Annual Report 2014
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Our customers are at
the core of our business
Myer strives to be customers’ number one destination when it comes to fashion, cosmetics, and the home.
Our strategy provides a clear direction for us to continually delight our customers when they engage with us,
whether it is in a store or online.
Contents
Chairman and CEO Report
Operating and Financial Review
Sustainability
Board of Directors
Management Team
Corporate Governance Statement
Page 04
Page 06
Page 22
Page 26
Page 28
Page 30
Directors’ Report
Remuneration Report
Financial Report
Auditor’s Independence Declaration
Independent Auditor’s Report
Shareholder Information
Corporate Directory
Page 42
Page 47
Page 68
Page 114
Page 115
Page 117
Page 119
Annual General Meeting
The fifth Annual General Meeting of Myer Holdings Limited will be held
on Friday 21 November 2014 at 11.00am (Melbourne time).
Mural Hall
Level 6, Myer Melbourne Store
Bourke Street Mall, Melbourne VIC 3000
Myer Holdings Limited ABN 14 119 085 602
Front cover image: Myer Adelaide
Left page top to bottom: Team member and customer; Homewares, Myer Adelaide;
Childrenswear, Myer, Emporium Melbourne.
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CHAIRMAN AND
CEO REPORT
Paul McClintock AO and Bernie Brookes
was able to maintain total sales of $3,143 million.
On a comparable store sales basis, sales increased by
1.2 percent. It is encouraging that comparable store sales
have now grown in eight of the last nine quarters, which
points to our ability to successfully execute our strategy.
Best performing categories for the year were Cosmetics,
Women’s Footwear and Handbags, Miss Shop (Youth),
and Appliances. Myer Exclusive Brands grew by a further
1.7 percent to $638.2 million.
We reported a 22.6 percent fall in net profit after tax (NPAT),
reflecting a drop in operating gross profit and a previously
flagged increase in the cash cost of doing business
(cash CODB). The 57 basis point reduction in operating gross
profit margin was predominantly driven by the impact of
the depreciation of the Australian dollar on Myer Exclusive
Brands, as well as our increased investment in product
development. The competitive nature of the market,
particularly during the second half, restricted our ability
to pass on these cost increases. Cash CODB increased by
3.3 percent to $1,033 million. This increase partly reflects
the annualisation of the transition of our store wages penalty
structure in accordance with the Fair Work Act, as well as a
targeted investment in additional store labour hours.
The results include the acquisition in the first half of the
remaining 35 percent of the sass & bide business for
$33 million. We now own 100 percent of the sass & bide
business, which once again delivered sales growth
during the year.
Recognising Myer’s continued strong cash generation and
stable balance sheet, the Board has determined a fully
franked final dividend of 5.5 cents per share, taking the
full year dividend to 14.5 cents per share. This represents
a payout ratio of 86 percent and reflects the Board’s
confidence in the outlook for the business in FY2015.
Myer made a confidential and conditional proposal
to David Jones in October 2013 for a merger of equals,
which at the time we believed had strategic merits and
potential value accretion for both sets of shareholders.
The bid subsequently became public; however Myer
withdrew in April 2014, following the announcement
of Woolworths’ (South Africa) bid for David Jones.
Paul McClintock AO (left) and Bernie Brookes (right)
During the past year Myer has continued to evolve our
strategy, and in parallel, invest in the business to lay strong
foundations for future growth. We have a long history
of serving Australians in stores across the country from
Cairns to Bendigo and a solid track record of nurturing
Australian fashion and design. With our ongoing investment
in key areas such as our store network, online capability,
merchandise offer, and brand portfolio, we are well placed
to build on our position as a world class department store
in an increasingly global market place.
Financial performance
The full year sales result for the financial year (ended 26 July
2014) was encouraging in a challenging year impacted by
significant planned investment to reposition the business.
The investment was focused in the areas of our store
network, omni-channel, and Myer Exclusive Brands.
As expected, our investment in the business during the
year adversely affected performance and profitability;
however, we look forward to the benefits of our
investments beginning to be realised in FY2015.
The external environment was characterised by subdued
consumer sentiment throughout the year due in part to the
change in Federal Government and uncertainty surrounding
subsequent budget measures. In addition, there continued
to be strong competition from both international and online
retailers, along with the depreciation in the value of the
Australian dollar which impacted margins.
Despite four of our top 25 stores undergoing major
refurbishment and two store closures at Dandenong
(Victoria) and Elizabeth (South Australia), the business
04 Myer Annual Report 2014
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Evolving our strategy
During the year we continued to invest in our strategy,
which places the customer at the core of our business.
Our customer service offer was further strengthened with
the addition of a new digital customer feedback program,
the expansion of personal shopping services from 14 to 29
stores and into menswear, the delivery of enhanced in-store
theatre and experiences, the launch of online booking
services, and additional team member training programs.
Another exciting initiative was the rollout of customised
iPads to all stores, enabling our team members to offer
customers a significantly expanded product range via
a Myer app on the iPads.
During the year we were delighted to attract a significant
number of exciting new Australian and international brands
to Myer including Alex Perry, Scotch & Soda, White Suede,
M.J. Bale, and Herringbone, further reinforcing our position as
customers’ first choice for fashion. Our Myer Exclusive Brands
remain an integral part of our merchandise strategy, and we
have optimised the range for our customers by consolidating
some brands, developing key master brands, exiting some
smaller brands, and enhancing our design, speed to market,
and product development capabilities.
In August 2014 our loyalty program MYER one celebrated
its 10th anniversary. The program is a key competitive
advantage for Myer, with more than five million loyalty cards
distributed since the program commenced and sales from
MYER one members representing more than $2 billion of
overall sales in FY2014. This year, we again distributed a total
of over $50 million in Rewards Cards to members, with the
average spend on redemption reaching a new high of four
times the card value.
We invested significantly in improving our omni-channel
capability to provide customers with more choice in
when, where, and how they shop with us. This investment
delivered positive results, with online sales growth of more
than 100 percent during the year, supported by improved
fulfilment with the opening of our dedicated online
distribution centre in Melbourne (Victoria).
During the year we continued to invest in our store network to
enhance our customers’ experience. The major refurbishments
at our stores in Adelaide (South Australia), Indooroopilly
(Queensland), and Macquarie (New South Wales) are now
complete, and in May 2014 we opened our new space at
Emporium Melbourne (Victoria), which adjoins our CBD
flagship store. The refurbishment at the Miranda
(New South Wales) store is expected to be completed by
Christmas this year. In FY2015, we look forward to realising the
benefits from our completed refurbishments and new stores
at Mt Gravatt (Queensland) which opened in October 2014
and Joondalup (Western Australia), which is scheduled to
open before Christmas 2014.
Our people and community
Our 13,000 team members continue to be our greatest
strength. Their commitment and dedication is absolutely
critical to our business, and we would like to thank our team
for their continued hard work throughout the year.
In February 2014 the Board announced the reappointment
of Bernie Brookes as Myer CEO and Managing Director.
The Board considers that Bernie’s passion for Myer and his
strong leadership will ensure the business is well placed
to achieve its potential. In February 2014 we appointed
two new directors to the Board, Ian Cornell and Bob Thorn,
who both have extensive retail expertise. In July 2014 we
announced the retirement of Peter Hay from the Board, and
we would like to thank him for his valuable contribution
during the past four years. We also continued to strengthen
our leadership team with the appointments of Daniel
Bracken as Chief Merchandise and Marketing Officer, Richard
Umbers as Chief Information and Supply Chain Officer,
and Gary Williams as Executive General Manager Strategic
Planning and Business Development, who will support
the successful execution of our strategy. We look forward
to leveraging the valuable insights of our strengthened
leadership team as we continue to evolve our strategy.
This year marks 80 years since the passing of our founder
Sidney Myer. We have ensured that his strong philanthropic
legacy continues throughout the Myer business today.
Through the Myer Stores Community Fund, we have
supported more than 100 local and national charities this
year. The Myer Board and management team continue to
foster the well established relationships that exist within our
local communities, and we remain committed to minimising
our impact on the environment. Our Sustainability Report
is available from our website, myer.com.au/investor,
and contains further information about our community
involvement and sustainable business practices.
We were delighted to re-sign Jennifer Hawkins as
the Face of Myer, and Kris Smith as a Myer brand ambassador.
We also announced international model and television
personality, Kate Peck, as a new Myer brand ambassador.
FY2015 and beyond
As we move into FY2015 we expect to begin realising the
benefits of recent investments and a number of strategic
initiatives. We see this as a time of opportunity and will
continue to invest in the important areas of omni-channel,
our people, Myer Exclusive Brands, customer service
innovation, and refreshing the Myer brand, to position
Myer at the forefront of a rapidly changing and competitive
retail environment.
We remain confident in the strength of Myer, the quality
of the Myer team, and in our ability to capitalise on the
significant opportunities ahead.
We thank all our shareholders for their ongoing support
and look forward to seeing you at our Annual General
Meeting in November.
Paul McClintock AO
Chairman
Bernie Brookes
Chief Executive Officer and Managing Director
05 Chairman and CEO Report
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OPERATING AND
FINANCIAL REVIEW
About Myer
Myer is an iconic Australian brand with a rich heritage of style, fashion,
and community engagement spanning over 100 years.
Myer department stores
We pride ourselves on our strong Australian heritage,
having been an essential part of our customers’ lives for over
100 years with a committed history of philanthropy and
community engagement.
Our merchandise offer includes: Womenswear; Menswear;
Miss Shop (Youth); Childrenswear; Intimate apparel;
Cosmetics; Women’s Footwear, handbags and accessories;
Homewares; Entertainment; Toys; Furniture; and
General merchandise.
With 67 stores located in prime retail locations across
Australia, 13,000 team members, an engaged and loyal
customer base, and complementary e-commerce, digital
and mobile platforms, we are well placed to build on our
position as a leading department store group.
sass & bide
Myer Holdings Limited has owned 100 percent of the
sass & bide business since September 2013. sass & bide
is an exciting womenswear brand offering unique and
individual designs through a full range of ready-to-wear
apparel, denim, and intimates in 26 standalone boutiques
and in 22 Myer stores. The range is also available overseas
in selected department stores, specialised boutiques,
and global e-tailers, while the online store delivers to
New Zealand, the United Kingdom, and the United States.
With a strong wholesale business established in key
international markets, our focus is on enhancing and
leveraging the sass & bide e-commerce offer and
expanding the retail business across new markets
and categories.
Womenswear - Myer Adelaide
06 Myer Annual Report 2014
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67
MYER stores
across Australia
PERTH
Joondalup
Karrinyup
Perth City
Garden City
Morley
Carousel
WA
BRISBANE
North Lakes
Brookside
Indooroopilly
Mt Gravatt
Chermside
Brisbane City
Carindale
Darwin
NT
SA
Loganholme
Coomera
Pacific Fair
Robina
Cairns
Townsville
Mackay
QLD
NSW & ACT
Maroochydore
BRISBANE
Toowoomba
ADELAIDE
PERTH
ADELAIDE
Dubbo
Orange
MELBOURNE
VIC
Bendigo
Ballarat
Geelong
Belconnen
Wagga
Canberra
Albury
MELBOURNE
Green Hills
Tuggerah
Erina
Charlestown
SYDNEY
Wollongong
Shellharbour
Tea Tree Plaza
Adelaide City
Marion
Colonnades
Highpoint
Melbourne City
Northland
Doncaster
Eastland
Werribee
Chadstone
Southland
Frankston
Knox City
Fountain
Gate
Launceston
TAS
Hobart
SYDNEY
Penrith
Castle Hill
Blacktown
Parramatta
Hornsby
Macquarie
Bankstown
Top Ryde
Liverpool
Roselands
Hurstville
Miranda
Warringah
Chatswood
Sydney City
Bondi
Eastgardens
INDICATIVE NEW STORES
Anticipated opening (subject to variation and review)
• FY2015 • FY2016 • FY2017
STORE CLOSURES
Dandenong, Victoria (Oct 2013)
Elizabeth, South Australia (Feb 2014)
Hurstville, New South Wales (early 2015)
• Existing stores
• Recently opened
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Operating gross profit margin (%)*
41.23
41.48
40.91
39.50
38.61
FY10
FY11
FY12
FY13
FY14
SALES IN FY2014
+1.2%
ON A COMPARABLE
STORES BASIS
Total sales ($b)
Net profit after tax ($m)
3.14
3.14
3.12
3.16
Earnings per share (cents)
16.8
21.8
23.9
3.28
27.9
29.0
98.5
127.2
139.3
Full year dividends (cents)
14.5
18.0
19.0
FY14
FY13
FY12
FY11
FY10
FY14
FY13
FY12
FY11
FY10
162.7
168.7
22.5
22.0
42.0
41.0
40.0
39.0
38.0
37.0
FY14
FY13
FY12
FY11
FY10
FY14
FY13
FY12
FY11
FY10
Financial summary (million)
Sales
Operating gross profit*
Operating gross profit margin*
Cash cost of doing business (cash CODB)*
Earnings before interest, tax, depreciation, amortisation (EBITDA)
Earnings before interest and tax (EBIT)
Net profit after tax (NPAT) after non-controlling interest
FY2014
FY2013
Change
$3,143.0
$1,285.9
40.91%
$1,033.3
$252.6
$160.3
$98.5
$3,144.9
$1,304.5
41.48%
$999.9
$304.6
$214.8
$127.2
-0.06%
-1.43%
-57bps
+3.33%
-17.07%
-25.37%
-22.56%
*To better reflect the nature of certain items of income and expense, the income statement includes a reclassification of those items from
operating gross profit to cash cost of doing business. Please refer to page 82 for further information.
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Financial performance
Continued comparable store sales growth and significant investment for future growth.
Sales
Total sales for the full year (ending 26 July 2014) were
maintained at $3,143 million, up 1.2 percent on a
comparable stores basis. Total sales benefited from new
stores opened in FY2013: Fountain Gate (Victoria) in
September 2012; Townsville (Queensland) in October 2012;
and Shellharbour (New South Wales) in May 2013. This was
offset by the negative impact of the refurbishments in four
of our top 25 stores: Adelaide (South Australia); Indooroopilly
(Queensland); Miranda (New South Wales); and Macquarie
(New South Wales); as well as the closure of two stores:
Dandenong (Victoria) in October 2013; and Elizabeth
(South Australia) in February 2014.
Cosmetics continued to be the top performing category,
driven by the excellent customer response to the
introduction of leading make-up brand Napoleon Perdis
in all stores and strong performances by M.A.C Cosmetics,
Benefit and Chanel. Women’s Footwear and Handbags,
Miss Shop (Youth) and Appliances also performed strongly.
The continued growth in Myer Exclusive Brands was led by
some of our larger brands including Miss Shop,
Trent Nathan, and Australian House & Garden,
as well as new brands such as Baker by Ted Baker.
There was solid growth in concession brands including
Marcs, R.M. Williams, Politix, and Sunglass Hut. There were
a number of national brands that performed well, including
Lego, Seafolly, and Wish; however, these were offset by
a disappointing performance in tablet sales, as well as the
continued rationalisation of audio-visual. Online sales growth
of more than 100 percent and an increase in average online
transaction value during the year were driven by greater
customer engagement.
Margins and costs
The EBIT result reflected a drop in operating gross profit and
a previously flagged increase in cash CODB.
The 57 basis point reduction in operating gross profit margin
was predominantly driven by the impact of the depreciation
of the Australian dollar on Myer Exclusive Brands, as well
as the increased investment in product development. The
competitive nature of the market, particularly during the
second half, restricted our ability to pass on these cost
increases. Operating gross profit margin was also impacted
by the strong customer response to loyalty initiatives such as
MYER one bonus points promotions and bounce-back offers.
Some of the impact on gross margin was recovered through
a further reduction in shrinkage, improved sourcing and,
where possible, adjustments to selling prices.
Cash CODB increased by 3.3 percent to $1,033 million.
This increase partly reflects the annualisation of the
transition of our store wages penalty structure in accordance
with the Fair Work Act, as well as a targeted investment
in additional store labour hours. Also contributing to the
increased costs were occupancy, Myer Exclusive Brands
initiatives, ongoing investment in delivering the
omni-channel strategy, and space optimisation initiatives.
Depreciation, net finance costs, and tax
Capital investments made in previous years, as well as
the impact from new and closed stores, resulted in a
2.8 percent increase in depreciation to $92.3 million
(FY2013: $89.8 million). Despite the $33 million payment for
the remaining 35 percent of the sass & bide business during
the first half, net interest expense reduced by 16.1 percent
from $26.1 million to $21.9 million. This was predominantly
due to lower interest rates, the ongoing benefit from
the refinancing of our debt facilities in July 2013, and
disciplined cash flow management. The tax expense of
$39.9 million represents an effective tax rate of 28.8 percent
(FY2013: 30.0 percent). The lower tax rate was due to the
impact of the full consolidation of the sass & bide business
during the year.
Cash generation and working capital
The business continues to be highly cash generative despite a
12.3 percent reduction in operating cash flow to $263 million
during the year (FY2013: $300 million). A working capital
inflow of $10 million was underpinned by our disciplined
focus on inventory management, with inventory turns up
and aged inventory down. These improvements reflect
the continuing benefits of our significant investment in
merchandise and point-of-sale systems.
Balance sheet
Net debt finished the year slightly up at $348 million
(FY2013: $340 million). Excluding the $33 million payment for
the remaining 35 percent stake in the sass & bide business in
October 2013, net debt would have dropped 7.3 percent to
$315 million. The Board has determined a final dividend of
5.5 cents per share, taking the full year dividend to 14.5 cents
per share fully franked (FY2013:18.0 cents). This represents a
payout ratio of 86 percent, above the Board’s target dividend
payout ratio of 70-80 percent of NPAT, reflecting the Board’s
confidence in the outlook for the business in FY2015.
09 Operating and Financial Review
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Strategy, prospects and risks
Strategy overview
Myer’s strategy underpins our activities and decision-making. We continually seek to adapt and evolve our strategy, ensuring
that we are well placed to respond to the competitive and increasingly global retail environment and meet changing
customer preferences.
Improve
customer service
Enhance our
merchandise offer
Page 12
Page 14
Strengthen our
loyalty offer
Page 16
Build a leading
omni-channel offer
Optimise our store
network
Page 18
Page 20
Prospects
Our focus will remain on delivering improved shareholder value through the execution of our strategy. We see this as a time
of opportunity and will continue to invest to position Myer at the forefront of a rapidly changing retail environment.
As we progress through FY2015 we expect to begin realising the benefits from recent investments and a number of strategic
initiatives. We anticipate our performance will be assisted by a number of factors including the benefits of completed store
refurbishments and openings; growth of the online business supported by an enhanced customer experience; new partnerships
with Australian designer brands; continued growth in Myer Exclusive Brands, sass & bide, and other new national and international
brands; as well as a new Christmas merchandise and marketing strategy.
We will continue to invest in the business in FY2015 with a focus on accelerating our omni-channel strategy, investing in
our people, optimising the Myer Exclusive Brands strategy, customer service innovation, and refreshing the Myer brand.
These investments are important to deliver the operational improvements and capabilities required to underpin long-term,
sustainable growth.
The recent strengthening of the leadership team with a number of senior appointments will contribute to the evolution of
Myer’s strategy as we continue to build on our strengths and position the business for future growth.
The material risks that may affect our ability to realise these prospects are detailed below.
Material risks and mitigating strategies
Myer’s strategy takes into account expected operating and retail market conditions, together with the general economic
conditions, which are inherently uncertain. Myer has structured and proactive risk management and internal control systems
in place to manage risks and offset any negative impact.
A detailed discussion of the Company’s risk management, including financial risk management, is set out in the Corporate
Governance Statement (Part 4, on page 35) and in the Financial Report (at note 2, on page 82).
Known risks that could have a material impact on Myer, the ability to successfully implement our strategy and which could
adversely impact on future growth prospects for FY2015 and beyond, have been discussed on the following page.
10 Myer Annual Report 2014
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External economic environment risks
Macro-economic factors such as the fluctuation of the Australian dollar, poor consumer confidence, changes to government
policies, and weakness in the global economy could adversely impact the Company’s ability to achieve sales growth. Myer
regularly analyses and uses economic data to help mitigate the future impact on sales, and has also implemented conservative
hedging, capital management, and marketing and merchandise initiatives to combat the cyclical nature of the business.
Competitive landscape risks
The Australian retail industry in which Myer operates is highly competitive. The Company’s competitive position may be
negatively impacted by new international and domestic entrants to the market, existing competitors, and increased online
competition, which could impact sales. To mitigate these risks, Myer has invested in key areas of customer service, store network,
omni-channel, and merchandise and marketing to continue to provide a compelling offer for our customers.
Technology risks
With Myer’s increasing reliance on technology in a rapidly changing technological environment, outages, online disruptions
and a failure to upgrade and improve our IT systems, could have a detrimental effect on our sales, business efficiencies, and
brand reputation. To offset these risks, Myer continues to invest and develop our in-house IT capabilities and engage with
reputable third party IT service providers to be able to adapt to rapidly changing technology and and ensure we have reliable
IT systems.
Brand reputation risks
Myer’s strong brand reputation is crucial for building positive relationships with customers, which in turn generates sales and
goodwill towards the Company. A significant event or issue could attract strong criticism of the Myer brand through a range of
channels (such as traditional media or social media) which could impact sales or our share price. Myer has a range of policies
and initiatives to mitigate brand risks, including a Code of Conduct, a Whistleblower Policy, an Ethical Sourcing Policy, marketing
campaigns, and ongoing environmental and sustainability initiatives.
People management risks
Myer is exposed to health and safety risks, particularly due to the large number of team members and customers across
our locations. Failure to manage these risks could have a negative effect on Myer’s reputation and performance. Safety is a
high priority at Myer to ensure the wellbeing of all of our team members, customers, and suppliers. We conduct regular detailed
risk assessments at each store, distribution centre, and at our support office, as well as regular team member education sessions.
Myer needs to attract and retain talented senior managers to ensure that our leadership team has the right skills and experience
to evolve our strategy. Failure to do so may adversely affect Myer’s reputation, performance, and growth. We are increasing the
skills of our people through enhanced training and development programs and the utilisation of our Human Resources and
Remuneration Committee, which provides oversight and advice. During the year we made a number of appointments to our
Board and Executive Management Group, which have further strengthened our leadership team.
Regulatory and compliance risks
Myer operates in a regulated environment, and failure to comply with changes to applicable laws such as mandatory
compliance standards, disclosure requirements, consumer protection, and the Privacy Act could impact on our financial
performance and brand reputation.
Myer’s Audit, Finance and Risk Committee and in-house Legal and Assurance teams provide crucial business advice and training
in legislation and compliance. Board reporting and continuous disclosure processes are also in place.
Strategic and business plan risks
A failure to execute our strategy could impact sales, share price, and our reputation. We continue to evolve our strategy in line
with changing customer preferences, with a strong focus on key performance indicators such as return on capital, inventory
management, and operating gross profit to ensure that strategic business plans are achieved and financial performance is met.
Store refurbishments, new openings, and other capital investments are closely managed to ensure that expected benefits are
delivered, and we continue to make improvements in inventory management and shrinkage reduction, security requirements,
and inventory systems and processes.
11 Operating and Financial Review
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“Paula was friendly, greeting myself
and my three-year-old with the
best smile, engaging both of us
in conversation.”
- Myer Werribee customer
Personal shopping service - Myer Adelaide
Paula Razumic - Intimate apparel, Myer Werribee
Herringbone (Menswear) - Myer Melbourne
12 Myer Annual Report 2014
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Improve
customer service
Providing excellent service across all channels remains key to ensuring
that we delight our customers every time they engage with us.
Service initiatives
We were pleased to deliver a number of improvements in
customer service during FY2014. In particular, significant
progress was made across store operations to ensure that
our teams are better able to focus on serving customers.
Productivity and efficiency gains from a number of initiatives
continue to be reinvested into providing additional service
and selling team hours.
The customer feedback program launched in 2013 has now
received more than 40,000 individual customer comments
about our team members’ service which enables us to
benchmark and improve our progress. We are delighted with
the improved trend in our Net Promoter Score
(which measures customer satisfaction), reflecting our
customers’ recognition of our investment and innovation in
enhancing customer service.
Following the success of our women’s personal shopping
service, we extended the service to include menswear,
with 29 stores now offering this service. Positive customer
feedback demonstrates the value in providing a dedicated
one-on-one service, and team member sales productivity
in this area is consistently higher than the team member
average for these departments.
An exciting new initiative changing the way our customers
shop in our stores was the rollout of 1,400 iPads across the
store network from July 2014. The iPads have a customised
app, ‘MyCustomer Orders’, that allows customers to check
product availability and order from a significantly expanded
range from any Myer store.
During the year we trialled a new convenient in-store
destination at Highpoint (Victoria). ‘The Hub’ enables
customers to access in-store services such as ‘Click and Collect’,
lay-by, gift registry, free Wi-Fi, and iPads to shop our
online range. We plan to deliver similar concepts at our
new stores in Mt Gravatt (Queensland) and
Joondalup (Western Australia).
Visits to see Santa in Myer stores continue to be a
strong driver of foot traffic during the Christmas period.
We successfully piloted our online booking service
during Christmas 2013, with more than 5,000 customers
booking their visit with Santa online. We are progressively
implementing this service in other areas including personal
shopping, cosmetic appointments, intimate apparel fittings,
and back to school shoe fittings which will reduce customer
waiting times.
To further enhance the in-store experience for customers,
from September 2014 we are progressively introducing more
than 160 dedicated service manager roles in stores to lead
our team members.
The improvements we have delivered in customer service
continue to be recognised locally and internationally.
During the year the International Customer Service
Professionals awarded Myer the People Choice Business
Category Award for Department Stores, as well as the
overall platinum winner award.
For the second year in a row, Myer was awarded the
Department Store of the Year by Roy Morgan Research in its
2013 Customer Satisfaction Awards, and we were pleased
to be recognised as a finalist in the Australian Retailers
Association’s Retail Awards.
Targeted investment improves
customer service
Efficiency initiatives
During the year we continued to focus on identifying areas
where we can improve our productivity across the business.
Our fitting rooms in selected stores are undergoing upgrades
to provide more modern environments, and we have
implemented dedicated service models to improve the
customer experience and increase sales productivity.
Our initiative to improve the flow of stock from our receiving
docks to the selling floor continues to deliver positive gains.
An initial trial in three stores has been expanded to 13 stores,
improving our product availability and enabling our frontline
team to provide better customer service.
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Enhance our
merchandise offer
Myer is focused on inspiring and delighting our customers, and we strive to be the
first choice for customers shopping for fashion, cosmetics, and the home.
Our extensive range of national brands, Australian and
international designers, and Myer Exclusive Brands, reflects
our focus on inspiring and delighting our customers.
