A N N U A L R E P O R T
2 0 1 9
CONTENT S
2
CHAIRMAN &
CEO’S REPORT
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6
PERFORMANCE
REVIEW
OUR CUSTOMER
FIRST PLAN
10 Sustainability at Myer • 12 Directors’ Report • 26 Auditor’s Independence Declaration
27 Remuneration Report • 49 Financial Statements • 87 Directors’ Declaration
88 Independent Auditor’s Report • 96 Shareholder Information • 98 Corporate Directory
ANNUAL GENERAL MEETING
The tenth Annual General Meeting of Myer Holdings Limited will be held on Wednesday 30 October 2019 at 2.30pm (Sydney time)
at Dockside, Balcony Level, Cockle Bay Wharf, Darling Park, Sydney 2000.
Myer Holdings Limited ABN 14 119 085 602
The 2019 Myer Annual Report reflects the Company’s financial and sustainability performance for the period 29 July 2018 to 27 July 2019. It covers our retail
and store support operations in Australia. The Annual Report is prepared for all Myer stakeholders including shareholders, analysts, customers, suppliers,
team members, and the wider community. Content is based on ASX financial and governance reporting guidelines, stakeholder feedback, and Myer’s business
strategy. Further information is available from myer.com.au.
A B OUT M Y ER
Myer is one of Australia’s largest department store groups with a focus on
placing customers first in every decision we make, and every action we take.
Myer operates 61 department stores
we have sourcing offices located in
Our loyalty program, MYER one, has
across Australia, and with our team
China and Hong Kong.
members, we are committed to being
Australia’s favourite department store.
Myer’s online business is a significant
asset that continues to deliver strong
Our merchandise offer includes core
growth, now representing our largest
product categories: Womenswear;
store by sales.
Menswear; Childrenswear; Beauty;
Homewares; Electrical Goods; Toys
and General Merchandise.
The majority of Myer’s operations
are in Australia and encompass Myer
department stores, sass & bide and
Marcs and David Lawrence (MDL). In
addition to our Australian operations,
We will provide friendly,
helpful service, high quality
and exclusive brands and
offer compelling value.
more than five million membership
cards in circulation. Members earn
Credits on purchases at Myer that
convert into Reward Cards on a
quarterly basis. For every $1,000 spent
at Myer, Members receive a $20 Reward
Card. Members can also earn MYER
one Credits at MYER one affiliates and
on purchases made with the Myer
Credit Card. Further details about
the MYER one program are available
at: myerone.com.au.
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DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTS
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CH A IR M A N &
CEO’ S R EP OR T
We are pleased to report on a year where we have continued to strengthen the foundations
of our great Company. We have made good progress in executing the Customer First Plan to
underpin the future success of the Company and to ensure we are making decisions that are
in the best interests of customers and shareholders.
STRENGTHENED BOARD AND
EXECUTIVE MANAGEMENT TEAM
During the year we have significantly
refreshed the Board to ensure we have
the right skills and experience with five
of the eight current Board members
having joined within the last three
years. This includes the appointments
of respected IT entrepreneur Lyndsey
Cattermole AM and experienced retailer
Jacquie Naylor.
Lyndsey founded one of Australia’s
largest and most successful
IT businesses, Aspect Computing,
which operated for almost thirty years
before being sold to the ASX-listed
company KAZ Group. She also has
significant board experience including
at Foster’s Group Ltd, Treasury Wine
Estates Ltd, Tatts Group Ltd and the
Victorian Major Events Corporation.
Jacquie brings to the Board a wealth
of experience and knowledge of both
women’s and men’s apparel, homewares
and outdoor brands. She has been an
owner, director and executive at some
of the most iconic Australian retailers
including as an Executive Director and
Non-Executive Director at The PAS
Group. In addition, Jacquie was a Non-
Executive Director of one of the world’s
most trusted outdoor brands, Macpac,
and has also been a Group Executive
Director at the Just Jeans Group.
Importantly, we now have an equal
split of female and male directors
demonstrating our commitment to
gender diversity, which better aligns
the Board with the diversity of our
customer base.
As shareholders know, we have been
FY2019 RESULTS
encouraging directors to have skin in
the game to better align their interests
with shareholders. Last year the Board
introduced a Shareholding Policy
whereby each Non-Executive Director
targets the purchase of a shareholding
that is the equivalent of a minimum of
one year’s directors’ fees within three
years. The directors have responded
positively to this Policy and collectively
we now own over two million shares.
