved, no STI
payments were made.
The reward potential of the short-term incentive plan was significantly
impacted by the prevailing economic conditions and their impact
on the retail sector. Executives were set challenging KPIs including
achieving budgeted Net Profit After Tax (NPAT) to drive performance
for shareholders.
In terms of long-term performance, the previous plans that may have
resulted in options vesting were tested this year. These options are
unlikely to vest as the EPS target is unlikely to be achieved.
Given the combination of outcomes, for the current year, on all three
aspects of executive reward the Board has determined some structural
changes to reward for this year. Details are provided in this report.
Human Resources and Remuneration Committee
and Nomination Committee
The Board reviews annually its role, responsibilities and performance
to ensure that the Company continues to maintain and improve
its governance standards. During 2012, the Board, on the
recommendation of the Nomination and Remuneration Committee,
resolved to separate the Nomination and Remuneration Committee
into two Committees comprising the Nomination Committee and the
Human Resources and Remuneration Committee. As a consequence,
revised Charters of responsibility were developed for each Committee.
Each Committee charter is available on the Company’s website
www.myer.com.au.
The Chair of the Board, Mr Howard McDonald, chairs the Nomination
Committee. The role of the Nomination Committee is to support and
advise the Board on the composition of the Board and matters relating
to Board governance and performance. The other members of
the Committee are Mr Rupert Myer, Ms Anne Brennan and
Ms Chris Froggatt.
The Human Resources and Remuneration Committee is chaired by
Ms Chris Froggatt. The other members of the Committee are Messrs.
Howard McDonald, Rupert Myer and Ms Anne Brennan.
This Remuneration Report sets out the strategy, framework and
conditions of employment for Myer Holdings Limited Non-Executive
Directors, Executive Directors and other Key Management Personnel
(KMP) of the Group and the Company. The report also details the
role and accountability of the Board and the relevant Committees
established to support the Board on these matters.
Contents
This report provides details on the following matters:
› Overview
› Human Resources and Remuneration Committee
and Nomination Committee
Executive remuneration
› Directors and executives disclosed in this report
› Use of remuneration consultants
›
› Non-Executive Director Remuneration
›
›
›
Remuneration and company performance
Future focus for Executive reward
The Remuneration of Executive and Non-Executive Directors
and KMPs
Overview
During 2011–12, the Board continued to review Myer’s approach
to executive remuneration. This review was initiated with a view to
ensuring strong and effective ongoing alignment between executive
remuneration, Company performance and shareholder returns.
The Board is committed to a direct, transparent linkage between
performance and reward so that executive reward outcomes are
dependent on delivering results to shareholders. We have a strong
and talented executive team. The remuneration approach is designed
to ensure these individuals are retained and motivated to drive the
future success of our Company.
The approach is regularly reviewed to ensure it meets the needs of
the business and shareholders. At the same time, we are cognisant
of the practices of other Australian companies and competitors. This
review process is essential to keep our remuneration offering relevant
and competitive.
As a result of the most recent review, we are considering changes to
reward mechanisms to ensure appropriate rewards for performance
in what remains an uncertain and volatile market. For some executives
we will be reducing the portion of their total annual remuneration
based on the short-term incentive and increasing the fixed
remuneration to better balance overall reward structure in line with
market practices.
External benchmarking has identified that a number of the Key
Management Personnel’s base salary had fallen below the market
levels the Board targets for reward for this group. It is important to our
long-term business sustainability that we retain key talent by ensuring
all Myer executives are being remunerated at market rates in a highly
competitive market. The Board commissioned external benchmarking
undertaken by Mercer (Australia) Pty Ltd (Mercer) for CEO and KMP
roles, which included data from relevant Australian listed companies.
The review found the KMP base salary was below the market median.
The CEO’s total remuneration is positioned at the level targeted by the
Board in his renewed contract established in 2011.
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The Human Resources and Remuneration Committee (Committee)
has the responsibility to make recommendations to the Board on:
› Non-Executive Director fees;
›
executive remuneration (directors and other executives) including
specific recommendations on remuneration packages and other
terms of employment for the Chairman, Non-Executive Directors,
the CEO and other senior executives; and
the over-arching remuneration framework including the policy,
strategy and practices for fixed reward and both short and long
term incentive plans.
›
The Committee has been established under rule 8.15 of the
Constitution of the Company.
The objective is to ensure that remuneration policies and structures
are fair and competitive and aligned with the long-term strategic
interests of the Group and the creation of shareholder value. In
doing this, the Committee seeks advice from independent advisors
particularly on matters such as market trends and comparative terms
and conditions relevant for consideration to Myer.
Further information on the role of the Committee, its membership
and meetings held throughout the year are set out in the Corporate
Governance Statement and the Directors’ Report.
The Committee has regard to the following policy objectives:
to ensure that the Company’s remuneration structures are
›
equitable and aligned with the long-term interests of the Company
and its shareholders;
to attract and retain skilled executives;
to structure short and long-term incentives that are challenging
and linked to the creation of sustainable shareholder returns; and
to ensure that any termination benefits are justified and appropriate.
›
›
›
The Committee must at all times have regard to, and notify the Board
as appropriate, of all legal and regulatory requirements, including any
shareholder approvals required in connection with remuneration matters.
The Committee Chair or if they are not available, a Committee
member, will attend the Annual General Meeting and make
themselves available to answer any questions from shareholders
about the Committee’s activities or, if appropriate, the Company’s
remuneration arrangements.
Directors and executives disclosed in this report
Name
Position
non-executive Directors
H McDonald
Chairman, Independent Non-Executive Director1
A Brennan
T Flood
Independent Non-Executive Director
Independent Non-Executive Director
(retired 11 April 2012)2
C Froggatt
Independent Non-Executive Director
P Hay
R Myer
Independent Non-Executive Director
Independent Non-Executive Director3
executive Director
B Brookes
CEO and Managing Director
Name
Position
other Key Management personnel
M Ashby
Chief Financial Officer
M Goddard
G Travers
N Abboud
P Winn
Executive General Manager Retail Development
(appointed 13 March 2012)
Executive General Manager Business Services
and Office of the CEO
Executive General Manager Stores4
Executive General Manager Merchandise5
Changes since the end of the reporting period
Paul McClintock AO was appointed as an Independent Non-Executive
Director on 8 August 2012 and will be appointed Chairman on
10 October 2012. Ian Morrice was appointed as an Independent
Non-Executive Director on 8 August 2012.
1
H McDonald will retire on 10 October 2012. H McDonald was appointed a director
on 6 November 2006 and Chairman on 4 August 2009.
2 T Flood was appointed a director on 26 July 2007.
3 R Myer was appointed Deputy Chairman on 8 August 2012.
4 N Abboud ceased employment on 18 September 2012.
5 P Winn ceased employment on 8 December 2011.
Use of remuneration consultants
The Board directly engages external advisors to provide input to
the process of reviewing Non-Executive Director, Executive Director
and executive remuneration. During 2012, Mercer was engaged by
the Committee to provide relevant market comparator information
and a recommendation in regard to the level of Non-Executive
Director fees including board and committee fees. To ensure that
Mercer, in making the remuneration recommendation, would be
free from undue influence of the Non-Executive Directors to whom
the recommendation relates, remuneration recommendations were
provided by Mercer directly to the Chair of the Human Resources
and Remuneration Committee and were not provided to a person
who is neither a director nor a member of the Human Resources and
Remuneration Committee. Mercer also provided a statement to the
Committee that the advice had been prepared free of undue influence
from the Non-Executive Directors to whom the advice relates.
The Board is satisfied that remuneration recommendations were made
free from undue influence. All decisions were made independently
using the information provided and having careful regard to Myer’s
position, strategic objectives and current requirements. The reasons
for the Board being satisfied include the fact that:
› procedures were implemented to ensure that remuneration
recommendations were provided by Mercer directly to the Chair;
› Mercer did not provide remuneration recommendations to a
person who is neither a director nor a member of the Human
Resources and Remuneration Committee in accordance with the
Corporations Act 2001; and
› Mercer provided a statement that remuneration recommendations
were free of undue influence from the Non-Executive Directors to
whom the remuneration recommendation relates.
Myer provides superannuation arrangements for employees who
exercise choice in participating in a Myer sponsored superannuation
option through Myer’s participation in the Mercer Public Master Trust.
Myer also engaged Mercer’s Retirement Risk and Finance business unit
to provide advice in relation to the Myer Super Plan. This advice was
commissioned by and provided to Myer executives. The fee payable
for this advice was $8,000.
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Mercer also provided access to the Mercer database for ad hoc
enquiries from Myer generally, other than for advice on KMP. The
fee payable in relation to those ad hoc enquiries was $4,497.
Base annual fees
Chair
The total fee paid to Mercer during the year inclusive of remuneration
advice, superannuation and database services, was $48,522.
Executive remuneration
The remuneration structure seeks to ensure that executive
rewards deliver an appropriate balance between shareholder
and executive interests.
The remuneration structure provides a mix of fixed and variable
(or ‘at risk’) pay, and a blend of short and longer term incentives.
As executives gain seniority within the Group, the balance of this
mix shifts to a higher proportion of ‘at risk’ pay.
In order to align shareholder and executive interests and attract
and retain talent, the remuneration structure is designed to:
encourage a performance-based workplace culture and
›
recognition for contribution to meeting business objectives;
› have profit as a core component of reward design;
›
through long term incentive, focus on sustained growth in
shareholder returns, consisting of dividends and growth in
earnings per share and share price;
› deliver consistent financial returns as well as focusing the
executives on key non-financial drivers of value;
attract and retain high-calibre executives; and
reward capability and performance.
›
›
As a general guide, the Company targets a median fixed remuneration
position having regard to a comparator group of companies and a
slightly higher position for incentive reward both short and long term
against the same group.
Non-Executive Director remuneration
Fees and payments to Non-Executive Directors reflect the demands
and responsibilities of those directors. The Board, on recommendation
of the Committee, reviews Non-Executive Directors’ fees and payments
at least once a year. As part of that review the Board considers the
advice of independent remuneration consultants in relation to:
› Chairman’s fees and payments;
› Non-Executive Directors’ fees and payments; and
› payments made in relation to the Chair of committees or for other
specific tasks that may be performed by Directors.
Non-Executive Directors’ fees are determined within an aggregate
directors’ fee pool limit as approved from time to time by Myer
shareholders in the general meeting. The maximum aggregate sum
excludes special and additional remuneration for special exertions and
additional services performed by a director as determined appropriate
by the Board but includes superannuation as is required by the ASX
Listing Rules as well as committee fees that follow. The Constitution
also makes provision for Myer to pay all expenses incurred by directors
in attending meetings and carrying out their duties. The current
maximum aggregate fee pool limit is $2,150,000 per annum. The
aggregate fee pool limit has not changed since the Group was listed in
November 2009. Non-Executive Directors who chair a committee also
receive additional yearly fees for their role in serving that committee.
The following yearly fees currently apply:
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Other Non-Executive Directors
Additional annual fees
Deputy Chair
Audit, Finance and Risk Committee – Chair
Audit, Finance and Risk Committee – member
Human Resources and Remuneration
Committee – Chair
Human Resources and Remuneration
Committee – member
Nomination Committee – Chair
Nomination Committee – member
$500,000 1
$150,000
$30,000 2
$30,000
–
$15,000
–
–
–
1 The new fee to apply for the Chair will be $400,000 effective from October 2012.
2 The new fee applicable to the role of Deputy Chairman will apply from August 2012.
During 2012, the Board considered a report from independent advisers
(Mercer) in relation to Non-Executive Director fees generally, and
decided not to change the base or additional fees.
Non-Executive Directors do not receive performance-based pay.
However, they are able to purchase shares in the Company, which can
be acquired on market during approved ‘windows’ for share trading
consistent with the Company’s Guidelines for Dealing in Securities.
Non-Executive Directors are not entitled to any additional
remuneration upon retirement. Superannuation contributions
required by legislation are made from the fee paid to directors
and fall within the aggregate fee pool limit.
In August 2012, Myer announced a range of changes to Board
membership including the appointment of Mr Paul McClintock AO
as Chairman from 10 October 2012. Mr McClintock will be paid a fee
of $400,000 per annum. Mr Rupert Myer AM was also appointed
Deputy Chairman effective 8 August 2012. As part of that appointment
a new additional fee was established for the role of Deputy Chairman
of $30,000.
Nomination of directors
The responsibilities of the Nomination Committee in relation to the
nomination of directors are as follows:
›
review and recommend to the Board the size and composition
of the Board, including review of Board succession plans and the
succession of the Chairman and CEO;
review and recommend to the Board the criteria for Board
membership, including assessment of necessary and desirable
competencies of Board members;
review and recommend to the Board membership of the Board,
including recommendations for the appointment and re-election
of directors, and where necessary propose candidates for
consideration by the Board;
assist the Board as required in relation to the performance
evaluation of the Board, its committees and individual directors; and
review and make recommendations in relation to any corporate
governance issues as requested by the Board from time to time.
›
›
›
›
Remuneration Report continued
In exercising its responsibilities the Committee assists the Board as
required to identify individuals who are qualified to become Board
members (including in respect of any Executive Directors), considering
the skills, experience, expertise and personal qualities that will best
complement Board effectiveness and the capability of the candidate
to devote the necessary time and commitment to the role. This
involves a consideration of matters such as other Board or executive
appointments, potential conflicts of interest, and independence.
Short Term Incentive (STI)
Short-term variable reward for the CEO and KMP are determined based
on the achievement of established key performance indicators (KPIs).
These KPIs are set by reference to the Company’s overall performance
and individual performance objectives established for the year. In
the case of the CEO, these objectives are set by the Chairman and
endorsed by the Board. KPIs for the KMP are set by the CEO and
endorsed by the Committee for approval by the Board.
The Committee also reviews the Board Charter on a periodic basis and
recommends any amendments for Board consideration and ensures that
an effective induction process is in place for any newly appointed directors.
Remuneration and Company performance
The Company’s remuneration principles and policies have been
applied during the year to ensure remuneration outcomes for
executives reflect the prevailing market conditions, the need to attract
and retain talented executives and Company performance.
The executive pay and reward framework has three components:
›
Total Fixed Compensation (TFC) – base pay and benefits, including
superannuation;
Short Term Incentives (STI) through participation in the Myer
Annual Incentive Plan (MAIP); and
Long Term Incentives (LTI) through participation in the Myer Equity
Incentive Plan (MEIP).
›
›
The combination of these three components comprises an executive’s
total remuneration reflected by percentage in the following charts:
20%1
40%
26%
CEO
40%
KMP
44%
30%
Base
Salary
STI
LTI
1 The target LTI remuneration for the CEO reflects one third of the $2.7 million
allocation of performance rights approved in 2011 assessed over a three
year period.
Total Fixed Compensation (TFC)
TFC was structured as a total fixed employment compensation
package, made up of base salary, superannuation and other benefits.
Base salary levels for each executive were set with reference to the
market conditions and the scope and nature of each individual’s role,
the experience of the individual and performance in that role.
Base salaries were reviewed during the year and generally any
increases applied were modest, particularly in light of market
comparator rates. Superannuation provided to KMP remained
unchanged, as were other benefits.
Given the prevailing economic conditions and their impact on the
retail sector generally, the Board has considered the performance
of the Myer management team in relation to each of these areas of
focus. While the returns generated from the business were down on
expectations they were reflective of the general retail environment.
The Board has, however, determined that given the overall profit
achieved they did not warrant the payment of the STI for the year.
Myer’s short term incentive plan (Myer Annual Incentive Plan – MAIP)
operates on an annual basis subject to Board review and approval.
The FY2012 MAIP applied to all eligible management team members
including the KMP, subject to certain conditions and performance criteria
being met which are reviewed and approved annually by the Board.
The current quantum of an executive’s MAIP reward varies depending
on the specific role, with a potential reward of 100% of base pay at the
CEO level for ‘at target’ performance, up to 70% for Executive General
Managers and 50% for Group General Managers, through to 10% for ‘at
target’ performance for store or merchandise management level roles.
If the Group achieves the pre-determined performance targets set by
the Board, a short term incentive will be paid.
MAIP rewards are generally payable in October each year after the final
determination and release of audited full-year results. The MAIP criteria
applied in FY2012 used an NPAT target as a threshold to ensure that an
STI reward is only available when profit is consistent with or in excess
of the business plan approved by the Board.
Each executive level has a target MAIP reward depending on their
accountabilities and their impact on the Group or business unit
performance. The target reward is the maximum total STI payment for
achieving target objectives. A minimum threshold is also set, below
which no STI reward is provided. The Board retains the discretion to
provide an award greater than the target maximum reward where
performance against the performance criteria warrants such a reward.
Each year, the Committee considers the appropriate performance
criteria and recommends any payout level under the MAIP, if targets
are met, for Board approval.
The Committee is responsible for assessing whether the performance
criteria are met. To help make this assessment, the Committee
receives reports on performance from management. All proposed
MAIP payments are verified by internal audit review prior to
any payment being made. The Committee has the discretion to
recommend to the Board an adjustment to short term incentives in
light of unexpected or unintended circumstances. This discretion has
not been applied this year despite the factors impacting the overall
result being largely macro in nature and affecting many retail and
other businesses generally.
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The following graph shows the average individual total MAIP payment
(as a % of each individual’s target MAIP, where 100% is the target) for
the KMP group and its relationship to Group Earnings Before Interest,
Taxes, Depreciation and Amortisation (EBITDA) and NPAT outcomes
over three financial years.
EBITDA
NPAT
MAIP
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$400
$300
$200
$100
$0
60%
40%
20%
0%
%
o
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t
a
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t
I
M
A
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o
s
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n
o
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e
x
e
c
u
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i
v
e
s
i
FY2010
FY2011
FY2012
Given the balance sought by the Board to meet all the remuneration
objectives set and the non-payment of any short term incentive since
2010, the Committee has considered revised metrics for FY2013 and
has determined that NPAT, Sales and Omni-channel will form the
basis of FY2013 metrics for short-term incentive for the KMP and
certain other senior executives (Executive General Managers and
Group General Managers). Details are provided in the section on
Future focus for executive reward on page 49.
Long Term Incentive (LTI)
An allocation of performance rights for each KMP through the
Myer Equity Incentive Plan (MEIP) is determined as part of the Total
Remuneration for an executive role. The Committee determines
LTI awards by assessing the quantum required to provide a market
competitive Total Remuneration reward structure including base
salary and STI amounts.
The purpose of the LTI is to focus management’s efforts on the
achievement of sustainable long-term growth and success of the
Company and to align senior executive rewards with sustained
shareholder returns through metrics such as Earnings Per Share
performance and relative Total Shareholder Return performance hurdles.
Myer’s long term incentive plan operates for selected senior executives
and has been in operation since December 2006. Under the MEIP,
eligible senior executives have in the past been granted options, each
option entitling them to acquire one fully paid ordinary share in the
Company, subject to the satisfaction of vesting terms and conditions
determined by the Board.
In 2011, the Board reviewed the long term incentives provided to
the senior executives as part of its annual review of the remuneration
structure. As part of that review, the Board approved a change from the
grant of options to the grant of ‘performance rights’ under the MEIP.
The performance conditions established for the MEIP are designed
to create and deliver sustained shareholder returns and to reward
executives when shareholders benefit.
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0.500
0.375
0.250
0.125
0
s
e
v
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x
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s
o
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d
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P
I
A
M
t
e
g
r
a
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f
o
%
FY2011
FY2012
Under the MEIP, performance rights are granted to each participant.
Each performance right is a conditional right to one ordinary Myer
share upon satisfaction of the vesting conditions established for
the plan over the three-year performance period established.
The performance right will therefore not provide any value to the
holder between the grant years until the end of the financial year
in which the plan vests and then only if the performance conditions
$400
are achieved. The Committee regards it as an important principle
that performance rights will be forfeited by the individual in specific
circumstances, including if they resign from the Company within
$300
the three-year performance period. Performance rights do not carry
entitlements to ordinary dividends or other shareholder rights. Dividends
are not received by the executives during the performance period.
s
n
o
$200
Upon vesting, performance rights are automatically exercised (at no
cost to the participant) in accordance with the terms of the grant and
Myer’s Guidelines for Dealing in Securities.
M
$
i
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$100
LTI awards only vest to the extent that performance conditions
are met. The awards are governed by the MEIP rules. Any Board
discretion, such as vesting in the event of a change of control, is clearly
prescribed under the Plan rules. Options or rights under the MEIP may
$0
vest prior to the vesting date on a change of control or on a pro-rata
basis, at the discretion of the Board.
FY2010
The following table shows the Company’s annual performance against
a range of metrics since 2010. The table shows the impact of Company
performance on shareholder returns, taking into account dividend
payments, share price changes, and other capital adjustments during
the period.
Basic earnings
per share (cents)1
NPAT (millions)2
Dividends
(cents per share)
Share price at
beginning of year3
Share price at
end of year
31 July
2010
30 July
2011
28 July
2012
29.0
$168.7
27.9
$162.7
23.9
$139.3
22.0
22.5
19.0
$4.10
$3.45
$2.31
$3.45
$2.31
$1.83
1 2010 Basic earnings per share is calculated using proforma NPAT and divided by
the closing shares on issue. 2011 and 2012 Basic earnings per share is calculated
using normalised Net Profit After Tax and divided by the weighted average shares.
2 For details of 2011 and 2012 NPAT refer to page 5.
3 2010 share price at the beginning of the year is the share price at listing.
A further long-term incentive in the form of retention incentive was
introduced for selected executives other than the CEO at the time of
the listing of Myer in 2009. These incentives were targeted at retaining
those executives for an extended period after the listing which
expired on 1 November 2011 and have now been paid where the
conditions attached to the payment including continuous service and
achievement of individual performance objectives were satisfied. The
retention arrangements were in the form of deferred cash incentives
and were conditional on continued employment with the Group and
meeting certain individual performance conditions as established by
the Company. The retention arrangements involved payments over a
staggered period with the final component of the retention incentive
paid on 1 November 2011.
Remuneration Report continued
Generally, the amount paid to an individual over the two-year
retention period represented approximately one year of base pay as at
the date the retention incentives were granted. Of the executives who
were eligible for retention incentives, 80% remained with the Company
for the full duration of the retention period. There are no further cash
retention arrangements currently in place.
The remuneration of the CEO is governed by his contract of
employment. At the 2011 Annual General Meeting, shareholders
approved a one off allocation of performance rights valued at
$2.7 million as part of the contract. The rights will vest subject to
meeting a range of objectives including: a total shareholder return
hurdle (TSR), a CAGR EPS hurdle (described on page 53 and 54 of
this report), a service hurdle and the delivery of a Board endorsed
succession plan for the CEO role.
Future focus for executive reward
The Board has considered each element of KMP reward having regard
to the experience and outcomes achieved since its last review during
2010. In September 2012, the Board has also considered advice from
its independent advisor Mercer on the relative position of KMP at Myer
to relevant comparator companies.
Overall, the Board has determined that notwithstanding the impact
of a range of factors on business results since 2010 it is clear that
the current mix of reward for the KMP has not delivered the desired
outcome the Board had hoped for in ensuring attraction and
retention, alignment with shareholder interests and a reasonable
likelihood of achievement in the prevailing circumstances.
Specifically, the base rates for KMP have at best remained static
compared to overall market comparators and in some cases also
remains below our target objective of a median market level. Short
term incentive structures remain above market level as a percentage
of Total Fixed Compensation; however, due to high targets set as a
gate to performance in challenging circumstances, have failed to
deliver any reward at all for two consecutive years. A consequence
of the combination of these factors is that our base rate for KMP
generally remains too low and our STI percentage to target is too
high. Long term incentive through the various Myer Equity Incentive
Plans established since 2009 have also failed to deliver equity-based
outcomes to the KMP against the performance targets initially set
at the time of grant. Those plans that remain in place are also not
projected to deliver outcomes as intended due to the considerably
changed environment for retailers generally.