The key categories of Cosmetics, Miss Shop (Youth),
Women’s Footwear and Handbags, and Appliances
performed strongly in FY2014. Cosmetics in particular
has been a consistently strong performer, delivering nine
consecutive quarters of growth. High quality service, the
exceptionally strong customer response to the introduction
of leading make-up brand Napoleon Perdis and solid growth
across key brands including M.A.C Cosmetics, Chanel, and
Benefit underpinned the performance in Cosmetics.
Some of the best performing brands during the year were
Politix, Trent Nathan, Marcs, Wish, Seafolly,
M.A.C Cosmetics, and Lego.
As part of our commitment to newness and fashionability,
we also launched a number of exciting new brands in store
including YYTRIUM by Aurelio Costarella, One Tru Luv,
Dita Von Teese, Baker by Ted Baker, Tome, Lancel,
Napoleon Perdis, Nike, Kurt Geiger, and Peter Alexander.
We have an ongoing focus on attracting new leading
womenswear brands to our strong Australian and
international designer offering, and we are delighted to
welcome well-known brands such as Alex Perry, by Johnny,
White Suede, and Little Joe Women to Myer.
Work is underway to significantly enhance our menswear
offering through an improved product range, enhanced
in-store shopping environments, and targeted marketing.
As part of this drive, we are welcoming international
menswear brand Superdry and men’s footwear brand
Aquila to our stores, as well as M.J. Bale, Herringbone,
and Scotch & Soda.
In FY2014, we were excited to welcome a range of
international designer homewares and gifting brands
including Orla Kiely, kate spade new york, LSA, and
Jonathan Adler. Our market share in small appliances
continued to grow, with particularly strong results in the
food preparation and personal care categories.
Myer Exclusive Brands are an important driver of growth
and profitability for our business, and we have a number
of initiatives planned to ensure that our brands continue
to inspire and delight our customers. During the year
we optimised our range of Myer Exclusive Brands by
developing master brands such as Basque, Blaq, Vue,
and Trent Nathan, consolidating some brands, and exiting
some smaller brands. We are also enhancing the
merchandise offer for our customers by increasing our
design, speed to market, and product development
capabilities in key Myer Exclusive Brands.
We continue to attract
an exciting range of Australian
and international designers
In FY2014 our Myer Exclusive Brands womenswear offer
was strengthened by the acquisition of leading Australian
fashion brands Charlie Brown and Howard Showers and
our partnership with Lisa Ho to design a ready-to-wear range
exclusive to Myer, L Lisa Ho.
The volume of Myer Exclusive Brands merchandise sourced
through our global sourcing offices in Hong Kong and
Shanghai grew further in 2014. With a strong governance
framework in place, these offices will continue to support
the growth in Myer Exclusive Brands.
Since Myer acquired the remaining 35 percent stake in
sass & bide in September 2013, this unique Australian
women’s fashion brand has continued to deliver solid
growth, and we are exploring additional opportunities
including overseas expansion and the introduction of
new categories.
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Peter Alexander (Apparel) - Myer Melbourne
Australian House & Garden (Myer Exclusive Brand) - Myer Adelaide
Peter Pilotto (International Designer) - Myer Melbourne
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More than 3,000 MYER one Platinum members enjoy unique
‘money can’t buy’ experiences including private shopping nights
MYER one Platinum membership card
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Strengthen our
loyalty offer
Our MYER one loyalty program continues to be one of Australia’s leading loyalty programs
and provides an important competitive advantage for the business.
Sales from the MYER one program were in excess of
$2 billion this year and we have distributed more than
five million membership cards since the program began.
Throughout the year, MYER one members received more
than $50 million in Rewards Cards and the average spend on
redemption reached a new high of four times the card value.
This program is a highly effective tool to evaluate key aspects
of our business including stores, brands, space, product,
service, and marketing.
We have continued to focus on an engagement and
retention program for our 3,000 premium MYER one
Platinum members. This includes the opportunity to
participate in ‘money can’t buy’ experiences such as private
shopping nights, exclusive event invitations, and their
own personal concierge. For Christmas 2013, we launched
exclusive premium shopping nights for our Platinum and
Gold members and another exclusive event for our top
100,000 Silver members across 20 stores.
We continue to deliver improvements to the overall program,
with members now able to receive tailored electronic direct
marketing materials specific to their individual shopping
interests. Over 400,000 members have now downloaded
the MYER one app, and there has been a strong uptake of
members using their app to receive digital Rewards Cards.
Plans are underway to release an update in FY2015.
MYER one’s popularity is underpinned by the strength of the
Myer brand and by our MYER one affiliates program with well
known brands such as IGA Supermarkets, Air New Zealand,
and helloworld (formerly Harvey World Travel). Our new
affiliate, Caltex has been particularly successful this year,
with a significant number of MYER one Shopping Credits
being generated by members making purchases at Caltex
during the period.
The implementation of a new customer relationship
management (CRM) system will enable us to consolidate
our customer information, and will deliver a single
comprehensive view of our customers that will enable us to
engage and communicate with them more effectively.
The MYER one program celebrated its 10th anniversary
in August 2014 with a number of events and offers for
our members. As we seek to grow the program beyond
this milestone, we are developing exciting initiatives in
data analytics and CRM that will leverage the strength
of the existing program, and identify new opportunities
for growth and innovation.
We are also very proud of the continued success of our
world class Emporium magazine, which was internationally
recognised as a finalist for the Pearl Awards by the Content
Council in the United States. The digital version of Emporium
magazine continues to be very popular with MYER one
members, with 53,000 iPad issues downloaded. More than
250,000 copies of the magazine are also distributed to stores
and members each quarter.
Over $2 billion in sales
through MYER one
The Myer Visa Card continues to be an important loyalty offer
for our customers and remains one of the most competitive
cards in the market.
The Commonwealth Bank of Australia ‘pay-with-points’
collaboration resonates strongly with customers as
market-leading technology allows instant redemption
of Commonwealth Awards points at Myer point-of-sale
terminals. This channel has driven significant sales since
the partnership began.
The Myer Wine Club is now in its second year and offers
members a wide selection of wines, while earning
MYER one Shopping Credits on their purchases. The Myer
Wine Club continues to be popular with members’ earning
approximately 45 million Shopping Credits since the
program launched.
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MyCustomer Orders app
Scanning product for online fulfilment
Dispatching product for online orders
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Build a leading
omni-channel offer
As technology and customer shopping habits continue to evolve, Myer is investing in
technology platforms to provide a seamless customer experience across all channels.
We made considerable improvements to our omni-channel
capabilities this year in order to provide customers with
more choice in the way they shop with us.
Our online business represents an important growth
platform, as customers increasingly choose to research
and purchase products via our website. We are pleased
with the continued acceleration in all key customer metrics
including sales, average monthly visits, basket size, and
online order value.
Investing in improving the performance and stability of
our website has been a key priority in FY2014. A number of
innovative initiatives have been implemented to improve
the overall online experience including optimising website
functionality, enhancing product information pages,
simplifying the checkout process, and expanding
delivery options. These initiatives have made it easier for
our customers to browse the online store, find products,
and make their purchases.
Changing the way our customers
can shop in-store and online
As the significant growth in mobile commerce continues,
we have also optimised the performance of our online store
for tablet and smart phone devices to ensure that customers
can enjoy a seamless experience across these channels.
Coupled with the continued growth in mobile driven social
media, this channel is proving an important way to enhance
customer engagement.
In October 2013 we opened a dedicated online distribution
centre in Victoria, significantly improving our online
fulfilment capability. The distribution centre is stocked
with our most popular online products, and enables us
to achieve improved dispatch times for customer orders.
The distribution centre has delivered solid productivity
gains for the business with associated cost savings.
Our store network also provides a key competitive
advantage in the execution of our omni-channel strategy.
‘Click and Collect’ delivery is now available in all Myer stores,
and an increasing number of customers are opting for the
convenience of this service, which enables them to purchase
a product online and collect it from a nominated store.
We also recently introduced iPads to all stores, with a
customised app, ‘MyCustomer Orders’. With this technology,
we can now bring a significantly expanded product range
to customers across our physical store network.
We have invested in our in-house digital capabilities by
expanding the digital services team, which continues to set
a high standard in the delivery of innovative digital content
and marketing campaigns.
Our integrated marketing approach reflects our
omni-channel business model as we engage with
customers through traditional media as well as
digital channels. Social media plays a significant role
in enabling us to interact with customers and build
brand awareness. The live streaming of our seasonal
fashion launch parades, which provides our customers
with a unique experience, is growing in popularity,
with the content also distributed across other social
media channels.
The strength of Myer’s brand represents a significant
competitive advantage in omni-channel, and our social
media presence on Facebook, Twitter, Instagram, YouTube,
and Pinterest supports our strategy of inspiring more
customers every day.
In August 2014 we launched our Myer blog, which provides
a platform for our customers to discover new trends,
products, and brands, and receive fashion advice. The blog
can be accessed at blog.myer.com.au.
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Footwear and accessories - Myer Adelaide
Womenswear - Myer, Emporium Melbourne
Napoleon Perdis (Cosmetics) - Myer Adelaide
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Optimise our
store network
Our network of 67 stores across the country is a key strength as we engage
with our customers across a variety of channels.
The 2014 financial year has been a period of significant
investment and revitalisation for our store network, with four
of our top 25 stores under major refurbishment and two new
stores under construction.
Maximising returns per square metre continues to be a
key objective for the business, and we have improved
productivity through optimised store layouts, refurbishments,
space handbacks, the opening of new stores, and the closure
of some stores.
Approximately 12 percent of our total space was under
refurbishment or being expanded during FY2014. Although
this represented a significant disruption for our customers
and the business, it is an important investment in our
future growth.
In May 2014 we unveiled the final piece of our transformed
flagship Melbourne (Victoria) store with the opening of an
additional 7,000 square metres within the new Emporium
Melbourne development. The new space further cements
our reputation as a world class retailer and includes the
Myer MYKIDS Emporium, which offers exclusive concept
areas by major international toy brands.
During the year we completed two major refurbishments at
the Adelaide (South Australia) store and the Indooroopilly
(Queensland) store. As well as improved fixtures and fittings,
both stores now include reinvigorated beauty halls, the
addition of new brands, lifestyle themed homewares
areas, and personal shopping services in womenswear
and menswear.
The refurbishment of the Macquarie (New South Wales) store
was completed in October 2014, and the Miranda
(New South Wales) store refurbishment is on track to be
completed by Christmas 2014.
With the completion of the Macquarie (New South Wales)
refurbishment, 18 of our 67 stores have now been refurbished
since Myer was divested from the Coles Myer Group in 2006.
In October 2014 we opened the Mt Gravatt (Queensland)
store, and the Joondalup (Western Australia) store is
scheduled to open before Christmas 2014. We closed
the Dandenong (Victoria) store in October 2013 and the
Elizabeth (South Australia) store in February 2014.
Our MYER one data shows that the majority of customers
in those areas where a store is closed, continue to engage
with us by choosing to shop at nearby stores or online.
We recently announced the closure of the Hurstville
(New South Wales) store, which is scheduled to occur in early
2015. The decision was also made not to progress with the
planned new store at Woden (Australian Capital Territory).
Myer’s selling space as a percentage of overall space has
increased steadily in recent years. We constantly monitor
and review space optimisation opportunities in all existing
and planned stores in our portfolio and engage in proactive
lease negotiations, ahead of lease expiry, to ensure that we
optimise our store network.
We have now refurbished
18 of our 67 stores since 2006
During the year our space optimisation initiatives were
completed at five stores: Chatswood (New South Wales);
Doncaster (Victoria); Karrinyup (Western Australia);
Perth (Western Australia); and Sydney (New South Wales).
These initiatives have realigned space predominantly for
the key categories of womenswear and menswear.
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SUSTAINABILITY
Myer is committed to building a socially responsible business and integrating
sustainability into everyday business activities.
My customer
My team
My community
My environment
My business
• Customer service
and satisfaction
• MYER one
loyalty rewards
• Attraction and retention
• Capability and
development
• Reward and recognition
• Workplace safety
• Myer Stores
Community Fund
• Volunteering
• Strategic community
partnerships
• Energy and emissions
• Packaging stewardship
• Waste and recycling
• Ethical sourcing
• Code of Conduct
• Shrinkage
• Product responsibility
At Myer, we define sustainability as responsible business
growth and development that considers and addresses the
environmental, ethical, economic, and social impacts of our
operations and strategies. Our aim is to maximise the positive
outcomes and influences we have on our stakeholders
including customers, the community, suppliers, investors,
and the environment. Our strategy focuses on five pillars of
sustainability, which have been informed by our business
activities and impacts, internal risk assessment processes, and
stakeholder areas of interest within our Australian operations.
Following the acquisition of the sass & bide business in
September 2013, for this report we have included sass & bide
numbers in our staff numbers and diversity figures, and their
Australian stores are included in our energy and emissions
reporting. We are progressively integrating sass & bide
information into other sustainability data.
Further information about sustainability at Myer is provided
in our Sustainability Report, which is available from
myer.com.au/investor.
My customer
Myer’s customers are crucial to the success of our business.
A key element of our business strategy is to continue to
inspire and delight our customers with our service and
reward them for their loyalty.
Customer service and satisfaction
In FY2014 we launched our customer feedback program,
which provides our store management with individual
customer comments about our service. MYER one members
have the opportunity to provide feedback on their Myer
in-store experience through the use of digital technology.
From this data, a ‘Net Promoter Score’ is calculated and is
used to benchmark and improve our customer service offer.
In the first year of the program we exceeded our targets
for our Net Promoter Scores, and we will strive to improve
our results.
MYER one loyalty rewards
We continued to build our strong engagement
with MYER one members during the year.
Key highlights included:
› A substantial increase in the number of digital Rewards Cards
issued via the MYER one app in FY2014 compared with
the previous year.
The enhancement of our premium MYER one Platinum tier,
which now has more than 3,000 members who are able to
enjoy private shopping events, a Christmas shopping night
and invitation-only events.
›
› Continued success of our affiliates program, with a
significant number of MYER one members purchasing at our
key affiliate, Caltex, during its first full year in the program.
› A successful second year for our Myer Wine Club, which
continues to attract new members.
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My team
Myer’s team members are our most important resource.
We are committed to providing our team members
with a supportive, challenging, and rewarding workplace
that enables them to contribute and develop to their
full potential.
Attraction and retention
At the end of the financial year, Myer had more than
13,000 team members and, with additional casual employees
over the peak Christmas trading period, total team member
numbers increased to over 15,000.
Having a motivated team is essential to the success of our
business, and we were pleased to achieve a retention rate
for the year of approximately 75.0 percent.
The business continues to focus on providing a rewarding
and encouraging workplace which supports gender, age,
language, disability, and cultural diversity. In FY2014, women
made up 79.6 percent of our total team members.
Capability and development
In FY2014 we continued to build a customer-focused
culture in our stores through the ‘Delivering Delightful
Service and Selling’ program for all store team members.
Capability and development opportunities are offered
through ‘on-the-job’ training, instructor-led training,
and online courses. During the year, team members
took part in instructor-led training, and online
training courses.
Reward and recognition
We recognise and celebrate individual and team
performance through a range of recognition programs.
The annual Myer Inspirational People Awards recognise
individuals and teams who have contributed to achieving
our Company goals. The CEO’s High Performers Club
recognises excellence in sales performance, and 45 team
members were inducted this year, with a total of 833
members now in the program. The Myer 25 Year Club
celebrates the loyalty of our long-serving team members,
with over 3,000 members made up of both current and
former team members.
Workplace safety
Safety is a key priority for our team members, our customers,
and our suppliers. Our Lost Time Injury Frequency Rate
(LTIFR) has shown a consistent reduction over the past
five years, from 14.5 in FY2010 down to 7.0 this year.
We continue to maintain a strong focus on safety through
the management of safety hazards at our sites, management
and team member awareness, safety committees at all sites,
induction and ongoing training programs, and effective early
intervention and return-to-work processes.
Total team members
>13,000
% Female
79.6%
Retention rate
75.0%
LTIFR
7.0
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My community
Myer has a long history of local community support
and engagement. We continue to maintain strong and
meaningful relationships with our local communities.
In FY2014, Myer worked with our stakeholders to contribute
approximately $2.3 million to our local communities,
including approximately $1.3 million in fundraising and
$340,000 in direct cash donations.
Myer Stores Community Fund
The Myer Stores Community Fund is committed to
continuing Myer’s tradition of philanthropic support to
the community since 1924. The Fund supports charitable
projects for sick and disadvantaged children and youth,
and projects which support women’s health.
In FY2014, the Myer Stores Community Fund supported over
100 charities nominated by Myer store team members.
Volunteering
As part of Myer’s ongoing paid volunteer leave initiative,
Myer team members provided almost $600,000 worth of
volunteer hours to support the Myer Stores Community
Fund and other charity partners.
Strategic community partnerships
Fitted for Work
Fitted for Work assists disadvantaged women in finding
employment by providing free personal corporate
styling, interview coaching, mentoring, and transition to
work programs. Myer assists Fitted for Work by offering
mentoring, team member clothing donations, assistance in
retail employment, and team member volunteering leave
opportunities, and by engaging with our suppliers to
promote donations.
Myer and The Salvation Army
With the aim of reducing textile waste and increasing clothing
recycling, in FY2014, Myer and Salvos Stores launched a
national initiative encouraging customers to donate clothing
in Salvos Stores to receive a $10 Myer voucher. In the first
six months of the program, over 8,000 vouchers were given
to customers who donated more than 92,000 clothing
items nationally.
Myer stores also support the work of The Salvation Army by
donating all proceeds from the sales of the Spirit of Christmas CD,
which raised more than $350,000 during Christmas 2013.
My business
Myer is committed to conducting itself as a responsible
organisation, having regard to the reasonable expectations
of all our stakeholders including customers, the community,
investors, and suppliers.
Ethical sourcing
Myer’s Ethical Sourcing Policy underpins our commitment
to source merchandise that is produced in safe working
conditions, where the human rights of workers are respected
and environmental impacts are managed. Myer manages
our supply chain closely, including monitoring and auditing
suppliers regularly.
Code of Conduct
Myer is committed to the highest levels of integrity and
ethics in our business operations and interactions with
stakeholders. As part of this focus, team members are required
to complete the Myer Code of Conduct training regularly, and
the Myer confidential whistleblower hotline service is also
communicated to team members, contractors, and suppliers.
Shrinkage
Shrinkage is the loss of merchandise, and associated profit,
due to product theft or loss through product handling
processes. Myer has a dedicated shrinkage reduction
program with processes and education aimed at reducing
these losses. In FY2014, Myer produced our sixth consecutive
year of improved results, and we continue to focus on
reducing shrinkage across the business.
Product responsibility
Myer works with our suppliers to source and develop quality
and safe products, and we take our responsibilities regarding
product safety and compliance seriously. We have a team
of merchandise compliance specialists to monitor our
product range for safety and labelling compliance.
Checks undertaken in FY2014 showed a conformance
rate of over 95 percent.
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My environment
Myer is committed to minimising the impact of our
operations on the environment, with our priority being to
integrate environmental management and accountability
throughout our business. In particular, we focus our efforts
on the environmental impacts of energy use and associated
carbon emissions, packaging and waste management, and
recycling of packaging materials.
Energy and emissions
In FY2014, Myer delivered a 2.9 percent reduction in
energy use. This was achieved through various measures
such as the implementation of system upgrades, and also
via an internal education campaign on energy use and the
introduction of reporting requirements in stores. In addition,
our carbon emissions reduced by 5.0 percent compared to
last financial year. Further reductions in energy use continue
to be a strong focus for the business.
Packaging stewardship
As a signatory to the Australian Packaging Covenant, we
continue to focus on reducing consumer packaging and
using recyclable packaging materials. We are also working
to improve our supply chain and reduce the transport
required to deliver our stock to stores.
Our ‘Floor Ready’ program aims to achieve store product
handling efficiencies, drives improved packaging design, and
aims to reduce packaging waste. As at July 2014, the majority
of Myer’s direct suppliers have signed the Floor Ready
agreement and more than 70 percent of merchandise was
compliant with our Floor Ready standards. We continue to
work with our suppliers to increase merchandise compliance
with these standards.
Waste and recycling
Myer has extensive recycling programs in place across our
network of stores, distribution centres, and support office.
This includes specialised recycling programs for
retail-specific products such as security tags, clothes hangers,
paper, cardboard, plastic film, pallets, pallet sheets,
and metals. Our support office also recycles organics,
paper towels, and commingled containers.
Excess merchandise, damaged merchandise, samples,
and returns are recycled and reused through a third party
supplier, which enabled the on-selling of more than
353.2 tonnes of merchandise and the recycling of a further
72.6 tonnes in FY2014.
5.0%
reduction in
carbon emissions
2.9%
reduction in energy use
> 70%
of merchandise
is Floor Ready
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BOARD OF DIRECTORS
Left to right: Ian Cornell, Anne Brennan, Paul McClintock AO, Bernie Brookes, Rupert Myer AM, Chris Froggatt, and Bob Thorn in Myer, Emporium Melbourne
Paul McClintock AO
Chairman
Independent non-executive director
Member of the Board since 8 August 2012
Appointed Chairman 10 October 2012
Chairman – Nomination Committee
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 highly regarded for his wide and
varied experience, including his role as
the Secretary to Cabinet and Head of the
Cabinet Policy Unit reporting directly to
the Prime Minister and acting as the
Prime Minister’s most senior personal
adviser on strategic directions in
policy formulation.
Paul’s former positions include Chairman
of Medibank Private Limited, the COAG
Reform Council, the Expert Panel of the
Low Emissions Technology Demonstration
Fund, Intoll Management Limited, Symbion
Health, Affinity Health, Ashton Mining,
Plutonic Resources, and the Woolcock
Institute of Medical Research. He was
also a Director of the Australian Strategic
Policy Institute and Perpetual Limited, a
Commissioner of the Health Insurance
Commission, and a member of the
Australia-Malaysia Institute Executive
Committee. Paul graduated in Arts and Law
from the University of Sydney and is
an honorary fellow of the Faculty of
Medicine of the University of Sydney and
a Life Governor of the Woolcock Institute
of Medical Research. Paul resides in
New South Wales and is 65 years of age.
Other current directorships
Paul is Chairman of Thales Australia,
NSW Ports, I-MED Australia, and O’Connell
Street Associates. He is also a director of
St Vincent’s Health Australia and The George
Institute for Global Health.
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 roles in the retail and property
sector, healthcare, e-commerce, investment,
family office, wealth management,
philanthropy services, and the
community sector. Rupert serves as a
Board member of The Myer Foundation,
Creative Partnerships Australia, and Jawun.
Rupert is a member of the Business and
Economics Advisory Board of the University
of Melbourne. Rupert holds a Bachelor
of Commerce (Honours) degree from the
University of Melbourne, and a Master of
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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, and for his support
of museums, galleries, and the community
through a range of philanthropic and
service organisations. Rupert resides in
Victoria and is 56 years of age.
Other current directorships
Rupert is Chairman of the Australia Council
for the Arts and Nuco Pty Ltd. He is a
Director of AMCIL Limited, Healthscope
Limited, and eCargo Holdings Limited
(Hong Kong).
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 Myer
in June 2006 and has more than 36 years
of retail industry experience from roles
in Australia and overseas. Prior to Myer,
Bernie held numerous executive positions
with Woolworths, as well as a variety of
general management positions across
buying, IT, marketing, and operations.
He brings industry knowledge from
executive roles at organisations including
the Retail Traders Association in Queensland
and in Victoria, and as President of the
Queensland Grocery Association.
Bernie has received the Sir Charles McGrath
award for marketing excellence from
the Australian Marketing Institute,
the William Booth Medal from
The Salvation Army, and the Paul Harris
Fellow for Service to the Community from
the Rotary Club, Sydney. He is part of
the Australian Retailers Association Hall
of Fame and is currently the Australian
representative judge of the World Retail
Awards. Bernie supports a number of
charity organisations including
The Salvation Army, and is patron of the
Myer Stores Community Fund, as well as
the Australian Joe Berry Memorial Award.
Bernie divides his time between Victoria
and New South Wales and is 54 years of age.
Other current directorships
Bernie is a Territorial Advisory Board
Member of The Salvation Army Australia
and on the Advisory Board of Inghams
Enterprises. He is Chairman of Towncars
Australia and a Director of Intercontinental
Group of Department Stores.
Anne Brennan
Independent non-executive director
Member of the Board since 16 September 2009
Chairman – Audit, Finance and Risk Committee
Member – Human Resources and
Remuneration Committee
Member – Nomination Committee
Anne brings strong financial credentials
and business acumen to Myer, including
her experience from senior management
roles in both large corporate organisations
and professional services firms. Anne has
more than 20 years of experience in audit,
corporate finance, and transaction services
including executive roles as the CFO at CSR,
and 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.
During her time at Ernst & Young, Anne was
a member of the national executive team
and a board member. Anne was formerly
a director of Cuscal Limited.
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 54 years of age.
Other current directorships
Anne is currently the Deputy Chair of
Echo Entertainment Group Limited, and
is a Director of Argo Investments Limited,
Charter Hall Group, Nufarm Limited, and
Rabobank Limited (Australia and New
Zealand). Anne will retire from the Board
of Echo Entertainment Group Limited,
effective from 1 November 2014.
Ian Cornell
Independent non-executive director
Member of the Board since 6 February 2014
Member – Human Resources and
Remuneration Committee
Ian has extensive experience in the retail
industry across a number of senior retail
roles including 11 years at Westfield.
During his time at Westfield, Ian was Head
of Human Resources for seven years and
also responsible for retailing relationships
in Australia and New Zealand. He also spent
three years as the Head of Management
and Marketing for Westfield’s shopping
centres in Australia and New Zealand and
has extensive experience in large scale retail
operations and responding to changing
consumer trends. Prior to joining Westfield,
Ian was Chairman and CEO of supermarket
chain, Franklins, and earlier spent 22 years
at Woolworths, including his role as Chief
General Manager supermarkets. Ian is also
a Fellow of the Institute of Management, a
Fellow of the Human Resources Institute,
27 Board of Directors
member of the Institute of Company
Directors, and a graduate of the Advanced
Management Programme at Harvard.
Ian resides in New South Wales and is
60 years of age.
Other current directorships
Ian is a Director of Goodman Fielder Limited
and Inglis Bloodstock.
Chris Froggatt
Independent non-executive director
Member of the Board since 9 December 2010
Chairman – Human Resources and
Remuneration Committee
Member – Nomination Committee
Chris has a broad industry background,
including experience in consumer branded
products, retailing, and hospitality across
numerous industries such as beverages,
food, and confectionery. She has over
20 years of executive experience as a
human resources specialist in leading
international companies including Brambles
Industries, Whitbread Group, Mars, Diageo,
and Unilever NV. Chris has served on
the boards of Britvic and Sports Direct
International, 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 (United Kingdom).
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 56 years of age.
Other current directorships
Chris is a Director of Goodman Fielder
Limited, the Australian Chamber Orchestra,
and the Australian Chamber Orchestra
Instrument Fund.