In addition to the significantly refreshed
Board, we have strengthened the
Executive Management Team to ensure
it has the skills and experience needed
to deliver the Customer First Plan.
During the year we appointed Geoff
Ikin as Chief Customer Officer. Geoff
is responsible for the key customer
facing functions of online, MYER one,
marketing, advertising, public relations,
social media, corporate affairs and
communications.
In September 2018 Tabitha Pearson
joined Myer as Executive General
Manager People and Culture, and
is responsible for all aspects of
Myer’s human resources including
organisational development, sourcing
and talent strategies, industrial
relations, and risk and safety.
Paul Goodall joined Myer in October
2018 as Executive General Manager
Store Design and Development and
is responsible for store design, space
planning, project management and
visual merchandising.
Our FY2019 results demonstrate our
focus on profitable sales, a disciplined
management of costs and cash, as well
as deleveraging the business.
Total sales were down 3.5% to
$2,991.8 million and comparable store
sales were down 2.9%, in part reflecting
our focus on profitable sales. Excluding
sales of Apple products (exited May
2019), FY2019 comparable sales were
down 1.3%.
Total digital sales in FY2019 grew by
21.9% to $292.1 million (including Marcs
and David Lawrence (MDL) and sass
& bide online sales, Myer Market, and
$29.8 million via in-store iPads), now
representing our largest store and
9.8% of total sales.
Operating gross profit (OGP) declined
by 1.9% to $1,162.4 million. OGP margin
increased by 65 basis points to 38.9%,
driven by an improved Myer Exclusive
Brands (MEBs) mix as well as lower
promotional markdowns and shrinkage.
Cost of doing business (CODB)
decreased by 3.1% to $1,002.4 million
which reflected improved efficiencies
both in stores and at the Support Office.
Earnings before interest, tax,
depreciation and amortisation
(EBITDA) increased by 7.2% to
$160.1 million. Net profit after tax
(NPAT) pre-implementation costs
and individually significant items
increased by 2.2% to $33.2 million.
Operating cash flow (before interest
& tax) increased by $8 million to
$138 million, and closing net debt
of $39 million was $69 million below
last year. The dividend continues to
be suspended.
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Garry Hounsell
Chairman
John King
Managing Director and CEO
PUTTING CUSTOMERS FIRST
Online
Myer team members have been focused
Throughout the year we have continued
on the delivery of the Customer First
to improve the customer’s digital
Plan and we are continuing to place
shopping experience, following
program. As the event partner they
received more than $200,000, which will
go to assisting mothers who have been
affected by family violence.
customers first, in every decision we
the launch of our new website in
This year, with our customers, we also
make, and every action we take. Much
September 2018. We have enhanced the
raised $240,000 to assist flood and
work has been achieved across the key
experience by focusing on customer
drought affected communities.
focus areas, but there is much more to
feedback and building new features and
be done as we continue to strengthen
improvements, in particular on mobile
THANK YOU
the foundations of our Company for
devices. In addition, we continue to
future growth.
Customer
We have provided additional space in
our core categories optimising the brand
flow and allowing the prominent display
of quality brands that are exclusive to
close the gap between our in-store and
online ranges, and are progressing on
completing our aim of matching our
store and online ranges by the end of
the calendar year.
Efficiency
As we mark one year of delivery against
the Customer First Plan, we thank you
for the confidence you have shown in
the Board and Executive Management
Team, as we further strengthen the
foundations of this Company for future
growth and the delivery of shareholder
value. We know there is much more
Myer. These improved layouts and brand
We have continued with our commitment
to be done to transform this business
adjacencies have been undertaken
to always be making money or saving
in the interests of customers and
in 34 stores, and in many stores also
money. As part of this, we have made
shareholders and we look forward to
included the introduction of new brands.
decisions throughout the year not to
working with you to achieve this.
We have completed refurbishments
chase unprofitable sales.
Yours sincerely,
at our Castle Hill and Maroochydore
In addition, we have continued to
stores and have announced store
ensure that our Support Office is
refurbishments and space reductions
operating as closely to our customers
for our Cairns and Belconnen stores.
as possible by simplifying structures
As part of this work, we will improve the
and reducing duplication. This has
range and offer at these stores for our
resulted in a number of non-customer
loyal customers. In addition to this, we
facing management and administration
have extended the lease of our historic
roles leaving the business, and we have
Ballarat store, and will be undertaking
further reduced the Support Office by
store improvements.
Brands
one floor.