While in isolation the Board may have determined that having one
element of KMP reward “underperforming” was sustainable in the
short-term, having each element consistently underperforming its
intended outcome is unsustainable and not in the interests of either
the KMP or shareholders.
Given this the Board has considered the combination of factors
governing each reward component and the interaction between
elements. Consequently a number of changes to executive reward
will be made for the FY2013 year.
Base Pay – base pay for some KMP, other than the CEO and Non-
Executive Directors, will be adjusted to more clearly position the KMP
at the market level the Board consider appropriate. This will result in
larger base adjustments during FY2013 than may otherwise have
been applied.
Short Term Incentive – a revised Executive Incentive Plan (EIP) will
apply in FY2013 to the KMP and certain other senior executives. In
FY2012 a single metric, NPAT, applied to annual incentive. For FY2013
three metrics will be considered to determine any incentive payment.
NPAT will remain the primary metric weighted at 40% of the total
potential reward, sales growth will be the second metric also weighted
at 40% and achievement of various objectives we have established
for our omni-channel development weighted at 20% will be the
final metric.
The Board has also determined that given the increases to apply to
base pay, that the percentage of TFC applying to KMP for annual bonus
payments will be reduced from 70% to 60% for FY2013. This rate also
better reflects market comparator rates for annual incentives at this level.
The bonus percentage applying to the CEO will remain unchanged at
100% of TFC. This rate was determined as part of the review of the CEO
contract during 2011 and remains appropriate for the duration of the
contract term. The revised metrics of NPAT, Sales and Omni-channel will
be applied to the CEO annual incentive in FY2013 as well.
Long Term Incentive – a revised Executive Equity Incentive Plan
(EEIP) will also be applied to the KMP for the grant of performance
rights under the FY2013 plan. The EEIP will continue to have two
performance hurdles applied. Relative TSR performance against index
of comparator companies will be used to determine vesting of 50% of
the rights after the conclusion of the three-year performance period.
The second metric to apply will be the compound annual growth rate
in earnings per share (CAGR EPS) for Myer shares over the same three-
year performance period. The CAGR EPS metric will be altered for the
FY2013 plan to reflect the more challenging environment for retail
businesses and the circumstances faced by Myer. The range of CAGR
EPS used in the last plan was a range between 5% and 10%, with
zero vesting below 5% and 100% vesting at 10%. This range has been
altered for the FY2013 plan to apply between 2% and 7% CAGR EPS
with zero vesting below 2% and 100% vesting at 7% CAGR EPS.
The Board considers the changes to be appropriate, balancing the
objectives set for the KMP, the need to create a plan with a reasonable
likelihood of vesting of some reward and the interests of shareholders
in the prevailing retail environment.
No changes will apply to the equity grant made to the CEO in 2011.
The terms of that one-off grant, including performance metrics agreed
at that time, will remain as originally determined.
The Board considers the changes made to each of the elements of
reward for the KMP to be appropriate and a better reflection of the
overall reward objectives, relevant market comparators and in the
interests of shareholders.
Service agreements
On appointment to the Board, all Non-Executive Directors sign a letter
of appointment. The letter summarises the Board policies and terms
relevant to the office of director (including remuneration).
Remuneration and other terms of employment for the CEO and the other
executive KMPs are also formalised in service agreements. Each of these
agreements prescribes a base or fixed remuneration amount, a short
term incentive reward subject to the MAIP, other benefits including salary
sacrificing for vehicle leasing and, when eligible, long term incentive
reward through participation in the MEIP. Other key provisions of the
agreements relating to remuneration are summarised below.
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The termination provisions for the executive KMP are described below:
Name
B Brookes
Contract type
Fixed term –
ending on 31 Aug 2014
M Ashby
Rolling Contract
M Goddard3
Rolling Contract
G Travers
N Abboud4
Rolling Contract
Rolling Contract
Base salary including
superannuation1
$
Termination notice
period initiated
by KMP
Termination notice
period initiated
by the Company
Termination payment
where initiated
by the Company
1,800,000
6 months
12 months
12 months2
600,000
475,000
600,000
485,000
3 months
3 months
3 months
3 months
6 months
6 months
6 months
6 months
6 months
6 months
6 months
6 months
1 Base salaries (TFC) quoted as at 28 July 2012.
2
B Brookes’ contract provides that, subject to certain performance conditions being satisfied, if the contract runs through to term (31 August 2014) a cessation payment of
12 months average base TFC over the last three years may be made. B Brookes’ LTI offer contained in his contract of employment provides for entitlements on termination
in certain circumstances. These provisions were approved by shareholders at the 2011 Annual General Meeting.
3 M Goddard was appointed 13 March 2012.
4 N Abboud ceased employment on 18 September 2012.
The remuneration of Non-Executive and Executive Directors and KMPs
The following tables have been prepared in accordance with section 300A of the Corporations Act 2001 (Cth). They show details of the nature
and amount of each element of the remuneration paid or awarded for services provided in this period. In the case of share-based payments and
retention incentives, the amounts disclosed reflect the amount expensed during the year in accordance with relevant accounting standards
and accordingly this does not necessarily reflect the amount actually paid to the individual during the year, which may be more or less than the
amount shown in the table.
The following table shows the remuneration amounts recorded in the financial statements in the period.
Short-term employee benefits
Post
employ-
ment
benefits
Long-term benefits
Total
remu-
neration
expense
Share-
based
payments
Cash
salary &
fees1
$
Bonus /
incentive
STI2
$
Non-
monetary
benefits
$
Super-
annuation4
$
Other3
$
Subtotal
$
Name
Long
service
leave
$
Retention
bonus5
$
Term-
ination
& other
payments
$
Excluding
share-
based
payments6
$
Options7
$
Total
remu-
neration
expense
$
non-executive Directors
H McDonald
2012
2011
A Brennan
2012
2011
T Flood8
2012
2011
C Froggatt
2012
2011
P Hay
2012
2011
R Myer
2012
2011
484,225
484,753
164,225
164,801
106,708
136,500
150,150
93,176
136,500
136,500
136,500
145,056
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
executive Director
B Brookes
2012
2011
1,738,700
1,629,652
–
–
131,776
133,357
2
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0
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–
–
–
–
–
–
–
–
–
–
–
–
–
–
15,775
500,000
15,247
500,000
15,775
180,000
15,199
180,000
10,554
117,262
13,500
150,000
14,850
165,000
9,215
102,391
13,500
150,000
13,500
150,000
13,500
150,000
14,346
159,402
–
–
–
–
–
–
–
–
–
–
–
–
46,200
1,916,676
84,623
50,048
1,813,057
47,772
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
500,000
500,000
–
500,000
3,187
503,187
180,000
180,000
–
–
180,000
180,000
117,262
150,000
–
117,262
1,195
151,195
165,000
102,391
150,000
150,000
150,000
159,402
–
–
–
–
–
–
165,000
102,391
150,000
150,000
150,000
159,402
–
2,001,299
1,083,421
3,084,720
–
1,860,829
(947,404)
913,425
Remuneration Report continued
Short-term employee benefits
Post
employ-
ment
benefits
Long-term benefits
Total
remu-
neration
expense
Share-
based
payments
Cash
salary &
fees1
$
Bonus /
incentive
STI2
$
Non-
monetary
benefits
$
Super-
annuation4
$
Other3
$
Subtotal
$
Name
Long
service
leave
$
Retention
bonus5
$
Term-
ination
& other
payments
$
Excluding
share-
based
payments6
$
Options7
$
Total
remu-
neration
expense
$
Key Management personnel
M Ashby
2012
2011
M Goddard9
2012
2011
G Travers
2012
2011
N Abboud10
2012
2011
P Winn11
2012
2011
511,231
466,273
139,159
–
566,725
544,753
451,250
444,753
313,138
536,553
totals 2012 4,898,511
totals 2011 4,782,770
–
–
–
–
–
–
–
–
–
–
–
–
2,442
1,856
103
–
2,080
1,856
2,080
33,567
917
1,856
139,398
172,492
–
–
–
–
–
–
–
–
–
–
–
–
47,935
561,608
22,561
41,250
48,727
516,856
8,401
207,500
4,780
144,042
–
–
979
–
–
–
15,775
584,580
27,995
41,250
15,247
561,856
15,806
207,500
25,000
478,330
22,729
41,250
15,247
493,567
11,412
207,500
6,932
320,987
(14,499)
41,250
23,447
561,856
8,510
207,500
–
–
–
–
–
–
–
–
–
–
625,419
71,944
697,363
732,757
(74,290)
658,467
145,021
–
–
–
145,021
–
653,825
45,203
699,028
785,162
(133,824)
651,338
542,309
84,969
627,278
712,479
(85,233)
627,246
347,738
(127,021)
220,717
777,866
(68,960)
708,906
230,576 5,268,485
144,388
165,000
– 5,577,873 1,158,516
6,736,389
233,723 5,188,985
91,901
830,000
– 6,110,886 (1,305,329) 4,805,557
1 Cash salary includes short-term compensated absences, consideration for vehicle salary sacrifice and fees including allowances for Committee ‘chair’ responsibilities for
A Brennan and C Froggatt.
2 STI payments relate to program performance and conditions for the year they were earned, not the year of actual payment. Due to performance, no STI payments were
earned in the FY2012 year under the MAIP.
3 Other payments for B Brookes include payments for rental subsidy and certain other services in relation to provision of accommodation. Other payments also includes
Company-paid FBT expenses.
4 There were no post-employment benefits paid other than superannuation.
5 N Abboud, M Ashby, G Travers, and P Winn had retention incentives incorporated into their employment contracts in September 2009 to apply after the listing of Myer. The
amount shown represents the proportion of the total bonus payable that has been expensed in the current financial year in accordance with Accounting Standards. These
incentives were paid only in the event the executive meets the conditions of the retention arrangements, which included continuing service and meeting performance
standards as established by the Company. The incentives were paid in two parts totalling $500,000 (for N Abboud, M Ashby, G Travers and P Winn), the first payment of
$170,000 was made 1 November 2010 and the second payment of $330,000 was made on 1 November 2011. The amount described reflects the amount amortised in FY2012.
6 Total remuneration expense excluding share-based payments reflects the accounting expense treatment of base salary, any bonuses or short term incentive payments,
Fringe Benefit Tax expenses, superannuation, the balance of long service leave accruals, retention payments and any termination benefits in the reporting period.
7 Remuneration in relation to share options represents the amount expensed for the period based on valuations determined under AASB 2 Share-based Payments. This expense
is based on the fair value at grant date, and reflects expectations of the number of options expected to vest. Where expectations change in relation to vesting, adjustment
is made in the current period to reflect this change, which in FY2011 resulted in the write-back of prior period expenses, and therefore a negative remuneration amount for
B Brookes and the KMP. As the equity grant may fully vest, partially vest or not vest at all, the benefit that the KMP ultimately realises is likely to be different to the amount
disclosed in a particular year. The amount disclosed does not represent cash payments received in the period, and if vesting conditions are not met may result in reversal
of the remuneration amount in a future period. There were no other equity-settled share-based payments and there were no cash-settled share-based payments.
8 T Flood retired as a director on 11 April 2012.
9 M Goddard was appointed on 13 March 2012.
10 N Abboud ceased employment with Myer on 18 September 2012.
11 P Winn ceased employment with Myer on 8 December 2011.
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STI and LTI remuneration
The table below sets out the relative proportion of remuneration for the Executive Director and other KMP that is linked to performance and the
proportion which is fixed.
Total
remuneration
expense
Total fixed remuneration
At risk – STI
At risk – LTI1
Name
$
$
%
$
%
$
%
$
%
Share options
Retention incentive
executive Director
B Brookes
2012
2011
3,084,720
2,001,299
913,425
1,860,829
Key Management personnel
M Ashby
2012
2011
M Goddard2
2012
2011
G Travers
2012
2011
N Abboud3
2012
2011
P Winn4
2012
2011
697,363
584,169
658,467
525,257
145,021
145,021
–
–
699,028
612,575
651,338
577,662
627,278
501,059
627,246
504,979
220,717
306,488
708,906
570,366
totals 2012
5,474,127
4,150,611
totals 2011
3,559,382
4,039,093
65
204
84
80
100
0
88
89
80
81
139
80
76
113
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0
0
0
0
0
0
0
0
0
0
0
0
0
1,083,421
(947,404)
35
(104)
–
–
71,944
(74,290)
10
(11)
41,250
207,500
–
–
45,203
(133,824)
84,969
(85,233)
(127,021)
(68,960)
1,158,516
0
0
6
–
–
41,250
(21)
207,500
13
(14)
(58)
(9)
21
41,250
207,500
41,250
207,500
165,000
0 (1,309,711)
(36)
830,000
0
0
6
31
0
0
6
32
7
33
19
29
3
23
1 LTI was provided through the issue of options to individual executives under the MEIP. LTI allotments have been independently valued as at the date the option was granted
to the executive. The proportions shown represent the amount expensed for the period under AASB 2 Share-based Payments as a proportion of total remuneration expense
for the period. This amount also includes the current expense in relation to the retention bonuses. It does not reflect a cash payment to the executive under MEIP.
2 M Goddard was appointed 13 March 2012.
3 N Abboud ceased employment with Myer on 18 September 2012.
4 P Winn ceased employment with Myer on 8 December 2011.
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Long Term Incentives – 2012 grant
In 2011, the Board approved a long term incentive plan, which is designed to encourage Myer’s senior executives to create and deliver sustained
shareholder returns and to reward executives. The plan involves the grant of performance rights under the MEIP, which provide the executive
with the right to acquire a share in the Company if certain performance conditions are satisfied.
The number of performance rights that vest will depend on how well Myer has performed during the performance period. For superior
performance, 100 percent of the performance rights will vest. Only a percentage of performance rights will vest for performance below that level.
If Myer does not achieve certain minimum thresholds then all the performance rights will lapse and no performance rights can vest.
The following table summarises the 2012 performance rights grants made to Key Management Personnel in October 2011.
Value of
options at
grant date
$
Valuation
of each
option at
grant date
$
Number
of options
granted
Exercise
price
$
141,000
141,000
171,000
171,000
171,000
171,000
1.67
1.08
1.67
1.08
1.67
1.08
84,431
130,555
102,395
158,333
102,395
158,333
Nil
Nil
Nil
Nil
Nil
Nil
Applicable
hurdles
EPS Hurdle
TSR Hurdle
EPS Hurdle
TSR Hurdle
EPS Hurdle
TSR Hurdle
Potential time of vesting
End of perf. period – July 2014
End of perf. period – July 2014
End of perf. period – July 2014
End of perf. period – July 2014
End of perf. period – July 2014
End of perf. period – July 2014
KMP
N Abboud1
N Abboud1
M Ashby
M Ashby
G Travers
G Travers
1 N Abboud ceased employment with Myer on 18 September 2012 and all options lapsed.
The plan involved the grant of performance rights under the MEIP, which provide the executive with the right to acquire a share in the Company
if certain performance conditions are satisfied. The performance rights were granted to the executives participating in the MEIP at no cost and
there is no cost to those executives if the performance rights are exercised.
Before the performance rights can be exercised, certain performance conditions need to be satisfied. These performance conditions are based
on Myer’s performance over a three-year period. If Myer performs better than its identified peer companies and certain minimum thresholds
over that period are met then shareholders will benefit and executives will benefit as well by being provided with shares in the Company when
the performance rights are exercised. The number of performance rights that vest will depend on how well Myer has performed during the
performance period. For superior performance, 100 percent of the performance rights will vest. Only a percentage of performance rights will
vest for performance below that level. If Myer does not achieve certain minimum thresholds then all the performance rights will lapse and no
performance rights can vest. If a portion of the performance rights do not vest following the end of the performance period, then that portion
of the performance rights that are unvested will lapse immediately and there will be no retesting at a later date.
During the performance period, participants will not be able to sell, assign or otherwise deal in their performance rights. They will not be entitled
to any dividends or distributions or exercise any voting rights. Generally, the performance rights will lapse on cessation of employment if they have
not been exercised (whether vested or unvested before that time). Subject to applicable law, the Board has the power to allow an executive to keep
some, or all of their performance rights on cessation (although the discretion is only likely to be exercised, if at all, in exceptional circumstances).
FY2012 MEIP performance conditions
Other than for the CEO, who has additional hurdles as noted below, there are two performance conditions that apply to the FY2012 performance
rights based on EPS and TSR performance. The performance rights are allocated on an equal weighting of 50 percent to each of the EPS Hurdle
and the TSR Hurdle which are described below and these will be assessed separately, meaning that both hurdles do not need to be satisfied for
any of an executive’s performance rights to vest. This means that it is possible for some or all of the performance rights with an EPS Hurdle to
vest, while none of the performance rights with a TSR Hurdle vest (and vice versa).
The EPS Hurdle
The EPS Hurdle seeks to align the interests of the holders of performance rights with the financial performance of the Company. It does this by
providing that the EPS performance rights can only be exercised if the Company achieves the EPS Hurdle that has been set by the Board. The EPS
Hurdle is based on a minimum achieved compound annual growth rate (CAGR) in the Company’s fully diluted EPS over the performance period.
The base number will be the Company’s fully diluted EPS calculated on the Company’s final audited results for the financial year ended 30 July
2011. The CAGR from this base will be calculated on the Company’s fully diluted EPS using the Company’s final audited results for the financial
year ending 26 July 2014. The resulting CAGR will be used to determine the level of vesting for the performance rights with an EPS Hurdle.
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The table below sets out the percentage of performance rights that will vest depending on the Company’s performance against the EPS Hurdle
over the performance period, with a linear progression through the various threshold points.
EPS Hurdle rate
(compound annual growth
over the performance period)
Less than 5 percent
At 5 percent
From 5 to 10 percent pro-rata vesting of rights
Proportion of EPS performance rights that will vest*
Nil
50 percent of the number of EPS performance rights
Pro-rata with a linear progression between 50 percent and up to 100 percent of the number
of EPS performance rights
e.g. at 7 percent compound annual growth rate, 70 percent of EPS performance rights vest
10 percent or greater
100 percent of the number of EPS performance rights
*The number of performance rights will be rounded down to the nearest whole number.
For the FY2013 grant of performance rights the Board has considered the CAGR EPS Hurdle with regard to the operating plan and financial
objectives and the CAGR EPS hurdle will be adjusted to reflect these parameters with CAGR EPS annual rates being altered to 2 percent to
7 percent.
The TSR Hurdle
The TSR Hurdle also seeks to align the interests of the holders of performance rights with the interests of the Company’s shareholders. It does
this by providing that the performance rights will only be exercised if the TSR for shares compares favourably to the TSR for investments in a peer
group of companies. The Board has established a peer group of companies against which the Company’s TSR performance will be compared.
TSR is a measure of the return or growth in the value of a share to a shareholder over a performance period on a share held for that period. It
is the annualised return to shareholders, including all share price changes and reinvestment of distributions (including dividends). This figure
is calculated pre-tax and combines share price and distributions (including dividends) paid to show the total return to the shareholder. The
calculation assumes that the distribution is reinvested into shares on the day it is paid and at the close price on that day.
TSR was chosen as a performance measure after the Board sought independent remuneration advice from Mercer during the 2011 financial year.
TSR was considered a relevant market-based performance measure used by many ASX listed companies.
The Board also considered the TSR Hurdle and determined that the current metric remains relevant for FY2013.
The TSR peer group
The table below sets out the peer group for the FY2012 MEIP offer. If any of these organisations cease to exist as entities at any time during the
performance period, the size of the peer group may be maintained by additions determined by the Board.
In selecting the TSR peer group, the Board sought independent advice from Mercer. The composition of the group reflects measures of relative
sales and market capitalisation as well as industry type that is complementary in nature to the Company’s business. It includes companies that
are consumer facing, have a service orientation and/or are retail in nature with either product or services provided as part of their core offer.
Entity – peer group
Air New Zealand Ltd
AP Eagers Ltd
Australian Pharmaceutical Industries Ltd
Automotive Holdings Group Ltd
Bendigo and Adelaide Bank Ltd
Billabong International Ltd
Coca-Cola Amatil Ltd
Harvey Norman Holdings Ltd
Pacific Brands Ltd
Tatts Group Ltd
Woolworths Ltd
Breville Group Ltd
David Jones Ltd
JB Hi-Fi Ltd
Premier Investments Ltd
Oroton Group Ltd
Wesfarmers Ltd
STW Communications Group Ltd
Flight Centre Ltd
Metcash Ltd
Tabcorp Holdings Ltd
Specialty Fashion Group Ltd
GUD Holdings Ltd
As a consequence of the takeover of Foster’s Group Ltd by SAB Miller in December 2011, Foster’s Group Ltd ceased to be part of the peer
group for the purposes of LTI awards made in FY2012, leaving 23 comparator companies. Under the terms of the plan if any of the peer group
organisations cease to exist as entities at any time during the performance period, the size of the peer group may be maintained by additions
determined by the Myer Board. The Board considered the organisations in the peer group and determined that the size of the peer group (23)
did not warrant any additions.
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Remuneration Report continued
The table below sets out the percentage of the performance rights subject to a TSR Hurdle that will vest depending on the Company’s
performance against the TSR Hurdle over the performance period. For any of these performance rights to vest, the Company’s TSR performance
needs to be at least at the 50th percentile of the peer group for the performance period.
TSR percentile ranking
Proportion of TSR performance rights that will vest
Below 50th
From 50th to 75th
75th and above
Nil
Pro-rata with a linear progression between 50 percent and up to 100 percent of the number
of TSR performance rights
100 percent
The performance rights offered to the CEO in 2011 under the MEIP have the same EPS Hurdle and TSR Hurdle although there will be two
additional hurdles that the CEO must satisfy before any of these performance rights can be exercised, regardless of performance against the TSR
and EPS Hurdles. These additional hurdles require the CEO to develop and deliver a succession plan for the role of the CEO by the conclusion of
the performance period and to comply with the terms of his employment contract.
The Board has established a framework with the CEO that sets out the Board’s expectations on delivery of a succession plan. This includes regular
milestone reviews to assess progress against the succession plan.
If the succession plan is delivered before the expiry of the performance period and the Board elects to terminate the CEO’s new contract early,
the CEO may retain a pro-rated number of performance rights based on completed months of service of the contract period. Any pro-rata
performance rights earned by the CEO must be retained until the expiry of the full performance period of three years, unless, subject to Board
approval, there is a request by the CEO to exercise a proportion of his rights to meet any tax liability from the vesting of the rights.
Testing the TSR and EPS Hurdles
Following the end of the performance period for performance rights and after the Company has lodged its full year audited financial results for
2014 with the ASX, the Board will test the performance conditions and will determine how many performance rights (if any) are eligible to vest.
There will be no retesting of the performance conditions at a later date if they are not fully satisfied.
Historical grants
The Company’s LTI plan previously involved the grant of either options or performance rights under the MEIP. Under the terms of those plans,
senior executives can only exercise their options or performance rights once the vesting conditions are satisfied. Executives who then wish to
exercise any of their vested options must pay the relevant exercise price after which shares in the Company are provided to them. In the case
of performance rights, if vesting conditions are met, the right automatically vests and a share in the Company is provided to them at no cost.
Option or rights holders do not have the right to participate in any securities issues made by the Company although, consistent with the ASX
Listing Rules; there is provision for adjustments in the event of certain capital actions made by the Company.
Since 2006, six offers of options and one offer of performance rights have been made to selected executives under the MEIP. Details of options
granted under the MEIP that remain unvested as at 28 July 2012 are set out in the table below.