Bob Thorn
Independent non-executive director
Member of the Board since 6 February 2014
Member – Audit, Finance and Risk Committee
Bob brings considerable senior retail
management experience to Myer from
his nine years as Managing Director of
Super Retail Group. During his time at the
company, Bob drove Australia and New
Zealand expansions and led the creation of
the Boating Camping Fishing (BCF) business,
the market leader in camping and leisure.
Prior to Bob’s 13 years with Super Retail
Group, he was previously General Manager
at Lincraft, and held senior roles at other
major retailers including nine years with
David Jones. Bob has also been the
Chairman of Cutting Edge, and a Director at
WOW Sight and Sound, Babies Galore, and
Unity Water. Bob resides in Queensland and
is 59 years of age.
Other current directorships
Bob is a Director of B Mag Pty Ltd.
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MANAGEMENT TEAM
Back row: Bernie Brookes, Daniel Bracken, Timothy Clark, Richard Umbers, and Gary Williams
Front row: Tony Sutton, Marion Rodwell, Mark Ashby, and Louise Tebbutt
Bernie Brookes
Chief Executive Officer and Managing Director
Mark Ashby
Chief Financial Officer
Bernie was appointed Chief Executive Officer and Managing
Director of Myer in June 2006. He has been responsible
for the turnaround and rebuilding of the Myer business.
Bernie has led the development and implementation of
the Myer strategic plan, repositioning the business to meet
today’s challenges and investing for the future. He has
more than 36 years of experience working within the retail
industry in local and international roles.
Mark was appointed Chief Financial Officer (CFO) of Myer
in January 2008. As CFO, Mark’s responsibilities cover all
financial planning, accounting, treasury management,
taxation, compliance and internal audit, and procurement
aspects of the business. Prior to joining Myer, Mark was
CFO of Mitre 10, the Finance Director of Motorola and
held Finance Director roles in a number of domestic and
international organisations in retail and technology.
Mark is a fellow of CPA Australia and a graduate of the
Australian Institute of Company Directors.
28 Myer Annual Report 2014
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Tony Sutton
Executive General Manager Stores
Tony oversees all of the operations of the Myer store
network, including our customer service strategy, and has
a focus on operational efficiencies. Tony is a career retailer,
joining Myer in 1992, and was appointed to lead the stores
team in September 2012. He has worked cross-functionally
in a number of roles including store management,
merchandise and marketing. Tony has held a number of
senior roles in store management, including his most recent
role leading the State General Manager stores team.
Timothy Clark
Executive General Manager Property,
Store Development and Services
Marion Rodwell
Chief General Counsel and Group Company Secretary
Marion is the Company Secretary of Myer Holdings Limited
and all companies in the Group. Marion was appointed
Group General Counsel and Company Secretary in 2008.
Marion has over 25 years of corporate, commercial, litigation,
and governance experience. Prior to joining Myer, Marion
held General Counsel and Company Secretary roles in the
financial services, gaming, and retail industries, including
roles 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.
Tim was appointed as Group General Manager Property,
Store Development and Services in January 2011 and is
responsible for Myer’s property network. This includes our
new and refurbished stores development program,
in-store design developments, optimising the productivity
returns of Company space, and the execution of all facilities
management requirements. More recently, Tim was
appointed as Executive General Manager with the additional
responsibilities of the Company Project Management Office.
Tim has also held executive roles at Gazman Menswear
and Crown Ltd.
Daniel Bracken
Chief Merchandise and Marketing Officer
Daniel joined Myer in September 2014 as Chief Merchandise
and Marketing Officer. In this role, he manages the
merchandise areas of design, sourcing, buying, and
manufacturing, as well as advertising, digital, marketing,
events, and the execution of the Myer brand strategy.
Daniel has extensive experience in retail including more than
15 years at Burberry London and prior to joining Myer was
the CEO of The Apparel Group, owner of Sportscraft, Saba,
Willow, and Jag.
Louise Tebbutt
Executive General Manager Human Resources,
Risk and Safety
Louise is the Executive General Manager leading the
Human Resources function and has over 20 years of
industry experience. Louise is responsible for all aspects
of Myer’s human resources including organisational
development, recruitment and training, and employee
relations, as well as 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. Louise is also a director of the Myer Stores
Community Fund and Chair of the Myer Superannuation
Policy Committee.
Richard Umbers
Chief Information and Supply Chain Officer
Richard joined Myer in September 2014 as Chief Information
and Supply Chain Officer. In this role, Richard manages the
key areas of Myer online services, information technology
including payment systems, supply chain, and the MYER one
loyalty program. Richard has extensive retail, logistics, and IT
experience and has held senior roles at Aldi in Europe and
Woolworths in Australia and New Zealand. He joined Myer
from Australia Post, where he was the Executive General
Manager for Parcel and Express Services and
CEO of StarTrack.
Gary Williams
Executive General Manager Strategic Planning
and Business Development
Gary joined Myer as Executive General Manager Strategic
Planning and Business Development in August 2014.
He began his career in retail and brings significant global
experience across leading brands including time as
Managing Director at Coca-Cola Australia and South Africa,
global roles at Puma and Reebok, and more than nine years
at Westfield in Australia and five years at Westfield in the USA.
29 Management Team
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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 (myer.com.au/investor).
This Corporate Governance Statement outlines the Group’s main
corporate governance practices and policies in place throughout the
financial year. It is structured as follows:
›
›
›
›
›
› diversity at Myer.
the Board and management;
Board composition and director tenure;
Board Committees;
risk management;
key governance policies; and
The Company has followed the recommendations set out in the
ASX Principles (2nd edition) during the reporting period. The table
on page 41 indicates where specific ASX Principles are discussed
in this statement.
The 3rd edition of the ASX Principles will apply to the Company
from its FY2015. The Company will therefore report against the
recommendations of the ASX Principles (3rd edition) in its 2015
Annual Report. Unless otherwise stated, the commentary in this
statement is in relation to the ASX Principles (2nd edition).
Part 1 – The Board and management
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
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 is to:
›
represent and serve 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;
› protect and optimise Company performance and build 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;
›
›
set, review and ensure compliance with the Company’s values and
governance framework (including establishing and observing high
ethical standards); and
ensure 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 addresses the following:
›
›
Board composition and process;
the role and responsibilities of the Board, the directors, the
Chairman and the CEO;
› matters which are specifically reserved for the Board or the
Board Committees;
the relationship between the Board and management; and
›
› delegation by the Board to Board Committees and management.
As set out in the Board Charter, the responsibilities and functions
of the Board include:
›
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;
setting the remuneration policy for the Company, within which the
CEO has authority to operate;
contributing to and approving management 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;
› monitoring corporate performance and implementation of
›
›
strategy and policy;
approving major capital expenditure, acquisitions and divestments,
and monitoring capital management;
› monitoring and reviewing management processes aimed at
ensuring the integrity of financial and other reporting;
› developing and reviewing corporate governance principles and
›
›
policies;
in respect of ethical sourcing:
– approving and reviewing the Company’s ethical sourcing
policy; and
– reviewing and monitoring ethical sourcing risks;
in respect of diversity:
– approving and reviewing 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 the responsibilities of 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. The Company’s Chairman,
Mr Paul McClintock AO, is an independent non-executive director.
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The Chairman’s responsibilities include:
›
›
›
›
chairing meetings of the Board and shareholders, including the
Annual General Meeting;
ensuring that the Board’s decisions have been implemented;
ensuring that the Board fulfils its obligations under the Board
Charter and relevant legislation;
representing the Board to shareholders and communicating the
Board’s position;
› providing leadership to the Board and Myer;
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.
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 which include both financial and non-financial performance
measures;
›
leading the Board to ensure that it operates efficiently and
effectively; and
›
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. In February 2014, the Company announced the renewal
of Mr Bernie Brookes’ contract as the Company’s CEO and Managing
Director. The Board’s positive assessment of Mr Brookes’ performance
as CEO was an important factor in its decision to renew Mr Brookes’
contract.
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 47 to 67.
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.
1.5 Board and Board Committee meetings
The number of meetings of the Board and of each Board Committee
held during the period ended 26 July 2014, and the number of
meetings attended by each director and committee member are set
out in the Directors’ Report, at page 43.
1.6 Independent professional advice
Under the Board Charter, the Board collectively and each director
individually has the right to seek independent professional advice,
subject to the approval of the Chairman or the Board.
Under their respective Charters, each Board Committee is entitled
to seek the advice of the Company’s auditors, solicitors or other
independent advisers as to any matter pertaining to the powers,
duties or responsibilities of the Committee.
› promoting constructive and respectful relationships between 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 strategic objectives, plans and budgets
approved by the Board. The Board approves corporate objectives for
the CEO to satisfy and, jointly 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.
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 has committed to reviewing
and evaluating:
›
the performance of the Board, including against the requirements
of the Board Charter;
›
›
the performance of the Board Committees; and
the performance of individual directors,
on an annual basis against both measurable and qualitative indicators.
The review and evaluation undertaken in relation to the reporting
period is described below.
The Board and each Board Committee has conducted a review of
their effectiveness and performance. The Board is implementing the
recommendations arising out of this review. The Board and each
Board Committee have reviewed their respective Charters, and have
adopted new Charters, effective from the commencement of FY2015.
The Chairman has conducted an annual review of individual directors
in relation to the reporting period. 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. The Deputy Chairman is responsible for the performance
review of the Chairman. As with each other director, the Chairman also
completed a Board review and assessment document. The Chairman
met privately with the Deputy Chairman to discuss the assessment.
The Nomination Committee assists the Board as required in relation
to the performance evaluation of the Board, its Committees and
individual directors. It also assists in developing and implementing
plans for identifying, assessing and enhancing director competencies.
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 assessment processes for those individuals and the
reward structure. The Committee also reviews all significant human
resource issues, including development and succession planning.
31 Corporate Governance Statement
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Corporate Governance Statement
continued
1.7 Company Secretary
Marion Rodwell (Chief General Counsel and Group Company
Secretary) is the Company Secretary of the Company and all
companies in the Group. Marion’s experience and qualifications are set
out on page 29 of this Annual Report.
The Company Secretary has an important role in supporting the
effectiveness of the Board by monitoring that Board policy and
procedures are followed. The Company Secretary is accountable to the
Board. All directors have direct access to the Company Secretary.
The Company Secretary is responsible for coordination of all Board
business, including agendas, Board papers and minutes. The Company
Secretary is responsible for communication with regulatory bodies
and the ASX, and all statutory and other filings.
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 seven directors.
The majority of the Board are independent non-executive directors.
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 comprise directors with a broad range of skills, expertise and
experience from a diverse range of backgrounds. This will ensure that
the composition of the Board continues to reflect a range of expertise,
experience and diversity appropriate to the Group’s business
and strategies.
On 6 February 2014 Mr Ian Cornell and Mr Bob Thorn were appointed
as independent non-executive directors, bringing deep and varied
retail experience and significantly strengthening the Board’s existing
skills. Mr Cornell and Mr Thorn have significant combined skills
spanning merchandise, online retail, store operations, property,
commercial transactions, supply chain, people and
inventory management.
The range of backgrounds, skills and expertise currently represented
on the Board includes experience in senior roles in retail, finance,
property, government, human resources, law, and mergers and
acquisitions, as well as qualifications across a range of fields, including
commerce, law and the humanities. The directors also have expertise
in brand building and marketing, as well as international experience.
Name
Position
Paul McClintock AO Chairman
Rupert Myer AM
Bernie Brookes
Anne Brennan
Ian Cornell
Chris Froggatt
Bob Thorn
Independent
non-executive director
Deputy Chairman
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
8 August 2012
12 July 2006
12 July 2006
›
16 September 2009
6 February 2014
9 December 2010
6 February 2014
Ian Cornell and Bob Thorn were appointed as directors on 6 February
2014. Peter Hay retired from the Board with effect from 14 July 2014.
All other directors served as directors for the entire reporting period.
Details of the skills, qualifications, experience, expertise and special
responsibilities of each current director are set out on pages 26 and 27
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, experience, expertise and
diversity 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 in section 3.4.
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.
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 at the next Annual General
Meeting (AGM) after their appointment and offer themselves for
election by the Company’s shareholders.
The Board invested resources to identify, select and appoint each
of Mr Cornell and Mr Thorn 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 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 interest of director candidates. Mr Cornell and Mr Thorn
will each offer themselves for election as directors by the Company’s
shareholders at the 2014 AGM.
There is no specific term of office for non-executive directors.
In accordance with the ASX Listing Rules and the Company’s
Constitution, no director other than the CEO may hold office without
re-election beyond the third AGM following their last election. Where
eligible, a director may stand for re-election at the AGM. 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 or re-election of each
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director standing for election or re-election, or any other candidate
standing for election, having regard to any matters that the Board
considers relevant.
›
The Board will review any holding of five 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.
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 the Company’s 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 for regularly reviewing its effectiveness.
2.4 Independence of directors
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.
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 (2nd edition). 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;
› 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.
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 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 five 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 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 could, or could be reasonably perceived to, materially
interfere with the director’s ability to act in the best interests
of the Company.
Effective from 27 July 2014, the Board has adopted a revised Board
Charter, which is consistent with the relevant corporate governance
principles and recommendations in the ASX Principles (3rd edition).
Notably, the revised Board Charter includes updated guidelines
for assessing the independence of the Company’s directors. Those
guidelines are consistent with the guidelines in Box 2.3 of the ASX
Principles (3rd edition).
Assessment of the independence of the Company’s directors
The Board currently comprises seven directors. Each of those directors
are non-executive directors, other than Mr Brookes, who is an
executive director.
The Board has assessed the independence of its non-executive
directors against the guidelines and materiality thresholds consistent
with both:
›
›
the guidelines in the ASX Principles (2nd edition); and
the guidelines in the ASX Principles (3rd edition) for the period
commencing 27 July 2014 and ending on the date of the
Directors’ Report.
It is the Board’s view that each of its non-executive directors was
independent during the reporting period. At the date of signing the
Directors’ Report, it is the Board’s view that each of its non-executive
directors remains independent.
Directors did not participate in deliberations about or vote in relation
to their own independence.
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. 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.
Details of Committee members’ attendance at Committee meetings
are set out in the Directors’ Report at page 43.
All directors are invited to attend Committee meetings. Most Board
Committee meetings are attended by all directors.
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Corporate Governance Statement
continued
Non-Committee members, such as members of management, may
also attend all or part of a meeting of the Committee at the invitation
of the Committee Chairman.
3.2 Audit, Finance and Risk Committee
Composition
The current composition of the Audit, Finance and Risk Committee is:
Chairman
Members
Anne Brennan
Rupert Myer AM
Bob Thorn (from 19 March 2014)
Peter Hay was a member of the Committee until his retirement from the
Board on 14 July 2014.
All Committee members are financially literate and have an appropriate
understanding of the industries in which the Group operates.
The Chairman of the Committee is an independent non-executive
director, and is not the Chairman of the Board.
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;
Role and responsibilities
The responsibilities of the Committee include:
in relation to human resources policies:
›
– to review the Company’s policies and performance to assess the
effectiveness of the policies and their compliance with relevant
legislative, regulatory and governance requirements;
– to review and report to the Board on the diversity-related
›
›
›
measurable objectives for the Company and the Company’s
progress against objectives;
in relation to organisational effectiveness and capability, to
undertake an annual review of how the human resources strategy
is supporting the business strategy;
in relation to superannuation, to review and recommend to the
Board superannuation arrangements for the Company, having
regard to matters of compliance and legislative change;
in relation to remuneration and incentives:
– to review and recommend to the Board remuneration
arrangements for the CEO, executives reporting to the CEO, and
senior management;
– to review major changes and developments in the Company’s
remuneration framework, recruitment, retention and
termination policies and procedures for senior management,
remuneration policies, superannuation arrangements, human
resource practices and employee relations strategies for
the Group;
› oversee the Company’s financial controls and systems; and
– to review performance assessment processes for the
› 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 the CFO, 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:
Chairman
Members
Chris Froggatt
Anne Brennan
Ian Cornell (from 19 March 2014)
Rupert Myer AM
CEO and the CEO’s direct reports, and the annual results
of those assessments;
– to review and recommend to the Board in respect of the
Company’s employee equity incentive 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, as a
result of gender difference, any recommendations to the Board
should be made in relation to gender-based reward.
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 human resource and remuneration policies, subject to
the principle that no senior executive should be directly involved in
deciding their own remuneration.
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3.4 Nomination Committee
Composition
The current composition of the Nomination Committee is:
Chairman
Members
Paul McClintock AO
Anne Brennan
Chris Froggatt
Rupert Myer AM
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 the
CEO, and to review 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 review and recommend to the Board, membership of the Board
including recommendations for the appointment and re-election
of directors, and where necessary to propose additional candidates
for consideration by the Board;
to assist the Board in relation to the performance evaluation 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.
Part 4 – Risk management
Relevant documents – available from myer.com.au/investor
› Audit, Finance and Risk Committee Charter (including External
Audit Policy)
›
Risk Management 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.
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 monitors and reports 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 the Committee of Sponsoring Organizations
(COSO) 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 to determine whether there
have been any changes in the material business risks. Economic,
environmental and social sustainability risks have been considered
and controls appropriately applied.
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 reappointment
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 2012.
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 a National Assurance Manager who reports 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.
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 2001 (Cth) (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 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;
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Corporate Governance Statement
continued
›
›
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 Conduct
› Continuous Disclosure Policy
› Guidelines for Dealing in Securities
›
Shareholder Communication Strategy
5.1 Code of 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 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 employees 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, and
securities trading.
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. Team members are required
to undertake training and acknowledge acceptance of the Code on an
annual basis.
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 securities. The Company discharges
these obligations by releasing information in ASX announcements
and by disclosure of other relevant documents to the ASX and to
shareholders (e.g. 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 Chief General
Counsel and Group 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 Chairman of the Audit,
Finance and Risk Committee.
The Company has nominated the Group Company Secretary as the
person with the primary responsibility for all communication with
the ASX.
The Board regularly reviews the Continuous Disclosure Policy.
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.
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5.4 Shareholder communication
As set out in the Company’s Shareholder Communication Strategy, 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. In addition,
the Company recognises that potential investors and other interested
stakeholders may wish to obtain information about the Company.
To achieve this, 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
(myer.com.au). The Company has a dedicated investor section of its
website (myer.com.au/investor). The Myer investor website includes
information about the Company relevant to shareholders, including:
›
all announcements lodged with the ASX within the last three years,
including annual and half year financial results;
›
›
›
the Board and Board Committee Charters, the Company’s
Constitution, and key corporate governance policies;
the Company’s Annual Reports and sustainability reports;
information about the Company’s AGM (including the Notice of
Meeting, and a webcast of the meeting); and
›
financial information about the Company.
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.
Part 6 – Diversity at Myer
Relevant documents – available from myer.com.au/investor
› Diversity Policy
The Company’s Diversity Policy outlines our approach to creating
and maintaining an inclusive and collaborative workplace culture.
The Diversity Policy sets out the Company’s diversity principles. In this
context, diversity covers gender, age, ethnicity, cultural background,
language and disability. It also includes differences in backgrounds,
education and life experiences.
Having a diverse range of employees better enables the Company to
provide the best service to its customers. It enables the Company to
foster greater innovation, stronger problem solving capability, greater
customer connection, increased morale, motivation and engagement.
The Company’s diversity and inclusion framework has five core tenets:
› meritocracy;
›
›
›
›
fairness and equality;
contribution to commercial success;
that it’s everyone’s business; and
for Myer, it’s a part of who we are.
6.1 Key principles
The Company’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.
›
›
›
›
6.2 Diversity objectives
The Company’s diversity objectives are to ensure that Myer:
› has an inclusive workplace where every individual can thrive
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, the Company:
› 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.
6.3 Female representation
At 26 July 2014, representation of females employed by the Group
was as follows:
Board of Directors
Leadership roles
Total workforce
28.5%
66.8%
79.6%
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Corporate Governance Statement
continued
In May 2014 the Company lodged its Workforce Profile report with the Workplace Gender Equity Agency (WGEA).
A copy of this report is available at myer.com.au/investor.
The following charts outline female leadership representation across the Group.
Females in leadership positions at Myer as at 26 July 2014
54%
7 females
Strategic leadership
50%
54 females
Business/functional leadership
69%
81%
708 females
Operational leadership
9,903 females
Self-leadership
Females in leadership positions at Myer as at 27 July 2013*
36%
4 females
Strategic leadership
44%
40 females
Business/functional leadership
63%
80%
551 females
Operational leadership
9,439 females
Self-leadership
*FY2013 was prior to the 100% acquisition of the sass & bide business.
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6.4 Measurable objectives
The Board has assessed the Company’s performance against the measurable objectives established by the Board in respect of FY2014 for
achieving diversity at all levels of the Company. Details on the Company’s progress in achieving those objectives, and the measurable objectives
which have been set by the Board in respect of FY2015, are outlined below:
FY2014 and FY2015 measurable objectives
Objective
Progress
The Company aims to maintain a 50% proportion of
female candidates identified in succession plans. We
aim to ensure that within each job grade level there
are an equal number of senior women who are
ready to move into leadership roles.
The career development plans of all female middle management employees are
assessed annually to ensure their appropriateness in developing and retaining the
Company’s female talent.
›
The percentage of females represented in the Company’s ‘Top Talent Group’ is 50%,
up from 46.1% in FY2013.
The Company aims to maintain a return rate of
more than 70% for team members returning from
parental leave.
The Company aims for senior managers to meet
or formally contact women on parental leave at
least quarterly.
The Company aims to maintain 50/50 gender
balance in its Managers in Training Programs to
facilitate the creation of a pool of qualified female
candidates for manager role opportunities.
› At store level, females represent 48.9% of those identified as having potential for
further leadership positions.
The Company 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 re-introduction to the workplace.
› During the reporting period, 77.8% of the Company’s team members who
commenced parental leave returned from previous parental leave periods.
The Company 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
can set contact levels they are comfortable with, which may be greater or less than
quarterly, dependent upon their wishes.
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, 58.3% of participants in the MDP program were female.
›
›
The RMIT intern program currently has 100% female representation.
The GDP was not run in 2014.
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, 94% of the participants in this program were female.
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These policies provide a platform for further promotion of flexible
work and careers and active practice of inclusion, particularly for team
members with caring responsibilities.
The Company believes that the benefits of our activities and initiatives
around diversity and inclusion accrue in many ways in our business.
Most importantly, improving diversity and flexibility within the
workforce has seen increased employee engagement, which is a
key driver for productivity and providing great customer service. It
also helps the Company remain innovative in the ever-changing
markets in which we operate. In addition, improving the diversity of
our workforce and being an inclusive place to work, has meant that
the Company has been able to build stronger connections in the
communities we serve and in which employees live. The Company’s
plans in these areas are focused on continuing to connect with
our diverse customer base, contribute within the community and
encourage diversity, engagement, and productivity in delivering
against the Company’s strategy.
Corporate Governance Statement
continued
6.5 Other initiatives - Our people strategy
The Company continues to invest in human resource systems and
tools to support and facilitate more flexible ways of working.
The Company has continued its commitment to, and work in,
other areas of diversity and inclusion during FY2014 resulting in
achievements in each of the following areas:
›
Leadership development
During the year the Company launched the Interaction
Management program to equip the Company’s leaders with
coaching skills to empower their teams and embed a positive
and consistent coaching culture across the Company.
This coaching program is currently being deployed to
frontline managers across Myer.
› Employee engagement
›
›
A highly engaged workforce is a key part of success for Myer.
Research shows that a highly engaged workforce correlates to
better customer service, reduced health and safety incidents,
as well as higher productivity and profitability. In 2013 Myer’s
‘Your Say’ engagement survey reported our employee engagement
at 83 percent. This was the first survey that was run since 2006 and
sets an excellent benchmark for the Company. This result reflects
substantial work that we have undertaken to address employee
feedback in the areas of acknowledgement, communication, and
development. Across Myer, teams have identified priorities specific
to their team members and have developed plans to drive and
build engagement.
Indigenous participation
The Company continues to look at identifying opportunities to
increase Indigenous career pathways and job readiness programs.
Flexible arrangements and parental leave
Diversity has always been valued and encouraged at the
Company. With a workforce comprising predominantly female
team members, the Company 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 the Company 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 a
graduated return to work from parental leave, whilst establishing a
long and fulfilling career at the Company.
We recognise that periods of parental leave represent an
interruption in career progression. The Company 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.
The Company 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.
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Compliance with ASX Principles
The table below is provided to facilitate your understanding of the Company’s compliance with the recommendations in the ASX Principles (2nd
edition) and indicates where each recommendation is discussed in this statement.1
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
See sections 1.1 and 1.2
1.2 Disclose the process for evaluating the performance of senior executives
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
See sections 2.1 and 2.4
See sections 1.2 and 2.1
See sections 1.2 and 2.1
See sections 3.1 and 3.4
2.5 Disclose the process for evaluating the performance of the Board, its committees and individual directors
See section 1.3
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
See section 5.1
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
See part 6, sections 6.1
and 6.2
3.3 Disclose the Company’s measurable objectives for achieving gender diversity set by the Board and
See section 6.4
progress towards achieving them
3.4 Disclose the proportion of women employees in the whole organisation, in senior executive positions
See section 6.3
and on the Board
Principle 4 – Safeguard integrity in financial reporting
4.1 Establish an audit committee
See sections 3.1 and 3.2
4.2 The audit committee should have at least three members, consist only of non-executive directors
See sections 3.1 and 3.2
(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
See section 3.1
5.1 Establish and disclose a policy to ensure compliance with ASX Listing Rule disclosure requirements
See section 5.2
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
See section 5.4
Principle 7 – Recognise and manage risk
7.1 Establish and disclose policies for the oversight and management of material business risks
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
See sections 4.1 and 4.2
See sections 4.1, 4.2, 4.4
and 4.5
7.3 Disclose whether the Board has received assurance from the CEO and the CFO that the declaration
See section 4.5
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
See sections 3.1 and 3.3
8.2 The remuneration committee should have at least three members, a majority of whom are independent,
See sections 3.1 and 3.3
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 section 1.4 and the
Remuneration Report
1 The table includes all recommendations in the ASX Principles and Recommendations other than the ‘Guide to Reporting’ recommendations.
41 Corporate Governance Statement
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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 26 July 2014.
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
Paul McClintock AO
Rupert Myer AM
Bernie Brookes
Anne Brennan
Ian Cornell
Chris Froggatt
Peter Hay
Bob Thorn
Position
Date appointed as director
Chairman from 10 October 2012
Independent non-executive director
Deputy Chairman from 8 August 2012
Independent non-executive director
8 August 2012
12 July 2006
CEO and Managing Director
12 July 2006
Independent non-executive director
16 September 2009
Independent non-executive director
6 February 2014
Independent non-executive director
9 December 2010
Independent non-executive director
Independent non-executive director
3 February 2010
6 February 2014
Ian Cornell and Bob Thorn were appointed as directors on 6 February 2014. Peter Hay retired as a director with effect from 14 July 2014.