COMMUNITY
In the past year we have added more
Each year the Myer Community Fund
than 50 new brands, which is expected
works with over 55 charities. This year
to increase to 90 new brands by this
it disbursed over $1.9 million in funding.
Christmas. New brands include: Oasis,
Warehouse, Karl Lagerfeld Paris,
Selected Femme, Selected Homme,
Vero Moda, Fiorucci, Rotate by Birger
Christensen, Jack London, Twisted Tailor
and Acqua di Parma.
Now in its 15th year, the Precious Metal
Ball is the Fund’s premiere fundraising
event. This year it partnered with the
Australian Childhood Foundation and
supported their Bringing Up Great Kids
Garry Hounsell
Chairman
John King
Managing Director and CEO
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTS
4
PER FOR M A NCE
R E V IE W
The 2019 results reflect our focus on profitable sales, a disciplined
management of costs and cash, and on deleveraging the business.
SALES
COST OF DOING BUSINESS
CASH FLOW AND BALANCE SHEET
Total sales were down 3.5% to
Cost of doing business (CODB)
Operating cash flow (before interest
$2,991.8 million and comparable store
decreased by 3.1% to $1,002.4 million
& tax) increased by $8 million to
sales were down 2.9%, in part reflecting
which reflected improved efficiencies
$138 million. Capital expenditure
our focus on profitable sales. Excluding
both in stores and at the Support Office,
decreased to $45 million reflecting a
sales of Apple products (exited May
as well as cost savings achieved in IT,
heightened focus on return hurdles.
Net debt was $69 million lower than
last year at $39 million reflecting the
continued focus on deleveraging.
Inventory decreased by 5.4% to
$346.9 million.
2019), FY2019 comparable sales
occupancy and marketing.
were down 1.3%.
Total digital sales in FY2019 grew by
21.9% to $292.1 million (including
Marcs and David Lawrence (MDL) and
sass & bide online sales, Myer Market,
and $29.8 million via in-store iPads),
now representing our largest store
and 9.8% of total sales. Online sales
(excluding $29.8 million via in-store
iPads) increased 25.6% to $262.3m.
OPERATING GROSS PROFIT
OGP declined by 1.9% to $1,162.4 million
and OGP margin increased by 65 basis
points to 38.9%, driven by an improved
Myer Exclusive Brands (MEBs) mix as
well as lower promotional markdowns
and shrinkage. Total sales of MEBs
increased by 1.9% to $527.2 million,
now representing 17.6% of total sales
as a result of improved merchandise
and brand prioritisation.
Total digital sales now
represents our largest store
and 9.8% of total sales.
NET PROFIT AFTER TAX
Net profit after tax (NPAT) pre-
implementation costs and individually
significant items increased by 2.2%
to $33.2 million. Implementation
costs and individually significant
items (post-tax) totalled $8.7 million
and included redundancies reflecting
the simplification of the organisational
structure, as well as an onerous
lease and impairment of assets for
an additional level vacated at the
Support Office.
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TOTAL SALES ($B)
NET PROFIT AFTER TAX ($M)*
2019
2018
2017
2016
2015
33.2
32.5
3.0
3.1
3.2
3.3
3.2
2019
2018
2017
2016
2015
67.9
69.3
77.5
OPERATING GROSS PROFIT MARGIN (%)
EARNINGS PER SHARE (CENTS)*
2019
2018
2017
2016
2015
38.9
38.2
38.1
38.7
40.4
4.0
4.0
2019
2018
2017
2016
2015
FINANCIAL SUMMARY ($M)
Total Sales
Operating Gross Profit
Operating Gross Profit Margin
Cost of Doing Business
Earnings before interest, tax, depreciation, amortisation (EBITDA)*
Earnings before interest and tax (EBIT)*
Net profit after tax (NPAT)*
Implementation costs and individually significant items (post-tax)
Statutory NPAT
* Excluding implementation costs and individually significant items
** Not meaningful
8.3
8.8
13.2
FY2019
2,991.8
1,162.4
38.85%
FY2018
3,100.6
1,184.4
38.20%
(1,002.4)
(1,035.0)
160.1
58.5
33.2
(8.7)
24.5
149.4
55.4
32.5
(518.5)
(486.0)
Change
(3.5%)
(1.9%)
+65bps
(3.1%)
+7.2%
+5.5%
+2.2%
nm**
nm**
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW 6
OUR CUS TOMER
FIR S T PL A N
Throughout the year we have focused on implementing our Customer First Plan to transform the business in
the interests of customers and shareholders. We continue to put customers first - in every decision we make,
and every action we take. We are committed to ensuring Myer is Australia’s favourite department store,
providing friendly, helpful service, high quality and exclusive brands and offering compelling value.