Financial
year of offer
2008
2009
2009
2009
2009
2009
2010 (CEO EPS options)
2010 (CEO share price options)
2010 (Snr Executive EPS options)
2011
2012 (CEO Performance EPS rights)
2012 (CEO Performance TSR rights)
2012 (Snr Executive EPS rights)
2012 (Snr Executive TSR rights)
total
Number
of unvested
options1
Exercise
price
$
Grant date
Value per
option at
grant date
$
Vesting date
(if option holder
remains employed by a
Myer Group company)
Expiry date
23 Jan 2008
2,241,505
17 Dec 2008
403,000
17 Dec 2008
2,165,063
30 Jun 2009
30 Jun 2009
30 Jun 2009
6 Nov 2009
6 Nov 2009
6 Nov 2009
9 Dec 2011
9 Dec 2011
21 Oct 2011
21 Oct 2011
190,800
190,800
2,772,300
5,152,671
2,227,723
2,521,009
808,383
1,250,000
1,297,858
2,006,646
23,227,758
3.00
2.14
2.14
2.34
2.34
2.34
4.10
5.74
4.10
0.37
0.43
0.43
0.49
0.49
0.49
1.31
1.01
1.19
no grants were made
Nil
Nil
Nil
Nil
1.67
1.08
1.67
1.08
31 Jul 2012
21 Dec 2012
31 Jul 2012
24 Oct 2013
31 Jul 2013
24 Oct 2013
31 Jul 2012
24 Oct 2014
31 Jul 2013
24 Oct 2014
31 Jul 2014
24 Oct 2014
End of perf. periods
31 Dec 2013
End of perf. periods
31 Dec 2013
End of perf. period
31 Dec 2012
End of perf. period
31 Oct 2014
End of perf. period
31 Oct 2014
End of perf. period
31 Oct 2014
End of perf. period
31 Oct 2014
1
In addition to the unvested options noted above, 4,428,275 options that have vested remain unexercised with a total of 27,656,033 options still on issue.
Refer note 35 for details.
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2011 grants
No grants were made in financial year 2011.
2010 grants Tranche A to D (CEO only)
›
In November 2009, the Board approved an additional grant of options under the MEIP to Mr Brookes to the value of $9,000,000 (valued as at
the grant date of 6 November 2009). The options were granted in four tranches, at no cost to Mr Brookes, and formed the long term incentive
component of Mr Brookes’ remuneration under his then new long term incentive arrangements. The independent valuation of each tranche
of these options at the time of grant and the resulting number of options granted is shown in the following table. In total Mr Brookes was
granted 7,380,394 options under these LTI arrangements.
Three-quarters of the options are subject to a performance hurdle based on Myer’s fully diluted earnings per share (EPS) (EPS Options) and
one quarter of the options are subject to a performance hurdle based on Myer’s share price (Share Price Options). Vesting of the options is
also subject to a service condition – vesting will be subject to Mr Brookes remaining employed by the Group until the end of the relevant
performance period. Each option is an entitlement to one share upon payment of the exercise price. For the EPS Options, the exercise price
is $4.10 per option and for the Share Price Options, the exercise price $5.74 per option. Options which do not satisfy the vesting conditions
will lapse on the expiry date.
The Board considered that a combination of EPS and share price performance were the most appropriate hurdles for these options. In
particular, the EPS Hurdle measures compound annual growth (CAGR) in EPS and was chosen based on a review of then market practice
and the then lack of a valid peer group against which to measure the Group’s performance on other hurdles such as Total Shareholder Return
(TSR). Share price growth was selected to encourage Mr Brookes to focus on delivering results that lead to an improvement in the share price
of Myer above the IPO price.
›
›
Performance hurdles for 2010 grants – Tranche A to D (CEO only)
Set out below is a summary of performance hurdles and performance periods applicable to each component of the CEO grant
Financial
year of grant
2010
Tranche A
2010
Tranche B
2010
Tranche C
2010
Tranche D
Value of
options at
rant date
$
5,400,000
Valuation
of each
option at
grant date
$
Number
of options
granted
Exercise
price
$
Applicable
hurdles
Potential
time of vesting
1.31
4,122,137
4.10
EPS Hurdle1
1,350,000
1.31
1,030,534
4.10
1,800,000
1.01
1,782,178
5.74
450,000
1.01
445,545
5.74
EPS Hurdle1 and
extended
12 month
service condition
Share Price
Hurdle2
Share Price Hurdle3
and extended
12 month
service condition
End of First Performance Period.
Retesting at end of Second
Performance Period
End of Second Performance Period
End of First Performance Period.
Retesting at end of Second
Performance Period
End of Second Performance Period
1 For both 2010 Tranche A and B options, performance against the EPS Hurdle has been measured at the end of the First Performance Period. The EPS Hurdle was not met
at the end of the First Performance Period, the Tranche A and B options will be retested at the end of the Second Performance Period, measuring the Company’s annual
compound growth in EPS over the Second Performance Period applying the vesting schedule.
2 For 2010 Tranche C options, performance against the Share Price Hurdle has been measured at the end of the First Performance Period. The Share Price Hurdle was not
met at the end of the First Performance Period, the 2010 Tranche C options will be retested at the end of the Second Performance Period.
3 For 2010 D options, performance against the Share Price Hurdle will be measured at the end of the Second Performance Period.
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Remuneration Report continued
Performance periods for the CEO’s 2010 options are as follows:
›
›
the First Performance Period is the three financial years ending July 2012; and
the Second Performance Period is the four financial years ending July 2013.
The vesting schedule and performance hurdles for the CEO’s 2010 EPS options are as follows:
Compound annual growth rate in EPS over the performance period
Proportion of EPS options that will vest
At 10 percent
33.33 percent
Between 10 percent and 12.5 percent
Pro-rata vesting between 33.33 percent and 66.66 percent
At 12.5 percent
Between 12.5 percent and 15 percent
At or above 15 percent
66.66 percent
Pro-rata vesting between 66.66 percent and 100 percent
100 percent
The base EPS used for the purpose of determining the compound annual growth rate is 23.5 cents, representing FY2009 fully diluted EPS,
adjusted to a proforma basis consistent with the capital structure of the Group post IPO.
The Share Price Options hurdle will be satisfied if the market price of the Company’s shares exceeds $5.74 at the end of the relevant performance
period. For these purposes, the market price of the Company’s shares will be the volume weighted average price of the shares quoted on the
ASX over one calendar month prior to the expiry of the relevant performance period.
Assessment
At the end of each performance period, the Committee reviews the Company’s audited financial results and the results of the other performance
measures and assesses performance against each measure to determine the percentage of the options (if any) that will vest.
As at the date of this report these options are not likely to vest as the EPS target is unlikely to be achieved.
2010 Tranche E – offered to senior executives (other than the CEO) in November 2009
In November 2009, the Board approved a grant of options under MEIP to selected individuals to the value of $4,100,000 (valued as at the grant
date of 6 November 2009). These options were independently valued at $1.19 each as at the date of grant, resulting in a grant of 3,445,379
options in total. These options were subject to satisfaction of an EPS performance hurdle based on a compound annual growth rate in EPS of
10% over the performance period ended 28 July 2012. These options will lapse to the extent the EPS performance hurdle is not satisfied. The EPS
hurdle was selected as an appropriate measure to create and deliver sustainable shareholder returns.
As with other options granted under the MEIP, each option entitles the holder to acquire one fully paid ordinary share in the Company, subject to
the satisfaction of the relevant performance conditions and the payment of the exercise price. For the 2010 Tranche E Options the exercise price
is $4.10. The performance period for these options expired on 28 July 2012 and the performance metrics are tested on the audited results of the
three-year performance period. As at the date of this report these options are not likely to vest as the EPS target is unlikely to be achieved.
The following table summarises the 2010 Tranche E grants made to Key Management Personnel in November 2009.
Value of
options at
grant date
$
500,000
500,000
500,000
500,000
Valuation
of each
option at
grant date
$
Number
of options
granted
Exercise
price
$
1.19
1.19
1.19
1.19
420,168
420,168
420,168
420,168
4.10
4.10
4.10
4.10
Applicable
hurdles
EPS Hurdle
EPS Hurdle
EPS Hurdle
EPS Hurdle
Potential time of vesting
End of perf. period – July 2012
End of perf. period – July 2012
End of perf. period – July 2012
End of perf. period – July 2012
KMP
M Ashby
G Travers
N Abboud1
P Winn2
1 N Abboud ceased employment with Myer on 18 September 2012 and all options will lapse in accordance with the terms of the relevant plan.
2 P Winn ceased employment with Myer on 8 December 2011 and all options lapsed.
The applicable performance period was the three financial years for the Company ending July 2012.
The calculation of the compound annual growth rate in EPS is based on growth from the proforma FY2009 fully diluted EPS of 23.5 cents,
consistent with 2010 Tranche A and 2010 Tranche B grants to the CEO described above.
Details of options over ordinary shares in the Company currently provided as remuneration and granted during the current year to each director
and each of KMP are set out on page 59 of this report. Further information on the MEIP is set out in note 35 to the financial statements.
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Remuneration Report continued
Summary of options granted, vested and lapsed for the reporting period
Name
Number
of options
granted during
the period
Directors of Myer Holdings limited
Value of
options
at grant date
Number of
options vested
during the period2
Number of
options lapsed
during the period
Value at
lapsed date
$
H McDonald
B Brookes
A Brennan
T Flood
C Froggatt
P Hay
R Myer
–
2,058,383
–
2,700,000
–
–
–
–
–
–
–
–
–
–
342,000
–
342,000
282,000
–
Key Management personnel of the Company
M Ashby
M Goddard
G Travers
N Abboud
P Winn1
260,728
–
260,728
214,986
–
26,667
–
–
10,000
–
–
–
333,333
–
58,668
35,868
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,320,168
368,475
1 P Winn ceased employment with Myer on 8 December 2011.
The assessed fair value at grant date of options granted to KMP is allocated equally over the period from grant date to vesting date, and the
amount is included in the remuneration tables above. Fair values at grant date are independently determined using an option pricing model
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.
Shares provided on exercise of options
Details of ordinary shares in the Company provided as a result of the exercise of options to each director of the Company and KMPs are set out below.
Name
Directors of Myer Holdings limited
H McDonald
B Brookes
A Brennan
T Flood
C Froggatt
P Hay
R Myer
Key Management personnel of the Company
N Abboud
M Ashby
M Goddard
G Travers
P Winn
Number of ordinary
shares provided on
exercise of options
during the period1
Value at
exercise date2
$
26,667
–
–
10,000
–
–
–
5,868
–
–
58,668
–
21,600
–
–
8,500
–
–
–
12,088
–
–
120,856
–
1
The value at exercise date of options that were granted in prior periods as part of remuneration and were exercised during the year has been determined as the intrinsic
value of the options at that date. This represents the excess of market value of the share acquired over the exercise price paid.
2 The number of shares provided on exercise of options are on a one for one basis.
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The amounts paid per ordinary share by directors and other KMP on the exercise of options at the date of exercise were as follows:
Financial
year of grant
2008
2007
Number of ordinary
shares provided on
exercise of options
during the period
36,667
64,536
Amount paid
per share
on exercise
of options
$
1.27
0.01
No amounts are unpaid on any shares provided on the exercise of options.
Details of remuneration: bonuses and share-based compensation benefits
For each bonus, grant of options or grant of performance rights included in this report, the percentage of the available bonus or grant that was
paid, or that vested, in the financial year, and the percentage and value that was forfeited because the person did not meet the service and
performance criteria is set out below. Bonuses are payable in the year following the period in which they are earned. Options and performance
rights vest provided the vesting conditions or performance hurdles are met (see pages 53 to 57). No options or performance rights will vest if
the conditions (either service or performance) are not satisfied, therefore the minimum value of the options or performance rights yet to vest is
nil. The maximum value of the options or performance rights yet to vest has been determined as the amount of the grant date fair value of the
options or performance rights that is yet to be expensed.
STI / Bonus1
Share-based compensation benefits (options)
Achieved
2012
%
Forfeited
2012
%
–
Target
value
2012
$
–
Forfeited
value
2012
$
–
–
–
–
–
–
–
–
–
100
1,800,000
1,800,000
–
100
100
100
–
–
420,000
420,000
95,000
420,000
95,000
420,000
100
339,500
339,500
100
–
–
Name
H McDonald
B Brookes
T Flood
M Ashby
M Goddard2
G Travers
N Abboud3
P Winn4
Year
granted
Vested
%
Forfeited
%
The remaining
financial years
in which
options
may vest
Maximum
total value
of grant yet
to vest
$
2008
2012
2010
2007
2008
2012
2010
2008
–
2012
2010
2007
2012
2010
2009
2008
2007
2010
2009
2008
100
–
–
100
100
–
–
67
–
–
–
100
–
–
–
67
100
–
–
67
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100
100
100
2012
2015
2013–2014
2011
2012
2015
2013
2012–2013
–
2015
2013
2012
2015
2013
2014–2015
2012–2013
2012
2013
2014–2015
2012–2013
–
1,041,124
118,812
–
–
125,797
–
–
–
125,797
–
–
103,727
–
72,733
–
–
–
–
–
The % of STIs achieved and forfeited for 2012 are based on performance against ’at target’ performance as explained on page 47.
1
2 M Goddard was appointed on 13 March 2012.
3 N Abboud ceased employment with Myer on 18 September 2012 and all options will lapse in accordance with the terms of the relevant plan.
4 P Winn ceased employment with Myer on 8 December 2011.
Loans to directors and executives
Information on any loans to directors and executives, including amounts, interest rates and repayment terms are set out in note 24(c)
to the financial statements.
Dealing in securities
Under the Company’s Guidelines for Dealing in Securities, directors and senior executives are prohibited from entering into hedging
arrangements with respect to the Company’s securities. A copy of the Guidelines for Dealing in Securities is available on the Myer website.
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FinanCial report
for the period ended 28 July 2012
Myer Holdings Limited
ABN 14 119 085 602
Contents
Financial Report
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the financial statements
Directors’ declaration
Independent auditor’s report
Auditor’s independence declaration
60
61
62
63
64
65
66
111
112
114
These financial statements are the consolidated financial statements of the consolidated
entity consisting of Myer Holdings Limited and its subsidiaries. The financial statements
are presented in the Australian currency.
Myer Holdings Limited is a company limited by shares, incorporated and domiciled in
Australia. Its registered office is:
Myer Holdings Limited
Level 7, 800 Collins Street
Docklands VIC 3008
A description of the nature of the consolidated entity’s operations and its principal
activities is included in the Directors’ Report on pages 39 to 43, which is not part of these
financial statements.
The financial statements were authorised for issue by the directors on 10 October 2012.
The directors have the power to amend and reissue the financial statements.
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Consolidated income statement
for the period ended 28 July 2012
total sales value (excluding GSt)
Concession sales
Sale of goods (excluding GSt)
Sales revenue deferred under customer loyalty program
revenue from sale of goods (excluding GSt)
Other operating revenue (excluding finance revenue)
Cost of goods sold
Other income
operating gross profit
Selling expenses
Administration expenses
Store closure and restructuring costs
Write-back of fixed lease rental increases provision
Profit on sale of financial asset
earnings before interest and tax before non-recurring
Ipo transaction costs and related charges
Finance revenue
Finance costs
net finance costs
profit before income tax before non-recurring Ipo transaction costs and related charges
Income tax expense
profit for the period before non-recurring Ipo transaction costs and related charges
Initial Public Offering (IPO) transaction costs and other non-recurring IPO related charges (after tax)
profit for the period
profit is attributable to:
Owners of Myer Holdings Limited
Non-controlling interests
earnings per share for profit from continuing operations
attributable to the ordinary equity holders of the Company:
Basic earnings per share
Diluted earnings per share
The above consolidated income statement should be read in conjunction with the accompanying notes.
Notes
5
5
5
5
5
6
6
5
5
6
7
6
2012
52 weeks
$’000
2011
52 weeks
$’000
3,119,119
3,158,774
(467,207)
(451,867)
2,651,912
2,706,907
(39,212)
(40,104)
2,612,700
2,666,803
113,451
109,529
(1,464,574)
(1,551,112)
26,844
46,410
1,288,421
1,271,630
(756,035)
(302,413)
(18,450)
23,109
(717,063)
(295,633)
(10,476)
–
–
11,680
234,632
260,138
4,499
(34,263)
(29,764)
204,868
(63,801)
141,067
–
141,067
3,266
(38,747)
(35,481)
224,657
(61,470)
163,187
(3,522)
159,665
139,365
159,724
1,702
(59)
141,067
159,665
Cents
Cents
23.9
23.7
27.4
27.3
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Consolidated statement of comprehensive income
for the period ended 28 July 2012
profit for the period
other comprehensive income
Cash flow hedges
Actuarial gains/(losses) on retirement benefit obligation
Exchange differences on translation of foreign operations
Income tax relating to components of other comprehensive income
other comprehensive income for the period, net of tax
total comprehensive income for the period
Total comprehensive income for the period is attributable to:
Owners of Myer Holdings Limited
Non-controlling interests
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
Notes
22(b)
22(b)
7(d)
2012
52 weeks
$’000
2011
52 weeks
$’000
141,067
159,665
(509)
–
66
(535)
(978)
(2,893)
183
(85)
106
(2,689)
140,089
156,976
138,317
1,772
140,089
157,121
(145)
156,976
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Consolidated balance sheet
as at 28 July 2012
ASSetS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Total current assets
non-current assets
Derivative financial instruments
Property, plant and equipment
Deferred tax assets
Intangible assets
Other
Total non-current assets
total assets
lIABIlItIeS
Current liabilities
Trade and other payables
Derivative financial instruments
Current tax liabilities
Provisions
Other
Total current liabilities
non-current liabilities
Borrowings
Derivative financial instruments
Provisions
Deferred income
Other
Total non-current liabilities
total liabilities
net assets
eQuIty
Contributed equity
Retained profits/(losses)
Reserves
Capital and reserves attributable to owners of Myer Holdings Limited
Non-controlling interests
total equity
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
Notes
2012
$’000
2011
$’000
8
9
10
11
12
13
14
15
11
16
17
11
19
20
21
22
22
38,058
17,712
385,702
441,472
–
515,482
21,115
936,149
3,975
37,274
24,385
381,261
442,920
258
535,139
47,380
943,880
4,554
1,476,721
1,531,211
1,918,193
1,974,132
397,137
2,490
15,191
85,957
2,094
502,869
421,193
1,785
15,439
69,821
29,406
537,644
412,202
7,476
33,897
90,586
4,199
548,360
419,591
–
49,391
62,448
33,012
564,442
1,040,513
1,112,802
877,680
861,330
519,776
363,357
(14,800)
868,333
9,347
877,680
519,479
349,396
(15,120)
853,755
7,575
861,330
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Consolidated statement of changes in equity
for the period ended 28 July 2012
Balance as at 31 July 2010
total comprehensive income
for the period
transactions with owners in their
capacity as owners:
Contributions of equity, net of transaction costs
Put option to acquire non-controlling interest
Non-controlling interest on acquisition
of subsidiary
Dividends provided for or paid
Employee share options
Balance as at 30 July 2011
total comprehensive income
for the period
transactions with owners in their
capacity as owners:
Contributions of equity, net of transaction costs
Dividends provided for or paid
Employee share options
Contributed
equity
$’000
Notes
Reserves
$’000
Retained
earnings
$’000
Non-
controlling
interests
$’000
Total
$’000
517,128
19,842
320,470
–
857,440
–
(2,872)
159,907
(59)
156,976
21
22
23
22
21
23
22
2,351
–
–
–
–
–
(31,650)
–
–
(440)
–
–
–
(130,981)
–
2,351
(32,090)
(130,981)
519,479
(15,120)
349,396
–
–
2,351
(31,650)
7,634
–
–
7,634
7,575
7,634
(130,981)
(440)
(153,086)
861,330
–
(1,048)
139,365
1,772
140,089
297
–
–
297
–
–
1,368
1,368
–
(125,404)
–
(125,404)
–
–
–
–
297
(125,404)
1,368
(123,739)
Balance as at 28 July 2012
519,776
(14,800)
363,357
9,347
877,680
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
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Consolidated statement of cash flows
for the period ended 28 July 2012
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax)
Payments to suppliers and employees (inclusive of goods and services tax)
Other income
Interest paid
Tax paid
net cash inflow from operating activities
Cash flows from investing activities
Proceeds from sale of financial asset
Payments for property, plant and equipment
Acquisition of subsidiary
Acquisition of brands
Payments for intangible assets
Proceeds from sale of software
Lease incentives received
Return of capital received from investment
Interest received
net cash (outflow) inflow from investing activities
Cash flows from financing activities
Proceeds from borrowings net of transaction costs
Repayments of employee share loans
Proceeds from the issue of shares
Payment of costs of Initial Public Offering
Dividends paid
net cash (outflow) from financing activities
net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial period
Cash and cash equivalents at end of period
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
2012
52 weeks
$’000
2011
52 weeks
$’000
Notes
3,038,360
3,095,328
(2,805,122)
(2,865,443)
233,238
229,885
36,208
(32,169)
(57,363)
54,200
(38,190)
(18,844)
32
179,914
227,051
–
13,280
(48,715)
(136,542)
–
(40,374)
(8,413)
(10,189)
2,696
16,750
–
1,462
(2,070)
(7,633)
–
6,109
4,404
2,176
(46,409)
(160,650)
(115)
3
297
(7,502)
(2,500)
115
2,351
(3,946)
23
(125,404)
(130,981)
(132,721)
(134,961)
784
37,274
38,058
(68,560)
105,834
37,274
8
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5
notes to the financial statements
for the period ended 28 July 2012
Contents of the notes to the financial statements
1. Summary of significant accounting policies
2. Financial risk management
3. Critical accounting estimates and judgements
4. Segment information
5. Revenue and other income
6. Expenses
7.
Income tax expense
8. Current assets – Cash and cash equivalents
9. Current assets – Trade and other receivables
10. Current assets – Inventories
11. Derivative financial instruments
12. Non-current assets – Property, plant and equipment
13. Non-current assets – Deferred tax assets
14. Non-current assets – Intangible assets
15. Current liabilities – Trade and other payables
16. Current liabilities – Provisions
17. Borrowings
18. Non-current liabilities – Deferred tax liabilities
19. Non-current liabilities – Provisions
20. Non-current liabilities – Other
21. Contributed equity
22. Reserves and retained profits
23. Dividends
24. Key Management Personnel disclosures
25. Remuneration of auditors
26. Contingencies
27. Commitments
28. Related party transactions
29. Subsidiaries and transactions with non-controlling interests
30. Deed of cross guarantee
31. Events occurring after the reporting period
32. Reconciliation of profit after income tax to net cash inflow from operating activities
33. Parent entity financial information
34. Earnings per share
35. Share-based payments
67
75
80
80
81
82
83
84
84
85
86
87
88
89
90
90
91
92
93
94
94
95
97
97
100
101
101
101
102
102
104
105
105
106
107
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1. Summary of significant accounting policies
The principal accounting policies adopted in the preparation of these
consolidated financial statements are set out below. These policies
have been consistently applied to all the periods presented, unless
otherwise stated. The financial statements are for the consolidated
entity consisting of Myer Holdings Limited and its subsidiaries.
(a) 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 and the
Corporations Act 2001. Myer Holdings Limited is a for-profit entity
for the purpose of preparing the financial statements.
Compliance with IFRSs
The consolidated financial statements of Myer Holdings Limited Group
also comply with International Financial Reporting Standards (IFRS)
as issued by the International Accounting Standards Board (IASB).
Early adoption of standards
The Group has not elected to apply any pronouncements before
their operative date in the annual reporting period beginning
31 July 2011.
Historical cost convention
These financial statements have been prepared under the historical
cost convention, as modified by the revaluation of available for sale
financial assets and financial assets and liabilities (including derivative
instruments) at fair value through profit or loss.
Critical accounting estimates
The preparation of financial statements in conformity with accounting
standards requires the use of certain critical accounting estimates. It
also requires management to exercise its judgement in the process
of applying the Group’s accounting policies. The areas involving
a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial statements,
are disclosed in note 3.