All other directors served as directors of the Company for the whole financial year and until the date of this Directors’ Report.
Details of the qualifications, experience and special responsibilities of each current director are set out on pages 26 and 27 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 2011, and the period for which each
directorship has been held. The information provided in relation to former director Peter Hay is current as at the date that he retired as a
director of the Company.
Director
Paul McClintock AO
Rupert Myer AM
Bernie Brookes
Anne Brennan
Ian Cornell
Chris Froggatt
Peter Hay
Listed entity
Perpetual Limited
AMCIL Limited
Healthscope Limited
Period directorship held
April 2004 – November 2012
January 2000 – present
July 2014 – present1
Diversified United Investment Limited
November 2002 – January 2012
–
Charter Hall Group
Nufarm Limited
Argo Investments Limited
Echo Entertainment Group Limited
Goodman Fielder Limited
Goodman Fielder Limited
Alumina Limited
–
October 2010 – present
February 2011 – present
September 2011 – present
March 2012 – present2
February 2014 – present
August 2009 – present
December 2002 – December 2013
Australia and New Zealand Banking Group Limited
November 2008 – April 2014
Bob Thorn
–
GUD Holdings Limited
Newcrest Mining Limited
May 2009 – present
August 2013 – present
–
1 Healthscope Limited was listed on the ASX on 28 July 2014, after the reporting period, but prior to the date of this Directors’ Report. Rupert Myer AM was appointed as a director
of Healthscope Limited on the same date.
2 On 31 July 2014, Echo Entertainment Group Limited announced that Anne Brennan will retire as a director, following its Annual General Meeting to be
held on 31 October 2014.
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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 26 July 2014 are set out below.
All directors are invited to attend Board Committee meetings. Most Board Committee meetings are attended by all directors; however,
only attendance by directors who are members of the relevant Committee is shown in the table below.
Director
Paul McClintock AO
Rupert Myer AM
Bernie Brookes
Anne Brennan
Ian Cornell1
Chris Froggatt
Peter Hay2
Bob Thorn1
Meetings of
directors
Audit, Finance and
Risk Committee
Human Resources and
Remuneration Committee
Nomination
Committee
A
11
10
11
11
5
11
10
5
B
11
11
11
11
5
11
10
5
A
–
4
–
4
–
–
3
1
B
–
4
–
4
–
–
3
1
A
–
4
–
4
1
4
–
–
B
–
4
–
4
1
4
–
–
A
3
2
–
3
–
4
–
–
B
3
3
–
3
–
4
–
–
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.
1
Ian Cornell and Bob Thorn were appointed as directors on 6 February 2014. Ian Cornell was appointed to the Human Resources and Remuneration Committee and Bob Thorn
was appointed to the Audit, Finance and Risk Committee on 19 March 2014.
2 Peter Hay retired as a director on 14 July 2014.
4. Directors’ relevant interests in shares
The following table sets out the relevant interests that each director has in the Company’s ordinary shares or other securities as at the date of this
Directors’ Report.
No director has a relevant interest in a related body corporate of the Company.
Director
Paul McClintock AO
Rupert Myer AM
Bernie Brookes
Anne Brennan
Ian Cornell
Chris Froggatt
Bob Thorn
Ordinary shares
Options
Performance rights
181,000
733,999
10,042,399
53,658
10,000
10,040
100,000
–
–
–
–
–
–
–
–
–
2,058,383
–
–
–
–
Peter Hay retired as a director of the Company with effect from 14 July 2014. At the date of his retirement, Mr Hay had a relevant interest in
12,195 ordinary shares in the Company.
5. Company Secretary
Marion Rodwell has been the Company Secretary of the Company since 2008. In addition to being Group Company Secretary, Ms Rodwell is
also Chief General Counsel of the Group. Ms Rodwell’s experience and qualifications are set out on page 29 of this Annual Report.
43 Directors’ Report
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10. Key risks and uncertainties
The Group’s strategies take into account the expected operating and
retail market conditions, together with general economic conditions,
which are inherently uncertain.
The Group has structured, proactive risk management and internal
control systems in place to manage material risks. The key risks and
uncertainties that may have an effect on the Group’s ability to execute
its business strategies and the Group’s future growth prospects and
how the Group manages these risks are set out on pages 10 and 11.
11. Matters subsequent to the end of the financial year
No other 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.
12. Dividends
The following dividends have been paid to shareholders during the
financial year:
2013 Final dividend
Final dividend for the period ended 27 July 2013 of
8.0 cents per fully paid ordinary share, fully franked, paid
on 14 November 2013
2014 Interim dividend
Interim dividend for the period ended 26 July 2014 of
9.0 cents per fully paid ordinary share, fully franked, paid
on 8 May 2014
$’000
46,759
$’000
52,711
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 5.5 cents per fully paid ordinary share to be paid on
13 November 2014.
Further information regarding dividends is set out in the Financial
Report (at note 22).
Directors’ Report
continued
6. Principal activities
During the financial year, the principal activity of the Group was the
operation of the Myer department store business.
7. Operating and financial review
A detailed review of the Group’s operations for the financial year and the
results of those operations are set out on pages 4 to 21 of this Annual
Report, in the Chairman and CEO Report (pages 4 and 5) and the
Operating and Financial Review (pages 6 to 21).
8. Significant changes in the state of affairs
The following significant changes to the Group’s state of affairs have
occurred since the beginning of the financial year:
›
›
›
›
›
›
the continued investment in our strategic plan, including in
relation to the acquisition and development of brands and retail
formats, and our omni-channel offer;
a continuing challenging retail environment;
the appointment of two new non-executive directors, Mr Bob
Thorn and Mr Ian Cornell, and the resignation of Mr Peter Hay from
his role as a non-executive director;
the strengthening of our senior management team with a
number of new appointments and the reappointment of Mr Bernie
Brookes as CEO and Managing Director;
the refurbishments of four of our top 25 stores in Adelaide
(South Australia), Indooroopilly (Queensland), Miranda
(New South Wales) and Macquarie (New South Wales);
the addition of menswear, childrenswear and toy departments
in the Emporium Melbourne development, adjoining the Myer
Melbourne (Victoria) store;
› preparations for new stores due to be opened prior to Christmas
2014 in Mount Gravatt (Queensland) and Joondalup
(Western Australia);
›
›
the closure of our stores in Elizabeth (South Australia) and
Dandenong (Victoria); and
the acquisition of the remaining 35 percent of shares in the
sass & bide business resulting in complete ownership.
These matters are discussed on pages 6 to 21.
Other than the matters 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.
9. Business strategies and future developments
A high level description of the Group’s strategic plan is set out on
pages 10 and 11 of this Annual Report.
Discussion of the Group’s business strategies and comments on the
likely developments in the Group’s operations are included in the
Chairman and CEO Report (pages 4 and 5) and the Operating and
Financial Review (pages 6 to 21).
Further information on likely developments in the Group’s operations
and the expected results of those operations has not been included
in this Annual Report. The directors believe that the inclusion of
such information including certain business strategies, projects and
prospects, would be likely to result in unreasonable prejudice to the
Group’s interests.
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13. 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. Shares delivered to senior
executives as a result of the vesting and exercise of options and
performance rights can be either issued as new shares or purchased
on market.
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
26 July 2014 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
Exercise
price of
options
Number of
options1
30 June 2009
24 October 2014
$2.34
2,191,650
Closing balance
2,191,650
1 Each option entitles the holder to receive one fully paid ordinary share in the
Company, subject to the satisfaction of the relevant performance conditions and
the payment of the exercise price.
A holder of an option may only participate in new issues of securities
of the Company if the option has been exercised, participation is
permitted by its terms, and the shares in respect of the options have
been allocated and transferred to the option right holder before the
record date for determining entitlements to the new issue.
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).
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 (including
the details of the options granted to the Key Management Personnel
(KMP) of the Company) is included in the Remuneration Report (at
pages 58 to 62).
Performance rights
Since 2011, only performance rights have been granted under the
MEIP. During the financial year the Company granted a total of 868,789
performance rights to selected senior executives. These performance
rights were granted under the ‘Executive Equity Incentive Plan’ (EEIP)
offer. Two separate offers were made under the EEIP during the
financial year: 183,566 performance rights were granted to the CFO
under a specific CFO EEIP offer; and 685,223 performance rights were
granted to other executives. In previous years, the Company granted
performance rights to senior executives under a MEIP offer; however,
no performance rights were granted under that offer during the
financial year.
The performance rights granted under each offer are subject to
different performance conditions.
No performance rights have been granted since the end of the
financial year ended 26 July 2014.
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
performance
rights granted
21 October 2011
(grant to senior
executives)
9 December 2011
(grant to CEO)
29 January 2013
(grant to senior
executives under the
EEIP offer)
29 January 2013
(grant to senior
executives under the
MEIP offer)
11 December 2013
(grant to CFO under
the EEIP offer)
11 December 2013
(grant to senior
executives under the
EEIP offer)
Closing balance
Expiry date
Issue
price
Number of
performance
rights1
31 October 2014
31 October 2014
Nil
Nil
2,059,621
2,058,383
31 October 2015
Nil
457,805
31 October 2015
31 October 2016
Nil
Nil
1,128,961
183,566
31 October 2016
Nil
329,630
6,217,966
1 Each performance right entitles the holder to receive one fully paid ordinary share
in the Company, subject to the satisfaction of the relevant performance conditions.
A holder of a performance right may only participate in new issues of
securities of the Company if the performance right has been exercised,
participation is permitted by its terms, and the shares in respect of
the performance rights have been allocated and transferred to the
performance right holder before the record date for determining
entitlements to the new issue. As with the options, the number of
performance rights that a holder is entitled to receive on the exercise
of a performance right may be adjusted in a manner consistent
with the ASX Listing Rules if there is a pro rata issue of shares or a
reconstruction of the capital of the Company.
Further information about performance rights issued under the MEIP
(including the performance conditions attached to the performance
rights granted under the EEIP offer and the MEIP offer, and the
performance rights granted to the KMP of the Company) is included in
the Remuneration Report (at pages 58 to 62).
45 Directors’ Report
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Directors’ Report
continued
14.
Shares issued on the exercise of options
and performance rights
Options
From time to time, the Company issues fully paid ordinary shares in
the Company to the Myer Equity Plans Trust (Trust) for the purpose of
meeting anticipated exercises of securities granted under the MEIP.
During the period ended 26 July 2014, 2,090,000 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 Price of the Company’s
shares as at the close of trading on the date of issue. During the
period, all shares provided on the exercise of options were delivered
via this mechanism.
During the period, 2,110,500 shares were transferred from the Trust to
participants on the exercise of options under the MEIP as detailed below.
Date options
granted
Exercise price
of options
Number of shares
provided on
exercise of options
17 December 2008
$2.14
2,110,500
Post balance date events
Since 26 July 2014, 5,000 further shares have been issued to the Trust.
No other acquisitions of shares have been made by the Trust during
this period. Since 26 July 2014, 10,000 fully paid ordinary shares of the
Company held by the Trust were transferred to participants in the MEIP.
Performance rights
No performance rights were eligible to vest or to be exercised during
the financial year.
15. Remuneration Report
The Remuneration Report, which comprises part of this
Directors’ Report is presented separately on pages 47 to 67.
16. 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
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,
executive officers and 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.
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.
18. Environmental regulation
The Group is subject to and has complied with the reporting and
compliance requirements of the National Greenhouse and Energy
Reporting Act 2007 (Cth) (NGER Act). No significant environmental
incidents have been reported internally, and no breaches have been
notified to the Group by any government agency. 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. In compliance with
the NGER Act, the Group submitted its fifth report to the Greenhouse
and Energy Data Officer in October 2013 and is due to submit its sixth
report by 31 October 2014.
The Energy Efficiency Opportunities Act 2006 (Cth) (EEO Act) was
repealed with effect from 29 June 2014. The EEO Act required
the Group to assess its energy usage, evaluate energy saving
opportunities, and to report publicly on the assessments undertaken.
While the EEO Act was still in force, the Group submitted its sixth
public report in December 2013.
19. 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 24).
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 the 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.
20. 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.
21. 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.
The Directors’ Report is made in accordance with a resolution
of directors.
17. 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
Paul McClintock AO
Chairman
Melbourne, 3 October 2014
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REMUNERATION REPORT
This 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:
›
FY2014 remuneration overview
› Directors and executives disclosed in this report
› CEO and Managing Director contract renewal
›
Future focus for executive reward
› Human Resources and Remuneration Committee and remuneration governance
› Use of remuneration consultants
›
›
›
›
Policies for remuneration of directors and other KMP
Equity arrangements with directors and other KMP
Remuneration and Company performance
Remuneration outcomes for directors and other KMP
FY2014 remuneration overview
During FY2014, the Board continued to review Myer’s approach to executive remuneration with a view to ensuring ongoing alignment between
executive remuneration, Group performance and shareholder returns. The Board understands executive remuneration is an issue of significant
and sustained interest for shareholders. The Board remains committed to the principle that remuneration received by members of the executive
team should reflect Company performance and the achievement of demanding financial objectives.
The Board’s priority over the past year has been to oversee the introduction of a number of measures designed to further improve the
Company’s remuneration practices and provide greater consistency and transparency in the Company’s approach. While retaining largely the
same structure, the Board received advice from its remuneration adviser, Ernst & Young (EY), to assist in a better alignment of performance to
sustainable financial and customer outcomes, while attracting and retaining high quality senior executives.
An equally important focus of the Board is supporting initiatives to foster diversity, engagement, talent management and succession planning
throughout all levels of the business, and progress has been made in all of these areas over the past year.
A key component of the Company’s strategic plan is creating a business and culture to attract and retain high performing individuals. The Board
continues to take a considered approach to executive remuneration but is mindful that shareholder interests will not be served if the Company
becomes unable to retain or attract the talented people who are key to achieving the Company’s strategic objectives.
Myer recently announced a number of senior management and organisational changes to evolve and accelerate its strategy, support its growth
and transformation, and strengthen succession planning within its senior leadership group. The Board recognised the need to appoint a number
of senior executives to improve the bench strength of the leadership group.
47 Remuneration Report
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Remuneration Report
continued
Key developments/changes for the year ended 26 July 2014 were:
Organisational changes
Key development/remuneration outcomes
Governance and
non-executive
director
remuneration
Bob Thorn appointed as a non-executive director on
6 February 2014.
Ian Cornell appointed as a non-executive director on
6 February 2014.
Peter Hay retired as a non-executive director effective
from 14 July 2014.
CEO and
Managing Director
remuneration
Mr Bernie Brookes reappointed as CEO and Managing
Director on an ‘open term’ contract effective from
February 2014.
Directors’ fees were not increased in FY2014.
Mr Brookes’ fixed remuneration has been adjusted
by 11.1% to $2.0 million per annum. This was the first
adjustment since September 2011. Mr Brookes’ base pay
is subject to annual performance-based review.
› Short term incentive (STI)
A target annual incentive payment equivalent to
120% of Mr Brookes’ Total Fixed Compensation (TFC)
for achievement against targeted performance and
up to 150% of TFC for superior performance based on
prescribed metrics. Subject to shareholder approval,
30% of any annual STI awarded to Mr Brookes will be
delivered through a grant of restricted shares for two
years from the date of grant.
›
Long term incentive (LTI)
Subject to shareholder approval, Mr Brookes’ long
term incentive award will be delivered through a grant
of performance rights to the value of 30% of TFC.
Mr Brookes will be eligible to participate in future
grants of performance rights under the Executive
Equity Incentive Plan (EEIP), with any such grants
being subject to shareholder approval.
Under Mr Brookes’ previous contract he was entitled to
a payment equal to 12 months’ pay ($1.8 million) had his
employment ceased under his contract in August 2014.
This payment no longer applies.
Other KMP
remuneration
KMP consists of
four executives at
Executive General
Manager level
Greg Travers ceased employment on 2 May 2014.
Adam Stapleton ceased employment on 18 July 2014.
A general freeze on the base pay of executives applied in
FY2014.
The Chief Financial Officer (CFO), Mark Ashby’s base
pay was adjusted by 7.1% in recognition of additional
responsibilities, effective from 1 May 2014.
No STI payment awarded to executives.
This is the fourth consecutive year where no STI has been
awarded.
Executives were granted new performance rights in
FY2014, with 868,789 performance rights granted in
December 2013.
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The Board considers each element of KMP reward annually. The Board takes into account the outcomes achieved and also seeks advice from its
independent adviser EY on the remuneration practices of relevant comparator companies.
In framing the remuneration structure for FY2014, the Board assessed the Company’s remuneration arrangements and the following changes
were made to the Company’s remuneration structure for FY2014.
› Base Pay – Changes were made to the CEO and Managing Director’s remuneration arrangements as part of the renewal of his contract in
FY2014 (these are outlined in more detail below). In addition, the Board approved changes to the remuneration of the CFO in recognition of
his additional responsibilities and an independent review indicating that the CFO’s fixed remuneration level was below market median.
A general freeze on the fixed remuneration of salaried team members applied in FY2014 and as a result no annual remuneration increases
were delivered to executives.
› STI – At the beginning of the financial year, the Board approves the performance targets and measures which must be satisfied for any
STI award to be made to KMP and other executives in that year. The performance measure selected for the FY2014 STI Plan for KMP and
executives was focused on the Company’s Net Profit After Tax (NPAT) performance. Accordingly, eligible executives are only entitled to
receive an STI reward when the Company’s profit is consistent with or ahead of the business plan approved by the Board. The NPAT hurdle
was selected on the basis that it has a direct correlation to the financial performance of the Company and is intended to incentivise KMP and
executives to work towards building the Company’s financial performance.
›
LTI – Performance rights were granted to KMP under a revised Executive Equity Incentive Plan (EEIP) offer in FY2014. The performance rights
granted under the EEIP offer continued to be subject to the same two hurdles as in previous years, being relative Total Shareholder Return
(TSR) against an index of comparator companies (50% of the performance rights granted to each executive were subject to the TSR Hurdle)
and Compound Annual Growth Rate in Earnings Per Share (CAGR EPS) (25% of the performance rights granted to each executive were
subject to the CAGR EPS Hurdle).
A third metric, the Business Transformation (BT) Hurdle, was introduced under the FY2014 plan relating to the successful delivery of the
Company’s strategic plan over the performance period (25% of the performance rights granted to each executive under the EEIP are subject
to this hurdle). This hurdle was chosen by the Board as a way of measuring the Company’s transformation through the structural changes of
the retail industry and in recognition of the important delivery of the strategic plan to the Company. This BT Hurdle will be tested at the end
of the performance period (following the submission of the Company’s audited results to the ASX for FY2016) by comparing the Company’s
actual performance against the Company’s target performance against those measures as set out in the Company’s business plan.
Additional performance rights were offered to the CFO in FY2014. The potential value of the performance rights granted to the CFO under
the EEIP was equivalent to 75% of his TFC. The performance rights reflecting 45% of his TFC will be subject to the three metrics outlined
above (applied in the same way as for other executives covered by the EEIP offer), and performance rights reflecting 30% of his TFC subject to
a condition of continuous employment with the Company through to the end of the performance period.
The Board considers the changes made to each of the elements of reward for the KMP to be appropriate, taking into account the Company’s
overall reward objectives, relevant market comparators and the interests of shareholders.
Directors and executives disclosed in this report
Name
Position
Non-executive directors
P McClintock
Chairman,
Independent non-executive director
R Myer
Deputy Chairman,
Independent non-executive director
A Brennan
Independent non-executive director
I Cornell1
Independent non-executive director
C Froggatt
Independent non-executive director
P Hay2
R Thorn3
Independent non-executive director
Independent non-executive director
Name
Position
Name
Position
Executive director
Other Key Management Personnel
B Brookes CEO and
M Ashby
Chief Financial Officer
Managing Director
A Stapleton4 Executive General Manager
Merchandise
A Sutton
Executive General Manager Stores
G Travers5
Executive General Manager Business
Services and Strategic Planning
I Cornell was appointed as a non-executive director on 6 February 2014.
1
2 P Hay was appointed as a non-executive director on 3 February 2010 and retired on 14 July 2014.
3 R Thorn was appointed as a non-executive director on 6 February 2014.
4 A Stapleton was promoted to Executive General Manager Merchandise on 4 February 2013 and ceased employment on 18 July 2014.
5 G Travers was appointed as Executive General Manager Business Services on 1 November 2010 and ceased employment on 2 May 2014.
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continued
CEO and Managing Director contract renewal
In February 2014 the Board announced the reappointment of
Mr Brookes as CEO and Managing Director. The key terms and
conditions of Mr Brookes’ reappointment are outlined below:
Term
The new contract is in the form of an ‘open term’ contract and replaces
Mr Brookes’ previous fixed term contract which was due to expire in
August 2014.
Remuneration package
Mr Brookes’ remuneration includes his TFC (being cash salary and
superannuation), an annual STI delivered in cash and equity in the
form of restricted shares and a LTI delivered in equity in the form of
performance rights.
› TFC
Mr Brookes’ TFC is subject to an annual performance-based review.
His fixed remuneration has been adjusted by 11.1% to
$2.0 million per annum. This is the first adjustment to Mr Brookes’
fixed remuneration since September 2011.
› STI
›
Mr Brookes is eligible to receive an annual incentive payment
equivalent to 120% of TFC at target, and up to 150% of TFC at
stretch. Subject to shareholder approval, 30% of any STI awarded
will be delivered in restricted shares. Mr Brookes cannot access,
trade or otherwise deal in the shares for a period of two years from
the date of the grant, which effectively defers this portion of Mr
Brookes’ STI reward for two years. The Board has a discretion to
award cash in lieu of restricted shares.
LTI
Subject to shareholder approval, Mr Brookes, will be entitled to
receive performance rights to the value of 30% of his TFC. These
will be broadly on the same terms as performance rights granted
to other senior executives participating in the EEIP.
Mr Brookes received a one-off long term incentive of $2.7 million
as part of his 2011 contract renewal. The long term incentive
was delivered through a one-off grant of performance rights
which were granted to Mr Brookes following the 2011 AGM. The
performance rights were subject to the satisfaction of the following
performance hurdles: 50% of the performance rights were subject
to a TSR Hurdle and 50% were subject to an EPS Hurdle. Regardless
of performance against the TSR and EPS Hurdles, the CEO was
required 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.
Indicative testing of the TSR and EPS performance hurdles
applicable to this grant of performance rights to the CEO was
undertaken following the lodgement of the Company’s FY2014
preliminary financial results with the ASX. Based on this preliminary
assessment, these rights are not likely to vest as the TSR and CAGR
EPS hurdles are unlikely to be achieved. The TSR and EPS hurdles
will be tested following the lodgement of the Company’s audited
results with the ASX. If that testing confirms that the hurdles have
not been achieved, then all of these performance rights will lapse.
Total remuneration
Under Mr Brookes’ new contract, his total remuneration (including TFC,
STI and LTI) at target is $5 million and at stretch, $5.6 million.
Termination provisions
Myer may terminate Mr Brookes’ employment at any time by
providing 12 months, written notice or payment in lieu of notice
(or a combination of these).
Mr Brookes may terminate his employment by providing the
Company with six months’ notice.
Future focus for executive reward
The Board was pleased to announce the appointment of a number of
senior executives in June 2014. We believe we have secured several
outstanding executives to join the Company’s senior leadership team,
with an excellent combination of new thought leadership and world
class retailing skills obtained both domestically and internationally.
These appointments complement the knowledge and experience of
the existing leadership team.
The remuneration arrangements to secure these executives were
structured to encourage them to move from their previous roles
where they had significant incentive arrangements which were to be
forfeited upon leaving. Selected sign-on grants have been made in the
form of both cash and equity to align them to shareholder interests.
These can be clawed back and forfeited if the executive is not retained.
The Board considers each element of KMP reward annually, having
regard to the experience and outcomes achieved and advice from
its independent adviser, EY, on the relative position of KMP at Myer
to relevant comparator companies. The Board has determined that
the following changes will be made to the Company’s remuneration
structure for the 2015 financial year:
›
Fixed remuneration - The Board undertook a review of
remuneration for KMP and benchmarked this against the market.
This review highlighted the need to adjust base salaries for some
KMP (giving consideration to the freeze on base salaries applied in
FY2014). These increases reflect the restructure of the business and
our need to retain KMP to lead major strategic initiatives.
› STI - To incentivise performance and bring about positive change,
three metrics will be considered to determine any incentive
payment for FY2015: EBIT will be the main metric, weighted
at 50% of the total potential reward; sales growth will be the
second metric, weighted at 30%; and the final metric will be the
achievement of personal objectives we have established for each
KMP and other executives, weighted at 20%. Each measure will be
assessed in isolation without a ‘gate’ applying before any payment
is made against individual metrics.
EBIT growth is one of the primary measures that the Board uses
to assess the operating performance of the Group, with an aim to
maintain a focus on the Group’s operating results and associated
cash generation. It reflects the contribution from individual assets
to the Group’s operating performance and focuses on elements of
the result that management can influence to drive improvements
in short term earnings.
Sales growth was chosen principally because of the impact it has
on NPAT, which is a significant contributor to the achievement of
satisfactory returns to shareholders.
Personal objectives will make up 20% of the STI available to each of
the KMP and other executives. This metric will depend on specific
individual quantitative targets set by the CEO (and approved by
the Human Resources and Remuneration Committee and the
Board). These targets relate to aspects of the business over which
the relevant executive has significant influence and aligned to our
strategic goals.
The measures selected for each executive have been determined
by reference to the specific objectives of the executive’s role
for FY2015. Company financial measures were allocated to all
executives to ensure an alignment between executive reward
outcomes and Company performance. Given that STI awards are
contingent on performance across a range of measures, maximum
STI awards can only be achieved for performance that is strong on
all measures.
As in previous years, the Board has 100% discretion with the
STI outcome.
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›
LTI – Performance rights will be granted to KMP under an EEIP offer
in FY2015. The performance rights granted under the EEIP offer
will continue be subject to the same three hurdles of Relative TSR
performance against an index of comparator companies (weighted
at 50%), CAGR EPS (weighted at 25%) and Business Transformation
(weighted at 25%).
The Business Transformation Hurdle was introduced under the
FY2014 plan, relating to the successful delivery of the strategic plan
over the performance period.
With the delisting of David Jones from the ASX it was timely
to review the TSR peer group of organisations to apply to the
FY2015 allocation of performance shares. Our discussions with
proxy advisers, and the Board’s remuneration adviser (EY), have
helped shape our decisions with regard to the future peer group
of organisations. The Board has approved a change in comparator
group for the purposes of measuring relative TSR performance
under the FY2015 LTI plan offer. The new comparator group will
comprise of Standard & Poor’s/ASX200 market constituents
(with some exclusions). This peer group is considered appropriate
to benchmark the Company’s relative performance, given Myer’s
size and position within the ASX200.
For FY2015, non-executive director fees (including the Chairman’s
fee) have been reviewed following independent advice received
from EY, and will be increased in line with inflation movement. This
increase remains within the aggregate fee pool limit and is the
first increase in directors’ fees since Myer’s public listing in 2009. In
addition, the annual fee for the Chairman of the Human Resources
and Remuneration Committee will be increased to $22,500 per annum
(up from $15,000) for FY2015. This increase is in recognition of the
demands of the responsibilities of this position and is in line with
market rates.
Human Resources and Remuneration Committee and
remuneration governance
The Board annually reviews its role, responsibilities and performance
to ensure that the Company continues to maintain and improve its
governance standards.
The Board is responsible for ensuring the Group’s remuneration
strategy is equitable and aligned with Company performance and
shareholder interests. The Board conducts an annual review of the
remuneration strategy of the business. To assist with this, the Board
has established a Human Resources and Remuneration Committee
(Committee) made up of non-executive directors only. The Committee
charter is available on the Company’s website, myer.com.au/investor.
To ensure the Committee is fully informed when making remuneration
decisions, it draws on the services of independent remuneration
advisers. Independent remuneration advisers are engaged by and
report directly to the Committee and provide advice and assistance on
a range of matters including but not limited to:
› updates on remuneration trends, regulatory developments and
shareholder views;
›
the review, design or implementation of the executive
remuneration strategy and its underlying components (such as
incentive plans); and
› market remuneration analysis and comparative conditions relevant
to Myer.
When making remuneration decisions, the Committee will also
give consideration to the Company’s internal succession plan and
capability profile.
Ms Chris Froggatt chairs the Human Resources and Remuneration
Committee. Other members of the Committee are Ms Anne Brennan,
and Mr Ian Cornell and Mr Rupert Myer AM.
In performing its role, the Committee has the responsibility to make
recommendations to the Board on:
› non-executive director fees;
›
›
›
executive remuneration (for the Managing Director and CEO
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;
the over-arching remuneration framework including the policy,
strategy and practices for fixed reward and both short and long
term incentive plans and performance hurdles; and
the regular and continuing review of executive succession
planning and executive development activities ensuring
appropriate plans are in place for succession cover for business
critical roles.
The Committee has been established under rule 8.15 of the
Constitution of the Company. 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 Chairman, the CEO and the head of the Human Resources
function are regular attendees at the Committee meetings. The CEO
was not present during any Committee or Board meetings when his
remuneration was considered or discussed during the financial year.
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 Chairman or if she is not available, a Committee
member, will attend the Annual General Meeting and be
available to answer any questions from shareholders about
the Committee’s activities or, if appropriate, the Company’s
remuneration arrangements.
Use of remuneration consultants
To ensure it is fully informed when making remuneration decisions,
the Committee draws on services from a range of external sources,
including remuneration consultants where appropriate. Myer’s
guidelines on the use of remuneration consultants aim to ensure the
independence of remuneration consultants from Myer’s management,
and include the process for the selection of consultants and the terms
of engagement.
Remuneration consultants are engaged by, and report directly to,
the Committee.
The Board and Committee engage remuneration advisers to provide
remuneration and market practice advice and information to the
Board. During FY2014, the Committee continued to engage EY to
provide independent advice to the Board in its review of remuneration
arrangements. Remuneration advisers are engaged by the Chairman
of the Committee with an agreed set of protocols to be followed by
the advisers, the Committee and management that determine the
way in which remuneration recommendations would be developed
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Remuneration Report
continued
and provided to the Board. This process is intended to ensure there
could be no undue influence by KMP for whom any recommendations
may relate.
Any remuneration information for the CEO provided by EY was
provided directly to the Committee Chairman who determined
a recommendation, in consultation with the Committee and the
Chairman of the Board.
Market data provided by EY is also used to inform the CEO in order to
propose to the Committee adjustments to the remuneration of KMP
for their approval.
Throughout FY2014, the information received from the Committee’s
remuneration consultants in respect of the CEO and executives
related to:
›
›
regulatory reforms;
current market practices; and
› benchmarking to support the annual remuneration review for the
CEO and executives.
During this engagement no remuneration recommendations (as
defined by the Corporations Amendment (Improving Accountability on
Director and Executive Remuneration) Act 2011 (Cth)) were provided
to the Committee by EY. The Committee had full oversight of the
review process and therefore it, and the Board, were satisfied that the
information provided by EY was free from undue influence by KMP.
During the renewal of the CEO’s contract of employment, a
remuneration recommendation (as defined by Division 1 of
Part 1.2 of Chapter 1 of the Corporations Act) was provided by EY.
This remuneration recommendation was only provided to a
non-executive director of the Company. EY has provided the
Committee with a declaration that the remuneration recommendation
has been made free from undue influence by the KMP to whom it
relates. The cost associated with this recommendation was $6,630.
No other remuneration recommendations, as defined by the
Corporations Act, were made by the remuneration adviser. EY was
engaged in FY2014 to provide benchmarking services relating to
executive and director remuneration. The total fees paid to EY during
the year for this advice was $110,840.
The Board is satisfied that the remuneration information received from
EY was free from undue influence by Board members or any of the
KMP to whom the information relates.
Policies for remuneration of directors and other KMP
Non-executive director remuneration
Fees and payments to non-executive directors reflect the demands
upon 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 Chairman 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 at the Annual General Meeting. The maximum
aggregate limit includes superannuation contributions for the benefit
of non-executive directors and any fees which a non-executive
director agrees to sacrifice for other benefits. It does not include
reimbursement of genuine out-of-pocket expenses, genuine special
exertions fees paid in accordance with the Company’s constitution or
certain issues of securities under ASX Listing Rule 10.11 or 10.14, with
the approval of shareholders. The current maximum aggregate fee
pool limit is $2,150,000 per annum. The aggregate fee pool limit has
not changed since the Company 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 applied in FY2014:
Base annual fees
Chairman1
Other non-executive directors
Additional annual fees
Deputy Chairman
Audit, Finance and Risk Committee – Chairman
Audit, Finance and Risk Committee – member
Human Resources and Remuneration
Committee – Chairman
Human Resources and Remuneration
Committee – member
Nomination Committee – Chairman
Nomination Committee – member
$
400,000
150,000
30,000
30,000
–
15,000
–
–
–
1 Prior to October 2012, the fee for the Chairman was $500,000 per annum.
Note: Based on the composition of the Board over FY2014, the total fees actually paid to
non-executive directors have reduced from FY2013, as shown on the table on page 63.
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.
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Executive Director and other KMP 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.
The diagram below illustrates how Myer’s remuneration strategy, and the structures the Board has put in place to achieve this strategy, align with
the Company’s business objectives.
Operational strategy
Optimise our
store network
Enhance our
merchandise offer
Improve customer
service
Strengthen our
loyalty program
Build a leading
omni-channel offer
Attract and retain high calibre executives
Align executive rewards with Myer’s performance
Remuneration strategy
reward competitively in the markets in which Myer operates
›
› provide a balance of fixed and ‘at risk’ remuneration
assess rewards against objective financial measures
›
› make short-term and long-term components of remuneration ‘at risk’
›
remunerate or reward based on performance
Fixed annual remuneration
Short term incentive
Long term incentive
Remuneration components
› provides ‘predictable’ base level of reward
set at market median using external
›
benchmark data
varies based on employee’s experience,
skills and performance
consideration given to both external
and internal relativities
›
›
› entirely focused on financial targets linked
› delivered in equity to align executives with
to objective measures
›
›
›
shareholder interests
tested after three years
focused on long-term business strategy and aligns
KMP and shareholder interests to support the
creation of long-term shareholder value
full vesting when Myer achieves top
quartile performance and when the EPS Hurdle
is achieved
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, share price and growth in earnings
per share;
› 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.
Executive remuneration
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:
›
›
›
TFC – base pay and benefits, including superannuation;
STI; and
LTI through participation in the offers under the EEIP.
The combination of these three components comprises an executive’s total remuneration mix at target of performance reflected by
percentage in the following charts.
30% STI
(deferred
stock for
two years)
LTI
12.0%
14.4%
CEO
TFC
40%
LTI
31.9%
42.6%
TFC
CFO
LTI
27.3%
Other KMP
45.4%
TFC
33.6%
70% STI
(cash)
STI (cash)
27.3%
25.5%
STI (cash)
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continued
Total Fixed Compensation
Fixed remuneration is determined by assessing an individual’s competency level and experience against the requirements of the respective
position relative to business unit/functional alignment and external market conditions, with flexibility to recognise individual performance and
value to the organisation.
Feature
What is included in TFC?
How is TFC reviewed?
Which benchmarks are used?
Description
TFC is structured as a total fixed employment compensation package, made up of base salary,
superannuation and other benefits. Some of the benefits include the opportunity to receive
a portion of their fixed remuneration in a variety of forms, including fringe benefits such as
motor vehicles, or to make additional contributions to superannuation or retirement plans (as
permitted by relevant legislation).
Base salary levels for each executive are 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.
The Committee reviews and makes recommendations to the Board regarding TFC for KMP
and senior executives annually in July, having regard to Group and individual performance
and relevant comparative remuneration in the market. Annual adjustments approved by
the Board are effective 1 February. The Board may also approve adjustments to executive
remuneration as recommended by the CEO, such as on promotion or as a result of additional
duties performed by the executive.
Where new senior executives join the Group or existing executives are appointed to new
roles, a review and benchmarking of fixed and total remuneration is conducted for each
individual prior to the issue of an offer and execution of a new employment contract.
Annual adjustments to the remuneration of executives and employees who are not KMP or
senior executives are determined based upon guidelines approved by the CEO and advised
to the Committee.
Remuneration for KMP is benchmarked against both a peer group of companies and
companies from the ASX 200, with a market capitalisation of between 50% and 200% of that
of Myer (excluding companies from the financial and mining sectors).
EY provided benchmarking data to the Committee in connection with the Committee’s review of TFC for members of the Group Executive in
March 2014. Other than for the renewal of the CEO’s contract and the CFO, no adjustment to TFC was approved for the KMP for FY2014. EY’s 2014
review of remuneration indicated that the CFO’s TFC was below market median. The Board approved a 7.1% increase to the CFO’s TFC to
be effective from 1 May 2014 in recognition of the CFO taking on additional duties and having regard to EY’s benchmarking data.
Short Term Incentive
The quantum of short term variable rewards for the CEO and other KMP payable in a particular year are determined based on the extent to which
key performance indicators (KPIs) are satisfied in the relevant year. 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 other KMP are set by the CEO and endorsed by the Committee for approval by the Board.
Myer’s STI plan for KMP and other senior executives operates on an annual basis subject to Board review and approval. The FY2014 STI applied
to all eligible executives including the KMP, subject to certain conditions and performance criteria being met which are reviewed and approved
annually by the Board.
In the 2014 financial year, despite a number of strategic and operational objectives being met, the Board determined that it would not approve
the payment of STI to any of the Myer management team.
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Feature
What is the STI Plan?
Description
The STI plan is the cash-based component of a senior executive’s at risk reward opportunity,
based on achieving pre-determined performance measurement criteria.
What is the value of the STI opportunity?
In respect of FY2014:
›
›
The CEO had the opportunity to receive an STI award equivalent to 100% of his TFC
for at target performance.
The remaining members of the senior executive team had the opportunity to earn a
bonus equivalent to between 45% and 60% of their fixed annual remuneration for at
target performance.
What was the FY2014 performance measure?
The KPI approved by the Board for the FY2014 STI plan was NPAT.
Why was the performance measure
selected?
How is performance measured?
When are incentives paid?
Does a ‘clawback’ apply?
NPAT was identified as the key financial objective for the success of the business in FY2014
and the achievement of satisfactory returns for the Company’s shareholders. NPAT was
considered to be the appropriate financial performance criteria for the STI plan given it
measures bottom line growth and increases in Company earnings, being what shareholders
expect the Company to deliver.
The Committee determines whether, or the extent to which, the NPAT target is satisfied
following the end of the financial year, once the Company’s annual accounts have been
approved by the directors and audited.
If the NPAT Hurdle is satisfied, a STI will be paid to participating KMP and other executives.
The quantum of any STI reward provided will depend on the extent to which the NPAT target
reward is achieved. A minimum threshold is also set, below which no STI reward
will be provided.
Once it has been determined whether, and the extent to which, the NPAT target has been
satisfied, the Committee will make a recommendation to the Board for approval of the STI
rewards to be paid to the CEO and individual executives.
STI rewards approved by the Board are paid to participating KMP and executives in the month
following the release of the Company’s results to the ASX.
The STI Plan allows the Board to take any steps that it determines appropriate to recover from
the individual executive any STI reward that was incorrectly provided as a result of a material
misstatement in, or omission from, the Company’s financial statements. The provision applies
only to those executives who were KMP of the Group Executive at the time the financial
statements were approved by the Board and issued by the Company.
The Committee is responsible for assessing whether the performance criteria are met. To help make this assessment, the Committee receives
reports on the Company’s performance from management. All proposed STI 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 STIs in light of unexpected or unintended
circumstances. There has been no discretion applied.
Details of remuneration: bonuses
For each STI reward referred to in this report, the percentage of the available STI reward that was paid in the financial year, and the percentage
and value that was forfeited because the relevant KMP did not meet the service and performance criteria is set out below. STI rewards are
payable in the year following the period in which they are earned.
Short term performance and STI payments for FY2014
The FY2014 STI program relevant to the KMP can be summarised as follows:
STI/Bonus1
Achieved 2014
%
Forfeited 2014
%
0
0
0
0
0
100
100
100
100
100
Target value
2014
$
2,000,000
425,950
285,000
255,000
420,000
Forfeited value
2014
$
2,000,000
425,950
285,000
255,000
420,000
Name
B Brookes
M Ashby
A Stapleton2
A Sutton
G Travers3
1 The % of STIs achieved and forfeited for 2014 are based on performance against ’at target’ performance as explained above.
2 A Stapleton ceased employment on 18 July 2014.
3 G Travers ceased employment on 2 May 2014.
55 Remuneration Report
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Remuneration Report
continued
Long Term Incentive
Myer’s LTI plan, the Myer Equity Incentive Plan (MEIP) has been in operation since December 2006. Features of the MEIP are outlined in the
table below. In FY2014 the Board granted participating and eligible KMP and other senior executives performance rights under the MEIP. This
FY2014 offer of performance rights was made under the EEIP offer, which was an LTI offer specifically designed for eligible KMP and other senior
executives. The EEIP offer was administered under the overarching terms of the MEIP.
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 the three year performance period or where the clawback arrangements would apply.
MEIP (LTI Plan)
Feature
What is the LTI Plan?
Instrument
Determining the number of performance
rights
Performance period
Description
Under the MEIP, performance rights (being rights to be provided with shares in the Company) may
be offered annually to the CEO and nominated executives. The employees entitled to participate
in the plan include executives who are considered to play a leading role in achieving the Group’s
long term strategic and operational objectives.
In FY2014, KMP and other senior executives received performance rights under the EEIP offer. A
grant of performance rights for each executive through the EEIP offer is determined as part of
the calculation of 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 MEIP is a retention incentive that is intended to promote alignment between executive
and shareholder interests over the longer term. Each right offered is an entitlement to one fully
paid ordinary share in the Company on terms and hurdles determined by the Board, including
performance hurdles linked to both service (through a three year performance period for each
offer) and Company performance.
Performance rights: each performance right entitles a participating executive to be provided with
one Myer share in the Company, subject to the satisfaction of the performance hurdles set out
below. The number of performance rights that vest is not determined until after the end of the
performance period (being 30 July 2016).
The performance right will therefore not provide any value to the holder between the date the
performance right is granted until after the end of the performance period and then only if the
performance hurdles are satisfied.
Performance rights do not carry entitlements to ordinary dividends or other shareholder rights
until the performance rights vest and shares are provided. Accordingly, participating executives
do not receive dividends during the performance period.
The number of performance rights allocated depends on each executive’s LTI target (see diagram
on page 53 for an explanation of target remuneration). The value of the performance rights
granted is calculated based on the Volume Weighted Average Price (VWAP) of the Company’s
shares for the five days prior to the closing date of the offer.
The performance period commences at the beginning of the financial year in which the
performance rights are granted. For the performance rights granted under the FY2014 EEIP, the
performance period started on 28 July 2013 and ends after three years on 30 July 2016. Following
the end of the performance period for the performance rights and after the Company has lodged
its full year audited financial results for 2016 with the ASX, the Board will test the performance
hurdles that apply to the FY2014 EEIP offer and will determine how many performance rights (if
any) are eligible to vest. There will be no retesting of the performance hurdles at a later date if they
are not fully satisfied.
56 Myer Annual Report 2014
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MEIP (LTI Plan) continued
Feature
Description
Performance hurdles
FY2014 EEIP offer (Performance period 28 July 2013 – 30 July 2016):
Why were the performance measures
selected?
Vesting framework (continued next page)
Consistent with prior years, the financial performance measures approved by the Board for
the FY2014 EEIP offer were TSR performance and the Company’s EPS.
The Board also approved a new performance measure for the FY2014 EEIP, known as the Business
Transformation Hurdle.
›
›
›
50% of each award is subject to a performance hurdle, which measures the Company’s
TSR performance relative to a set peer group. In selecting the TSR peer group, the Board
sought independent advice. 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.
25% of each award is subject to a performance hurdle that measures the Company’s EPS. The
EPS Hurdle is based on the compound annual growth rate in the Company’s fully diluted EPS
over the performance period.
25% of each award is subject to a Business Transformation Hurdle. The purpose of the Business
Transformation Hurdle is to assess the way in which Myer is transforming due to the structural
realignment of the retail industry.
The Board wished to continue with a market-based performance measure for the FY2014
offer and a relative TSR measure was selected to ensure an alignment between comparative
shareholder return and reward for executives. This also provides a direct comparison of the
Company’s performance over the three year performance period against a comparator group
of companies that would, broadly, be expected to be similarly impacted by changes in market
conditions.
EPS was selected as it is considered to be an effective measure for determining the underlying
profitability of the business.
The Business Transformation measure was introduced to the plan to assess the way in which the
Company is transforming in a time of continued structural realignment of the retail industry.
The number of performance rights that vest will depend on how well Myer has performed during
the performance period. For superior performance, 100% 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 applicable performance rights will lapse and no
performance rights can vest.
For the FY2014 EEIP offer the following vesting hurdles apply:
› TSR (50% of the award)
TSR percentile ranking % of TSR performance rights that will vest
Below 50th
Nil
From 50th to 75th
Pro rata with a linear progression between 50% and up to 100% of
the number of TSR performance rights
75th and above
100%
› EPS (25% of the award)
EPS Hurdle rate
(CAGR over the
performance period)
% of EPS performance rights that will vest
Less than 2%
Nil
Between 2% and 7%
pro rata vesting of rights
Pro rata with a linear progression between 50% and up to 100% of
the number of EPS performance rights
7% or greater
100% of the number of EPS performance rights
57 Remuneration Report
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Remuneration Report
continued
MEIP (LTI Plan) continued
Feature
Description
Vesting framework (continued)
› Business Transformation (25% of the award)
At the end of the performance period, the Board will compare Myer’s actual performance
against the target performance for the Business Transformation Hurdle metrics as set out in
Myer’s business plan.
The Board will then determine, in its absolute discretion, the percentage of the Business
Transformation performance rights that are eligible to vest on the basis of the results of the
comparison of Myer’s actual performance against the target performance for the Business
Transformation Hurdle metrics as set out in Myer’s business plan.
Each performance hurdle will be assessed separately, meaning that all 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 or BT Hurdle vest (and vice versa).
Generally, any performance rights granted 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 of employment (although the discretion is only likely to be exercised in exceptional
circumstances).
The LTI plan includes provisions for unvested rights to lapse and rights or interests in shares
allocated or to be allocated under the EEIP to be forfeited, at the Board’s discretion, if any
performance rights were incorrectly granted as a result of a material misstatement in, or omission
from, the Company’s financial statements. The provision applies only to those executives who
were KMP of the Company at the time the financial statements were approved by the Board and
issued by the Company.
The rights and entitlements attaching to performance rights may be adjusted if the Company
undertakes a bonus or rights issue or a capital reconstruction in relation to the Company’s shares.
At the end of the applicable performance period, any performance rights that have not vested will
lapse and no shares will be provided for those performance rights.
Cessation of employment
Does a ‘clawback’ apply?
Board discretion
Expiry
Equity arrangements with directors and other KMP
FY2014 EEIP grant
In FY2014 KMP (other than the CEO) and other senior executives received LTI awards under the MEIP through the EEIP offer. The awards granted
may deliver value to executives at the end of the three year performance period, subject to satisfaction of performance hurdles as set out in the
diagram below:
Performance
rights granted
Three year
performance period
Total Shareholder
Return Hurdle = 50%
Earnings Per Share
Hurdle = 25%
Business
Transformation
Hurdle = 25%
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The following table summarises the FY2014 performance right grants made to KMP in December 2013.
Value of
performance
rights at
grant date
$525,000
KMP
M Ashby
A Stapleton2
$285,000
A Sutton
$255,000
G Travers3
$420,000
Valuation
of each
performance
right at
grant date
EPS $2.36
TSR $1.57
BT $2.36
Service $2.36
EPS $2.36
TSR $1.57
BT $2.36
EPS $2.36
TSR $1.57
BT $2.36
EPS $2.36
TSR $1.57
BT $2.36
Number of
performance
rights
granted1
183,566
99,650
89,160
146,853
1 The VWAP price used for the allocation of the FY2014 grant was $2.86.
2 A Stapleton ceased employment on 18 July 2014.
3 G Travers ceased employment on 2 May 2014.
Exercise
price
Applicable
hurdles
End of performance
period
0
0
0
0
30% TSR Hurdle
15% EPS Hurdle
15% BT Hurdle
40% 3 year Service Hurdle
50% TSR Hurdle
25% EPS Hurdle
25% BT Hurdle
50% TSR Hurdle
25% EPS Hurdle
25% BT Hurdle
50% TSR Hurdle
25% EPS Hurdle
25% BT Hurdle
30 July 2016
30 July 2016
30 July 2016
30 July 2016
The TSR peer group
The table below sets out the peer group for the FY2014 EEIP 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. 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.
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
David Jones Ltd
JB Hi-Fi Ltd
Flight Centre Ltd
Metcash Ltd
Pacific Brands Ltd
Tatts Group Ltd
Woolworths Ltd
Breville Group Ltd
Premier Investments Ltd
Tabcorp Holdings Ltd
Oroton Group Ltd
Wesfarmers Ltd
STW Communications Group Ltd
Specialty Fashion Group Ltd
GUD Holdings Ltd
As David Jones limited has traded for the full year in 2014 it remains appropriate that it is included in the TSR assessment for performance rights
that were issued in FY2012. Indicative testing of these performance rights was undertaken following the lodgement of the Company’s FY2014
preliminary results with the ASX. Based on this preliminary assessment, these rights are not likely to vest as the TSR and CAGR EPS hurdles are
unlikely to be achieved. The TSR and EPS hurdles will be tested following the lodgement of the Company’s audited results with the ASX. If that
testing confirms that the hurdles have not been achieved, then all of these performance rights will lapse.
Two other grants of performance rights have been made where David Jones was included in the peer group of entities for the TSR hurdle
(FY2013 and FY2014). David Jones will be removed from the peer group and will not be replaced by another entity when measuring
achievement against these two awards.
Additional grant to CFO
Additional performance rights were offered to the CFO in FY2014. The potential value of the performance rights granted to the CFO under the
EEIP offer was equivalent to 75% of his TFC. The performance rights comprising 45% of TFC will be subject to the three metrics outlined on
pages 57 and 58 (applied in the same way as other executives covered by the EEIP offer), and 30% of TFC subject to a condition of continuous
employment with the Company until the end of the vesting period (being 30 July 2016).
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Remuneration Report
continued
Options and performance rights
Details of options granted under the MEIP that remain unvested as at 26 July 2014 are set out in the table below. No options have been granted
under the MEIP since 2009.
Grant type
(Options/Performance rights)
Options
Options
Grant date
17 Dec 2008
–
30 Jun 2009
2,231,650
Options (CEO only EPS Hurdle)
6 Nov 2009
Options (CEO only share price Hurdle)
6 Nov 2009
–
–
Number of
options1
Exercise
price
$
Value per
option at
grant date
$
Vesting date (if option
holder remains employed
by a Myer Group company) Expiry date
$2.14
$2.34
$4.10
$5.74
$0.43
$0.49
$1.31
$1.01
31 Jul 2013
24 Oct 2013
31 Jul 2014
24 Oct 2014
End of performance period 31 Dec 2013
End of performance period 31 Dec 2013
FY2011
No grants were made
Rights (CEO only EPS Hurdle)
9 Dec 2011
808,383
Rights (CEO only TSR Hurdle)
9 Dec 2011
1,250,000
Rights (EPS Hurdle)
Rights (TSR Hurdle)
Rights (EPS Hurdle)
Rights (TSR Hurdle)
21 Oct 2011
851,977
21 Oct 2011
1,317,228
29 Jan 2013
29 Jan 2013
275,733
275,737
Rights (Service Hurdle)
29 Jan 2013
1,138,011
Rights (EPS Hurdle)
Rights (TSR Hurdle)
Rights (BT Hurdle)
Rights (CFO only service Hurdle)
Total
11 Dec 2013
11 Dec 2013
11 Dec 2013
11 Dec 2013
128,035
256,075
128,037
73,426
8,734,292
–
–
–
–
–
–
–
–
–
–
–
$1.67
$1.08
$1.67
$1.08
$2.08
$1.56
$2.08
$2.36
$1.57
$2.36
$2.36
End of performance period 31 Oct 2014
End of performance period 31 Oct 2014
End of performance period 31 Oct 2014
End of performance period 31 Oct 2014
End of performance period 31 Oct 2015
End of performance period 31 Oct 2015
End of performance period 31 Oct 2015
End of performance period 31 Oct 2016
End of performance period 31 Oct 2016
End of performance period 31 Oct 2016
End of performance period 31 Oct 2016
1 Of the options noted above, 315,600 options have vested and remain unexercised as at 26 July 2014. Refer to Financial Report (note 36) for details.
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.
Details of options and performance rights over ordinary shares in the Company currently provided as remuneration and granted during the
current year to each director and each KMP are set out below. Further information on the MEIP is set out in note 36 of the Financial Report.
Summary of options and performance rights granted, vested and lapsed for the reporting period
Name
KMP of the Company
M Ashby
A Stapleton3
A Sutton
G Travers4
Number of
performance rights
granted during
the period1
Value of
performance rights
at grant date2
$
Number of
options vested
during the period
Number of
options lapsed
during the period
Value at
lapsed date
$
183,566
99,650
89,160
146,853
525,000
285,000
255,000
420,000
–
15,000
115,000
–
–
410,723
–
597,626
–
361,231
–
630,495
1 No options or rights were granted to any director of the Company during the reporting period.
2 The VWAP price used for the allocation of the FY2014 grant was $2.86.
3 A Stapleton ceased employment on 18 July 2014.
4 G Travers ceased employment on 2 May 2014.
Note: Section 300 (1) of the Corporations Act requires additional disclosures for the top five most highly remunerated officers of Myer. T Clark is not KMP but together with certain
KMP listed above, fell within the five most highly remunerated officers of Myer during FY2014. T Clark was granted 78,670 performance rights as part of his remuneration in FY2014.