(b) Principles of consolidation
(i) Subsidiaries
The consolidated financial statements incorporate the assets and
liabilities of all subsidiaries of Myer Holdings Limited (‘’Company’’ or
‘’parent entity’’) as at 28 July 2012 and the results of all subsidiaries
for the period then ended. Myer Holdings Limited and its subsidiaries
together are referred to in this financial report as the Group or the
consolidated entity.
Subsidiaries are all those entities (including special purpose entities)
over which the Group has the power to govern the financial and
operating policies, generally accompanying a shareholding of
more than one half of the voting rights. The existence and effect
of potential voting rights that are currently exercisable or convertible
are considered when assessing whether the Company controls
another entity.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are deconsolidated from the date that
control ceases.
The acquisition method of accounting is used to account for business
combinations by the Group (refer note 1(h)).
Intercompany transactions, balances and unrealised gains on
transactions between Group companies are eliminated. Unrealised
losses are also eliminated unless the transaction provides evidence
of the impairment of the asset transferred. Accounting policies
of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are
shown separately in the consolidated income statement, statement of
comprehensive income, statement of changes in equity and balance
sheet respectively.
(ii) Employee Share Trust
The Group has formed a trust to administer the Group’s employee
share scheme. This trust is consolidated, as the substance of the
relationship is that the trust is controlled by the Group.
Shares in Myer Holdings Limited held by the Myer Equity Plans Trust
are disclosed as treasury shares and deducted from contributed equity.
(c) Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision maker.
The chief operating decision maker, who is responsible for allocating
resources and assessing performance of the operating segments, has
been identified as the Chief Executive Officer.
(d) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities
are measured using the currency of the primary economic environment
in which the entity operates (‘the functional currency’). The consolidated
financial statements are presented in Australian dollars, which is Myer
Holdings Limited’s functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional
currency 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 year end
exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in profit or loss, except when they
are deferred in equity as qualifying cash flow hedges and qualifying
net investment hedges or are attributable to part of the
net investment in a foreign operation.
Foreign exchange gains and losses that relate to borrowings are
presented in the income statement, within finance costs. All other
foreign exchange gains and losses are presented in the income
statement on a net basis within other income or other expenses.
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1. Summary of significant accounting policies continued
(d) Foreign currency translation continued
Non-monetary items that are measured at fair value in a foreign
currency are translated using the exchange rates at the date when
the fair value was determined. Translation differences on assets and
liabilities carried at fair value are reported as part of the fair value gain
or loss. For example, translation differences on non-monetary assets
and liabilities such as equities held at fair value through profit or loss
are recognised in profit or loss as part of the fair value gain or loss
and translation differences on non-monetary assets such as equities
classified as available-for-sale financial assets are recognised in other
comprehensive income.
(iii) Group companies
The results and financial position of foreign operations (none of
which has the currency of a hyperinflationary economy) that have
a functional currency different from the presentation currency are
translated into the presentation currency as follows:
›
›
›
assets and liabilities for each balance sheet presented are translated
at the closing rate at the date of that balance sheet;
income and expenses for each income statement and statement
of comprehensive income are translated at average exchange rates
(unless this is not a reasonable approximation of the cumulative
effect of the rates prevailing on the transaction dates, in which
case income and expenses are translated at the dates of the
transactions); and
all resulting exchange differences are recognised in other
comprehensive income.
On consolidation, exchange differences arising from the translation
of any net investment in foreign entities, and of borrowings and other
financial instruments designated as hedges of such investments, are
recognised in other comprehensive income. When a foreign operation
is sold or any borrowings forming part of the net investment are
repaid, the associated exchange difference is reclassified to profit
or loss, as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a
foreign operation are treated as assets and liabilities of the foreign
operation and translated at the closing rate.
(e) Revenue recognition
Total sales value presented on the income statement represents
proceeds from sale of goods from sales (both by Myer and concession
operators) generated in Myer stores and prior to the deferral of
revenue under the customer loyalty program. Concession sales
presented in the income statement represents sales proceeds of
concession operators within Myer stores. Total sales value is disclosed
to show the total sales generated in Myer stores and provide a basis
of comparison with similar department stores.
Revenue from the sale of goods, excluding lay-by transactions, is
recognised at the point of sale and is after deducting taxes paid, and
does not include concession sales. Allowance is made for expected
sales returns based on past experience of returns and expectations
about the future. A provision for sales returns is recognised based on
this assessment. Revenue from lay-by transactions is recognised as
part of revenue from the sale of goods at the date upon which the
customer satisfies all payment obligations and takes possession
of the merchandise.
Revenue from sale of goods excludes concession sales on the basis
that the inventory sold is owned by the concession operator at
the time of sale and not Myer. Myer’s share of concession sales is
recognised as income within other operating revenue at the time
the sale is made.
Interest income is recognised on a time proportion basis using the
effective interest method. Dividends are recognised as revenue when
the right to receive payment is established.
Customer loyalty program
The Group operates a loyalty program where customers accumulate
points for purchases made which entitle them to discounts on future
purchases. The award points are recognised as a separately identifiable
component of the initial sale transaction, by allocating the fair value of
the consideration received between the award points and the other
components of the sale such that the award points are recognised at
their fair value. Revenue from the award points is recognised when the
points are redeemed. The amount of revenue is based on the number
of points redeemed relative to the total number expected to be
redeemed. Award points expire 24 months after the initial sale.
(f) Income tax
The income tax expense or revenue for the period is the tax payable
on the current period’s taxable income based on the national income
tax rate adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences between the tax bases of assets
and liabilities and their carrying amounts in the financial statements,
and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary
differences at the tax rates expected to apply when the assets are
recovered or liabilities are settled, based on those tax rates which are
enacted or substantively enacted. The relevant tax rates are applied
to the cumulative amounts of deductible and taxable temporary
differences to measure the deferred tax asset or liability. An exemption
is made for certain temporary differences if they arose in a transaction,
other than a business combination, that at the time of the transaction
did not affect accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary
differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary
differences and losses.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets and liabilities and when
the deferred tax balances relate to the same taxation authority. Current
tax assets and tax liabilities are offset where the entity has a legally
enforceable right to offset and intends either to settle on a net basis,
or to realise the asset and settle the liability simultaneously.
Current and deferred tax balances attributable to amounts recognised
in other comprehensive income or directly in equity are also
recognised directly in other comprehensive income or equity.
(g) Leases
Leases of property, plant and equipment in which a significant portion
of the risks and rewards of ownership are retained by the lessor are
classified as operating leases (note 27). Lease incentives received on
entering into operating leases are recognised as deferred income and
are amortised over the lease term. Payments made under operating
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Notes to the financial statements continued
leases (net of any amortised deferred income) are charged to the
income statement on a straight line basis over the period of the lease.
Leases where the Group has substantially all the risks and rewards of
ownership are classified as finance leases. There were no finance leases
in place during the reporting period.
(h) Business combinations
The acquisition method of accounting is used to account for all
business combinations, regardless of whether equity instruments
or other assets are acquired. The consideration transferred for the
acquisition of a subsidiary comprises the fair values of the assets
transferred, the liabilities incurred and the equity interests issued by
the Group. The consideration transferred also includes the fair value
of any asset or liability resulting from a contingent consideration
arrangement and the fair value of any pre-existing equity interest
in the subsidiary. Acquisition-related costs are expensed as incurred.
Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are, with limited exceptions,
measured initially at their fair values at the acquisition date. On an
acquisition-by-acquisition basis, the Group recognises any non-
controlling interest in the acquiree either at fair value or at the
non-controlling interest’s proportionate share of the acquiree’s net
identifiable assets.
The excess of the consideration transferred and the amount of any
non-controlling interest in the acquiree over the fair value of the net
identifiable assets acquired is recorded as goodwill. If those amounts
are less than the fair value of the net identifiable assets of the subsidiary
acquired and the measurement of all amounts has been reviewed, the
difference is recognised directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred,
the amounts payable in the future are discounted to their present
value as at the date of exchange. The discount rate used is the
entity’s incremental borrowing rate, being the rate at which a similar
borrowing could be obtained from an independent financier under
comparable terms and conditions.
Contingent consideration is classified either as equity or a financial
liability. Amounts classified as a financial liability are subsequently
remeasured to fair value with changes in fair value recognised in profit
or loss.
(i) Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are
not subject to amortisation and are tested annually for impairment, or
more frequently if events or changes in circumstances indicate that
they might be impaired. Other assets are reviewed for impairment
whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the
higher of an asset’s fair value less costs to sell and value in use. For the
purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash inflows which are
largely independent of the cash inflows from other assets or groups
of assets (cash generating units). For store assets, the appropriate cash-
generating unit is an individual store. Non-financial assets other than
goodwill that have previously suffered an impairment are reviewed for
possible reversal of the impairment at each reporting date.
(j) Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash
and cash equivalents includes cash on hand, deposits held at call with
financial institutions, other short-term, highly liquid investments with
original maturities of three months or less that are readily convertible
to known amounts of cash and which are subject to an insignificant
risk of changes in value, and bank overdrafts.
(k) Trade receivables
Collectibility of trade receivables is reviewed on an ongoing basis.
Debts which are known to be uncollectible are written off by reducing
the carrying amount directly. An allowance account (provision for
impairment of trade receivables) is established when there is objective
evidence that the Group will not be able to collect all amounts due
according to the original terms of receivables. Cash flows relating to
short-term receivables are not discounted if the effect of discounting
is immaterial.
The amount of the impairment loss is recognised in the income
statement within other expenses. When a trade receivable for which
an impairment allowance had been recognised becomes uncollectible
in a subsequent period, it is written off against the allowance account.
Subsequent recoveries of amounts previously written off are credited
against other expenses in the income statement.
(l) Inventories
At the end of the reporting period, all inventories are valued at the
lower of cost and net realisable value. Cost is determined using
the weighted average cost method, after deducting any purchase
settlement discount and including logistics expenses incurred in
bringing the inventories to their present location and condition.
Volume related supplier rebates and supplier promotional rebates
are recognised as a reduction in the cost of inventory and are recorded
as a reduction of cost of goods sold when the inventory is sold.
(m) Investments and other financial assets
Classification
The Group classifies its investments in the following categories:
financial assets at fair value through profit or loss, loans and
receivables, held to maturity investments, and available for sale
financial assets. The classification depends on the purpose for which
the investments were acquired. Management determines the
classification of its investments at initial recognition and, in the case
of assets classified as held to maturity, re-evaluates this designation
at the end of each reporting period.
(i) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets
held for trading which are acquired principally for the purpose
of selling in the short-term with the intention of making a profit.
Derivatives are also categorised as held for trading unless they are
designated as hedges.
(ii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They
arise when the Group provides money, goods or services directly to a
debtor with no intention of selling the receivable. They are included in
current assets, except for those with maturities greater than 12 months
after the reporting period which are classified as non-current assets.
Loans and receivables are included in receivables in the balance sheet
(note 9).
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1. Summary of significant accounting policies continued
(m) Investments and other financial assets continued
(iii) Held to maturity investments
Held to maturity investments are non-derivative financial assets
with fixed or determinable payments and fixed maturities that the
Group’s management has the positive intention and ability to hold
to maturity.
(iv) Available for sale financial assets
Available for sale financial assets are non-derivatives that are
either designated in this category or not classified in any of the
other categories. They are included in non-current assets unless
management intends to dispose of the investment within
12 months of the end of the reporting period.
Recognition and derecognition
Purchases and sales of investments are recognised on trade-date,
the date on which the Group commits to purchase or sell the asset.
Investments are initially recognised at fair value plus transaction costs
for all financial assets not carried at fair value through profit or loss.
Financial assets carried at fair value through profit or loss are initially
recognised at fair value and transaction costs are expensed in profit or
loss. Financial assets are derecognised when the rights to receive cash
flows from the financial assets have expired or have been transferred
and the Group has transferred substantially all the risks and rewards
of ownership.
Measurement
Available for sale financial assets and financial assets at fair value
through profit or loss are subsequently carried at fair value, unless
they are equity securities that do not have a market price quoted
in an active market and whose fair value cannot be reliably measured.
In that case they are carried at cost.
Loans and receivables and held to maturity investments are carried
at amortised cost using the effective interest method. Gains or losses
arising from changes in the fair value of the ‘financial assets at fair
value through profit or loss’ category, including interest and dividend
income, are presented in profit or loss within other income or other
expenses in the period in which they arise.
Changes in the fair value of monetary securities denominated in
a foreign currency and classified as available for sale are analysed
between translation differences resulting from changes in amortised
cost of the security and other changes in the carrying amount of the
security. The translation differences are recognised in profit or loss and
other changes in carrying amount are recognised in equity. Changes
in the fair value of other monetary and non-monetary securities
classified as available for sale are recognised in equity.
When securities classified as available for sale are sold or impaired, the
accumulated fair value adjustments recognised in equity are included
in profit or loss as gains and losses from investment securities.
Details on how the fair value of financial instruments is determined
are disclosed in note 2.
assets, the cumulative loss – measured as the difference between
the acquisition cost and the current fair value, less any impairment
loss on that financial asset previously recognised in profit or loss
– is reclassified from equity and recognised in profit or loss as a
reclassification adjustment. Impairment losses recognised in profit
or loss on equity instruments classified as available for sale are not
reversed through profit or loss.
(n) Derivatives and hedging activities
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 the end of each reporting period. The accounting for
subsequent changes in fair value depends on whether the derivative
is designated as a hedging instrument, and if so, the nature of the item
being hedged. The Group designates certain derivatives as either:
› hedges of the fair value of recognised assets or liabilities
or a firm commitment (fair value hedges); or
› hedges of the cash flows or recognised assets or liabilities and
highly probable forecast transactions (cash flow hedges).
The Group documents at the inception of the hedging transaction the
relationship between hedging instruments and hedged items, as well
as its risk management objective and strategy for undertaking various
hedge transactions. The Group also documents its assessments,
both at hedge inception and on an ongoing basis, of whether the
derivatives that are used in hedging transactions have been and will
continue to be highly effective in offsetting changes in fair values or
cash flows of hedged items.
The full fair value of a hedging derivative is classified as a non-current
asset or liability when the remaining maturity of the hedged item is
more than 12 months. It is classified as a current asset or liability when
the remaining maturity of the hedged item is less than 12 months.
(i) Fair value hedge
Changes in the fair value of derivatives that are designated and qualify
as fair value hedges are recorded in the income statement, together
with any changes in the fair value of the hedged asset or liability
that are attributable to the hedged risk. The gain or loss relating
to the effective portion of interest rate swaps hedging fixed rate
borrowings is recognised in profit or loss within finance costs, together
with changes in the fair value of the hedged fixed rate borrowings
attributable to interest rate risk. The gain or loss relating to the
ineffective portion is recognised in profit or loss.
If the hedge no longer meets the criteria for hedge accounting, the
adjustment to the carrying amount of a hedge item for which the
effective interest method is used is amortised to profit or loss over
the period to maturity using a recalculated effective interest rate.
(ii) Cash flow hedge
The effective portion of changes in the fair value of derivatives that are
designated and qualify as cash flow hedges is recognised in equity in
the hedging reserve. The gain or loss relating to the ineffective portion
is recognised immediately in profit or loss.
Impairment
The Group assesses at the end of each reporting period whether there
is objective evidence that a financial asset or Group of financial assets
is impaired. In the case of equity securities classified as available for
sale, a significant or prolonged decline in the fair value of a security
below its cost is considered in determining whether the security is
impaired. If any such evidence exists for available for sale financial
Amounts accumulated in equity are reclassified to profit or loss in
the periods when the hedged item affects profit or loss. The gain
or loss relating to the effective portion of the interest rate swaps
hedging variable rate borrowings is recognised in profit or loss within
finance costs. When the forecast transaction that is hedged results
in the recognition of a non-financial asset (for example, inventory or
fixed assets) the gains and losses previously deferred in equity are
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Notes to the financial statements continued
transferred from equity and included in the initial measurement of
the cost of the asset. The deferred amounts are ultimately recognised
in profit or loss as cost of goods sold in the case of inventory, or as
depreciation in the case of fixed assets.
When a hedging instrument expires or is sold or terminated, or
when a hedge no longer meets the criteria for hedge accounting,
any cumulative gain or loss existing in equity at that time remains in
equity and is recognised when the forecast transaction is ultimately
recognised in profit or loss. When a forecast transaction is no longer
expected to occur, the cumulative gain or loss that was reported in
equity is immediately reclassified to profit or loss.
(iii) Derivatives that do not qualify for hedge accounting
Certain derivative instruments do not qualify for hedge accounting.
Changes in the fair value of any derivative instrument that does not
qualify for hedge accounting are recognised immediately in profit
or loss.
(o) Property, plant and equipment
Property, plant and equipment is stated at cost less depreciation. Cost
includes expenditure that is directly attributable to the acquisition of
the items. Cost may also include transfers from equity of any gains/
losses on qualifying cash flow hedges of foreign currency purchases
of property, plant and equipment.
Subsequent costs are included in the asset’s carrying amount or
recognised as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to
the Group and the cost of the item can be measured reliably. All other
repairs and maintenance are charged to profit or loss during the
financial period in which they are incurred.
Land is not depreciated. Depreciation on other assets is calculated
using the straight line method to allocate their cost net of their
residual values, over their estimated useful lives, as follows:
›
›
›
›
Buildings
Fixtures and fittings
Plant and equipment
Leasehold improvements
40 years
3 – 12.5 years
10 – 20 years
20 years
The assets’ residual values and useful lives are reviewed, and adjusted
if appropriate, at the end of each reporting period.
An asset’s carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount (note 1(i)).
Gains and losses on disposals are determined by comparing proceeds
with carrying amount. These are included in profit or loss.
Non-current assets held for sale
Non-current assets are classified as held for sale and stated at the
lower of their carrying amount and fair value less costs to sell if
their carrying amount will be recovered principally through a sale
transaction rather than through continuing use.
Non-current assets are not depreciated or amortised while they are
classified as held for sale. Non-current assets classified as held for sale
are presented separately from the other assets in the balance sheet.
(p) Intangible assets
(i) Goodwill
Goodwill is measured as described in note 1(h). Goodwill on
acquisition of subsidiaries is included in intangible assets. Goodwill
is not amortised but it is tested for impairment annually, or more
frequently if events or changes in circumstances indicate that it might
be impaired, and is carried at cost less accumulated impairment losses.
Gains and losses on the disposal of an entity include the carrying
amount of goodwill relating to the entity sold.
(ii) Brand names and trademarks
Certain Group brands are considered to have indefinite lives. These
brands are not considered to have foreseeable brand maturity dates,
and have accordingly been assessed as having indefinite useful lives
and are therefore not amortised. Instead, the brand names are tested
for impairment annually, or more frequently if events or changes in
circumstances indicate that they might be impaired, and are carried at
cost less accumulated impairment losses.
Other brands have a finite useful life and are carried at cost less
accumulated amortisation and impairment losses. Amortisation is
calculated using the straight line method to allocate the cost of brands
over their estimated useful life of 20 years.
(iii) Computer software
All costs directly incurred in the purchase or development of
major computer software or subsequent upgrades and material
enhancements, which can be reliably measured and are not integral
to a related asset, are capitalised as intangible assets. Direct costs may
include internal payroll and on-costs for employees directly associated
with the project. Costs incurred on computer software maintenance
or during the planning phase are expensed as incurred. Computer
software is amortised over the period of time during which the
benefits are expected to arise, being 5 to 10 years.
(iv) Lease rights
Lease rights represent the amount paid up-front to take over store site
leases from the existing lessee where such payments are in addition
to the ongoing payment of normal market lease rentals. Lease rights
are amortised over the term of the lease plus any renewal options
reasonably certain to be utilised at the time of acquisition of the lease
rights, being 13 to 17 years.
(q) Trade and other payables
These amounts represent liabilities for goods and services provided
to the Group prior to the end of financial period which are unpaid.
The amounts are unsecured and are usually paid within 30 to 90 days
of recognition. Trade and other payables are presented as current
liabilities unless payment is not due within 12 months from the
reporting date.
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1. Summary of significant accounting policies continued
(r) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs
incurred. Borrowings are subsequently measured at amortised cost.
Any difference between the proceeds (net of transaction costs) and
the redemption amount is recognised in profit or loss over the period
of the borrowings using the effective interest method. Fees paid
on the establishment of loan facilities are recognised as transaction
costs of the loan to the extent that it is probable that some or all of
the facility will be drawn down. In this case, the fee is deferred until
the draw down occurs. To the extent there is no evidence that it is
probable that some or all of the facility will be drawn down, the fee is
capitalised as a prepayment for liquidity services and amortised over
the period of the facility to which it relates.
Borrowings are classified as current liabilities unless the Group has
an unconditional right to defer settlement of the liability for at least
12 months after the reporting period.
(s) Borrowing costs
Borrowing costs incurred for the construction of any qualifying asset
are capitalised during the period of time that is required to complete
and prepare the asset for its intended use or sale. Other borrowing
costs are expensed.
(t) Provisions
Provisions are recognised when the Group has a present legal or
constructive obligation as a result of past events, it is probable that an
outflow of resources will be required to settle the obligation and the
amount has been reliably estimated. Provisions are not recognised for
future operating losses.
Where there are a number of similar obligations, the likelihood that an
outflow will be required in settlement is determined by considering
the class of obligations as a whole. A provision is recognised even if
the likelihood of an outflow with respect to any one item included in
the same class of obligations may be small.
Provisions are measured at the present value of management’s best
estimate of the expenditure required to settle the present obligation
at the end of the reporting period. The discount rate used to
determine the present value reflects current market assessments
of the time value of money and the risks specific to the liability.
The Group is self-insured for costs relating to workers’ compensation
and general liability claims in certain states. Provisions are recognised
based on claims reported, and an estimate of claims incurred but not
yet reported, prior to balance date. These provisions are determined
utilising an actuarially determined method, which is based on various
assumptions including but not limited to future inflation, average
claim size and claim administrative expenses. These assumptions are
reviewed annually and any reassessment of these assumptions will
affect the workers’ compensation expense.
(u) Employee benefits
(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits
and annual leave expected to be settled within 12 months after the
end of the period in which the employees render the related service
are recognised in respect of employees’ services up to the end of the
reporting period and are measured at the amounts expected to be
paid when the liabilities are settled. The liability for annual leave is
recognised in the provision for employee benefits. All other short-term
employee benefit obligations are presented as payables.
(ii) Other long-term employee benefit obligations
The liability for long service leave which is not expected to be settled
within 12 months after the end of the period in which the employees
render the related service is recognised in the provision for employee
benefits and measured as the present value of expected future
payments to be made in respect of services provided by employees
up to the end of the reporting period using the projected unit credit
method. Consideration is given to expected future wage and salary
levels, experience of employee departures and periods of service.
Expected future payments are discounted using market yields at the
end of the reporting period on national government bonds with
terms to maturity and currency that match, as closely as possible, the
estimated future cash outflows.
The obligations are presented as current liabilities in the balance sheet
if the entity does not have an unconditional right to defer settlement
for at least 12 months after the reporting date, regardless of when the
actual settlement is expected to occur.
(iii) Retirement benefit obligations
The Group contributes to a number of superannuation funds that have
been established to provide benefits for employees. Apart from one
defined benefit fund, with a range of member categories, all funds are
defined contribution funds, and contributions to them are recognised
as an expense as they become payable.
The defined benefit fund that the Group contributes to is currently
administered through Mercer Human Resource Consulting within
a Mercer Master Trust arrangement on behalf of Myer. The defined
benefit fund provides defined lump sum pension benefits based
on years of service and final average salary. Myer defined benefit
members who were members of the Coles Myer Defined Benefit Fund
were transferred to the Myer Fund effective 2 June 2006. The fund is
closed to new members and only existing Defined Benefit members
were eligible for membership.
A liability or asset in respect of the defined benefit fund is recognised
in the balance sheet, and is measured as the present value of the
defined benefit obligation at the end of the reporting period less
the fair value of the fund’s assets at that date and any unrecognised
past service cost. The present value of the defined benefit obligation
is based on expected future payments that arise from membership
of the fund to the end of the reporting period, calculated annually
by independent actuaries using the projected unit credit method.