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 on page 63. 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.
60 Myer Annual Report 2014
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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
KMP are set out below.
Name
KMP of the Company
M Ashby
A Stapleton4
A Sutton
G Travers5
Number of ordinary
shares provided on
exercise of options
during the period1
Value at
exercise date2,3
$
–
15,000
115,000
–
–
7,812
57,929
–
1 The number of shares provided on exercise of options are on a one-for-one basis.
2 No options or rights were granted to any director of the Company during the reporting period.
3 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.
4 A Stapleton ceased employment on 18 July 2014.
5 G Travers ceased employment on 2 May 2014.
No amounts are unpaid on any shares provided on the exercise of options.
Long term incentives on issue
Details of remuneration: share-based compensation benefits
For each grant of options or grant of performance rights included in this report, the percentage of the 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. Options and performance rights vest provided the vesting conditions or performance hurdles are met (see pages 56 to 58). No options
or performance rights will vest if the hurdles (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. The following equity grants were made to KMP:
Name
B Brookes
M Ashby
A Stapleton1
A Sutton
G Travers2
Share-based compensation benefits (options)
Year granted
Vested
%
Forfeited
%
The remaining
financial years in which
performance rights
may vest
Maximum total value
of grant yet to vest
$
2012
2014
2013
2012
2014
2013
2012
2014
2013
2012
2013
2012
2010
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100
100
100
–
–
–
100
100
100
2015
2017
2016
2015
2017
2016
2015
2017
2016
2015
2016
2015
2013
71,893
248,452
64,297
8,687
–
–
–
93,798
40,823
762
–
–
–
1 A Stapleton ceased employment on 18 July 2014.
2 G Travers ceased employment on 2 May 2014.
61 Remuneration Report
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Remuneration Report
continued
Service agreements
On appointment to the Board, all non-executive directors sign a letter of appointment. The letter summarises the Board’s 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 formalised in service agreements. Each of these agreements prescribes a base or fixed remuneration amount, a STI reward, other
benefits including salary sacrificing for vehicle leasing and, when eligible, LTI reward through participation in the MEIP through the EEIP offer.
Other key provisions of the agreements relating to remuneration. The termination provisions for the KMP are described below:
Name
Contract type
B Brookes2
M Ashby
A Sutton
Rolling contract
Rolling contract
Rolling contract
Base salary
including
superannuation1
$
Termination notice
period initiated
by KMP
Termination notice
period initiated
by Company
Termination
payment where
initiated by the
Company
2,000,000
750,000
425,000
6 months
3 months
3 months
12 months
6 months
6 months
12 months
6 months
6 months
1 Base salaries (TFC) quoted as at 26 July 2014.
2 B Brookes appointed on an open term contract in February 2014.
Remuneration and Company performance
The following graph shows the average individual total STI payment (as a percentage of each individual’s target STI, where 100% is the target
for the KMP group and its relationship to Group EBITDA and NPAT outcomes over five financial years).
EBITDA
NPAT
STI
$400
$350
$250
) $300
T
A
P
N
/
A
D
T
I
B
E
(
s
n
o
$200
$150
i
l
l
i
m
$
$100
$50
$0
FY2010
FY2011
FY2012
FY2013
FY2014
60%
40%
20%
0%
%
o
f
t
a
r
g
e
t
S
T
I
i
p
a
i
d
t
o
s
e
n
o
r
e
x
e
c
u
t
i
v
e
s
The following table shows the Company’s annual performance against a range of metrics since 2010. The table shows the impact of Company
performance on shareholder returns, taking into account dividend payments, share price changes, and other capital adjustments
during the period.
Basic EPS (cents)1
NPAT ($’000)2
Dividends (cents per share)
Share price at beginning of year3 ($)
Share price at end of year ($)
FY2010
FY2011
FY2012
FY2013
FY2014
29.0
27.9
23.9
21.8
168,7024
162,6575
139,365
127,212
22.0
4.10
3.45
22.5
3.45
2.31
19.0
2.31
1.83
18.0
1.83
2.66
16.8
98,499
14.5
2.66
2.24
1 2010 Basic EPS is calculated using pro forma NPAT and divided by the closing shares on issue. 2011 Basic EPS is calculated using normalised NPAT and divided by the weighted
average shares.
2 For details of 2011 to 2013 NPAT refer to page 8.
3 2010 share price at the beginning of the year is the share price at listing.
4 2010 NPAT is pro forma NPAT excluding IPO costs.
5 2011 NPAT excludes IPO and one-off costs.
Remuneration outcomes for directors and other KMP
The following tables have been prepared in accordance with section 300A of the Corporations Act. 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 tables on the following pages.
62 Myer Annual Report 2014
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The below table shows the remuneration amounts recorded in the financial statements in the period. Footnotes are on the following page.
Short-term employee benefits
Post
employment
benefits
Long-term benefits
Total
remuneration
expense
Share-
based
payments
Bonus/
incentive
STI2
$
Non-
monetary
benefits
$
Other3
$
Super-
annuation4
$
Subtotal
$
Long
service
leave
$
Retention
bonus
$
Termination
and other
payments
$
Excluding
share-
based
payments5
$
Total
remuneration
expense
$
Options6
$
55,017
–
382,225
301,659
163,350
163,457
149,738
150,150
–
134,898
163,350
163,800
Cash
salary
and fees1
Name
$
Non-executive directors
P McClintock7
2014
2013
H McDonald8
2014
2013
R Myer9
2014
2013
A Brennan
2014
2013
I Cornell10
2014
2013
C Froggatt
2014
2013
P Hay11
2014
2013
I Morrice12
2014
2013
R Thorn13
2014
2013
Executive director
B Brookes
2014
2013
Key Management Personnel
N Abboud14
2014
2013
M Ashby
2014
2013
M Goddard15
2014
2013
A Stapleton16
2014
2013
A Sutton17
1,843,056
1,783,530
–
241,160
131,152
136,500
451,324
188,595
631,159
601,617
–
89,127
55,017
–
–
77,694
407,225
167,783
2014
2013
G Travers18
722,273
2014
2013
623,064
Totals 2014 5,154,886
Totals 2013 4,823,034
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
153,336
109,805
–
–
–
–
–
–
–
–
–
–
–
184
1,317
1,313
–
684
1,317
255
1,317
295
1,317
–
1,313
–
158,604
–
– 113,849
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
17,775
14,283
400,000
315,942
–
4,595
–
139,493
16,650
13,500
180,000
176,957
16,650
16,200
180,000
180,000
5,608
–
60,625
–
15,262
14,850
165,000
165,000
13,413
13,500
144,565
150,000
–
7,684
–
85,378
5,608
–
60,625
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
29,444
16,470
2,025,836
1,909,805
60,897
29,351
–
13,936
–
103,247
–
–
77,175
40,050
709,651
642,980
25,598
11,387
–
22,097
–
263,941
–
–
23,676
9,321
476,317
198,171
–
19,349
17,775
6,863
426,317
174,941
8,111
30,711
14,947
18,602
–
738,537
21,612
642,979
94,606
253,983 5,567,473
211,951 5,148,834 112,410
63 Remuneration Report
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
400,000
315,942
–
139,493
180,000
176,957
180,000
180,000
60,625
–
165,000
165,000
144,565
150,000
–
85,378
60,625
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
400,000
315,942
–
139,493
180,000
176,957
180,000
180,000
60,625
–
165,000
165,000
144,565
150,000
–
85,378
60,625
–
2,086,733
1,939,156
484,615
604,616
2,571,348
2,543,772
–
103,247
–
(185,840)
–
(82,593)
735,249
654,367
181,328
95,997
916,577
750,364
–
263,941
–
–
–
263,941
476,317
217,520
(101,916)
55,223
374,401
272,743
434,428
205,652
96,840
55,535
531,268
261,187
738,537
664,591
5,662,079
5,261,244
(141,201)
95,997
519,666
721,528
597,336
760,588
6,181,745
5,982,772
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Remuneration Report
continued
1 Cash salary includes short term compensated absences, consideration for vehicle salary sacrifice and fees including allowances for Committee ‘chairman’ responsibilities for
A Brennan and C Froggatt and Deputy Chairman fee for R Myer.
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 FY2014 year under the STI.
3 Other payments for B Brookes include payments for rental subsidy and certain other services in relation to provision of accommodation. Other payments also include
Company-paid FBT expenses.
4 There were no post-employment benefits paid other than superannuation.
5 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.
6 Remuneration in relation to share options represents the amount expensed for the period based on valuations determined under AASB 2 Share-based Payment. 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. 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.
7 P McClintock was appointed as a non-executive director on 8 August 2012 and appointed Chairman on 10 October 2012.
8 H McDonald retired on 10 October 2012. H McDonald was appointed as a director on 6 November 2006 and Chairman on 4 August 2009.
9 R Myer was appointed as a non-executive director on 12 July 2006 and was appointed Deputy Chairman on 8 August 2012.
10 I Cornell was appointed as a non-executive director on 6 February 2014.
11 P Hay retired as a non-executive director effective from 14 July 2014.
12 I Morrice was appointed as a director on 8 August 2012 and retired on 1 March 2013.
13 R Thorn was appointed as a non-executive director on 6 February 2014
14 N Abboud ceased employment on 18 September 2012.
15 M Goddard ceased employment on 4 February 2013.
16 A Stapleton was promoted to Executive General Manager Merchandise on 4 February 2013 and ceased employment on 18 July 2014.
17 A Sutton was promoted to Executive General Manager Stores on 14 February 2013.
18 G Travers was appointed as Executive General Manager Business Services on 1 November 2010 and ceased employment on 2 May 2014.
STI and LTI remuneration
The table below sets out the relative proportion of remuneration for the executive directors 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
Share options
Retention incentive
Name
Executive directors
B Brookes
2014
2013
$
$
2,571,348
2,543,772
2,086,733
1,939,156
–
(82,593)
–
103,247
–
(125)
KMP
N Abboud2
2014
2013
M Ashby
2014
2013
M Goddard3
2014
2013
A Stapleton4
2014
2013
A Sutton5
2014
2013
G Travers6
2014
2013
916,577
750,364
735,249
654,367
–
263,941
–
263,941
374,401
272,743
476,317
217,520
531,268
261,187
434,428
205,652
597,336
760,588
738,537
664,591
Totals 2014
4,990,930
4,471,264
Totals 2013
4,770,002
4,048,474
%
81
76
80
87
–
100
127
80
82
79
124
87
90
85
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
%
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
484,615
604,616
–
(185,840)
181,328
95,997
–
–
(101,916)
55,223
96,840
55,535
(141,201)
95,997
519,666
721,528
%
19
24
–
225
20
13
–
–
(27)
20
18
21
(24)
13
10
15
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
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 Payment 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 N Abboud ceased employment on 18 September 2012.
3 M Goddard ceased employment on 4 February 2013.
4 A Stapleton was promoted to Executive General Manager Merchandise on 4 February 2013 and ceased employment on 18 July 2014.
5 A Sutton was promoted to Executive General Manager Stores on 14 February 2013.
6 G Travers was appointed as Executive General Manager Business Services on 1 November 2010 and ceased employment on 2 May 2014.
64 Myer Annual Report 2014
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The number of options and rights over ordinary shares in the Company held during the financial period by each director of Myer Holdings
Limited and other KMP of the Group, including their personally related parties, are set out below.
Opening
balance
Granted as
compensation 1
Exercised
Other
changes2
Closing
balance
Vested and
exercisable 3
Unvested
2014
Directors of Myer Holdings Limited
P McClintock
R Myer
B Brookes
A Brennan
C Froggatt
I Cornell4
P Hay5
R Thorn6
–
–
9,438,777
–
–
–
–
–
–
–
–
–
–
–
–
–
Other KMP of the Group
M Ashby
A Stapleton7
A Sutton8
G Travers9
2013
450,773
326,073
483,119
450,773
183,566
99,650
89,160
146,853
Directors of Myer Holdings Limited
P McClintock10
H McDonald11
R Myer
B Brookes
A Brennan
T Flood12
P Hay
I Morrice13
Other KMP of the Group
N Abboud14
M Ashby
M Goddard15
A Stapleton16
A Sutton17
G Travers
–
–
–
9,438,777
–
–
–
–
1,195,154
1,600,896
–
–
–
680,896
–
–
–
–
–
–
–
–
–
190,045
135,747
96,719
45,249
190,045
–
–
–
–
–
–
–
–
–
(15,000)
(115,000)
–
–
–
–
(7,380,394)
2,058,383
–
–
–
–
–
–
(410,723)
–
–
–
–
–
634,339
–
-
457,279
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(597,626)
–
–
–
–
–
–
–
–
(1,195,154)
(1,340,168)
(135,747)
229,354
437,870
(420,168)
–
–
–
–
9,438,777
–
–
–
–
–
450,773
–
326,073
483,119
450,773
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,058,383
–
–
–
–
–
634,339
–
457,279
–
–
–
–
9,438,777
–
–
–
–
–
450,773
–
326,073
483,119
450,773
1 Options and rights granted during the year are outlined on page 59.
2 Other changes comprise of (i) options and rights which have expired or forfeited during the period, (ii) balances held by new KMP from the date of appointment and (iii) removes
balances for those no longer regarded as KMP.
I Cornell was appointed as a non-executive director on 6 February 2014.
3 All vested options are exercisable at the end of the period.
4
5 P Hay retired as a non-executive director effective 14 July 2014.
6 R Thorn was appointed as a non-executive director on 6 February 2014.
7 A Stapleton ceased employment on 18 July 2014.
8 Excludes options held by a related party, granted in accordance with their Myer employment.
9 G Travers ceased employment on 2 May 2014.
10 P McClintock was appointed as a non-executive director on 8 August 2012 and appointed Chairman of the Company on 10 October 2012.
11 H McDonald retired as Chairman and director on 10 October 2012.
12 T Flood retired as a non-executive director effective 11 April 2012.
13 I Morrice was appointed as a non-executive director on 8 August 2012 and retired effective 1 March 2013.
14 N Abboud ceased employment on 18 September 2012.
15 M Goddard ceased employment on 4 February 2013.
16 A Stapleton was promoted to Executive General Manager Merchandise on 4 February 2013.
17 A Sutton was promoted to Executive General Manager Stores on 14 February 2013.
65 Remuneration Report
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Remuneration Report
continued
The number of shares in the Company held during the financial period by each director of Myer Holdings Limited and other KMP of the Group,
including their personally related parties, are set out below. There were no shares granted during the reporting period as compensation.
Opening balance Exercise of options
Ceased
employment
Other changes1
Closing balance
2014
Directors of Myer Holdings Limited
P McClintock
R Myer
B Brookes
A Brennan
C Froggatt
I Cornell2
P Hay3
R Thorn4
Other KMP of the Group
M Ashby
A Stapleton5
A Sutton
G Travers6
2013
106,000
733,999
10,178,952
53,658
10,040
–
12,195
–
245,257
–
–
1,325,808
Directors of Myer Holdings Limited
P McClintock7
H McDonald8
R Myer
B Brookes
A Brennan
T Flood9
C Froggatt
P Hay
Other KMP of the Group
N Abboud10
M Ashby
M Goddard11
G Travers
A Stapleton12
A Sutton13
–
2,074,390
733,999
10,783,380
53,658
400,000
10,040
12,195
–
245,257
–
1,515,808
–
–
–
–
–
–
–
–
–
–
–
15,000
115,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(12,195)
–
–
–
–
(1,325,808)
75,000
–
–
–
–
10,000
–
–
–
(15,000)
(115,000)
–
–
106,000
(2,074,390)
–
–
–
(400,000)
–
–
–
–
–
–
–
–
–
–
(604,428)
–
–
–
–
–
–
–
(190,000)
–
–
181,000
733,999
10,178,952
53,658
10,040
10,000
–
–
245,257
–
–
–
106,000
–
733,999
10,178,952
53,658
–
10,040
12,195
–
245,257
–
1,325,808
–
–
1 Other changes comprise of (i) shares which have been purchased or sold during the period, (ii) balances held by new KMP from the date of appointment and (iii) removes
balances for those no longer regarded as KMP.
I Cornell was appointed as a non-executive director on 6 February 2014.
2
3 P Hay retired as a non-executive director effective 14 July 2014.
4 R Thorn was appointed as a non-executive director on 6 February 2014.
5 A Stapleton ceased employment on 18 July 2014.
6 G Travers ceased employment on 2 May 2014.
7 P McClintock was appointed a non-executive director on 8 August 2012 and appointed Chairman of the Company on 10 October 2012.
8 H McDonald retired as Chairman and director on 10 October 2012.
9 T Flood retired as a non-executive director effective 11 April 2012.
10 N Abboud ceased employment on 18 September 2012.
11 M Goddard ceased employment on 4 February 2013.
12 A Stapleton was promoted to Executive General Manager Merchandise on 4 February 2013.
13 A Sutton was promoted to Executive General Manager Stores on 14 February 2013.
66 Myer Annual Report 2014
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Loans
Details of loans made to directors of Myer Holdings Limited and other KMP of the Group, including their personally related parties,
are set out below.
(i) Aggregates for KMP
In 2014 and 2013 there were no loans to individuals at any time.
(ii) Individuals with loans above $100,000 during the financial period
In 2014 and 2013 there were no loans to individuals that exceeded $100,000 at any time.
Other transactions
There were no transactions with KMP or entities related to them, other than compensation.
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,
myer.com.au/investor.
67 Remuneration Report
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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 42 to 46, which is not part
of this Financial Report.
This Financial Report was authorised for
issue by the directors on 3 October 2014.
The directors have the power to amend
and reissue this Financial Report.
FINANCIAL REPORT
for the period ended 26 July 2014
Myer Holdings Limited
ABN 14 119 085 602
Contents
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 consolidated 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 Cash and cash equivalents
9 Trade and other receivables and prepayments
10 Inventories
11 Derivative financial instruments
12 Property, plant and equipment
13 Deferred tax assets
14 Intangible assets
15 Trade and other payables
16 Provisions
17 Other liabilities
18 Deferred tax liabilities
19 Borrowings
20 Contributed equity
21 Retained earnings and reserves
22 Dividends
23 Key Management Personnel disclosures
24 Remuneration of auditors
25 Acquisition of non-controlling interests
26 Business combination
27 Contingencies
28 Commitments
29 Related party transactions
30 Subsidiaries and transactions with non-controlling interests
31 Deed of cross guarantee
32 Events occurring after the reporting period
33 Reconciliation of profit after income tax to net cash inflow
from operating activities
34 Parent entity financial information
35 Earnings per share
36 Share-based payments
Directors’ Declaration
Auditor’s Independence Declaration
Independent Auditor’s Report
69
70
71
72
73
74
82
86
87
87
87
88
88
89
90
90
91
92
93
94
94
95
95
96
97
98
100
100
101
102
102
103
103
103
104
105
107
108
108
109
110
113
114
115
68 Myer Annual Report 2014
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Consolidated income statement
for the period ended 26 July 2014
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
Operating gross profit
Other income
Selling expenses
Administration expenses
Earnings before interest and tax
Finance revenue
Finance costs
Net finance costs
Profit before income tax
Income tax expense
Profit for the period
Profit is attributable to:
Owners of Myer Holdings Limited
Non-controlling interests
Earnings per share 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
5
6
7
2014
52 weeks
$’000
3,143,027
(491,482)
2,651,545
(39,378)
2,612,167
128,769
(1,455,066)
1,285,870
6,356
(811,718)
(320,204)
160,304
1,025
(22,931)
(21,906)
138,398
(39,856)
98,542
98,499
43
98,542
2013
52 weeks
$’000
3,144,904
(485,720)
2,659,184
(37,942)
2,621,242
126,293
(1,443,005)
1,304,530
457
(783,800)
(306,338)
214,849
1,417
(29,782)
(28,365)
186,484
(56,607)
129,877
127,212
2,665
129,877
Cents
Cents
35
35
16.8
16.6
21.8
21.6
69 Financial Report
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Consolidated statement of comprehensive income
for the period ended 26 July 2014
Profit for the period
Other comprehensive income
Items that may be reclassified to profit or loss:
Cash flow hedges
Exchange differences on translation of foreign operations
Income tax relating to components of other comprehensive income
7(d)
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
2014
52 weeks
$’000
2013
52 weeks
$’000
98,542
129,877
(13,320)
110
(349)
(13,559)
84,983
85,078
(95)
84,983
9,241
(567)
800
9,474
139,351
136,485
2,866
139,351
70 Myer Annual Report 2014
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Consolidated balance sheet
as at 26 July 2014
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables and prepayments
Inventories
Derivative financial instruments
Total current assets
Non-current assets
Property, plant and equipment
Deferred tax assets
Intangible assets
Other non-current assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Derivative financial instruments
Current tax liabilities
Provisions
Deferred income
Other liabilities
Total current liabilities
Non-current liabilities
Borrowings
Derivative financial instruments
Provisions
Deferred income
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Retained earnings
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
2014
$’000
2013
$’000
8
9
10
11
12
13
14
15
11
16
17
19
11
16
17
20
21
21
73,564
30,133
376,763
–
480,460
502,881
13,698
932,598
3,027
81,470
24,384
363,880
9,442
479,176
508,974
16,846
931,017
3,692
1,452,204
1,460,529
1,932,664
1,939,705
428,066
5,253
7,321
82,167
6,045
2,029
387,673
–
19,042
84,304
5,929
31,710
530,881
528,658
422,030
3,401
14,039
68,900
–
508,370
420,824
2,331
13,243
67,654
1,353
505,405
1,039,251
1,034,063
893,413
905,642
524,732
378,751
(10,070)
893,413
–
893,413
520,216
379,722
(4,024)
895,914
9,728
905,642
71 Financial Report
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Consolidated statement of changes in equity
for the period ended 26 July 2014
Balance as at 28 July 2012
Net profit for the period
Other comprehensive income for the period
Total comprehensive income for the period
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs
Dividends paid
Employee share schemes
Balance as at 27 July 2013
Net profit for the period
Other comprehensive income for the period
Total comprehensive income for the period
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs
Acquisition of non-controlling interests
Dividends paid
Employee share schemes
Contributed
equity
$’000
Notes
Retained
earnings
$’000
Reserves
$’000
519,776
363,357
(14,800)
–
–
–
127,212
–
127,212
440
–
–
–
(110,847)
–
440
(110,847)
520,216
379,722
–
9,273
9,273
–
–
1,503
1,503
(4,024)
Non-
controlling
interests
$’000
9,347
2,665
201
2,866
Total
$’000
877,680
129,877
9,474
139,351
–
440
(2,485)
(113,332)
–
1,503
(2,485)
(111,389)
9,728
905,642
98,499
–
43
98,542
–
(13,421)
98,499
(13,421)
(138)
(95)
(13,559)
84,983
–
–
–
–
6,029
(9,633)
4,516
(3,604)
(99,470)
1,346
–
–
(99,470)
–
–
1,346
7,375
4,516
(99,470)
(9,633)
(97,212)
20
22
21
20
22
21
–
–
–
4,516
–
–
–
Balance as at 26 July 2014
524,732
378,751
(10,070)
–
893,413
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
72 Myer Annual Report 2014
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Consolidated statement of cash flows
for the period ended 26 July 2014
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
Payments for property, plant and equipment
Acquisition of business
Payment for brands acquisition
Payments for intangible assets
Payment for acquisition of non-controlling interests
Lease incentives received
Interest received
Net cash outflow from investing activities
Cash flows from financing activities
Repayment of borrowings net of transaction costs
Other
Proceeds from the issue of shares
Dividends paid to equity holders of the parent
Dividends paid to non-controlling interests
Net cash outflow from financing activities
Net increase 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.
2014
52 weeks
$’000
2013
52 weeks
$’000
Notes
3 ,042,312
(2,785,366)
3 ,051,474
( 2,751,713)
256,946
6,356
(22,443)
(49,283)
191,576
(50,112)
(2,999)
(1,000)
(26,157)
(33,363)
8,375
1,006
(104,250)
–
(278)
4,516
(99,470)
–
(95,232)
(7,906)
81,470
73,564
299,761
457
(26,411)
(48,282)
225,525
(54,768)
–
(906)
(18,670)
–
5,991
1,397
(66,956)
(2,015)
(250)
440
(110,847)
(2,485)
(115,157)
43,412
38,058
81,470
33
22
8
73 Financial Report
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Notes to the consolidated financial statements
as at 26 July 2014
1 Summary of significant accounting policies
The principal accounting policies adopted in the preparation of these
consolidated financial statements (‘financial statements’ or ‘financial
report’) 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 (‘Group’ or ‘consolidated entity’).
(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 (AASB) and the
Corporations Act. Myer Holdings Limited is a for-profit entity for the
purpose of preparing the financial statements.
Compliance with IFRS
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).
Historical cost convention
These financial statements have been prepared under the historical
cost convention, except for financial assets and liabilities (including
derivative instruments) which have been measured 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.
New and amended standards adopted by the Group
The Group has applied the following standards and amendments
for the first time in the annual reporting period commencing
28 July 2013:
› AASB 10 Consolidated Financial Statements, AASB 11 Joint
Arrangements, AASB 12 Disclosure of Interests in Other Entities,
revised AASB 127 Separate Financial Statements, AASB 128
Investments in Associates and Joint Ventures, AASB 2011-7
Amendments to Australian Accounting Standards arising from the
Consolidation and Joint Arrangement Standards and AASB 2012-
10 Amendments to Australian Accounting Standards – Transition
Guidance and Other Amendments together represent a group
of related standards covering the accounting and disclosure
requirements for consolidated financial statements, associates, joint
arrangements and off balance sheet vehicles. The new standards
and amendments do not have any impact on the current
accounting treatment of the Group’s investment in subsidiaries.
› AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to
Australian Accounting Standards arising from AASB 13 establishes a
single source of guidance for determining the fair value of assets
and liabilities. AASB 13 does not change when an entity is required
to use fair value. The impact of the new standard is not material for
the Group and did not affect the Group’s accounting policies or the
amounts recognised in the financial statements.
› AASB 119 Employee Benefits has been amended for disclosure,
presentation and accounting changes to defined benefit plans.
The amendment removes the options for accounting for the
liability and requires that the liabilities arising from such plans are
recognised in full with actuarial gains and losses being recognised
in other comprehensive income. It also revised the method of
calculating the return on plan assets. The impact of the revised
standard is not material for the Group and did not impact any of
the amounts recognised in the financial statements.
› Other new standards that are applicable for the first time in
the financial report are AASB 2011-4 Amendments to Australian
Accounting Standards to Remove Individual Key Management
Personnel Disclosure Requirements, AASB 2012-2 Amendments to
Australian Accounting Standards – Disclosure – Offsetting Financial
Assets and Financial Liabilities and AASB 2012-5 Amendments to
Australian Accounting Standards arising from Annual Improvements
from 2009-2011 Cycle. The Group also early adopted AASB 2013-
3 Amendments to AASB 136 – Recoverable Amount Disclosures for
Non-Financial Assets. These revised standards did not affect any of
the Group’s accounting policies or any of the amounts recognised
and affected only the disclosures in the notes to the financial
statements.