Consideration is given to expected future wage and salary levels,
experience of employee departures and periods of service.
Expected future payments are discounted using market yields at the
end of the reporting period on government bonds with terms to
maturity and currency that match, as closely as possible, the estimated
future cash outflows.
Actuarial gains and losses arising from experience adjustments and
changes in actuarial assumptions are recognised in the period in
which they occur, outside profit or loss directly in the statement
of comprehensive income.
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Notes to the financial statements continued
(iv) Profit sharing and bonus plans
The Group recognises a liability and an expense for bonuses and profit
sharing based on a formula that takes into consideration the profit
attributable to the Group’s shareholders after certain adjustments. The
Group recognises a provision where contractually obliged or where
there is a past practice that has created a constructive obligation.
(v) Termination benefits
Termination benefits are payable when employment is terminated
before the normal retirement date, or when an employee accepts
voluntary redundancy in exchange for these benefits. The Group
recognises termination benefits when it is demonstrably committed to
either terminating the employment of current employees according
to a detailed formal plan without possibility of withdrawal or providing
termination benefits as a result of an offer made to encourage
voluntary redundancy. Benefits falling due more than 12 months after
the end of the reporting period are discounted to present value.
(vi) Share-based payments
Share-based compensation benefits are provided to employees via the
Myer Equity Incentive Plan. Information relating to these schemes is
set out in note 35.
The fair value of options granted under the plan is recognised as an
employee benefit expense with a corresponding increase in equity.
The total amount to be expensed is determined by reference to
the fair value of the options granted, which includes any market
performance conditions but excludes the impact of any services and
non-market performance vesting conditions and the impact of any
non-vesting conditions.
Non-market vesting conditions are included in assumptions about
the number of options that are expected to vest. The total expense is
recognised over the vesting period, which is the period over which all
the specified vesting conditions are to be satisfied. At the end of each
period, the entity revises its estimates of the number of options that
are expected to vest based on the non-market vesting conditions. It
recognises the impact of revisions to original estimates, if any, in profit
or loss, with a corresponding adjustment to equity.
The Myer Equity Incentive Plan is administered by the Myer Equity
Incentive Plan Trust see note 1(b)(ii). When options are exercised, the
trust transfers the appropriate number of shares to the employee. The
proceeds received net of any directly attributable transaction costs are
credited directly to equity.
(v) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares are shown in equity as a
deduction, net of tax, from the proceeds.
Where any Group company purchases the Company’s equity
instruments, for example as the result of a share buy-back or a share-
based payment plan, the consideration paid, including any directly
attributable incremental costs (net of income taxes) is deducted from
equity attributable to the owners of Myer Holdings Limited as treasury
shares until the shares are cancelled or reissued. Where such ordinary
shares are subsequently reissued, any consideration received, net of
any directly attributable incremental transaction costs and the related
income tax effects, is included in equity attributable to the owners of
Myer Holdings Limited.
(w) Dividends
Provision is made for the amount of any dividend declared, being
appropriately authorised and no longer at the discretion of the entity,
on or before the end of the financial period but not distributed at
balance date.
(x) Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing:
›
the profit attributable to owners of the Company, excluding any
costs of servicing equity other than ordinary shares
› by the weighted average number of ordinary shares outstanding
during the financial period, adjusted for bonus elements in
ordinary shares issued during the period and excluding treasury
shares (note 21).
(ii) 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 additional ordinary shares that
would have been outstanding assuming the conversion of all
dilutive potential ordinary shares.
›
(y) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of
associated GST, unless the GST incurred is not recoverable from the
taxation authority. In this case it is recognised as part of the cost of
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 taxation authority is included with other receivables or
payables in the balance sheet.
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 taxation authority, are presented
as operating cash flow.
(z) Rounding of amounts
The Group has taken advantage of Class Order 98/100, issued by the
Australian Securities and Investments Commission, relating to the
‘’rounding off’’ of amounts in the financial statements. Amounts in the
financial statements have been rounded off to the nearest thousand
dollars, or in certain cases, to the nearest dollar.
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1. Summary of significant accounting policies continued
(aa) New accounting standards and interpretations
Certain new accounting standards and interpretations have been
published that are not mandatory for 28 July 2012 reporting periods.
The Group’s and the parent entity’s assessment of the impact of these
new standards and interpretations, that were considered relevant for
the consolidated entity, is set out below.
(i) AASB 9 Financial Instruments 2009-11 Amendments to Australian
Accounting Standards arising from AASB 9 and AASB 2010-7
Amendments to Australian Accounting Standards arising from AASB 9
(December 2010) (effective from 1 January 2013)
AASB 9 Financial Instruments addresses the classification, measurement
and derecognition of financial assets and financial liabilities. The
standard is not applicable until 1 January 2015 but is available for
early adoption. When adopted, the standard will affect in particular
the Group’s accounting for its available for sale financial assets, since
AASB 9 only permits the recognition of fair value gains and losses in
other comprehensive income if they relate to equity investments that
are not held for trading. Fair value gains and losses on available for sale
debt investments, for example, will therefore have to be recognised
directly in profit or loss.
There will be no impact on the Group’s accounting for financial
liabilities, as the new requirements only affect the accounting for
financial liabilities that are designated at fair value through profit or loss
and the Group does not have any such liabilities. The derecognition
rules have been transferred from AASB 139 Financial Instruments:
Recognition and Measurement and have not been changed.
(ii) AASB 10 Consolidated Financial Statements, AASB 11 Joint
Arrangements, AASB 12 Disclosure of Interests in Other Entities,
revised AASB 127 Separate Financial Statements and AASB 128
Investments in Associates and Joint Ventures and AASB 2011-7
Amendments to Australian Accounting Standards arising from
the Consolidation and Joint Arrangements Standards (effective
1 January 2013)
In August 2011, the AASB issued a suite of five new and amended
standards which address the accounting for joint arrangements,
consolidated financial statements and associated disclosures.
AASB 10 replaces all of the guidance on control and consolidation
in AASB 127 Consolidated and Separate Financial Statements, and
Interpretation 12 Consolidation – Special Purpose Entities. The core
principle that a consolidated entity presents a parent and its
subsidiaries as if they are a single economic entity remains unchanged,
as do the mechanics of consolidation. However, the standard
introduces a single definition of control that applies to all entities.
It focuses on the need to have both power and rights or exposure
to variable returns. Power is the current ability to direct the activities
that significantly influence returns. Returns must vary and can be
positive, negative or both. Control exists when the investor can use its
power to affect the amount of its returns. There is also new guidance
on participating and protective rights and on agent/principal
relationships. While the Group does not expect the new standard
to have a significant impact on its composition, it has yet to perform
a detailed analysis of the new guidance in the context of its various
investees that may or may not be controlled under the new rules.
AASB 11 introduces a principles-based approach to accounting for
joint arrangements. The focus is no longer on the legal structure
of joint arrangements, but rather on how rights and obligations
are shared by the parties to the joint arrangement. Based on the
assessment of rights and obligations, a joint arrangement will be
classified as either a joint operation or a joint venture. Joint ventures
are accounted for using the equity method, and the choice to
proportionately consolidate will no longer be permitted. Parties to a
joint operation will account their share of revenues, expenses, assets
and liabilities in much the same way as under the previous standard.
AASB 11 also provides guidance for parties that participate in joint
arrangements but do not share joint control. The Group does not have
any joint ventures.
AASB 12 sets out the required disclosures for entities reporting under
the two new standards, AASB 10 and AASB 11, and replaces the
disclosure requirements currently found in AASB 127 and AASB 128.
Application of this standard by the Group will not affect any of the
amounts recognised in the financial statements, but will impact the
type of information disclosed in relation to the Group’s investments.
Amendments to AASB 128 provide clarification that an entity
continues to apply the equity method and does not remeasure its
retained interest as part of ownership changes where a joint venture
becomes an associate, and vice versa. The amendments also introduce
a “partial disposal” concept. The Group does not expect these
amendments to make a material impact.
The Group does not expect to adopt the new standards before their
operative date. They would therefore be first applied in the financial
statements for the annual reporting period ending 30 June 2014.
(iii) AASB 13 Fair Value Measurement and AASB 2011-8 Amendments
to Australian Accounting Standards arising from AASB 13 (effective
1 January 2013)
AASB 13 was released in September 2011. It explains how to measure
fair value and aims to enhance fair value disclosures. The Group has
yet to determine which, if any, of its current measurement techniques
will have to change as a result of the new guidance. It is therefore
not possible to state the impact, if any, of the new rules on any of the
amounts recognised in the financial statements. However, application
of the new standard will impact the type of information disclosed in the
notes to the financial statements. The Group does not intend to adopt
the new standard before its operative date, which means that it would
be first applied in the annual reporting period ending 30 June 2014.
(iv) Revised AASB 119 Employee Benefits, AASB 2011-10
Amendments to Australian Accounting Standards arising from
AASB 119 (September 2011) and AASB 2011-11 Amendments
to AASB 119 (September 2011) arising from Reduced Disclosure
Requirements (effective 1 January 2013)
In September 2011, the AASB released a revised standard on
accounting for employee benefits. It requires the recognition of all
remeasurements of defined benefit liabilities/assets immediately
in other comprehensive income (removal of the so-called ‘corridor’
method) and the calculation of a net interest expense or income by
applying the discount rate to the net defined benefit liability or asset.
This replaces the expected return on plan assets that is currently
included in profit or loss. The standard also introduces a number of
additional disclosures for defined benefit liabilities/assets and could
affect the timing of the recognition of termination benefits. The
amendments will have to be implemented retrospectively. The Group
does not expect these amendments to make a material impact.
There are no other standards that are not yet effective and that are
expected to have a material impact on the entity in the current or
future reporting periods and on foreseeable future transactions.
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Notes to the financial statements continued
(ab) Parent entity financial information
The financial information for the parent entity, Myer Holdings Limited,
disclosed in note 33 has been prepared on the same basis as the
consolidated financial statements, except as set out below.
(i) Investments in subsidiaries
Investment in subsidiaries are accounted for at cost in the financial
statements of Myer Holdings Limited.
(ii) Tax consolidation legislation
Myer Holdings Limited and its wholly owned Australian controlled
entities have implemented the tax consolidation legislation.
The head entity, Myer Holdings Limited, and the controlled entities in
the tax consolidated Group continue to account for their own current
and deferred tax amounts. These tax amounts are measured as if each
entity in the tax consolidated Group continues to be a stand-alone
taxpayer in its own right.
In addition to its own current and deferred tax amounts, Myer Holdings
Limited also recognises the current tax liabilities (or assets) and the
deferred tax assets arising from unused tax losses and unused tax
credits assumed from controlled entities in the tax consolidated Group.
The entities have also entered into a tax funding agreement under which
the wholly-owned entities fully compensate Myer Holdings Limited
for any current tax payable assumed and are compensated by Myer
Holdings Limited for any current tax receivable and deferred tax assets
relating to unused tax losses or unused tax credits that are transferred
to Myer Holdings Limited under the tax consolidation legislation.
The funding amounts are determined by reference to the amounts
recognised in the wholly-owned entities’ financial statements.
The funding amounts are recognised as current intercompany
receivables or payables.
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 Group.
Any difference between the amounts assumed and amounts
receivable or payable under the tax funding agreement are recognised
as a contribution to (or distribution from) wholly-owned tax
consolidated entities.
(ac) Comparative amounts
Where current period balances have been classified differently within
current period disclosures when compared to the prior period,
comparative disclosures have been restated to ensure consistency
of presentation between periods.
2. Financial risk management
The Group’s activities expose it to a variety of financial risks; market
risk (including currency risk and cash flow and fair value 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
foreign exchange contracts and interest rate swaps to hedge certain
risk 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 and foreign exchange risk, and an aging analysis for
credit risk.
Risk management is carried out by the Company under policies
approved by the Board of Directors. The Company identifies, evaluates
and hedges financial risks. The Board provides written principles for
overall risk management, as well as policies covering specific areas,
such as foreign exchange risk, interest rate risk, and use of financial
instruments and non-derivative financial instruments.
(a) Market risk
(i) Foreign exchange risk
Foreign exchange risk arises when future commercial transactions
and recognised assets and liabilities are denominated in a currency
that is not the entity’s functional currency.
The Group sources inventory purchases overseas and is exposed to
foreign exchange risk, particularly in relation to currency exposures to
the US dollar.
To minimise the effects of a volatile and unpredictable exchange
rate Group policy is to enter into forward exchange contracts in
relation to the Group’s overseas purchases for any 12-month period.
The actual level of cover taken fluctuates depending on the period
until settlement of the foreign currency transaction, within the
board approved hedging policy. This policy allows cover to be taken
on a sliding scale between 25 – 100% depending on the period to
maturity (up to 12 months).
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2. Financial risk management continued
(a) Market risk continued
The Group’s exposure to foreign currency risk at the end of the reporting period was as follows:
Trade payables
Forward exchange contracts
28 July 2012
30 July 2011
USD
$’000
11,987
113,550
EURO
$’000
350
–
GBP
$’000
15
–
USD
$’000
13,208
76,350
EURO
$’000
264
–
HKD
$’000
82
–
The parent entity’s financial assets and liabilities are denominated in Australian dollars.
Group sensitivity
Based on the financial instruments held at 28 July 2012, had the Australian dollar weakened/strengthened by 10% against the US dollar
with all other variables held constant, the Group’s post-tax profit for the period would have been $0.7 million higher/$0.9 million lower
(2011: $0.7 million higher/$0.9 million lower), mainly as a result of foreign exchange gains/losses on translation of US dollar denominated
financial instruments as detailed in the above table.
Other components of equity would have been $6.4 million higher/$7.0 million lower (2011: $3.6 million higher/$3.4 million lower) had the
Australian dollar weakened/strengthened by 10% against the US dollar, arising from foreign exchange contracts designated as cash flow hedges.
The Group’s exposure to other foreign exchange movements is not material.
These sensitivities were calculated based on the Group’s period end spot rate for the applicable reporting period.
(ii) Cash flow and fair value interest rate risk
The Group is exposed to interest rate risk as it borrows funds at floating interest rates. Borrowings issued at floating rates expose the Group to
cash flow interest rate risk. The risks are managed by the use of floating to fixed interest rate swap contracts. During the period, the Group policy
was to fix the rates between 0 to 30% of its Term Debt Facility. This policy had been complied with at the period end.
Interest rate swaps have the economic effect of converting borrowings from floating rates to fixed rates. Generally, the Group raises long-term
borrowings at floating rates and swaps them into fixed rates that are lower than those available if the Group borrowed at fixed rates directly.
Under the interest rate swaps, the Group agrees with other parties to exchange, at specified intervals (mainly quarterly), the difference between
fixed contract rates and floating rate interest amounts calculated by reference to the agreed notional principal amounts.
As at the end of the reporting period, the Group had the following variable rate borrowings and interest rate swap contracts outstanding:
Borrowings – Variable
Interest rate swaps (notional principal amount)
Net exposure to cash flow interest rate risk
28 July 2012
30 July 2011
Weighted
average
interest rate
%
5.2%
5.6%
Weighted
average
interest rate
%
6.7%
6.2%
Balance
$’000
421,193
(100,000)
321,193
Balance
$’000
419,591
(80,000)
339,591
The weighted average interest rates noted above for both borrowings and swaps are inclusive of margins applicable to the underlying variable
rate borrowings.
An analysis by maturities is provided in (c) below.
Interest rate exposure is evaluated regularly to confirm alignment with Group policy and to ensure the Group is not exposed to excess risk from
interest rate volatility.
At 28 July 2012, if interest rates had changed by +/ – 10% from the period end rates with all other variables held constant, post-tax profit for
the period would have been $0.8 million higher/$0.8 million lower (2011: change of +/ – 10%: $1.2 million higher/$1.2 million lower), mainly
as a result of higher/lower interest expense on borrowings.
Other components of equity would have been $0.6 million lower/$0.6 million higher (2011: $0.3 million lower/$0.3 million higher) mainly as a
result of an increase/decrease in the fair value of the cash flow hedges of borrowings.
The range of sensitivities have been assumed based on the Group’s experience of average interest rate fluctuations in the applicable
reporting period.
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Notes to the financial statements continued
(b) Credit risk
Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with
banks and financial institutions, as well as credit exposures to customers, including receivables and committed transactions. For banks and
financial institutions, only independently rated parties with a minimum rating of ‘A’ are accepted. Sales to retail customers are primarily required
to be settled in cash or using major credit cards, mitigating credit risk. Where transactions are settled by way of lay-by arrangements, revenue is
not recognised until full payment has been received from the customer and goods collected.
The maximum exposure to credit risk at the end of the reporting period is the carrying amount of the financial assets as disclosed in notes 8, 9, and 11.
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings as detailed
below, historical information about receivables default rates and current trading levels.
Based on the credit history of these classes, it is expected that these amounts will be received and are not impaired.
Cash at bank and short-term bank deposits
AAA
AA
A
Derivative financial assets
AAA
AA
A
Consolidated
2012
$’000
2011
$’000
–
38,058
–
38,058
–
–
–
–
–
37,274
–
37,274
–
258
–
258
(c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an
adequate amount of committed credit facilities to meet obligations when due and due to close out market positions. Due to the seasonal nature
of the retail business, the Group has in place flexible funding facilities to ensure liquidity risk is minimised.
Financing arrangements
The Group had access to the following undrawn borrowing facilities at the end of the reporting period:
Floating rate
Expiring within one year (revolving cash advance facility)
Expiring beyond one year (revolving cash advance facility)
Consolidated
2012
$’000
2011
$’000
30,000
200,000
230,000
50,000
200,000
250,000
The long-term revolving cash advance facility has two tranches each comprising $100 million and are set to expire 2 June 2014 and 2 June 2015
respectively. The long-term revolving cash advance facilities may be drawn at any time and are subject to the Group continuing to meet its
covenants. At balance date these facilities remain undrawn.
In addition to the above, in the prior year the Group entered into a 1 year $50 million revolving credit facility on 13 April 2011 for the purpose of
funding the acquisition of the sass & bide business. This facility has now been reduced to a $30 million revolving credit facility and extended for
an additional year.
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2. Financial risk management continued
(c) Liquidity risk continued
Maturities of financial liabilities
The tables below analyse the Group’s financial liabilities; into relevant maturity groupings based on their contractual maturities for:
(a) all non-derivative financial liabilities, and
(b) net and gross settled derivative financial instruments for which the contractual maturities are essential for an understanding of the timing
of the cash flows;
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying amounts
as the impact of discounting is not significant. For interest rate swaps the cash flows have been estimated using forward interest rates applicable
at the end of the reporting period.
Contractual maturities
of financial liabilities
28 July 2012
non-derivatives
Non-interest bearing
Variable rate
Fixed rate
total non-derivatives
Derivatives
Net settled (interest rate swaps)
Gross settled
– (inflow)
– outflow
total derivatives
Contractual maturities
of financial liabilities
30 July 2011
non-derivatives
Non-interest bearing
Variable rate
Fixed rate
total non-derivatives
Derivatives
Net settled (interest rate swaps)
Gross settled
– (inflow)
– outflow
total derivatives
Less than
6 months
$’000
6 – 12
months
$’000
Between
1 and
2 years
$’000
Between
2 and
5 years
$’000
Over
5 years
$’000
Total
contractual
cash flows
$’000
Carrying
amount
(assets)/
liabilities
$’000
397,137
11,247
–
408,384
–
11,219
–
11,219
27,553
22,938
–
50,491
–
443,649
–
443,649
195
193
226
(74,075)
75,952
2,072
(35,197)
36,277
1,273
(445)
449
230
(42)
–
–
(42)
–
–
–
–
–
–
–
–
424,690
489,053
–
913,743
424,690
421,193
–
845,883
572
1,785
(109,717)
112,678
3,533
–
2,490
4,275
Less than
6 months
$’000
6 – 12
months
$’000
Between
1 and
2 years
$’000
Between
2 and
5 years
$’000
Over
5 years
$’000
Total
contractual
cash flows
$’000
Carrying
amount
(assets)/
liabilities
$’000
414,935
5,742
–
420,677
–
20,462
–
20,462
–
24,396
–
24,396
31,650
471,799
–
503,449
(135)
148
(54,518)
61,463
6,810
(15,570)
16,726
1,304
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
446,585
522,399
–
968,984
446,585
419,591
–
866,176
13
(258)
(70,088)
78,189
8,114
–
7,476
7,218
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Notes to the financial statements continued
(d) Fair value measurements
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.
AASB 7 Financial Instruments: Disclosures requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:
(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
(b) inputs other than quoted prices included within level 1 that are observable for the asset or liabilities either directly (as prices)
or indirectly (derived from prices) (level 2); and
(c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
The following tables present the Group’s assets and liabilities measured and recognised at fair value at 28 July 2012 and 30 July 2011.
Group – at 28 July 2012
Assets
Derivatives used for hedging
total assets
liabilities
Derivatives used for hedging
total liabilities
Group – at 30 July 2011
Assets
Derivatives used for hedging
total assets
liabilities
Derivatives used for hedging
total liabilities
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
–
–
–
–
–
–
4,275
4,275
–
–
–
–
Level 1
$’000
Level 2
$’000
Level 3
$’000
–
–
–
–
258
258
7,476
7,476
–
–
–
–
–
–
4,275
4,275
Total
$’000
258
258
7,476
7,476
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using
valuation techniques. The Group uses quoted market prices or dealer quotes of similar instruments in order to estimate fair value for long-term
debt instruments held. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. The fair value
of forward exchange contracts is determined using forward exchange market rates at the end of the reporting period. These instruments are
included in level 2 and comprise derivative financial instruments.
The carrying amounts of trade receivables and payables are assumed to approximate their fair values due to their short-term nature. The fair
value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest
rate that is available to the Group for similar financial instruments.
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3. Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations of
future events that may have a financial impact on the entity and that
are believed to be reasonable under the circumstances.
(a) Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future.
The resulting accounting estimates will, by definition, seldom equal
the related actual results. The estimates and assumptions that have
a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial period are
discussed below.
(i) Income taxes
The Group is subject to income taxes in Australia and jurisdictions
where it has foreign operations. Significant judgement is required in
determining the worldwide provision for income taxes. There are many
transactions and calculations undertaken during the ordinary course
of business for which the ultimate tax determination is uncertain. The
Group recognises tax assets and liabilities based on its best estimate
of the tax implications of the underlying transactions. Where the final
tax outcome is different from the amounts that were initially recorded,
such differences will impact the current tax provision and deferred
tax assets and liabilities in the period in which the final determination
is made.
(ii) Impairment
The Group tests annually whether goodwill and indefinite lived
intangibles have suffered any impairment, in accordance with the
accounting policy stated in note 1(i). The recoverable amount of
cash generating units have been determined based on value in use
calculations at a store level. Goodwill and certain intangibles can only be
tested for impairment at the level of the Myer Group as a whole. These
calculations require the use of assumptions. Refer to note 14 for details
of these assumptions. Should assumptions about future cash flows
prove incorrect, the Group may be at risk of impairment write-downs.
(iii) Recoverable amount of inventory
Management has assessed the value of inventory that is likely to be
sold below cost using past experience and judgement on the likely
sell through rates of various items of inventory, and booked a provision
for this amount. To the extent that these judgements and assumptions
prove incorrect, the Company may be exposed to potential additional
inventory write-downs in future periods.
4. Segment information
Management has determined the operating segments based on the
reports reviewed by the Chief Executive Officer that are used to make
strategic decisions about the allocation of resources.
The Chief Executive Officer considers the business based on total store
and product portfolio, and has identified that the Group operates in
Australia in the department store retail segment.
As a result of the acquisition of sass & bide during the prior year, the
Group also undertakes activities outside the department store retail
business. On the basis that this aspect of the business represents less
than 10% of the total Group’s operations, it has not been disclosed
as a separate reporting segment.
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Notes to the financial statements continued
5. Revenue and other income
revenue from continuing operations
Sales revenue
Total sales value (excluding GST)
Concession sales
Sale of goods (excluding GST)
Sales revenue deferred under customer loyalty program
Revenue from sale of goods (excluding GST)
Other revenue
Concessions revenue
Rental revenue
Finance revenue
Interest revenue
Remeasurement of financial liability
Finance revenue
Total revenue
other income from continuing operations
Other
Consolidated
2012
52 weeks
$’000
2011
52 weeks
$’000
3,119,119
3,158,774
(467,207)
(451,867)
2,651,912
2,706,907
(39,212)
(40,104)
2,612,700
2,666,803
113,305
109,329
146
200
113,451
109,529
1,499
3,000
4,499
2,169
1,097
3,266
2,730,650
2,778,501
26,844
26,844
46,410
46,410
Other income from continuing operations includes revenue in relation to the financial services business, forfeited lay-by deposits, customer
delivery fees, commission on EFT transactions, gift card non-redemption income and the 2011 financial year included profit underpinning
received in relation to the Myer Melbourne store redevelopment.
profit on sale of financial asset
Net profit on sale of financial asset
–
11,680
In the prior period, the Group disposed of its interest in equity securities of Harsyn Pty Ltd (holding company of Harris Scarfe Australia Pty Ltd)
and Australian Geographic Retail Pty Ltd.
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6. Expenses
profit before income tax includes the following specific expenses:
Employee benefits expenses
Defined contribution superannuation expense
Other employee benefits expenses
Total employee benefits expenses
Total depreciation, amortisation, write-off expense
Finance costs
Interest and finance charges paid/payable
Fair value (gains)/losses on interest rate swap cash flow hedges – transfer from equity
Finance costs expensed
Rental expense relating to operating leases
Minimum lease payments
Contingent rentals
Total rental expense relating to operating leases
Foreign exchange (gains)/losses
Net foreign exchange (gains)/losses
Net loss/(gain) on foreign currency derivatives not qualifying as hedges
Impairment of assets – inventory
Consolidated
2012
52 weeks
$’000
2011
52 weeks
$’000
35,443
407,225
442,668
81,858
34,113
150
34,263
32,653
380,965
413,618
78,981
37,961
(311)
37,650
193,142
187,311
6,249
8,287
199,392
195,598
(8,320)
(3,984)
–
(8,320)
15,413
–
(3,984)
17,479
Store closure costs and restructuring costs
10,476
Store closure and restructuring costs represents redundancy costs and the write-down or impairment of assets and inventory associated with the
decision to exit stores and certain business categories.
18,450
Write-back of fixed lease rental increases provision
–
Due to the signing of a new lease for a store, the fixed lease rental increase provision for this store has been written back to the income statement.
(23,109)
profit for the period includes the following items
that are unusual because of their nature, size or incidence.
Expenses incurred in relation to the Initial Public Offering of shares in the Company, classified as:
– Administration expenses
– Net finance costs
Total expenses incurred in relation to the Initial Public Offering of shares in the Company
Less: Applicable income tax benefit
–
–
–
–
–
5,031
–
5,031
(1,509)
3,522
In 2010, the Company listed on the Australian Securities Exchange (ASX). The Initial Public Offering of shares in the Company resulted in the
Company incurring significant one-off expenses during prior periods that do not form part of the ongoing operations of the business. Costs
categorised as Administration expenses in the prior period represent the retention bonuses payable to key staff as a result of the listing of
the Company.
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Notes to the financial statements continued
7. Income tax expense
(a) Income tax expense
Current tax
Deferred tax
Income tax expense is attributable to:
Profit from continuing operations
Aggregate income tax expense
Income tax expense from operations before IPO costs
Income tax benefit on IPO costs
Deferred income tax (revenue) expense included in income tax expense comprises:
(Increase) decrease in deferred tax assets (note 13)
(Decrease) increase in deferred tax liabilities (note 18)
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Profit from continuing operations before income tax expense including IPO transaction
costs and other non-recurring IPO related charges and before income tax expense
Tax at the Australian tax rate of 30% (2011: 30%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Non-deductible acquisition costs
Non-deductible entertainment
Impairment loss on intangible assets
Sundry items
Adjustments for current tax of prior periods
Income tax expense
(c) Amounts recognised directly in equity
Aggregate current and deferred tax arising in the reporting period and not recognised in net profit or loss or
other comprehensive income but directly debited or credited to equity
Net deferred tax – debited (credited) directly to equity (note 22(b))
(d) Tax expense (income) relating to items of other comprehensive income
Cash flow hedges
Consolidated
2012
52 weeks
$’000
2011
52 weeks
$’000
38,071
25,730
63,801
63,801
63,801
63,801
–
63,801
16,679
9,051
25,730
42,616
17,346
59,962
59,962
59,962
61,470
(1,508)
59,962
12,739
4,607
17,346
204,868
61,460
219,626
65,888
–
32
3,226
(724)
63,994
(193)
63,801
(587)
(587)
(535)
(535)
228
26
–
(531)
65,611
(5,649)
59,962
969
969
106
106
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8. Current assets – Cash and cash equivalents
Cash on hand
Cash at bank
Consolidated
2012
$’000
2,945
35,113
38,058
2011
$’000
3,046
34,228
37,274
Risk exposure
The Group’s exposure to interest rate risk is discussed in note 2. The maximum exposure to credit risk at the end of the reporting period is the
carrying amount of each class of cash and cash equivalents mentioned above.
9. Current assets – Trade and other receivables
Trade receivables
Provision for impairment of receivables (note(a))
Other receivables
Prepayments
Consolidated
2012
$’000
5,235
(411)
4,824
4,803
8,085
12,888
17,712
2011
$’000
5,409
(702)
4,707
12,469
7,209
19,678
24,385
(a) Impaired trade receivables
As at 28 July 2012 current trade receivables of the Group with a nominal value of $411 thousands (2011: $702 thousands) were impaired.
The amount of the provision was $411 thousands (2011: $702 thousands). The individually impaired receivables mainly relate to wholesalers.
The ageing of these receivables is as follows:
Up to 3 months
Over 3 months
Movements in the provision for impairment of receivables are as follows:
Opening balance
Provision for impairment recognised during the period
Receivables written off during the period as uncollectible
Unused amount reversed
Closing balance
Consolidated
2012
$’000
19
392
411
2011
$’000
45
657
702
Consolidated
2012
$’000
702
58
(309)
(40)
411
2011
$’000
290
456
(16)
(28)
702
The creation and release of the provision for impaired receivables has been included in ‘administration expenses’ in the income statement.
Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.
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Notes to the financial statements continued
(b) Past due but not impaired
As of 28 July 2012, trade receivables of $1,806 thousands (2011: $721 thousands) were past due but not impaired. These relate to a number of
independent debtors for whom there is no recent history of default. The ageing analysis of these trade receivables is as follows:
Up to 3 months
Over 3 months
Consolidated
2012
$’000
1,720
86
1,806
2011
$’000
483
238
721
Based on the credit history of these classes, it is expected that these amounts will be received and are not impaired.
(c) Foreign exchange and interest rate risk
Information about the Group’s exposure to foreign currency risk and interest rate risk in relation to trade and other receivables is provided in note 2.
(d) Fair values and credit risk
Due to the short-term nature of these receivables, their carrying amount is assumed to approximate their fair value.
The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of receivables mentioned above.
Refer to note 2 for more information on the financial risk management policy of the Group and the credit quality of the entities’ trade receivables.
10. Current assets – Inventories
Retail inventories
Consolidated
2012
$’000
2011
$’000
385,702
381,261
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11. Derivative financial instruments
non-current assets
Interest rate swap contracts (i)
Total non-current derivative financial instrument assets
Current liabilities
Forward foreign exchange contracts (ii)
Total current derivative financial instrument liabilities
non-current liabilities
Interest rate swap contracts (i)
Total non-current derivative financial instrument liabilities
Consolidated
2012
$’000
–
–
2,490
2,490
1,785
1,785
2011
$’000
258
258
7,476
7,476
–
–
(a) Instruments used by the Group
The Group is party to derivative financial instruments in the normal course of business in order to hedge exposure to fluctuations in interest and
foreign exchange rates in accordance with the Group’s financial risk management policies (refer to note 2).
(i) Interest rate swap contracts
Bank loans of the Group currently bear an average variable interest rate of 5.19% (2011: 6.66%). It is policy to protect part of the loans from
exposure to increasing interest rates. Accordingly, the Group has entered into interest rate swap contracts under which it is obliged to receive
interest at variable rates and to pay interest at fixed rates.
Swaps currently in place cover approximately 24% (2011: 19%) of the Group’s debt facility (refer to note 17 for details of the Group’s borrowings).
The notional principal amounts used in the swap agreements match the terms of the debt facilities. In relation to the debt facilities the fixed
interest rates range between 3.985% and 3.990% (2011: 4.35% and 4.75%) and the variable rates under the swap agreements are the Bank Bill
Swap Rate bid (BBSY Bid).
The contracts require settlement of net interest receivable or payable each three months. The contracts are settled on a net basis.
The gain or loss from remeasuring the hedging instruments at fair value is deferred in equity in the hedging reserve, to the extent that the hedge
is effective, and reclassified into the income statement when the hedged interest expense is recognised. In the period ended 28 July 2012 nil was
reclassified in profit and loss (2011: nil) and included in finance cost. There was no hedge ineffectiveness in the current period.
(ii) Forward exchange contracts – cash flow hedges
The Group makes purchases in numerous currencies, primarily US dollars. In order to protect against exchange rate movements, the Group has
entered into forward exchange contracts to purchase US dollars.
These contracts are hedging highly probable forecasted purchases for the ensuing financial period. The contracts are timed to mature when
payments for shipments of inventory are scheduled to be made.
The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised directly in equity. When
the cash flows occur, the Group adjusts the initial measurement of the inventory recognised in the balance sheet by the related amount deferred
in equity.
During the period ended 28 July 2012 a gain of $0.1 million (2011: gain of $1.8 million) was reclassified from equity and included in the cost of
inventory. There was no hedge ineffectiveness in the current or prior period.
(b) Risk exposures
Information about the Group’s exposure to credit risk, foreign exchange and interest rate risk is provided in note 2. The maximum exposure to
credit risk at the end of the reporting period is the carrying amount of each class of derivative financial assets mentioned above.
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Notes to the financial statements continued
12. Non-current assets – Property, plant and equipment
Consolidated
At 31 July 2010
Cost
Accumulated depreciation
Net book amount
period ended 30 July 2011
Opening net book amount
Acquisition of subsidiary
Additions
Transfer between classes
Assets written off – cost
Assets written off – accumulated depreciation
Depreciation charge
Closing net book amount
At 30 July 2011
Cost
Accumulated depreciation
Net book amount
period ended 28 July 2012
Opening net book amount
Additions
Transfer between classes
Assets written off – cost
Assets written off – accumulated depreciation
Depreciation charge
Impairment loss
Closing net book amount
At 28 July 2012
Cost
Accumulated depreciation
Net book amount
Freehold
land
$’000
Freehold
buildings
$’000
Fixtures and
fittings
$’000
Plant and
equipment
$’000
Capital
works
in progress
$’000
Total
$’000
10,100
–
10,100
10,100
–
–
–
–
–
–
10,100
10,100
–
10,100
10,100
–
–
–
–
–
–
10,100
10,100
–
10,100
19,500
(2,031)
17,469
17,469
–
–
–
–
–
(488)
16,981
19,500
(2,519)
16,981
16,981
–
–
–
–
(487)
–
16,494
19,500
(3,006)
16,494
343,035
(114,206)
228,829
228,829
235
12,254
99,566
(2)
2
(39,320)
301,564
455,088
(153,524)
301,564
301,564
14,378
(48,224)
(37,022)
36,261
(28,616)
(1,000)
193,125
(55,296)
137,829
137,829
3,974
11,942
53,026
797
(797)
(19,778)
186,993
262,864
(75,871)
186,993
186,993
14,340
59,782
(2,845)
2,589
(29,655)
–
73,823
–
73,823
639,583
(171,533)
468,050
73,823
10
80,909
(135,241)
–
–
–
19,501
19,501
–
19,501
19,501
22,510
(21,668)
–
–
–
–
468,050
4,219
105,105
17,351
795
(795)
(59,586)
535,139
767,053
(231,914)
535,139
535,139
51,228
(10,110)
(39,867)
38,850
(58,758)
(1,000)
237,341
231,204
20,343
515,482
384,220
(146,879)
334,140
(102,936)
237,341
231,204
20,343
–
20,343
768,303
(252,821)
515,482
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13. Non-current assets – Deferred tax assets
the balance comprises temporary differences attributable to:
Employee benefits
Non-employee provisions
Deferred income
Amortising deductions
Other
Tax losses
Set off of deferred tax liabilities pursuant to set off provisions (note 18)
Net deferred tax assets
Movements:
Opening balance at 30 July 2011
Credited/(charged) to profit or loss (note 7)
Credited/(charged) to other comprehensive income
Acquisition of subsidiary
Closing balance at 28 July 2012
Consolidated
2012
$’000
2011
$’000
19,839
5,805
640
9,090
15,697
332
51,403
(30,288)
21,115
68,082
(16,679)
–
–
17,770
19,347
2,204
14,520
14,241
–
68,082
(20,702)
47,380
80,114
(12,739)
(126)
832
51,403
68,082
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Notes to the financial statements continued
14. Non-current assets – Intangible assets
Consolidated
At 31 July 2010
Cost
Accumulated amortisation
Net book amount
period ended 30 July 2011
Opening net book amount
Acquisition of subsidiary
Other additions
Transfer between classes
Assets written off
Amortisation charge**
Closing net book amount
At 30 July 2011
Cost
Accumulated amortisation
Net book amount
period ended 28 July 2012
Opening net book amount
Other additions
Transfer between classes
Assets written off – cost
Assets written off – accumulated depreciation
Amortisation charge**
Impairment loss***
Closing net book amount
At 28 July 2012
Cost
Accumulated amortisation and impairment
Net book amount
Brand
names and
trademarks*
$’000
Goodwill
$’000
Software
$’000
181,248
(35,557)
145,691
145,691
234
7,961
(17,351)
–
(16,941)
119,594
172,092
(52,498)
119,594
119,594
10,226
10,104
(8,862)
6,248
(19,839)
–
Lease
rights
$’000
48,540
(13,270)
35,270
35,270
–
–
–
–
(5,971)
29,299
Total
$’000
971,342
(50,322)
921,020
921,020
50,900
12,574
(17,351)
–
(23,263)
943,880
48,540
(19,241)
29,299
1,017,465
(73,585)
943,880
29,299
–
–
–
–
(2,408)
(10,754)
943,880
18,139
10,104
(8,862)
6,248
(22,606)
(10,754)
392,020
(1,495)
390,525
390,525
23,569
4,613
–
–
(351)
418,356
420,202
(1,846)
418,356
418,356
7,913
–
–
–
(359)
–
425,910
117,471
16,137
936,149
428,115
(2,205)
425,910
183,560
(66,089)
117,471
48,540
(32,403)
1,036,846
(100,697)
16,137
936,149
349,534
–
349,534
349,534
27,097
–
–
–
–
376,631
376,631
–
376,631
376,631
–
–
–
–
–
–
376,631
376,631
–
376,631
*
Brand names and trademarks include certain brand names which have indefinite useful lives. The carrying amount at 28 July 2012 of the indefinite lived brands
was $426 million (2011: $413 million).
** Amortisation of $22.6 million (2011: $23.3 million) is included in administration and selling expenses in the income statement.
*** Impairment of $10.8 million (2011: nil) is included in store closure and restructuring costs in the income statement.
(a) Impairment tests for goodwill and intangibles with an indefinite useful life
The goodwill arising on the acquisition of the Myer business cannot be allocated to the Group’s individual cash generating units (the Group’s
stores), and hence has been allocated to the business as a whole. Similarly, the Myer brand name, which has an indefinite useful life, has been
allocated to the business as a whole.
The goodwill arising on the acquisition of the sass & bide business cannot be allocated to the individual cash generating units (the sass
& bide stores), and hence has been allocated to the sass & bide business as a whole. Similarly, the sass & bide brand name, which has
an indefinite useful life, has been allocated to the sass & bide business as a whole.
AASB 136 Impairment of Assets requires goodwill and intangible assets with an indefinite useful life to be tested annually for impairment. In
testing these assets for impairment, the recoverable amount of each business has been determined using a value in use calculation. This
calculation uses cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond
five periods are extrapolated using a terminal growth rate of 2.5 percent. Key assumptions used in the calculation were as follows:
– discount rate (pre tax) 14.4 percent
– terminal growth rate 2.5 percent
– operating gross profit margin 41 percent
Neither goodwill nor indefinite lived intangibles were impaired at the end of the reporting period. Sensitivity analysis on reasonably possible
changes in assumptions did not result in an outcome where an impairment would be required.
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15. Current liabilities – Trade and other payables
Trade payables
Other payables
Trade and other payables are non-interest bearing.
16. Current liabilities – Provisions
Employee benefits
Workers’ compensation (a)
Sales returns (b)
Other
Consolidated
2012
$’000
201,163
195,974
397,137
2011
$’000
207,144
205,058
412,202
Consolidated
2012
$’000
59,590
19,839
3,867
2,661
85,957
2011
$’000
63,850
19,228
3,503
4,005
90,586
(a) Workers’ compensation
The amount represents a provision for potential workers’ compensation claims in certain states.
(b) Sales returns
The amount represents a provision for potential sales returns under the Group’s returns policy.
(c) Movements in provisions
Movements in each class of provision during the financial period, other than employee benefits, are set out below:
Workers’
compensation
$’000
Sales
returns
$’000
Other
$’000
Total
$’000
19,228
3,471
(2,860)
19,839
Workers’
compensation
$’000
17,324
6,645
(4,741)
19,228
3,503
3,867
(3,503)
3,867
Sales
returns
$’000
3,446
3,503
(3,446)
3,503
4,005
9,927
(11,271)
2,661
26,736
17,265
(17,634)
26,367
Other
$’000
Total
$’000
6,139
7,248
(9,382)
4,005
26,909
17,396
(17,569)
26,736
2012 consolidated
Current
Carrying amount at start of period
Additional provisions recognised during the period
Amounts utilised during the period
Carrying amount at end of period
2011 consolidated
Current
Carrying amount at start of period
Additional provisions recognised during the period
Amounts utilised during the period
Carrying amount at end of period
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Notes to the financial statements continued
17. Borrowings
non-current borrowings
Bank loans
Total borrowings
Consolidated
2012
$’000
2011
$’000
421,193
421,193
419,591
419,591
(a) Structure of debt
The debt funding of the Group at 28 July 2012 comprised bank loan facilities. The loan facilities comprise the following:
– Term cash advance facility: $425 million; and
– Revolving cash advance facility: $200 million.
These facilities were established on 29 October 2009, drawn down on the 6 November 2009 and have been amended and restated in the prior
year on 3 June 2011. In addition to the above, the Group entered into a one-year $50 million revolving credit facility on 13 April 2011 for the
purpose of funding the acquisition of the sass & bide business. This facility has been extended for an additional year as a $30 million revolving
credit facility. At balance date, the following amounts remain drawn down:
2012
$’000
425,000
–
425,000
(3,807)
421,193
2011
$’000
425,000
–
425,000
(5,409)
419,591
Term
3 years from 3 June 2011
4 years from 3 June 2011
3 years from 3 June 2011
4 years from 3 June 2011
Term cash advance facility
Revolving cash advance facility
Less borrowing costs
Net borrowings per balance sheet
(i) Bank loan facilities
The terms and conditions of the Group’s bank loan facilities are as follows:
Loan facilities
Syndicated facility
Term cash advance facility – Tranche A
Term cash advance facility – Tranche B
Revolving cash advance facility – Tranche C
Revolving cash advance facility – Tranche D
Bilateral cash advance facility
Revolving cash advance facilities
Description
Term loan facility
Term loan facility
Revolving facility
Revolving facility
Amount
$
225 million
200 million
100 million
100 million
Revolving facility
30 million
1 year from 13 April 2012
The Term cash advance facilities (Tranche A and B) are term loan facilities repayable at maturity on 2 June 2014 and 2 June 2015 respectively.
Any amounts repaid on these facilities during the term may not be redrawn. The revolving cash advance facilities (Tranche C, D and bilateral)
are revolving, so that amounts repaid may be redrawn during their terms.
(b) Security
The loan facilities in place at 28 July 2012 are unsecured, subject to various representations, undertakings, events of default and review events
which are usual for facilities of this nature.
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17. Borrowings continued
(c) Fair value
The carrying amounts and fair values of borrowings at balance date are:
Group
Bank loans
2012
2011
Carrying
amount
$’000
421,193
421,193
Fair value
$’000
421,193
421,193
Carrying
amount
$’000
419,591
419,591
Fair value
$’000
419,591
419,591
The fair value of existing borrowings equals their carrying amount, as the impact of discounting is not significant.
(d) Risk exposures
Details of the Group’s exposure to risks arising from current and non-current borrowings are set out in note 2.
18. Non-current liabilities – Deferred tax liabilities
the balance comprises temporary differences attributable to:
Property, plant, equipment and software
Deferred stamp duty
Brand names
Derivative financial instruments
Sundry items
Set off of deferred tax liabilities pursuant to set off provisions (note 13)
Net deferred tax liabilities
Movements:
Balance at beginning of period
Charged/(credited) to income statement (note 7)
Charged/(credited) to other comprehensive income
Acquisition of subsidiary
Balance at end of period
Consolidated
2012
$’000
2011
$’000
19,858
1,141
8,465
535
289
30,288
10,772
1,309
8,568
16
37
20,702
(30,288)
(20,702)
–
–
20,702
9,051
535
–
30,288
9,277
4,607
(232)
7,050
20,702
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Notes to the financial statements continued
19. Non-current liabilities – Provisions
Employee benefits
Fixed lease rental increases
Unfavourable lease contracts
Consolidated
2012
$’000
5,243
10,196
–
15,439
2011
$’000
4,374
41,935
3,082
49,391
(a) Fixed lease rental increases
The Group is a party to a number of leases that include fixed rental increases during their term. In accordance with AASB 117 Leases, the total
rentals over these leases are being expensed over the lease term on a straight-line basis. The above provision reflects the difference between the
future committed payments under these leases and the total future expense.
(b) Unfavourable lease contracts
At the date the Myer business was acquired, the business was party to a number of unfavourable lease contracts compared to market rentals
payable at the time. As part of the acquisition accounting, a provision was raised for the difference between the rentals committed under these
leases and the market value of these leases. This provision has now been fully utilised.