(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 26 July 2014 and the results of all subsidiaries for
the period then ended.
Subsidiaries are all those entities (including structured entities) over
which the Group has control. The Group controls an entity when
the Group is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns
through its power to direct the activities of the entity. Subsidiaries are
fully consolidated from the date on which control is transferred to the
Group. They are deconsolidated from the date that control ceases.
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
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, balance sheet and statement of changes
in equity respectively.
(ii) Employee share trust
The Group has formed the Myer Equity Plans 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 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.
74 Myer Annual Report 2014
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(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 on a net basis within
other income or other expenses, except when they are deferred in
equity as qualifying cash flow hedges.
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 the rates prevailing on the
transaction dates; and
all resulting exchange differences are recognised in other
comprehensive income.
On consolidation, when a foreign operation is sold, the associated
exchange difference is reclassified to profit or loss, as part of the gain
or loss on sale.
(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) and prior to the deferral of revenue under the customer
loyalty program. Concession sales presented in the income statement
represent 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
Shopping Credits 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 28). Lease incentives received on
entering into operating leases are recognised as deferred income and
are amortised over the lease term. Payments made under operating
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.
(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
75 Financial Report
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Notes to the consolidated financial statements
continued
1 Summary of significant accounting policies continued
(h) Business combinations continued
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
identifiable net 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 non-current 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 non-current 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 group 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 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
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).
(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.
76 Myer Annual Report 2014
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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.
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
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 Group uses derivative financial instruments to hedge its exposure
to foreign exchange and interest rate risks arising from operational
and financing activities.
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.
Amounts accumulated in equity are reclassified to profit or loss in
the periods when the hedged item affects profit or loss. 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 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.
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 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,
including leasehold improvements
40 years
3 – 12.5 years
10 – 20 years
77 Financial Report
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Notes to the consolidated financial statements
continued
1 Summary of significant accounting policies continued
(o) Property, plant and equipment continued
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.
(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 trade marks
The useful life of brands are assessed on acquisition. The brands which
are not considered to have foreseeable brand maturity dates have
been assessed as having indefinite useful lives as there is a view that
there is no foreseeable limit to the period over which key brands are
expected to generate net cash inflows for the entity. These brands
are therefore not amortised. Instead, these 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
Brands with a limited useful life are amortised over five years using
the straight-line method and are carried at cost less accumulated
amortisation and impairment losses.
(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 five 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.
(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
78 Myer Annual Report 2014
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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.
(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 36.
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
Plans 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
› 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.
(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.
79 Financial Report
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Notes to the consolidated financial statements
continued
1 Summary of significant accounting policies continued
(y) Goods and Services Tax (GST) continued
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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(aa) New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for the 26 July 2014 reporting period.
The Group’s assessment of the impact of these new standards and interpretations, that were considered relevant for the consolidated entity,
is set out below.
Application
date of
standard
1 January 2017
Reference
Title
Summary
Financial
Instruments
AASB 9
Amendments
were made to
this and other
standards via
AASB 2010-7,
AASB 2010-
10 and AASB
2013-9
AASB 9 includes requirements for the classification
and measurement of financial assets. It was further
amended by AASB 2010-7 to reflect amendments
to the accounting for financial liabilities. The main
changes are described below:
›
The standard will affect the accounting of
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.
› Where the fair value option is used for financial
liabilities, the change in fair value is accounted
for in other comprehensive income if it relates
to changes in credit risk. The remaining change
is presented in the income statement.
In December 2013, a revised standard was issued
and sets out the new rules for hedge accounting.
The main changes are described below:
› New hedge accounting requirements
including changes to hedge effectiveness
testing, treatment of hedging costs, risk
components that can be hedged and
disclosures.
Expanded disclosure requirements and
changes in presentation.
›
IFRS 15
Revenue from
Contracts with
Customers
The core principle of the new revenue recognition
standard is that revenue must be recognised
when the goods or services are transferred to the
customer, at the transaction price.
1 January 2017
Application
date for
Group for
financial
year ending
28 July 2018
28 July 2018
Impact on
Group’s
financial
statements
There will be no
material 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 Group
also does not have
any available for sale
financial assets.
The Group has
not yet assessed
how its hedging
arrangements would
be affected by the
new rules; however, it
does not expect the
impact to be material.
Increased disclosures
may be required
in the financial
statements.
The Group does
not expect the new
accounting standard
to have a significant
impact.
81 Financial Report
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Notes to the consolidated financial statements
continued
1 Summary of significant accounting policies continued
(ab) Parent entity financial information
The financial information for the parent entity, Myer Holdings Limited, disclosed in note 34, has been prepared on the same basis as the
consolidated financial statements, except as set out below.
(i) Investments in subsidiaries
Investments 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 when compared to the prior period, comparative disclosures have been restated
to ensure consistency of presentation between periods. To better reflect the nature of certain items of income and expense within the income
statement, certain items previously classified as ‘Other Income’ within Operating Gross Profit have been reclassified to Other Operating Revenue
($9.9 million), Cost of Goods Sold ($7.7 million), Selling Expenses ($10.8 million) and Administration Expenses (-$4.2 million). This resulted in
the reduction of ‘Other Income’ from $24.6 million to $0.5 million with the remaining balance reclassified below Operating Gross Profit.
These adjustments resulted in a net reduction in Operating Gross Profit of $7.1 million with a corresponding decrease in items below
Operating Gross Profit.
2 Financial risk management
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, cash flow and fair value interest rate risk), credit
risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictably 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).
The Group’s exposure to foreign currency risk at the end of the reporting period, expressed in Australian dollars, was as follows:
Trade payables
Forward exchange contracts
USD
$’000
26,425
183,151
2014
EURO
$’000
585
–
GBP
$’000
44
–
USD
$’000
21,873
108,982
2013
EURO
$’000
863
–
HKD
$’000
82
–
82 Myer Annual Report 2014
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Group sensitivity
The Group applies a prudent cash flow hedging policy approach whereby all forward exchange contracts in relation to the Group’s overseas
purchases are designated as cash flow hedges at inception. Subsequent testing of effectiveness ensures that all effective hedge movements flow
through the cash flow hedge reserve within equity. Consistent with this approach, the sensitivity for movements in foreign exchange rates for
the US dollar denominated financial instruments held at 26 July 2014, as detailed in the above table, will flow through equity and will therefore
have minimal impact on profit.
Other components of equity would have been $14.4 million lower/$17.0 million higher (2013: $6.3 million lower/$7.8 million higher) had the
Australian dollar strengthened/weakened 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 risk is 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 and 50% of its average gross debt. The Group complied with this policy during the period.
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
2014
2013
Weighted
average
interest rate
%
4.1%
4.7%
Weighted
average
interest rate
%
4.2%
4.9%
Balance
$’000
422,030
(200,000)
222,030
Balance
$’000
420,824
(200,000)
220,824
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) on the following page.
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 26 July 2014, 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 $0.4 million lower/$0.4 million higher (2013: $0.4 million lower/$0.4 million higher), mainly as a result of higher/lower
interest expense on borrowings.
Other components of equity would have been $0.6 million higher/$0.6 million lower (2013: $0.6 million higher/$0.6 million lower) mainly
as a result of an increase/decrease in the fair value of the cash flow hedges of borrowings.
The range of sensitivities has been assumed based on the Group’s experience of average interest rate fluctuations in the applicable
reporting period.
(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.
83 Financial Report
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Notes to the consolidated financial statements
continued
2 Financial risk management continued
(b) Credit risk continued
Cash at bank and short-term bank deposits
AAA
AA
A
Derivative financial assets
AAA
AA
A
2014
$’000
2013
$’000
–
73,564
–
73,564
–
–
–
–
–
81,470
–
81,470
–
9,442
–
9,442
(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)
2014
$’000
2013
$’000
–
200,000
200,000
–
200,000
200,000
The long-term revolving cash advance facility comprises the following three tranches totalling $625 million with $425 million drawn
at period end:
›
›
›
Tranche A $75 million, fully drawn expires on 21 August 2015
Tranche B $275 million, fully drawn expires on 22 August 2016
Tranche C $275 million, $75 million drawn expires on 21 August 2017
84 Myer Annual Report 2014
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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
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
2014
Non-derivatives
Non-interest bearing
Variable rate
Fixed rate
Total non-derivatives
Derivatives
Net settled (interest rate swaps)
Gross settled
– (inflow)
– outflow
Total derivatives
2013
Non-derivatives
Non-interest bearing
Variable rate
Fixed rate
Total non-derivatives
Derivatives
Net settled (interest rate swaps)
Gross settled
– (inflow)
– outflow
Total derivatives
326,840
8,449
–
335,289
–
7,533
–
7,533
–
89,817
–
89,817
–
357,576
–
357,576
596
766
1,329
(106,066)
110,108
4,638
(71,539)
73,043
2,270
316,859
8,992
–
325,851
–
8,290
–
8,290
761
992
(80,436)
72,947
(6,728)
(38,038)
36,035
(1,011)
–
–
1,329
–
18,118
–
18,118
649
–
–
649
925
–
–
925
–
452,161
–
452,161
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
326,840
463,375
–
790,215
326,840
422,030
–
748,870
3,616
3,401
(177,605)
183,151
9,162
–
5,253
8,654
316,859
487,561
–
804,420
316,859
420,824
–
737,683
2,402
2,331
(118,474)
108,982
(7,090)
(9,442)
–
(7,111)
(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).
85 Financial Report
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Notes to the consolidated financial statements
continued
2 Financial risk management continued
(d) Fair value measurements continued
The following tables present the Group’s assets and liabilities measured and recognised at fair value at 26 July 2014 and 27 July 2013.
2014
Assets
Derivatives used for hedging
Total assets
Liabilities
Derivatives used for hedging
Total liabilities
2013
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
–
–
–
–
–
–
–
–
–
–
8,654
8,654
9,442
9,442
2,331
2,331
–
–
–
–
–
–
–
–
–
–
8,654
8,654
9,442
9,442
2,331
2,331
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 which maximise the use of observable market data and rely as little as possible on entity-specific estimates. 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 derivative financial instruments are included in level 2
as the significant inputs to fair value the instruments are observable.
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.
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.
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 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 Group may be exposed to potential additional inventory write-downs in future periods.
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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.
The Group also undertakes activities outside the department store retail business through its subsidiaries, sass & bide and FSS Retail Pty Ltd.
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.
5 Revenue and other income
Revenue
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 operating revenue
Concessions revenue
Other
Finance revenue
Interest revenue
Total revenue
Other includes revenue in relation to the gift card non-redemption income and forfeited lay-by deposits.
Other income
Other
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
Depreciation, amortisation and write-off expense
Finance costs
Interest and finance charges paid/payable
Fair value losses on interest rate swap cash flow hedges, transferred from equity
Loss/(gain) on remeasurement of financial liability
Finance costs expensed
Rental expense relating to operating leases
Minimum lease payments
Contingent rentals
Total rental expense relating to operating leases
Net foreign exchange gains
Impairment of assets - inventory
87 Financial Report
2014
52 weeks
$’000
2013
52 weeks
$’000
3,143,027
(491,482)
2,651,545
(39,378)
3,144,904
(485,720)
2,659,184
(37,942)
2,612,167
2,621,242
116,616
12,153
128,769
116,302
9,991
126,293
1,025
1,417
2,741,961
2,748,952
6,356
6,356
457
457
2014
52 weeks
$’000
2013
52 weeks
$’000
40,002
435,099
475,101
92,320
21,408
1,523
–
22,931
216,084
5,339
221,423
(1,377)
9,779
37,706
423,876
461,582
89,760
26,808
768
2,206
29,782
202,655
6,557
209,212
(4,285)
14,148
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Notes to the consolidated financial statements
continued
7 Income tax expense
(a) Income tax expense
Current tax
Deferred tax
Income tax expense
Deferred income tax expense included in income tax expense comprises:
Decrease/(increase) in deferred tax assets (note 13)
Increase/(decrease) in deferred tax liabilities (note 18)
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Profit before income tax expense
Tax at the Australian tax rate of 30% (2013: 30%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Non-assessable (gain)/loss on remeasurement of financial liability
Sundry items
Adjustments for current tax of prior periods
Income tax expense
2014
52 weeks
$’000
2013
52 weeks
$’000
37,058
2,798
39,856
2,140
658
2,798
51,454
5,153
56,607
9,765
(4,612)
5,153
138,398
41,520
186,484
55,945
–
(1,777)
39,743
113
39,856
662
(601)
56,006
601
56,607
(c) Deferred tax relating to items 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 21(b))
(504)
(594)
(d) Deferred tax relating to items charged or credited directly to other comprehensive income
Cash flow hedges (note 21(b))
8 Cash and cash equivalents
Cash on hand
Cash at bank
(349)
800
2014
$’000
2,837
70,727
73,564
2013
$’000
2,845
78,625
81,470
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.
88 Myer Annual Report 2014
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9 Trade and other receivables and prepayments
Trade receivables
Provision for impairment of receivables (note (a))
Other receivables
Prepayments
(a) Impaired trade receivables
2014
$’000
5,357
(1,120)
4,237
12,615
13,281
25,896
30,133
2013
$’000
4,353
(718)
3,635
10,186
10,563
20,749
24,384
As at 26 July 2014, current trade receivables of the Group with a nominal value of $1.1 million (2013: $0.7 million) were impaired. The amount of
the provision was $1.1 million (2013: $0.7 million).
The ageing of these receivables are as follows:
Up to three months
Over three months
Movements in the provision for impairment of receivables are as follows:
Carrying amount at beginning of period
Provision for impairment recognised during the period
Receivables written off during the period as uncollectible
Unused amount reversed
Carrying amount at end of period
2014
$’000
25
1,095
1,120
718
406
(4)
–
1,120
2013
$’000
57
661
718
411
360
(53)
–
718
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.
(b) Past due but not impaired
As of 26 July 2014, trade receivables of $0.2 million (2013: $0.2 million) 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 three months
Over three months
2014
$’000
153
–
153
2013
$’000
65
104
169
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.
89 Financial Report
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Notes to the consolidated financial statements
continued
10 Inventories
Retail inventories
11 Derivative financial instruments
Current assets
Forward foreign exchange contracts (i)
Total current derivative financial instrument assets
Current liabilities
Forward foreign exchange contracts (i)
Total current derivative financial instrument liabilities
Non-current liabilities
Interest rate swap contracts (ii)
Total non-current derivative financial instrument liabilities
2014
$’000
2013
$’000
376,763
363,880
2014
$’000
–
–
5,253
5,253
3,401
3,401
2013
$’000
9,442
9,442
–
–
2,331
2,331
(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) 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 26 July 2014, nil (2013: nil) was reclassified from equity and included in the cost of inventory. There was no hedge
ineffectiveness in the current or prior period.
(ii) Interest rate swap contracts
Bank loans of the Group currently bear an average variable interest rate of 4.12% (2013: 4.25%). It is the Group’s 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 47.1% (2013: 47.1%) of the Group’s debt facility (refer to note 19 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 2.97% and 3.99% (2013: 2.908% and 3.99%) 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 26 July 2014
$1.5 million was reclassified in profit and loss (2013: $0.8 million) and included in finance cost. There was no hedge ineffectiveness in the
current 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.
90 Myer Annual Report 2014
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12 Property, plant and equipment
At 28 July 2012
Cost
Accumulated depreciation
Net book amount
Period ended 27 July 2013
Carrying amount at beginning of period
Additions
Transfer between classes
Assets written off – cost
Assets written off – accumulated depreciation
Depreciation charge
Exchange differences
Freehold
land
$’000
Freehold
buildings
$’000
Fixtures
and fittings
$’000
Plant
and
equipment
$’000
Capital
works in
progress
$’000
10,100
–
10,100
10,100
–
–
–
–
–
–
19,500
(3,006)
16,494
16,494
–
–
–
–
(488)
–
384,220
(146,879)
237,341
334,140
(102,936)
231,204
237,341
3,198
25,598
(2,549)
1,683
(36,955)
7
231,204
5,787
19,137
(1,199)
888
(26,539)
(63)
20,343
–
20,343
20,343
49,663
(44,821)
–
–
–
145
Total
$’000
768,303
(252,821)
515,482
515,482
58,648
(86)
(3,748)
2,571
(63,982)
89
Carrying amount at end of period
10,100
16,006
228,323
229,215
25,330
508,974
At 27 July 2013
Cost
Accumulated depreciation
Net book amount
Period ended 26 July 2014
Carrying amount at beginning of period
Additions
Additions – acquisition
Transfer between classes
Assets written off – cost
Assets written off – accumulated depreciation
Assets disposal
Depreciation charge
Exchange differences
Carrying amount at end of period
At 26 July 2014
Cost
Accumulated depreciation
Net book amount
10,100
–
10,100
10,100
–
–
–
–
–
(500)
–
–
9,600
9,600
–
9,600
19,500
(3,494)
16,006
16,006
–
–
–
–
–
–
(488)
–
15,518
19,500
(3,982)
15,518
410,474
(182,151)
357,863
(128,648)
25,330
–
823,267
(314,293)
228,323
229,215
25,330
508,974
228,323
7,391
162
16,012
(11,831)
10,584
–
(34,605)
1
229,215
8,542
–
22,679
(7,401)
6,467
–
(28,592)
(4)
25,330
43,787
–
(38,136)
–
–
–
–
(161)
508,974
59,720
162
555
(19,232)
17,051
(500)
(63,685)
(164)
216,037
230,906
30,820
502,881
422,209
(206,172)
381,679
(150,773)
216,037
230,906
30,820
–
30,820
863,808
(360,927)
502,881
91 Financial Report
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Notes to the consolidated financial statements
continued
13 Deferred tax assets
Deferred tax assets comprise temporary differences attributable to:
Employee benefits
Non-employee provisions and accruals
Amortising deductions
Trading stock
Other
Tax losses
Total deferred tax assets
Set off of deferred tax liabilities pursuant to set off provisions (note 18)
Net deferred tax assets
Deferred tax assets expected to be recovered within 12 months
Deferred tax assets expected to be recovered after more than 12 months
Movements:
Carrying amount at beginning of period
Credited (charged) to income statement (note 7)
Credited (charged) to other comprehensive income
Carrying amount at end of period
2014
$’000
2013
$’000
20,076
12,609
837
4,990
–
1,521
40,033
(26,335)
13,698
26,507
13,526
40,033
42,872
(2,140)
(699)
40,033
21,232
9,706
4,280
4,946
1,245
1,463
42,872
(26,026)
16,846
25,933
16,939
42,872
51,403
(9,765)
1,234
42,872
92 Myer Annual Report 2014
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14 Intangible assets
At 28 July 2012
Cost
Accumulated amortisation
Net book amount
Period ended 27 July 2013
Carrying amount at beginning of period
Additions
Transfer between classes
Assets written off – cost
Amortisation charge*
Exchange differences
Carrying amount at end of period
At 27 July 2013
Cost
Accumulated amortisation
Net book amount
Period ended 26 July 2014
Carrying amount at beginning of period
Additions
Additions – acquisition
Transfer between classes
Assets written off – cost
Assets written off – accumulated amortisation
Amortisation charge*
Exchange differences
Carrying amount at end of period
At 26 July 2014
Cost
Accumulated amortisation
Net book amount
Brand
names
and
trade marks
$’000
Goodwill
$’000
Software
$’000
Lease
rights
$’000
Total
$’000
376,631
–
376,631
376,631
–
–
–
–
–
376,631
376,631
–
376,631
376,631
–
–
–
–
–
–
–
376,631
376,631
–
376,631
428,115
(2,205)
425,910
425,910
406
–
–
(14)
–
426,302
428,520
(2,218)
426,302
426,302
–
1,438
–
–
–
(14)
–
427,726
183,560
(66,089)
117,471
117,471
18,860
86
(1,991)
(20,984)
117
113,559
200,632
(87,073)
113,559
113,559
27,234
–
(555)
(2,822)
918
(20,853)
(82)
117,399
48,540
(32,403)
16,137
1,036,846
(100,697)
936,149
16,137
–
–
–
(1,612)
–
14,525
936,149
19,266
86
(1,991)
(22,610)
117
931,017
48,540
(34,015)
14,525
1,054,323
(123,306)
931,017
14,525
–
–
–
–
–
(3,683)
–
10,842
931,017
27,234
1,438
(555)
(2,822)
918
(24,550)
(82)
932,598
429,958
(2,232)
224,489
(107,090)
48,540
(37,698)
1,079,618
(147,020)
427,726
117,399
10,842
932,598
* Amortisation of $24.5 million (2013: $22.6 million) is included in administration and selling expenses 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 amounting to $349.5 million 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, brand names which have an indefinite
useful life and amounting to $402.8 million have been allocated to the business as a whole.
The goodwill arising on the acquisition of the sass & bide business amounting to $27.1 million 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 and amounting to $23.5 million 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-
year periods are extrapolated using a terminal growth rate of 2.5%. Key assumptions used in the calculation were as follows:
› discount rate (pre tax) 14.4% (2013: 14.4%)
›
terminal growth rate 2.5% (2013: 2.5%)
› operating gross profit margin 41% (2013: 41%)
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.
93 Financial Report
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Notes to the consolidated financial statements
continued
15 Trade and other payables
Trade payables
Other payables
Trade and other payables are non-interest bearing.
16 Provisions
Current
Employee benefits
Workers’ compensation (a)
Sales returns (b)
Other
Non-current
Employee benefits
Fixed lease rental increases (c)
Other
2014
$’000
203,473
224,593
428,066
2013
$’000
189,856
197,817
387,673
2014
$’000
2013
$’000
60,802
15,883
2,763
2,719
82,167
5,811
8,186
42
61,261
18,781
2,763
1,499
84,304
5,961
7,266
16
14,039
13,243
(a) Workers’ compensation
The amount represents a provision for workers’ compensation claims in certain states, for which the Group is self insured.
(b) Sales returns
The amount represents a provision for potential sales returns under the Group’s returns policy.
(c) Fixed lease rental increases
The Group is 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.
(d) Movement in provisions
Movement in each class of provision during the financial period, other than employee benefits, are set out below:
2014
Carrying amount at beginning of period
Additional provisions recognised during the period
Amounts utilised during the period
Carrying amount at end of period
Workers’
compensation
$’000
Sales
returns
$’000
18,781
1,559
(4,457)
15,883
2,763
2,763
(2,763)
2,763
Fixed lease
rental
increases
$’000
7,266
1,049
(129)
8,186
Other
$’000
1,515
10,603
(9,357)
2,761
Total
$’000
30,325
15,974
(16,706)
29,593
(e) Amounts not expected to be settled within the next 12 months
The current provision for employee benefits includes accrued annual leave and long service leave. For long service leave it covers all
unconditional entitlements where employees have completed the required period of service. The entire annual leave amount and current
portion of the long service leave provision is presented as current since the Group does not have an unconditional right to defer settlement for
any of these obligations. However, based on past experience, the Group does not expect all employees to take the full amount of accrued long
service leave or require payment within the next 12 months. The following amounts reflect leave that is not expected to be taken or paid within
the next 12 months.
Current long service leave obligations expected to be settled after 12 months
2014
$’000
28,301
2013
$’000
28,615
94 Myer Annual Report 2014
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17 Other liabilities
Current
Financial liability (note 21 (b) (iii))
Short-term payable
Non current
Long-term payable
Retirement benefit obligations
18 Deferred tax liabilities
Deferred tax liabilities comprise temporary differences attributable to:
Property, plant, equipment and software
Brand names
Deferred income
Sundry items
Set off of deferred tax liabilities pursuant to set off provisions (note 13)
Net deferred tax liabilities
Deferred tax liabilities expected to be recovered within 12 months
Deferred tax liabilities expected to be recovered after more than 12 months
Movement:
Carrying amount at beginning of period
Charged (credited) to income statement (note 7)
Charged (credited) to other comprehensive income
Carrying amount at end of period
2014
$’000
–
2,029
2,029
–
–
–
2013
$’000
29,758
1,952
31,710
1,000
353
1,353
2014
$’000
2013
$’000
13,118
8,465
2,594
2,158
26,335
14,523
8,465
1,202
1,836
26,026
(26,335)
(26,026)
–
–
731
25,604
26,335
26,026
658
(349)
26,335
845
25,181
26,026
30,288
(4,612)
350
26,026
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Notes to the consolidated financial statements
continued
19 Borrowings
Non-current borrowings
Bank loans
Total borrowings
2014
$’000
2013
$’000
422,030
422,030
420,824
420,824
(a) Structure of debt
The debt funding of the Group at 26 July 2014 comprised a revolving cash advance syndicated facility of $625 million. This facility was
established on 29 October 2009, drawn down on the 6 November 2009 and amended and restated on 3 June 2011. On 9 July 2013, the facility
went through a second amendment and restatement which included extending the tenure and changing the facility to be entirely a revolving
cash advance facility. At balance date the following amounts were drawn:
Bank loans
Less transaction costs
Borrowings
The terms and conditions of the Group’s revolving cash advance facility is as follows:
2014
$’000
425,000
(2,970)
422,030
2013
$’000
425,000
(4,176)
420,824
Revolving cash advance facility – Tranche A
Revolving cash advance facility – Tranche B
Revolving cash advance facility – Tranche C
Amount
$75 million
$275 million
$275 million
Term
2 years
3 years
4 years
Expiry date
21 August 2015
22 August 2016
21 August 2017
As the facility is revolving, amounts repaid may be redrawn during their terms.
(b) Security
The revolving cash advance facility in place at 26 July 2014 is unsecured, subject to various representations, undertakings, events of default and
review events which are usual for a facility of this nature.
(c) Fair value
The fair value of existing borrowings approximates 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.
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20 Contributed equity
Opening balance
Shares issued to Myer Equity Plans Trust at market value
Treasury shares
Opening balance
Shares issued to Myer Equity Plans Trust at market value
Shares allocated on exercise of options at $2.14
Closing balance of treasury shares
Closing balance
2014
Number
of shares
2013
Number
of shares
583,594,551
2,090,000
583,384,551
210,000
585,684,551
583,594,551
(29,700)
(2,090,000)
2,110,500
(25,200)
(210,000)
205,500
2014
$’000
558,728
5,518
564,246
(38,512)
(5,518)
4,516
(9,200)
(29,700)
(39,514)
2013
$’000
558,107
621
558,728
(38,331)
(621)
440
(38,512)
585,675,351
583,564,851
524,732
520,216
(a) Ordinary shares
The ordinary shares issued are fully paid. 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
Equity Incentive Plans (see note 36 for further information).
(c) Employee share and option schemes
Information relating to the employee share-based payment schemes, including details of shares issued under the schemes, is set out in note 36.