(c) Movements in provisions
Movements in each class of provision during the financial period, other than employee benefits, are set out below:
2012 consolidated
Carrying amount at start of period
Additional amounts recognised
Amounts unused and reversed during the period
Amounts utilised during the period
Carrying amount at end of period
2011 consolidated
Carrying amount at start of period
Additional amounts recognised
Amounts unused and reversed during the period
Amounts utilised during the period
Carrying amount at end of period
Fixed
lease
rental
increases
$’000
Unfavourable
lease
contracts
$’000
41,935
1,832
(23,833)
(9,738)
10,196
45,841
2,391
–
(6,297)
41,935
3,082
–
–
(3,082)
–
5,322
–
–
(2,240)
3,082
Other
$’000
–
–
–
–
–
5,000
–
(5,000)
–
–
Total
45,017
1,832
(23,833)
(12,820)
10,196
56,163
2,391
(5,000)
(8,537)
45,017
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20. Non-current liabilities – Other
Financial liability
Long-term payable
Retirement benefit obligations
21. Contributed equity
Opening balance
Options exercised at $0.01 per ordinary share during the period
Options exercised at $1.27 per ordinary share during the period
Shares issued to Employee Share Scheme Trust at market value during the period
Less: Transaction costs arising on share issue net of tax
treasury shares
Opening balance
Shares issued to Employee Share Scheme Trust
Shares allocated on exercise of options at $0.01 during the period
Shares allocated on exercise of options at $1.27 during the period
Shares allocated on exercise of options at $2.14 during the period
Closing balance of Treasury shares
Closing balance
Notes
22(b) (iii)
Consolidated
2012
$’000
27,553
1,500
353
29,406
2011
$’000
30,553
2,000
459
33,012
2012
2011
2012
2011
Number of
shares
Number of
shares
583,147,884
–
36,667
200,000
581,517,884
480,000
–
1,150,000
583,384,551
–
583,147,884
–
583,384,551
583,147,884
(306,405)
(200,000)
316,809
120,396
44,000
(537,016)
(1,150,000)
480,000
208,278
692,333
(25,200)
(306,405)
$’000
$’000
557,635
–
47
425
558,107
–
558,107
(38,156)
(425)
3
153
94
(38,331)
553,962
5
–
3,668
557,635
–
557,635
(36,834)
(3,668)
5
264
2,077
(38,156)
583,359,351
582,841,479
519,776
519,479
(a) Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number
of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each
share is entitled to one vote.
(b) Treasury shares
Treasury shares are shares in Myer Holdings Limited that are held by the Myer Equity Plans Trust for the purposes of issuing shares under the
Myer Equity Incentive Plan (see note 35 for further information).
(c) Employee share and option schemes
Information relating to the employee share and option schemes, including details of shares issued under the scheme, is set out in note 35.
(d) Share issue and exercise of options
The Company issued a further 36,667 new ordinary shares during the reporting period at $1.27 per share.
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Notes to the financial statements continued
(e) Capital risk management
The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide
returns for shareholders and benefits for other stakeholders and to maintain optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to
shareholders, issue new shares or sell assets to reduce debt.
Consistently with others in the industry, the Group monitors capital on the basis of various balance sheet ratios including the gearing ratio. This
ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings less cash and cash equivalents. Total capital is
calculated as ‘equity’ as shown in the balance sheet plus net debt.
The gearing ratios at 28 July 2012 and 30 July 2011 were as follows:
Total borrowings
Less: cash and cash equivalents
Net debt
Total equity
Total capital
Gearing ratio
Notes
17
8
Consolidated
2012
$’000
421,193
(38,058)
383,135
877,680
2011
$’000
419,591
(37,274)
382,317
861,330
1,260,815
1,243,647
30%
31%
The decrease in the gearing ratio during 2012 was primarily driven by the increase in equity associated with surplus retained profits over
dividends paid during the year.
22. Reserves and retained profits
(a) Retained profits
Movements in retained profits were as follows:
Balance at beginning of period
Items of other comprehensive income recognised directly in retained earnings
Actuarial (losses)/gains on retirement benefit obligation, net of tax
Dividends
Net profit/(loss) for the period
Balance at end of period
Consolidated
2012
$’000
2011
$’000
349,396
320,470
–
(125,404)
139,365
363,357
183
(130,981)
159,724
349,396
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22. Reserves and retained profits continued
(b) Reserves
Share-based payments (i)
Cash flow hedges (ii)
Other reserve (iii)
Foreign currency translation reserve (iv)
Movements:
Share-based payments
Balance at beginning of period
Share-based payments expense recognised
Income tax (notes 7, 13 and 18)
Balance at end of period
Cash flow hedges
Balance at beginning of period
Revaluation – gross
Deferred tax (notes 13 and 18)
Transfer to net profit – gross
Deferred tax (notes 13 and 18)
Transfer to inventory and other assets – gross
Deferred tax (notes 13 and 18)
Balance at end of period
Other reserve
Balance at beginning of period
Other reserve recognised
Balance at end of period
Foreign currency translation reserve
Balance at beginning of period
Currency translation differences arising during the period
Balance at end of period
Consolidated
2012
$’000
20,682
(3,837)
(31,650)
5
(14,800)
19,314
1,955
(587)
20,682
(2,699)
2,699
(1,526)
(3,442)
1,033
140
(42)
(3,837)
(31,650)
–
(31,650)
(85)
90
5
2011
$’000
19,314
(2,699)
(31,650)
(85)
(15,120)
19,754
(1,409)
969
19,314
88
(6,009)
1,041
1,289
(387)
1,827
(548)
(2,699)
–
(31,650)
(31,650)
–
(85)
(85)
(i) Share-based payments
The Share-based payments reserve is used to recognise the fair value of options issued to employees but not exercised.
(ii) Cash flow hedges
The hedging reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised directly in equity,
as described in note 1(n). Amounts are recognised in profit and loss when the associated hedged transaction affects profit and loss.
(iii) Other reserve
Under the shareholders’ agreement entered into with the non-controlling shareholders at the time of acquisition, the Group holds a call option
over the non-controlling shareholders’ 35% interest in Boogie & Boogie Pty Ltd, the owner of sass & bide, and the non-controlling shareholders
have a corresponding put option. These options are exercisable at any time after two years from acquisition date at a market value of the shares
at that time based on a formula contained within the shareholders’ agreement. The potential liability of the Group under the put option has been
estimated at acquisition date based on expectations on the timing of exercise and the exercise price at that future point in time, discounted to
present value using the Group’s incremental borrowing rate. The recognition of the put option liability at acquisition date has resulted in the
recognition of an amount to the other reserve within shareholders’ equity and a financial liability within non-current liabilities other. This liability
is reassessed each reporting date for any change in the expected liability on exercise, with the impact recognised within net finance costs within
the income statement.
(iv) Foreign currency translation reserve
Exchange differences arising on translation of the foreign controlled entity are recognised in other comprehensive income as described in note
1(d) and accumulated in a separate reserve within equity. The cumulative amount is reclassified to profit or loss when the net investment is
disposed of.
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Notes to the financial statements continued
23. Dividends
(a) Ordinary shares
Final dividend for the period ended 30 July 2011 of 11.5 cents (2010: 11.5 cents)
per fully paid share paid 16 November 2011 (2010: 4 November 2010)
Fully franked based on tax paid at 30%
Interim dividend for the period ended 28 July 2012 of 10.0 cents (2011: 11.0 cents)
per fully paid share paid 10 May 2012 (2011: 12 May 2011)
Fully franked based on tax paid at 30%
Total dividends provided for or paid
(b) Dividends not recognised at the end of the reporting period
In addition to the above dividends, since period end the directors have recommended the payment of a final
dividend of 9.0 cents per fully paid ordinary share, (2011: 11.5 cents) fully franked based on tax paid at 30%.
The aggregate amount of the proposed dividend expected to be paid on 14 November 2012, but not
recognised as a liability at period end, is:
(c) Franked dividends
The franked portions of the final dividends recommended after 28 July 2012 will be franked out of existing franking
credits or out of franking credits arising from the payment of income tax in the period ending 27 July 2013.
Franking credits available for subsequent financial periods based on a tax rate of 30% (2011: 30%)
The above amounts represent the balance of the franking account as at the reporting date, adjusted for:
(a) franking credits that will arise from the payment of the amount of the provision for income tax;
(b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date; and
(c) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date.
Consolidated
2012
$’000
2011
$’000
67,068
66,870
58,336
125,404
64,111
130,981
52,502
67,027
Consolidated
2012
$’000
2011
$’000
14,619
33,954
The consolidated amounts include franking credits that would be available to the parent entity if distributable profits of subsidiaries were
paid as dividends.
The impact on the franking account of the dividend recommended by the directors since the end of the reporting period, but not recognised
as a liability at the reporting date, will be a reduction in the franking account of $22 million (2011: reduction of $29 million).
24. Key Management Personnel disclosures
(a) Key Management Personnel compensation
Key Management Personnel compensation for the period ended 28 July 2012 is set out below. The Key Management Personnel of the Group are
persons having the authority and responsibility for planning, directing and controlling the Company’s activities directly or indirectly, including
the directors of Myer Holdings Limited.
Short term employee benefits
Post employment benefits
Long-term benefits
Termination and other benefits
Share-based payments
Detailed remuneration disclosures are provided in the Remuneration Report on pages 44 to 59.
Consolidated
2012
$’000
5,037,909
230,576
309,388
–
1,158,516
2011
$’000
4,955,262
233,723
921,901
–
(1,305,329)
6,736,389
4,805,557
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24. Key Management Personnel disclosures continued
(b) Equity instrument disclosures relating to Key Management Personnel
(i) Option and performance rights holdings
The numbers of options over ordinary shares in the Company held during the financial period by each director of Myer Holdings Limited and
other Key Management Personnel of the Group, including their personally related parties, are set out below.
2012
name
Directors of
Myer Holdings limited
Howard McDonald
Bernard Brookes
Tom Flood
Rupert Myer
Anne Brennan
Peter Hay
Chris Froggatt
other Key Management
personnel of the Group
Mark Ashby
Penny Winn
Greg Travers
Nick Abboud
Mark Goddard
Balance
at start
of the
period
Granted
as
compen-
sation
Exercised
Other
changes
Balance
at end
of the
period
Vested
and
exercisable
Unvested
26,667
7,380,394
10,000
–
–
–
–
1,340,168
1,320,168
478,836
986,036
–
–
2,058,383
–
–
–
–
–
(26,667)
–
(10,000)
–
–
–
–
–
–
–
–
–
–
–
–
9,438,777
–
–
–
–
–
–
–
–
–
–
–
–
260,728
–
260,728
214,986
–
–
–
(58,668)
(5,868)
–
–
(1,320,168)
–
–
–
1,600,896
–
680,896
1,195,154
–
586,666
–
–
30,000
–
–
9,438,777
–
–
–
–
–
1,014,230
–
680,896
1,165,154
Penny Winn has been included as part of Key Management Personnel for 2012, but due to the cessation of employment with Myer on 8 December
2011, option holdings have been removed in “Other changes”.
All vested options are exercisable at the end of the period.
Balance
at start
of the
period
Granted
as
compen-
sation
Exercised
Other
changes
Balance
at end
of the
period
Vested
and
exercisable
Unvested
26,667
7,860,394
10,000
–
–
–
–
1,420,168
1,320,168
478,836
1,016,036
–
–
–
–
–
–
–
–
–
–
–
–
(480,000)
–
–
–
–
–
(80,000)
–
–
(30,000)
–
–
–
–
–
–
–
–
–
–
–
26,667
7,380,394
10,000
–
–
–
–
1,340,168
1,320,168
478,836
986,036
–
–
–
–
–
–
–
26,667
7,380,394
10,000
–
–
–
–
253,333
166,667
–
–
1,086,835
1,153,501
478,836
986,036
2011
name
Directors of
Myer Holdings limited
Howard McDonald
Bernard Brookes
Tom Flood
Rupert Myer
Anne Brennan
Peter Hay
Chris Froggatt
other Key Management
personnel of the Group
Mark Ashby
Penny Winn
Greg Travers
Nick Abboud
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9
Notes to the financial statements continued
(ii) Share holdings
The number of shares in the Company held during the financial period by each director of Myer Holdings Limited and other Key Management
Personnel of the Group, including their personally related parties, are set out below. There were no shares granted during the reporting period
as compensation.
2012
name
Directors of Myer Holdings limited
ordinary shares
Howard McDonald
Bernard Brookes
Tom Flood
Rupert Myer
Anne Brennan
Peter Hay
Chris Froggatt
other Key Management personnel of the Group
ordinary shares
Mark Ashby
Penny Winn
Greg Travers
Nick Abboud
Mark Goddard
Received
during
the period
on the
exercise
of options
Balance
at the
start of
the period
Other
changes
during
the period
Balance
at the
end of
the period
2,047,723
11,546,630
390,000
725,710
53,658
12,195
10,040
245,257
200,000
1,537,140
–
–
26,667
–
10,000
–
–
–
–
–
–
58,668
5,868
–
–
(763,250)
–
8,289
–
–
–
2,074,390
10,783,380
400,000
733,999
53,658
12,195
10,040
–
(200,000)
(80,000)
(5,868)
–
245,257
–
1,515,808
–
–
Penny Winn has been included as part of Key Management Personnel for 2012, but due to the cessation of employment with Myer on 8 December
2011, option holdings have been removed in “Other changes during the period.”
2011
name
Directors of Myer Holdings limited
ordinary shares
Howard McDonald
Bernard Brookes
Tom Flood
Rupert Myer
Anne Brennan
Peter Hay
Chris Froggatt
other Key Management personnel of the Group
ordinary shares
Mark Ashby
Penny Winn
Greg Travers
Nick Abboud
Received
during
the period
on the
exercise
of options
Balance
at the
start of
the period
Other
changes
during
the period
Balance
at the
end of
the period
2,047,723
11,066,630
390,000
725,710
53,658
12,195
–
185,257
200,000
2,017,140
288,132
–
480,000
–
–
–
–
–
80,000
–
–
30,000
–
–
–
–
–
–
10,040
2,047,723
11,546,630
390,000
725,710
53,658
12,195
10,040
(20,000)
–
(480,000)
(318,132)
245,257
200,000
1,537,140
–
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24. Key Management Personnel disclosures continued
(c) Loans to Key Management Personnel
Details of loans made to directors of Myer Holdings Limited and other Key Management Personnel of the Group, including their personally
related parties, are set out below.
(i) Aggregates for Key Management Personnel
In 2011 and 2012 there were no loans to individuals at any time.
(ii) Individuals with loans above $100,000 during the financial period
In 2011 and 2012 there were no loans to individuals that exceeded $100,000 at any time.
(d) Other transactions with Key Management Personnel
There were no transactions with Key Management Personnel or entities related to them, other than compensation.
25. Remuneration of auditors
During the period the following fees were paid or payable for services provided by the auditor of the Group, and its related practices:
(a) PwC Australia
(i) Assurance services
Audit services
Audit and review of financial statements and other audit work under the Corporations Act 2001
Other assurance services
Audit of rent certificates
Other
Total remuneration for other assurance services
Total remuneration for assurance services
(ii) Taxation services
Tax consulting and tax advice
(iii) Other services
Other services
Total remuneration of PwC Australia
(b) Overseas practices of PwC
(i) Assurance services
Audit services
Audit and review of financial statements and other audit work under the Corporations Act 2001
(ii) Taxation services
Tax consulting and tax advice
(iii) Other services
Other services
Total remuneration for overseas practises of PwC
(c) Other firms
(i) Assurance services
Audit services
Audit and review of financial statements and other audit work under the Corporations Act 2001
Other assurance services
Audit of rent certificates
Other
Total remuneration for other assurance services
Total remuneration for assurance services
(ii) Taxation services
Tax consulting and tax advice
Total remuneration of Other firms
2
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Consolidated
2012
52 weeks
$
2011
52 weeks
$
389,075
334,460
41,400
–
41,400
34,100
29,026
63,126
430,475
397,586
166,946
284,748
40,000
637,421
51,729
734,063
37,026
16,712
6,546
60,284
–
–
–
–
–
–
–
–
–
60,593
60,593
69,500
3,000
4,231
7,231
76,731
19,000
95,731
Notes to the financial statements continued
26. Contingencies
Contingent liabilities
The Group had contingent liabilities at 28 July 2012 in respect of:
Guarantees
For information about guarantees given by entities within the Group, including the parent entity, please refer to notes 30 and 33.
While the amount and timing of any contingencies are uncertain, no material losses are anticipated in respect of the above contingent liabilities.
27. Commitments
(a) Capital commitments
Capital expenditure contracted for at the end of the reporting period but not recognised as liabilities is as follows:
Property, plant, equipment and software
Payable:
Within one year
Later than one year but not later than five years
Later than five years
Consolidated
2012
$’000
2011
$’000
7,481
–
–
7,481
13,613
–
–
13,613
(b) Lease commitments: Group as lessee
Operating leases
The Group leases the majority of its stores and warehouses under non-cancellable operating leases expiring within one to 30 years. The leases
have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated.
Commitments for minimum lease payments in relation
to non-cancellable operating leases are payable as follows:
Within one year
Later than one year but not later than five years
Later than five years
Consolidated
2012
$’000
2011
$’000
201,016
700,046
1,825,835
195,403
668,759
1,586,957
2,726,897
2,451,119
Not included in the above commitments are contingent rental payments that may arise in the event that sales made by certain leased stores exceed
a pre-determined amount. The contingent rentals payable as a percentage of sales revenue and the relevant thresholds vary from lease to lease.
28. Related party transactions
(a) Parent entities
The parent entity within the Group is Myer Holdings Limited, a listed public company, incorporated in Australia.
(b) Subsidiaries
Interests in subsidiaries are set out in note 29.
(c) Key Management Personnel
Disclosures relating to Key Management Personnel are set out in note 24.
(d) Transactions with other related parties
There were no transactions with other related parties during the current period.
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29. Subsidiaries and transactions with non-controlling interests
(a) Investments 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 1(b):
Name of entity
NB Elizabeth Pty Ltd
NB Russell Pty Ltd
NB Lonsdale Pty Ltd
NB Collins Pty Ltd
Warehouse Solutions Pty Ltd
Myer Group Pty Ltd
Myer Pty Ltd
Myer Group Finance Limited
The Myer Emporium Pty Ltd
ACT Employment Services Pty Ltd
Myer Employee Share Plan Pty Ltd
Myer Travel Pty Ltd
Myer Sourcing Asia Ltd
Shanghai Myer Service Company Ltd
Boogie & Boogie Pty Ltd
sass & bide Pty Ltd
sass & bide Retail Pty Ltd
sass & bide Retail (NZ) Pty Ltd
sass & bide UK Limited
sass & bide USA inc.
sass & bide inc.
Notes
(1), (3)
(2), (3)
(2), (3)
(1), (3)
(2), (3)
(1), (3)
(1), (3)
(1), (3)
(1), (3)
(2)
(2)
(2)
(2)
(2)
(2)
Country of
incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Hong Kong
China
Australia
Australia
Australia
Australia
United Kingdom
USA
USA
Class of
shares
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Equity
holdings(4)
2012
%
Equity
holdings(4)
2011
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
65
65
65
65
65
65
65
100
100
100
100
100
100
100
100
100
100
100
100
100
100
65
65
65
65
65
65
65
Notes:
(1) Each of these entities has been granted relief from the necessity to prepare financial statements in accordance with Class Order 98/1418 issued by the Australian Securities
and Investments Commission.
(2) Each of these entities is classified as small proprietary and therefore relieved from the requirement to prepare and lodge financial reports with ASIC.
(3) Each of these entities is party to a deed of cross guarantee, refer note 30.
(4) The proportion of ownership interest is equal to the proportion of voting power held.
(b) Transactions with non-controlling interests
There were no transactions with non-controlling interests in 2011 or 2012.
30. Deed of cross guarantee
Myer Holdings Limited, NB Elizabeth Pty Ltd, NB Collins Pty Ltd, NB Russell Pty Ltd, Myer Group Pty Ltd, NB Lonsdale Pty Ltd, Warehouse
Solutions Pty Ltd, Myer Group Finance Limited, Myer Pty Ltd and The Myer Emporium Pty Ltd are parties to a deed of cross guarantee under
which each company guarantees the debts of the others. By entering into the deed, the wholly-owned entities have been relieved from the
requirement to prepare a financial report and directors’ report under Class Order 98/1418 (as amended) issued by the Australian Securities
and Investments Commission.
Each of the members of the extended ‘closed group’ are considered to be solvent at 28 July 2012.
2
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Notes to the financial statements continued
(a) Consolidated income statement, statement of comprehensive income
and summary of movements in consolidated retained earnings
The above companies represent a ‘closed group’ for the purposes of the Class Order, and as there are no other parties to the deed of cross
guarantee that are controlled by Myer Holdings Limited, they also represent the ‘extended closed group’.
As certain group entities are not members of the closed group additional disclosure has been made in relation to the closed group.
Set out below is a consolidated income statement, a consolidated statement of comprehensive income and a summary of movements in
consolidated retained earnings for the year ended 28 July 2012 of the closed group.
Income statement
total sales value (excluding GSt)
Concession sales
Sale of goods (excluding GSt)
Sales revenue deferred under customer loyalty program
revenue from sale of goods (excluding GSt)
Other operating revenue (excluding finance revenue)
Cost of goods sold
Other income
operating gross profit
Selling expenses
Administration expenses
Store closure and restructuring costs
Write-back of fixed lease rental increases provision
Profit on sale of financial asset
earnings before interest and tax before non-recurring Ipo transaction costs and related charges
Finance revenue
Finance costs
net finance costs
profit before income tax before non-recurring Ipo transaction costs and related charges
Income tax expense
profit for the period before non-recurring Ipo transaction costs and related charges
Initial Public Offering (IPO) transaction costs and other non-recurring IPO related charges (after tax)
Profit for the period
Statement of comprehensive income
profit for the period
other comprehensive income
Cash flow hedges
Non-recurring IPO related transfers to profit and loss
Actuarial gains/(losses) on retirement benefit obligation
Exchange differences on translation of foreign operations
Income tax relating to components of other comprehensive income
other comprehensive income for the period, net of tax
total comprehensive income for the period
Summary of movements in consolidated retained earnings
retained earnings at the beginning of the financial year
Profit for the period
Actuarial gains/(losses) on retirement benefit obligation
Dividends provided for or paid
retained earnings at the end of the financial year
2012
52 weeks
$’000
3,080,111
(478,905)
2,601,206
(39,211)
2,561,995
115,853
(1,448,141)
25,908
1,255,615
(738,701)
(293,966)
(18,450)
23,109
–
227,607
4,460
(34,174)
(29,714)
197,893
(61,617)
136,276
–
136,276
2011
52 weeks
$’000
3,145,346
(452,000)
2,693,346
(40,104)
2,653,242
109,559
(1,545,733)
45,904
1,262,972
(713,060)
(290,101)
(10,476)
–
11,680
261,015
3,236
(38,743)
(35,507)
225,508
(61,465)
164,043
(3,522)
160,521
136,276
160,521
(455)
–
–
–
(552)
(1,007)
(2,665)
–
183
–
38
(2,444)
135,269
158,077
349,890
136,276
–
(125,404)
360,762
320,167
160,521
183
(130,981)
349,890
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30. Deed of cross guarantee continued
(b) Consolidated balance sheet
Set out below is a consolidated balance sheet as at 28 July 2012 of the closed group.
ASSetS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Total current assets
non-current assets
Other financial assets
Derivative financial instruments
Property, plant and equipment
Deferred tax assets
Intangible assets
Other
Total non-current assets
total assets
lIABIlItIeS
Current liabilities
Trade and other payables
Derivative financial instruments
Current tax liabilities
Provisions
Other
Total current liabilities
non-current liabilities
Borrowings
Derivative financial instruments
Provisions
Deferred income
Other
Total non-current liabilities
total liabilities
net assets
eQuIty
Contributed equity
Retained profits/(losses)
Reserves
total equity
2012
$’000
2011
$’000
30,790
23,726
378,089
432,605
41,374
–
510,760
27,066
884,193
3,812
36,149
26,455
376,406
439,010
41,368
258
530,476
53,635
891,972
4,420
1,467,205
1,522,129
1,899,810
1,961,139
394,334
2,207
14,549
84,899
1,119
497,108
421,193
1,785
15,023
69,821
29,406
537,228
409,913
7,247
32,899
89,954
3,078
543,091
419,591
–
49,153
62,448
33,012
564,204
1,034,336
1,107,295
865,474
853,844
519,776
360,762
(15,064)
865,474
519,379
349,890
(15,425)
853,844
31. Events occurring after the reporting period
Subsequent to 28 July 2012, the directors have determined to pay a final dividend of 9 cents per share, franked to 100 percent at the 30 percent
corporate income tax rate, payable on 14 November 2012. The record date for this dividend is 28 September 2012.
The financial effect of the final ordinary dividend for 2012 has not been recognised in the annual financial statements for the period ended
28 July 2012 and will be recognised in subsequent financial statements.
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Notes to the financial statements continued
32. Reconciliation of profit after income tax to net cash inflow from operating activities
Profit for the period
Depreciation and amortisation including lease inducements
Interest income
Fair value adjustment to derivatives
Interest expense – unwind of borrowing costs
IPO and related expenses
Share-based payments expense
Profit on sale of financial asset
Net exchange differences
Defined benefits superannuation
Change in operating assets and liabilities
Decrease (increase) in trade and other receivables
Decrease (increase) in inventories
Decrease (increase) in deferred tax asset
Increase (decrease) in trade and other payables
(Decrease) increase in current tax payable
(Decrease) increase in provisions
(Decrease) increase in other liabilities
Net cash inflow from operating activities
33. Parent entity financial information
(a) Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Balance sheet
Current assets
Total assets
Current liabilities
Total liabilities
Shareholders’ equity
Issued capital
Reserves
Cash flow hedges
Other reserve
Share-based payments
Retained earnings
profit for the period
total comprehensive income
Consolidated
2012
52 weeks
$’000
141,067
88,124
(4,499)
(3,505)
1,717
–
1,955
–
66
–
7,158
(4,306)
25,144
(21,010)
(18,706)
(31,080)
(2,211)
2011
52 weeks
$’000
159,665
79,443
(2,169)
2,628
2,173
5,031
(1,410)
(11,680)
–
(319)
1,582
(24,008)
18,314
6,497
22,802
(27,278)
(4,220)
179,914
227,051
2012
$’000
2011
$’000
176,071
1,073,255
38,320
488,850
45,621
948,567
56,912
507,056
519,776
519,479
(1,785)
(31,650)
13,185
85,430
268,641
267,275
258
(31,650)
11,230
(57,806)
2,900
2,774
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33. Parent entity financial information continued
(b) Guarantees entered into by the parent entity
Carrying amount included in current liabilities
2012
$’000
–
–
2011
$’000
–
–
The parent entity is the borrowing entity under the Group’s financing facilities. Under these facilities, the parent entity is party to a cross-
guarantee with various other Group entities, who guarantee the repayment of the facilities in the event that the parent entity is in default.
The parent entity is also party to a deed of cross guarantee entered into on 10 May 2010. The details of the deed of cross guarantee are set
out in note 30. At balance date no liability has been recognised in relation to these guarantees on the basis that the potential exposure is not
considered material.
The parent entity has issued bank guarantees amounting to $46.9 million, of which $31.9 million represents guarantees supporting workers’
compensation self insurance licences in various jurisdictions.
(c) Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities as at 28 July 2012 or 30 July 2011. For information about guarantees given by the parent
entity, please see above.
(d) Contractual commitments for the acquisition of property, plant or equipment
The parent entity did not have any contractual commitments for the acquisition of property, plant or equipment as at 28 July 2012 or 30 July 2011.
(e) Event subsequent to balance date
Subsequent to the end of the financial year, on 10 October 2012, the Company recorded a dividend from a subsidiary company of $133.8 million,
representing payment of undistributed profits of subsidiaries of the current financial year.
34. Earnings per share
(a) Basic earnings per share
Total basic earnings per share attributable to the ordinary equity holders of the Company
(b) Diluted earnings per share
Total diluted earnings per share attributable to the ordinary equity holders of the Company
(c) Reconciliations of earnings used in calculating earnings per share
Basic earnings per share
Profit attributable to the ordinary equity holders of the Company used in calculating basic earnings per share
Diluted earnings per share
Profit attributable to the ordinary equity holders of the Company used in calculating diluted earnings per share
(d) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share
Adjustments for calculation of diluted earnings per share:
Options
Weighted average number of ordinary shares and potential ordinary shares used as the denominator
in calculating diluted earnings per share
2
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Consolidated
2012
$’000
2011
$’000
23.9
23.7
27.4
27.3
139,365
159,724
139,365
159,724
Consolidated
2012
Number
2011
Number
583,288,348
582,174,903
4,578,147
3,778,086
587,866,495
585,952,989
Notes to the financial statements continued
(e) Information concerning the classification of securities
(i) Options and performance rights
Options granted to employees under the Myer Equity Incentive Plan are considered to be potential ordinary shares and have been included
in the determination of diluted earnings per share to the extent to which they are dilutive. The options have not been included in the
determination of basic earnings per share. Details relating to the options are set out in note 35.
22,293,146 options outstanding at period end are not included in the calculation of diluted earnings per share because they are antidilutive for
the period ended 28 July 2012. These options could potentially dilute basic earnings per share in the future.
35. Share-based payments
(a) Myer Equity Incentive Plan
The Myer Equity Incentive Plan was established to help ensure retention of senior management and key staff (Snr Executive) and to provide
incentives for the delivery of both short and long-term shareholder returns. Under the plan, options and rights have been issued in Myer
Holdings Limited, the Group’s ultimate Australian parent, since November 2006 as follows:
Tranche 1
Tranche 2
Tranche 3
Tranche 4
Tranche 5
Tranche 6
– EPS Snr
Executive Plan
Issued November – December 2006. Options were granted with time-based and performance-based components. Two-thirds
of the options granted were to vest evenly over a five-year period provided the participant remained with the Group, with the
other third vesting upon the achievement of certain EBITDA targets. Under the terms of the offer, as a result of the IPO, 80% of
unvested options vested immediately on 6 November 2009, with the remainder vesting on the second anniversary of IPO with
the exception of the CEO, whose remaining options under the tranche vested on the first anniversary of the IPO. This plan has
now expired and any unexercised options lapsed.
Issued August 2007. Options were granted with time-based and performance-based components. Two-thirds of the options
granted were to vest evenly over a four-year period provided the participant remained with the Group, with the other third
vesting upon the achievement of certain EBITDA targets. Under the terms of the offer, as a result of the IPO, 80% of unvested
options vested immediately on 6 November 2009, with the remainder vesting on the second anniversary of IPO. This plan has
now expired and any unexercised options lapsed.
Issued January – July 2008: Options vest on a time basis evenly over the three-year period from 31 July 2010 to 31 July 2012.
Issued 17 December 2008: Options vest on a time basis over the three-year period from 31 July 2011 to 31 July 2013.
Issued 30 June 2009: Options vest on a time basis over the three-year period from 31 July 2012 to 31 July 2014.
Issued 6 November 2009: Options vest on an EPS performance basis over a three-year period from November 2009
to 31 July 2012, subject to performance hurdles being met.
Tranche 6
– EPS CEO Plan
Issued 6 November 2009: Options vest on an EPS performance basis over a four-year period from November 2009
to 31 July 2013, subject to performance hurdles being met.
Tranche 6
– Share price
CEO Plan
Performance
rights TSR
(Snr Executive)
Performance
rights EPS
(Snr Executive)
Performance
rights TSR
(CEO)
Performance
rights EPS
(CEO)
Issued 6 November 2009: Options vest on a share price performance basis over the four-year period from November 2009
to 31 July 2013, the timing of which is subject to performance hurdles being met.
Issued October 2011: Management Total Shareholder Return performance rights vest depending on Myer’s performance
against TSR hurdles over the performance period 31 July 2011 to 26 July 2014. Following the end of the performance period
and after Myer has lodged its full year audited financial results for 2014 with the ASX, the Myer Board will test the performance
hurdles and will determine how many performance rights (if any) are eligible to vest.
Issued October 2011: Management Earnings Per Share performance rights will vest depending on Myer’s performance against
the EPS hurdle over the performance period 31 July 2011 to 26 July 2014, with a linear progression through the various
threshold points. Following the end of the performance period and after Myer has lodged its full year audited financial results
for 2014 with the ASX, the Myer Board will test the performance hurdles and will determine how many performance rights
(if any) are eligible to vest.
Issued December 2011: CEO Total Shareholder Return performance rights vest depending on Myer’s performance against TSR
hurdles over the performance period 31 July 2011 to 26 July 2014. Following the end of the performance period and after
Myer has lodged its full year audited financial results for 2014 with the ASX, the Myer Board will test the performance hurdles
and will determine how many performance rights (if any) are eligible to vest.
Issued December 2011: CEO Earnings Per Share performance rights will vest depending on Myer’s performance against the
EPS hurdle over the performance period 31 July 2011 to 26 July 2014, with a linear progression through the various threshold
points. Following the end of the performance period and after Myer has lodged its full year audited financial results for 2014
with the ASX, the Myer Board will test the performance hurdles and will determine how many performance rights (if any) are
eligible to vest.
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35. Share-based payments continued
(a) Myer Equity Incentive Plan continued
Options and rights are granted under the plan for no consideration, and carry no dividend or voting rights. When exercisable, each option
or right is convertible into one ordinary share in the Company. Participation in the plan is at the Board’s discretion and no individual has a
contractual right to participate in the plan or to receive any guaranteed benefits.
Set out below is a summary of options and rights granted under the plan:
Expiry
date
Exercise
price
$
Balance
at start
of period
number
Granted
during the
period
number
Exercised
during the
period
number
Lapsed
during
the period
number
Balance
at end
of period
number
Vested
and
exercisable
at end
of the
period
number
15 oct 2011
0.01
316,809
15 oct 2011
1.27
157,063
21 Dec 2012
3.00
7,440,580
24 oct 2013
2.14
3,705,863
24 oct 2014
2.34
4,153,900
31 Dec 2012
4.10
3,193,278
31 Dec 2013
4.10
5,152,671
31 Dec 2013
5.74
2,227,723
–
–
–
–
–
–
–
–
31 oct 2014
0.00
–
2,182,073
31 oct 2014
0.00
–
1,411,330
31 oct 2014
0.00
–
1,250,000
31 oct 2014
0.00
–
808,383
(316,809)
(157,063)
–
–
–
–
–
–
–
(1,219,400)
6,221,180
3,979,675
(44,000)
(645,200)
3,016,663
448,600
–
(1,000,000)
3,153,900
–
(672,269)
2,521,009
–
–
–
–
–
–
–
5,152,671
–
2,227,723
(175,427)
2,006,646
(113,472)
1,297,858
–
1,250,000
–
808,383
–
–
–
–
–
–
–
–
26,347,887
5,651,786
(517,872)
(3,825,768)
27,656,033
4,428,275
Grant date
Consolidated – 2012
Tranche 1:
Nov – Dec 2006
Tranche 2:
Aug – Nov 2007
Tranche 3:
Jan – May 2008
Tranche 4:
17 Dec 2008
Tranche 5:
30 Jun 2009
Tranche 6:
EPS Snr
Executive Plan
06 Nov 2009
Tranche 6:
EPS CEO Plan
06 Nov 2009
Tranche 6: Share
Price CEO Plan
06 Nov 2009
Performance rights
TSR (Snr Executive)
Performance rights
EPS (Snr Executive)
Performance rights
TSR (CEO)
Performance rights
EPS (CEO)
total
Weighted average exercise price
$3.31
$0.00
$0.57
$2.65
$2.78
$2.91
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Notes to the financial statements continued
Expiry
date
Exercise
price
$
Balance
at start
of period
number
Granted
during the
period
number
Exercised
during the
period
number
Lapsed
during
the period
number
Balance
at end
of period
number
Vested
and
exercisable
at end
of the
period
number
15 Oct 2011
0.01
1,287,475
15 Oct 2011
1.27
365,341
21 Dec 2012
3.00
9,028,213
24 Oct 2013
2.14
4,302,863
24 Oct 2014
2.34
4,702,900
31 Dec 2012
4.10
3,445,379
31 Dec 2013
4.10
5,152,671
31 Dec 2013
5.74
2,227,723
30,512,565
–
–
–
–
–
–
–
–
–
(960,000)
(10,666)
316,809
–
(208,278)
–
157,063
66,725
(692,333)
(895,300)
7,440,580
2,118,638
–
–
(597,000)
3,705,863
(549,000)
4,153,900
–
(252,101)
3,193,278
–
–
–
5,152,671
–
2,227,723
–
–
–
–
–
(1,860,611)
(2,304,067)
26,347,887
2,185,363
Grant date
Consolidated – 2011
Tranche 1:
Nov – Dec 2006
Tranche 2:
Aug – Nov 2007
Tranche 3:
Jan – May 2008
Tranche 4:
17 Dec 2008
Tranche 5:
30 Jun 2009
Tranche 6: EPS
Snr Executive Plan
06 Nov 2009
Tranche 6: EPS
CEO Plan
06 Nov 2009
Tranche 6: Share
Price CEO Plan
06 Nov 2009
total
Weighted average exercise price
$3.14
$0.00
$1.26
$2.73
$3.31
$2.95
No options expired during the periods covered by the above table.
The weighted average share price at the date of exercise of options exercised during the period ended 28 July 2012 was $2.16 (2011: $3.60).
The weighted average remaining contractual life of share options and rights outstanding at the end of the period was 1.4 years (2011: 2.1 years).
Fair value of performance rights granted
The assessed fair value at grant date of options and rights granted during the period is noted below. Fair value varies depending on the period to
vesting date. The fair values at grant dates were independently determined using a monte-carlo simulation pricing model that takes into account
the exercise price, the term of the rights, the impact of dilution, the fair value of shares in the Company at grant date and expected volatility of
the underlying share, the expected dividend yield and the risk-free interest rate for the term of the right.
The fair values and model inputs for performance rights granted during the period included:
a) Fair value of performance rights granted
b) Exercise price at grant date
c) Grant date
d) Expiry date
e) Share price at grant date
f ) Expected price volatility of the Group’s shares
g) Expected dividend yield
h) Risk-free interest rate
Performance
rights TSR
Snr Executive
Performance
rights EPS
Snr Executive
Performance
rights TSR
(CEO)
Performance
rights EPS
(CEO)
$1.08
$0.00
$1.67
$0.00
21 Oct 2011
Oct 2014
21 Oct 2011
Oct 2014
$2.08
30%
7%
3.56%
$2.08
30%
7%
3.56%
$1.08
$0.00
9 Dec 2011
Oct 2014
$2.08
30%
7%
3.56%
$1.67
$0.00
9 Dec 2011
Oct 2014
$2.08
30%
7%
3.56%
The expected price volatility is based on the historic volatility (based on the remaining life of the performance rights), adjusted for any expected
changes to future volatility due to publicly available information.
Where options or rights are issued to employees of subsidiaries within the Group, the subsidiaries compensate the Company for the amount
recognised as expense in relation to these options or rights.
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35. Share-based payments continued
(b) Expenses arising from share-based payment transactions
Total expenses arising from share-based payments transactions recognised during the period as part of employee benefit expense were
as follows:
Options and rights issued under Myer Equity Incentive Plan
Consolidated
2012
$’000
1,955
2011
$’000
(1,409)
Share-based payment transaction expenses represent the amount recognised in the period in relation to share-based remuneration plans.
Where expectations of the number of options or rights expected to vest changes, the life to date expense is adjusted which can result in a
negative expense for the period due to the reversal of amounts recognised in prior periods.
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Notes to the financial statements continued
DireCtorS’ DeClaration
In the directors’ opinion:
(a) the financial statements and notes set out on pages 60 to 110 are in accordance with the Corporations Act 2001, including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
(ii) giving a true and fair view of the consolidated entity’s financial position as at 28 July 2012 and of its performance for the financial period
ended on that date; and
(b) 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
(c) at the date of this declaration, there are reasonable grounds to believe that the members of the extended closed group identified in note 30
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 30.
Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International
Accounting Standards Board.
The directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of the
Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
Howard McDonald
Chairman
Melbourne
10 October 2012
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inDepenDent auDitor’S report
Report on the financial report
Independent auditor’s report to the members of Myer Holdings Limited
Independent auditor’s report to the members of
Myer Holdings Limited
Auditor’s opinion
Report on the financial report
In our opinion:
We have audited the accompanying financial report of Myer Holdings Limited (the company), which
comprises the statement of financial position as at 28 July 2012, the statement of comprehensive
We have audited the accompanying financial report of Myer Holdings Limited (the company), which comprises the
income, statement of changes in equity and statement of cash flows for the period ended on that date,
statement of financial position as at 28 July 2012, the statement of comprehensive income, statement of changes in
a summary of significant accounting policies, other explanatory notes and the directors’ declaration for
equity and statement of cash flows for the period ended on that date, a summary of significant accounting policies,
Myer Holdings Limited and the Myer Group (the consolidated entity). The consolidated entity
other explanatory notes and the directors’ declaration for Myer Holdings Limited and the Myer Group (the consolidated
comprises the company and the entities it controlled at the period’s end or from time to time during
entity). The consolidated entity comprises the company and the entities it controlled at the period’s end or from time
the financial period .
to time during the financial period.
(i)
(a)
the financial report of Myer Holdings Limited is in accordance with the Corporations Act
2001, including:
giving a true and fair view of the consolidated entity’s financial position as at 28 July
2012 and of its performance for the period ended on that date; and
Directors’ responsibility for the financial report
(ii)
Directors’ responsibility 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
The directors of the company are responsible for the preparation of the financial report that gives a true and fair view
and for such internal controls as the directors determine are necessary to enable the preparation of the
in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal controls as the
financial report that is free from material misstatement, whether due to fraud or error. In Note 1, the
directors determine are necessary to enable the preparation of the financial report that is free from material misstatement,
directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial
whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101
Statements, that the financial statements comply with International Financial Reporting Standards.
Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards.
complying with Australian Accounting Standards (including the Australian
Accounting Interpretations) and the Corporations Regulations 2001; and
the financial report and notes also comply with International Financial Reporting Standards
as disclosed in Note 1.
(b)
Auditor’s responsibility
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in
comply with relevant ethical requirements relating to audit engagements and plan and perform the
accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical
audit to obtain reasonable assurance whether the financial report is free from material misstatement.
requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether
the financial report is free from material misstatement.
Report on the Remuneration Report(13(a))
We have audited the remuneration report included in pages x to y of the directors’ report for the
period ended 28 July 2012. 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.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
in the financial report. The procedures selected depend on the auditor’s judgement, including the
report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor
In making those risk assessments, the auditor considers internal control relevant to the entity’s
considers internal control relevant to the entity’s preparation and fair presentation of the financial report in order to
preparation and fair presentation of the financial report in order to design audit procedures that are
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by the directors, as well as
policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall
evaluating the overall presentation of the financial report.
presentation of the financial report.
Auditor’s opinion
In our opinion, the remuneration report of Myer Holdings Limited for the year ended 28 July 2012,
complies with section 300A of the Corporations Act 2001.
Our procedures include reading the other information in the Annual Report to determine whether it contains any
material inconsistencies with the financial report.
Our procedures include reading the other information in the Annual Report to determine whether it
contains any material inconsistencies with the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
PricewaterhouseCoopers
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001.
PricewaterhouseCoopers, ABN 52 780 433 757
Freshwater Place, 2 Southbank Boulevard, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Andrew Mill
Partner
Melbourne
xx September 2012
Liability limited by a scheme approved under Professional Standards Legislation.
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Auditor’s opinion
In our opinion:
Auditor’s opinion
In our opinion:
the financial report of Myer Holdings Limited is in accordance with the Corporations Act 2001, including:
(a)
(i) giving a true and fair view of the consolidated entity’s financial position as at 28 July 2012 and of its
the financial report of Myer Holdings Limited is in accordance with the Corporations Act
2001, including:
performance for the period ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations)
(i)
and the Corporations Regulations 2001; and
giving a true and fair view of the consolidated entity’s financial position as at 28 July
2012 and of its performance for the period ended on that date; and
the financial report and notes also comply with International Financial Reporting Standards as disclosed in Note 1.
(a)
(b)
Report on the Remuneration Report
(ii)
complying with Australian Accounting Standards (including the Australian
Accounting Interpretations) and the Corporations Regulations 2001; and
We have audited the remuneration report included in pages 44 to 59 of the directors’ report for the period ended
28 July 2012. 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.
the financial report and notes also comply with International Financial Reporting Standards
as disclosed in Note 1.
(b)
Auditor’s opinion
In our opinion, the remuneration report of Myer Holdings Limited for the year ended 28 July 2012, complies with
section 300A of the Corporations Act 2001.
Report on the Remuneration Report(13(a))
We have audited the remuneration report included in pages x to y of the directors’ report for the
period ended 28 July 2012. 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.
pricewaterhouseCoopers
Auditor’s opinion
In our opinion, the remuneration report of Myer Holdings Limited for the year ended 28 July 2012,
complies with section 300A of the Corporations Act 2001.
Andrew Mill
partner
Melbourne
10 october 2012
PricewaterhouseCoopers
Andrew Mill
Partner
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auDitor’S inDepenDenCe DeClaration
As lead auditor for the audit of Myer Holdings Limited for the period ended 28 July 2012, I declare that to the
best of my knowledge and belief, there have been:
Independent auditor’s report to the members of
Myer Holdings Limited
Auditor’s opinion
Auditor’s Independence Declaration
Report on the financial report
In our opinion:
We have audited the accompanying financial report of Myer Holdings Limited (the company), which
comprises the statement of financial position as at 28 July 2012, the statement of comprehensive
(a)
income, statement of changes in equity and statement of cash flows for the period ended on that date,
no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation
a summary of significant accounting policies, other explanatory notes and the directors’ declaration for
to the audit; and
Myer Holdings Limited and the Myer Group (the consolidated entity). The consolidated entity
comprises the company and the entities it controlled at the period’s end or from time to time during
the financial period .
This declaration is in respect of Myer Holdings Limited and the entities it controlled during the period.
no contraventions of any applicable code of professional conduct in relation to the audit.
(i)
b)
a)
the financial report of Myer Holdings Limited is in accordance with the Corporations Act
2001, including:
giving a true and fair view of the consolidated entity’s financial position as at 28 July
2012 and of its performance for the period ended on that date; and
(ii)
Directors’ responsibility 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 controls as the directors determine are necessary to enable the preparation of the
financial report that is free from material misstatement, whether due to fraud or error. In Note 1, the
directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial
Statements, that the financial statements comply with International Financial Reporting Standards.
complying with Australian Accounting Standards (including the Australian
Accounting Interpretations) and the Corporations Regulations 2001; and
the financial report and notes also comply with International Financial Reporting Standards
as disclosed in Note 1.
(b)
Melbourne
10 october 2012
Andrew Mill
partner
pricewaterhouseCoopers
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we
comply with relevant ethical requirements relating to audit engagements and plan and perform the
audit to obtain reasonable assurance whether the financial report is free from material misstatement.
Report on the Remuneration Report(13(a))
We have audited the remuneration report included in pages x to y of the directors’ report for the
period ended 28 July 2012. 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.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial report 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by the directors, as well as
evaluating the overall presentation of the financial report.
Auditor’s opinion
In our opinion, the remuneration report of Myer Holdings Limited for the year ended 28 July 2012,
complies with section 300A of the Corporations Act 2001.
Our procedures include reading the other information in the Annual Report to determine whether it
contains any material inconsistencies with the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
PricewaterhouseCoopers
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001.
PricewaterhouseCoopers, ABN 52 780 433 757
Freshwater Place, 2 Southbank Boulevard, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Andrew Mill
Partner
Melbourne
xx September 2012
Liability limited by a scheme approved under Professional Standards Legislation.
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ShareholDer inFormation
Shareholder information as at 1 October 2012
Myer Holdings Limited only has one class of shares on issue (being ordinary shares). All of the Company’s issued shares are listed on the
Australian Securities Exchange.
Issued capital
Number of shareholders
Minimum parcel price
Holders with less than a marketable parcel (less than 291 shares)
Distribution of shareholders and shareholdings
Number
583,384,551
54,326
$1.72 per unit
8,559 holders (1,494,898 total shares)
Total holders
Units
% of issued capital
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
total
27,445
20,103
3,604
3,005
169
54,326
Unmarketable parcels
Minimum $500.00 parcel at $1.72 per unit
291
Minimum parcel size
Twenty largest shareholders
Rank
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
National Nominees Limited
Citicorp Nominees Pty Limited
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