(d) Capital risk management
The Group’s key objective when managing capital is to minimise its weighted average cost of capital while maintaining appropriate financing
facilities. This provides the opportunity to pursue growth and capital management initiatives. In managing its capital structure, the Group
also seeks to safeguard its ability to continue as a going concern in order to provide appropriate returns to shareholders and benefits for
other stakeholders.
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.
Consistent 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 26 July 2014 and 27 July 2013 were as follows:
Total borrowings (note 19)
Less: cash and cash equivalents (note 8)
Net debt
Total equity
Total capital
Gearing ratio
2014
$’000
422,030
(73,564)
348,466
893,413
2013
$’000
420,824
(81,470)
339,354
905,642
1,241,879
1,244,996
28%
27%
The increase in the gearing ratio during 2014 was primarily driven by a decrease in cash and a decrease in equity associated with dividends paid
during the year being marginally higher than profits and adverse movement in the cash flow hedge reserve.
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Notes to the consolidated financial statements
continued
21 Retained earnings and reserves
(a) Retained earnings
Movement in retained earnings were as follows:
Balance at beginning of period
Profit for the period
Dividends
Balance at end of period
(b) Reserves
Share-based payments (i)
Cash flow hedges (ii)
Other reserve (iii)
Foreign currency translation (iv)
Movement in reserves were as follows:
Share-based payments
Balance at beginning of period
Share-based payments expense recognised
Income tax (note 7)
Balance at end of period
Cash flow hedges
Balance at beginning of period
Net (loss)/gain on revaluation
Transfer to net profit
Deferred tax (notes 13 and 18)
Balance at end of period
Other reserve
Balance at beginning of period
Acquisition of non-controlling interests
Balance at end of period
Foreign currency translation
Balance at beginning of period
Currency translation differences arising during the period
Balance at end of period
2014
$’000
2013
$’000
379,722
98,499
(99,470)
363,357
127,212
(110,847)
378,751
379,722
23,531
(7,469)
(25,621)
(511)
(10,070)
22,185
1,850
(504)
23,531
6,039
(17,190)
4,031
(349)
(7,469)
(31,650)
6,029
(25,621)
(598)
87
(511)
22,185
6,039
(31,650)
(598)
(4,024)
20,682
2,097
(594)
22,185
(3,837)
12,305
(3,229)
800
6,039
(31,650)
–
(31,650)
5
(603)
(598)
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(i) Share-based payments
The share-based payments reserve is used to recognise the fair value of options and rights granted to employees under the employee share
plans. Further information on share-based payments is set out in note 36.
(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 the income statement when the associated hedged transaction affects profit or loss.
(iii) Other reserve
Under the shareholders’ agreement entered into with the non-controlling shareholders at the time of acquisition in 2011, the Group held 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 had a corresponding put option. These options became exercisable in 2014, 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 was 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 resulted
in the recognition of an amount to the other reserve within shareholders’ equity and a financial liability within non-current liabilities other,
reclassified to current liabilities in 2013 when it became payable.
On acquisition of the remaining 35% of sass & bide, the cash payment of $33.4 million was recorded against the current financial liability and
non-controlling interests balances were recorded against other reserve.
(iv) Foreign currency translation
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 the income statement when the net
investment is disposed of.
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Notes to the consolidated financial statements
continued
22 Dividends
(a) Ordinary shares
Final fully franked dividend for the period ended 27 July 2013 of 8.0 cents (2012: 9.0 cents) per fully paid share
paid 14 November 2013 (2012: 14 November 2012)
Interim fully franked dividend for the period ended 26 July 2014 of 9.0 cents (2013: 10.0 cents) per fully paid share
paid 8 May 2014 (2013: 9 May 2013)
Total dividends paid
2014
$’000
2013
$’000
46,759
52,502
52,711
99,470
58,345
110,847
(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 5.5 cents per fully paid ordinary share (2013: 8.0 cents) fully franked based on tax paid at 30%.
The aggregate amount of the proposed dividend expected to be paid on 13 November 2014, but not recognised
as a liability at period end, is:
32,212
46,685
(c) Franked dividends
The franked portions of the final dividends recommended after 26 July 2014 will be franked out of existing franking
credits or out of franking credits arising from the payment of income tax in the period ending 25 July 2015.
Franking credits available for subsequent financial periods based on a tax rate of 30% (2013: 30%)
17,175
19,094
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.
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 $14 million (2013: reduction of $20 million).
23 Key Management Personnel disclosures
(a) Compensation
Key Management Personnel compensation for the period ended 26 July 2014 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
Share-based payments
2014
$
5,313,490
253,983
94,606
519,666
2013
$
4,936,883
211,951
112,410
721,528
6,181,745
5,982,772
Detailed remuneration disclosures are provided in the Remuneration Report on pages 47 to 67.
(b) Loans
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 2014 and 2013 there were no loans to individuals at any time.
(ii) Individuals with loans above $100,000 during the financial period
In 2014 and 2013 there were no loans to individuals that exceeded $100,000 at any time.
(c) Other transactions
There were no transactions with Key Management Personnel or entities related to them, other than compensation.
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24 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:
2014
$
2013
$
(a) PwC Australia
(i) Assurance services
Audit services
Audit and review of financial statements and other audit work under the Corporations Act 2001
392,530
396,510
Other assurance services
Audit of rent certificates
Other services
Total remuneration for other assurance services
Total remuneration for assurance services
(ii) Taxation services
Tax consulting and tax advice
Total remuneration of PwC Australia
(b) Overseas practices of PwC
(i) Assurance services
Audit services
44,250
–
44,250
43,125
6,150
49,275
436,780
445,785
46,900
483,680
183,253
629,038
Audit and review of financial statements and other audit work under the Corporations Act 2001
68,109
65,857
(ii) Taxation services
Tax consulting and tax advice
Total remuneration for overseas practices of PwC
25,331
93,440
28,786
94,643
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Notes to the consolidated financial statements
continued
25 Acquisition of non-controlling interests
On 24 September 2013, the parent entity acquired the remaining 35% of the issued share capital of Boogie & Boogie Pty Ltd, the owner of the
sass & bide business, for $33.4 million ($30.2 million, net of cash acquired), resulting in 100% ownership. Prior to this, Myer Holdings Limited
owned 65% in Boogie & Boogie Pty Ltd.
26 Business combination
On 6 July 2014, Myer Pty Ltd acquired the business assets of Charlie Brown, a successful women’s fashion brand.
Details of the purchase consideration and the net assets acquired are as follows:
Purchase consideration:
Cash paid
The assets and liabilities recognised as a result of the acquisition are as follows:
Net identifiable assets acquired:
Intangible assets
Inventories
Plant and equipment
Provisions
There were no acquisitions in the period ended 27 July 2013.
$’000
2,999
Fair
value
$’000
1,438
1,434
162
(35)
2,999
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27 Contingencies
Contingent liabilities
The Group had contingent liabilities at 26 July 2014 in respect of:
Guarantees
The Group has issued bank guarantees amounting to $49.4 million (2013: $51.5 million), of which $30.5 million (2013: $33.9 million) represents
guarantees supporting workers’ compensation self insurance licences in various jurisdictions.
For information about other guarantees given by entities within the Group, including the parent entity, please refer to notes 31 and 34.
While the amount and timing of any contingencies are uncertain, no material losses are anticipated in respect of the above contingent liabilities.
28 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
2014
$’000
2013
$’000
10,553
–
–
10,553
16,754
–
–
16,754
(b) Operating lease commitments
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
2014
$’000
2013
$’000
225,526
880,983
2,145,696
209,975
798,279
1,936,273
3,252,205
2,944,527
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.
29 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 30.
(c) Key Management Personnel
Disclosures relating to Key Management Personnel are set out in note 23.
(d) Transactions with other related parties
There were no transactions with other related parties during the current period.
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Notes to the consolidated financial statements
continued
30 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.
FSS Retail Pty Ltd
Notes:
Notes
(1), (3)
(2), (3)
(2), (3)
(1), (3)
(2), (3)
(1), (3)
(1), (3)
(1), (3)
(1), (3)
(2)
(2)
(2)
(1), (3)
(2), (3)
(2), (3)
(2), (3)
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
(2), (3)
Australia
Class of
shares
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Equity
holdings(4)
Equity
holdings(4)
2014
%
2013
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
65
65
65
65
65
65
65
–
(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 (ASIC).
(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 31.
(4) The proportion of ownership interest is equal to the proportion of voting power held.
(b) Transactions with non-controlling interests
On 24 September 2013, the parent entity acquired the remaining 35% of the issued share capital of Boogie & Boogie Pty Ltd, the owner of sass &
bide, from the non-controlling shareholders for $33.4 million ($30.2 million, net of cash acquired) (Refer to note 25). There were no transactions
with non-controlling interests in 2013.
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31 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. FSS Retail Pty Ltd, Boogie & Boogie Pty Ltd, sass & bide Pty Ltd, sass & bide Retail Pty Ltd and sass &
bide Retail (NZ) Pty Ltd joined the deed of cross guarantee on 16 July 2014.
The Group already owned and controlled Boogie & Boogie Pty Ltd, sass & bide Pty Ltd, sass & bide Retail Pty Ltd and sass & bide Retail (NZ) Pty
Ltd prior to the companies joining the Deed of Cross Guarantee. The companies were added to the Deed of Cross Guarantee following the
acquisition of the remaining 35% of the issued share capital of Boogie & Boogie Pty Ltd, the owner of sass & bide, on 24 September 2013 (refer to
note 25). The sass & bide results have been included in 2014 as if they were in the Deed of Cross Guarantee since the beginning of the financial
year. Prior year comparatives do not include sass & bide as it did not form part of the Deed in 2013.
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 26 July 2014.
(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 on the following page is a consolidated income statement, a consolidated statement of comprehensive income and a summary of
movements in consolidated retained earnings for the year ended 26 July 2014 of the closed group.
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Notes to the consolidated financial statements
continued
31 Deed of cross guarantee continued
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
Dividend received
Operating gross profit
Other income
Selling expenses
Administration expenses
Earnings before interest and tax
Finance revenue
Finance costs
Net finance costs
Profit before income tax
Income tax expense
Profit for the period
Profit is attributable to:
Deed of Cross Guarantee group
Non-controlling interest
STATEMENT OF COMPREHENSIVE INCOME
Profit for the period
Other comprehensive income
Items that may be reclassified to profit or loss:
Cash flow hedges
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 retained earnings
Opening balance
sass & bide opening retained earnings
Profit for the period
Dividends paid
Closing balance
2014
52 weeks
$’000
2013
52 weeks
$’000
3,141,961
3,100,100
(491,482)
(501,692)
2,650,479
2,598,408
(39,378)
(37,942)
2,611,101
2,560,466
128,769
(1,454,015)
129,537
(1,423,329)
–
4,615
1,285,855
1,271,289
6,356
(810,112)
(319,771)
457
(768,241)
(291,388)
162,328
212,117
991
(22,930)
(21,939)
1,379
(29,767)
(28,388)
140,389
183,729
(40,106)
(54,246)
100,283
129,483
100,240
129,483
43
–
100,283
129,483
100,283
129,483
(13,320)
248
(349)
(13,421)
7,704
–
1,235
8,939
86,862
138,422
379,398
3,854
100,240
360,762
–
129,483
(99,470)
(110,847)
384,022
379,398
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(b) Consolidated balance sheet
Set out below is a consolidated balance sheet as at 26 July 2014 of the closed group.
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables and prepayments
Inventories
Derivative financial instruments
Total current assets
Non-current assets
Other financial assets
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
Deferred income
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 earnings
Reserves
Total equity
2014
$’000
2013
$’000
71,185
42,497
372,853
–
486,535
1,462
502,327
12,001
932,138
2,932
69,555
33,273
356,268
8,438
467,534
41,374
504,559
21,265
879,544
3,310
1,450,860
1,450,052
1,937,395
1,917,586
427,167
5,253
7,516
81,616
6,045
2,029
529,626
422,030
3,401
13,997
68,900
–
508,328
381,180
–
17,165
82,506
5,929
30,802
517,582
420,824
2,331
12,763
67,654
1,354
504,926
1,037,954
1,022,508
899,441
895,078
524,732
384,022
(9,313)
899,441
520,216
379,398
(4,536)
895,078
32 Events occurring after the reporting period
Subsequent to 26 July 2014, the directors have determined to pay a final dividend of 5.5 cents per share, fully franked at the 30% corporate
income tax rate, payable on 13 November 2014. The record date for this dividend is 29 September 2014.
The financial effect of the final ordinary dividend for 2014 has not been recognised in the annual financial statements for the period ended
26 July 2014 and will be recognised in subsequent financial statements.
There have been no other subsequent events.
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Notes to the consolidated financial statements
continued
33 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
Interest expense
Share-based payments expense
Net exchange differences
Change in operating assets and liabilities
Decrease/(increase) in trade and other receivables
Decrease/(increase) in inventories
Decrease/(increase) in deferred tax asset
Decrease/(increase) in derivative financial instruments
(Decrease)/increase 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
34 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
(b) Guarantees entered into by the parent entity
Carrying amount included in current liabilities
2014
52 weeks
$’000
2013
52 weeks
$’000
98,542
86,305
(1,025)
1,233
1,850
110
(6,418)
(11,049)
2,294
1,924
31,151
(11,721)
(1,345)
(275)
129,877
83,559
(1,402)
1,646
2,097
(567)
(2,289)
22,002
4,475
(2,168)
(13,768)
3,850
(3,849)
2,062
191,576
225,525
2014
$’000
2013
$’000
208,420
1,129,970
29,136
454,567
211,255
1,104,911
69,960
493,116
524,732
520,216
(3,418)
(1,891)
17,133
138,847
128,721
126,952
(1,648)
(31,650)
15,282
109,595
136,264
136,953
–
–
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 31. At balance date, no liability has been recognised in relation to these guarantees on the basis that the potential exposure is not
considered material.
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(c) Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities as at 26 July 2014 or 27 July 2013. 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 26 July 2014 or 27 July 2013.
(e) Events subsequent to balance date
Refer to note 32 for additional events which have occurred after the financial reporting date.
35 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) Reconciliation of earnings used in calculating earnings per share
Earnings used in calculation of basic and diluted EPS attributable to ordinary shareholders
(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
2014
cents
16.8
16.6
2013
cents
21.8
21.6
$’000
$’000
98,499
127,212
Number
Number
585,253,946
583,425,804
6,748,120
5,996,592
592,002,066
589,422,396
(e) Information concerning the classification of securities
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 36.
1,936,093 options outstanding at period end are not included in the calculation of diluted earnings per share because they are antidilutive for
the period ended 26 July 2014. These options could potentially dilute basic earnings per share in the future.
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Notes to the consolidated financial statements
continued
36 Share-based payments
(a) Equity Incentive Plans
The Myer Equity Incentive Plan (MEIP) and Executive Equity Incentive Plan (EEIP) were established to help ensure retention of senior
management and key staff and to provide incentives for the delivery of both short and long term shareholder returns.
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:
Grant type/
Grant date
2014
Option
17 Dec 2008
Option
30 Jun 2009
Option CEO EPS
06 Nov 2009
Option CEO
share price
06 Nov 2009
Right EPS
21 Oct 2011
Right TSR
21 Oct 2011
Right CEO EPS
9 Dec 2011
Right CEO TSR
9 Dec 2011
Right EPS
29 Jan 2013
Right TSR
29 Jan 2013
Right
29 Jan 2013
Right EPS
11 Dec 2013
Right TSR
11 Dec 2013
Right Business
Transformation
11 Dec 2013
Right CFO
11 Dec 2013
Total
Expiry date
Exercise
price
($)
Balance
27 July
2013
Granted
Exercised
Expired
and
lapsed
Balance
26 July
2014
Vested
and
exercisable
24 Oct 2013
$2.14
2,310,313
–
(2,110,500)
(199,813)
–
–
24 Oct 2014
$2.34
2,634,650
31 Dec 2013
$4.10
5,152,671
31 Dec 2013
$5.74
2,227,723
31 Oct 2014
$0.00
1,089,102
31 Oct 2014
$0.00
1,683,874
31 Oct 2014
$0.00
808,383
31 Oct 2014
$0.00
1,250,000
31 Oct 2015
$0.00
419,114
31 Oct 2015
$0.00
419,120
31 Oct 2015
$0.00
1,330,318
–
–
–
–
–
–
–
–
–
–
31 Oct 2016
$0.00
31 Oct 2016
$0.00
31 Oct 2016
$0.00
31 Oct 2016
$0.00
–
–
–
–
198,838
397,684
198,841
73,426
–
(403,000)
2,231,650
315,600
–
(5,152,671)
–
(2,227,723)
–
–
–
–
–
–
–
–
–
–
–
–
–
(237,125)
851,977
(366,646)
1,317,228
–
–
808,383
1,250,000
(143,381)
275,733
(143,383)
275,737
(192,307)
1,138,011
(70,803)
128,035
(141,609)
256,075
(70,804)
128,037
–
73,426
–
–
–
–
–
–
–
–
–
–
–
–
–
19,325,268
868,789
(2,110,500)
(9,349,265)
8,734,292
315,600
Weighted average exercise price
$2.33
$0.00
$2.14
$3.77
$0.60
$2.34
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Grant type/
Grant date
2013
Option
23 Jan 2008
Option
17 Dec 2008
Option
30 Jun 2009
Option
06 Nov 2009
Option CEO EPS
06 Nov 2009
Option CEO
share price
06 Nov 2009
Right EPS
21 Oct 2011
Right TSR
21 Oct 2011
Right CEO EPS
9 Dec 2011
Right CEO TSR
9 Dec 2011
Right EPS
29 Jan 2013
Right TSR
29 Jan 2013
Right
29 Jan 2013
Total
Expiry date
Exercise
price
($)
Balance
28 July
2012
Granted
Exercised
Expired
and
lapsed
Balance
27 July
2013
Vested
and
exercisable
21 Dec 2012
$3.00
6,221,180
24 Oct 2013
$2.14
3,016,663
24 Oct 2014
$2.34
3,153,900
31 Dec 2012
$4.10
2,521,009
31 Dec 2013
$4.10
5,152,671
31 Dec 2013
$5.74
2,227,723
31 Oct 2014
$0.00
1,297,858
31 Oct 2014
$0.00
2,006,646
31 Oct 2014
$0.00
808,383
31 Oct 2014
$0.00
1,250,000
–
–
–
–
–
–
–
–
–
–
31 Oct 2015
31 Oct 2015
31 Oct 2015
$0.00
$0.00
$0.00
–
–
–
486,987
486,994
1,334,843
–
(6,221,180)
–
–
(205,500)
(500,850)
2,310,313
512,500
–
(519,250)
2,634,650
168,800
–
(2,521,009)
–
–
–
–
–
–
–
–
–
–
–
5,152,671
–
2,227,723
(208,756)
1,089,102
(322,772)
1,683,874
–
–
808,383
1,250,000
(67,873)
419,114
(67,874)
419,120
(4,525)
1,330,318
–
–
–
–
–
–
–
–
–
–
27,656,033
2,308,824
(205,500)
(10,434,089)
19,325,268
681,300
Weighted average exercise price
$2.78
$0.00
$2.14
$3.00
$2.33
$2.19
The number of options which expired during the period was 158,813 (2013: 8,267,021).
The weighted average share price at the date of exercise of options exercised during the period ended 26 July 2014 was $2.61 (2013: $3.04).
The weighted average remaining contractual life of share options and rights outstanding at the end of the period was 0.6 years (2013: 0.9 years).
Fair value of performance rights granted
The assessed fair value at grant date of 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
2014
EEIP
Rights (EPS)
2014
EEIP
Rights (TSR)
2014 EEIP
Rights (Business
Transformation)
2014
EEIP
Rights CFO
$2.36
$0.00
11-Dec-13
31-Oct-16
$2.84
32%
6.3%
3.04%
$1.57
$0.00
11-Dec-13
31-Oct-16
$2.84
32%
6.3%
3.04%
$2.36
$0.00
11-Dec-13
31-Oct-16
$2.84
32%
6.3%
3.04%
$2.36
$0.00
11-Dec-13
31-Oct-16
$2.84
32%
6.3%
3.04%
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 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 rights.
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Notes to the consolidated financial statements
continued
36 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 the MEIP and EEIP
2014
$’000
1,850
2013
$’000
2,097
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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DIRECTORS’ DECLARATION
In the directors’ opinion:
(a) the financial statements and notes set out on pages 69 to 112 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 26 July 2014 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 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 31.
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.
Paul McClintock AO
Chairman
Melbourne, 3 October 2014
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AUDITOR’S INDEPENDENCE DECLARATION
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INDEPENDENT AUDITOR’S REPORT
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Independent auditor’s report
continued
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SHAREHOLDER INFORMATION
as at 23 September 2014
Myer Holdings has one class of shares on issue (being ordinary shares). All the Company’s shares are listed on the Australian Securities Exchange.
Issued capital
Number of shareholders
Minimum parcel price
Number
585,689,551
52,981
$2.02
Holders with less than a marketable parcel
7,217 (1,237,283 shares)
Distribution of shareholders and shareholdings
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Unmarketable parcels
Minimum $500.00 parcel at $2.02 per unit
Twenty largest shareholders
Rank Name
Total holders
25,235
18,989
4,333
4,220
204
52,981
Units
12,304,659
44,622,045
33,950,540
105,157,365
389,654,942
585,689,551
% of issued
capital
2.10
7.62
5.80
17.95
66.53
100.00
Minimum Parcel Size
248
Holders
7,217
Units
1,237,283
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
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LTD
BERNARD JOSEPH BROOKES
AMP LIFE LIMITED
BNP PARIBAS NOMINEES PTY LTD
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
ECAPITAL NOMINEES PTY LIMITED
QIC LIMITED
BAINPRO NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
BOND STREET CUSTODIANS LIMITED
BAINPRO NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BROOKES FAMILY INVESTMENTS PTY LTD
MR RICHARD WILLMOT CHADWICK + MRS GWENDA ANN CHADWICK
Total top 20 shareholders of fully paid ordinary shares
Total remaining holders balance
117 Shareholder Information
Units % of Units
126,234,855
21.55
54,280,896
52,237,069
32,199,765
28,829,532
7,868,938
6,225,782
4,867,581
3,946,000
3,476,926
3,330,822
1,845,582
1,815,490
1,792,634
1,698,091
1,692,208
1,572,468
1,524,119
1,500,000
1,335,000
9.27
8.92
5.50
4.92
1.34
1.06
0.83
0.67
0.59
0.57
0.32
0.31
0.31
0.29
0.29
0.27
0.26
0.26
0.23
338,273,758
247,415,793
57.76
42.24
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Shareholder information
continued
Substantial shareholders
As at 24 September 2014, there are five substantial shareholders that Myer is aware of:
Name
Harris Associates
Goldman Sachs Group Inc.
UBS AG
Commonwealth Bank of Australia
BlackRock Group
Date of most recent notice
22 May 2014
25 August 2014
23 September 2014
21 May 2014
16 June 2014
Relevant interest
42,724,764 shares
41,444,348 shares
38,339,954 shares
35,169,489 shares
29,286,209 shares
Voting rights
Shareholders may vote at a meeting of shareholders in person, directly or by proxy, attorney or representative, depending on whether the
shareholder is an individual or a company. Subject to any rights or restrictions attaching to shares, on a show of hands each shareholder present
in person or by proxy, attorney or representative has one vote and, on a poll, has one vote for each fully paid share held. Presently, Myer has only
one class of fully paid ordinary shares and these do not have any voting restrictions. If shares are not fully paid, on a poll the number of votes
attaching to the shares is pro-rated accordingly. Options and performance rights do not carry any voting rights.
Options and performance rights
Myer has unlisted options and performance rights on issue. As at 23 September 2014, there were 166 holders of options and 243 holders
of performance rights.
American Depositary Receipt Program
Myer Holdings has a Sponsored Level I American Depositary Receipt (ADR) program. Myer ADRs are not listed on an exchange and are only
traded in the United States over-the-counter (OTC) market under the code: ‘MYRSY’ and the CUSIP number: 62847V 207.
One ADR represents four existing ordinary Myer shares.
Deutsche Bank Trust Company Americas (DBTCA) is the Depositary for the Company’s ADR program in the United States. Holders of the
Company’s ADRs should deal directly with DBTCA on all matters relating to their ADR holdings on the contact details below:
Deutsche Bank Shareholder Services
American Stock Transfer & Trust Company
Operations Centre
6201 15th Avenue
Brooklyn NY 11219
Email: DB@amstock.com
Toll-free number: +1 800 937 5449
Direct Dial: +1 718 921 8124
118 Myer Annual Report 2014
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Shareholder information
continued
CORPORATE DIRECTORY
Registered office
Myer Holdings Limited
Level 7
800 Collins Street
Docklands VIC 3008
Phone: +61 (0) 3 8667 6000
Myer postal address
Myer Holdings Limited
PO Box 869J
Melbourne VIC 3000
Company Secretary
Marion Rodwell
Chief General Counsel and Group Company Secretary
Shareholder enquiries
Share Registry
Computershare Investor Services Pty Ltd
Postal address
GPO Box 2975
Melbourne VIC 3001
Myer shareholder information line
1300 820 260
+61 (0) 3 9415 4332 (outside Australia)
investorcentre.com
Investor relations
Davina Gunn
Investor Relations Manager
Phone: +61 (0) 3 8667 7879
Mobile: +61 (0) 400 896 809
Email: myer.investor.relations@myer.com.au
Olivia Reith
Investor Relations Manager
Phone: +61 (0) 3 8667 7820
Mobile: +61 (0) 438 101 789
Email: myer.investor.relations@myer.com.au
Media relations
Jo Lynch
General Manager Corporate Affairs & Media
Phone: +61 (0) 3 8667 7571
Mobile: +61 (0) 438 101 793
Email: myer.corporate.affairs@myer.com.au
Myer Customer Service Centre
PO Box 869J
Melbourne VIC 3001
Phone: 1800 811 611 (within Australia) or
+61 (0) 3 8667 6000 (outside Australia)
Fax: +61 (0) 3 8667 6091
Auditor
PricewaterhouseCoopers
Level 19, Freshwater Place
2 Southbank Boulevard
Southbank VIC 3006
Securities Exchange Listing
Myer Holdings Limited (MYR) shares are listed
on Australian Securities Exchange (ASX)
Websites
myer.com.au
myer.com.au/investor
myerone.com.au
About this Annual Report
The Myer Holdings Limited Annual Report is available
online at myer.com.au/investor. Hard copies can
be obtained by contacting our share registry.
Annual General Meeting
The 2014 Annual General Meeting of
Myer Holdings Limited will be held at
Mural Hall, Level 6, Myer Melbourne,
Bourke Street Mall, Melbourne, Victoria on
Friday 21 November 2014 at 11.00am.
Shop online:
myer.com.au
Find us here:
facebook.com/myer
instagram.com/myer
twitter.com/myer
youtube.com/myermystore
pinterest.com/myermystore
119 Corporate Directory
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