OUR VALUES
CU STOME RS
COME FI RST
OWN OUR
FUTURE
DO WHAT’S
RIGHT
ONE INCLUSIV E
TEAM
TR AN SFORM
CU STOMER
EX PERIENCE
I N STORE
FOCUS AREAS
‘ONLY A T MYER’
BRANDS AND
CATE GORIE S;
VALUE FOR MONEY
EF FICIE NCY LEV ERS
CONTINUE
ENHANCING
MYER.COM.A U
SIMP LIFIED
BU SI NESS PROC ESSES
Work smarter
EFFICIENT
FROM FACTORY
TO CUSTOMER
Mov e product at low est total c ost
ACCELERATE D
COST REDUCTION
S pend prudently
OUR MYER VALUES
Our Customer First Plan Values are:
An integral part of delivering our
Customers Come First
Customer First Plan lies in our values.
They guide our behaviour, shape our
culture, and provide a framework for
how we work at Myer.
Everyone at Myer has a role to play, from
those who source and buy our products
to the teams who sell them and everyone
in between. The values we share bind us
together, and are the things that matter
the most to our customers and our
people. In 2018 we refreshed our values
to ensure we put the customer first,
in every decision we make, and every
action we take.
We’re passionate about the customer;
they’re at the heart of everything we do.
Own Our Future
We find new ways and adapt to deliver
the right results.
Do What’s Right
We execute with integrity and we strive
to make a difference.
One Inclusive Team
We care as a family, work as a team.
CU STOME R SATISFAC TION
During the year Myer won the Roy
country, from Penrith to Perth and from
Morgan Annual Customer Satisfaction
Cairns to Chadstone, our 61 stores and
Award for Department Store of the Year.
their teams strive to give every customer
This is the fourth consecutive year that
the best experience. We believe that it’s
Myer has won this award and the sixth
because of this customer first approach,
time in the last eight years.
that they, our customers, have chosen
Myer Melbourne General Manager,
Loucinda McCorry, said at the awards
ceremony:
“This award is wonderful recognition for
again to make us their department store
of the year. This is now the fourth year
in a row that Myer has been given this
honour, and it is something that we truly
cherish and work tirelessly every day to
the team at Myer. Every day across the
retain.”
TRANSFORM CUSTOMER EXPERIENCE
Myer’s Santaland Wins!
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experience and product range for our
customers, including many new and
exclusive brands.
Listening to our customers
Our Voice of Customer program
provides our customers with the
opportunity to rate their shopping
experience in areas such as
Myer’s Santaland has been recognised
as the best retail marketing campaign
in the world at the 2019 annual
We closed the Logan store in January
Shop! Global Awards, announced at
2019 and also made the decision to exit
GlobalShop in Chicago.
level four of Emporium in Melbourne
product range, value, service and
Myer’s Santalands ran in our
ease of shopping. Each year, over
flagship stores within the Myer
300,000 customers complete these
Christmas Giftorium. They featured
from May 2020. As previously announced,
the Hornsby store will also close
by January 2020.
surveys and tell us about their recent
three zones: Santaland Express, Claus’
Bringing Myer’s iconic ‘My Store’
shopping experience at Myer.
Residence and Santa’s Workshop.
campaign back
Dawn Ralph – Northlakes, QLD
Created by Active and IdeaWorks
Myer relaunched the ‘My Store’
Dawn has received feedback from
175 customers, averaging a Team Member
Satisfaction score of 84% for the year.
by VMLY&R, Myer Santaland won two
campaign in October 2018. The
of the 16 Global Award categories
campaign acknowledges the brand’s
– Department Store Design and
strong history and the special place
Specialty Store Concepts.
it holds in the Australian community,
“She was friendly, approached me and
showed me where I could find what I
Store portfolio
was looking for and helped me use all
We continue to improve productivity
of my vouchers.”
Christopher Dragt – Hobart City, TAS
Christopher has received feedback
from 153 customers, averaging a Team
Member Satisfaction score of 87% for
the year.
“He is highly personable and professional
in his practice, knows me by name and
looks to be his best at all times, Chris
is a credit to Myer. I used to manage
a menswear store in Sydney and I rate
his service highly.”
Penny Heywood – Melbourne City, VIC
Penny has received feedback from
112 customers, averaging a Team Member
Satisfaction score of 89% for the year.
“Penny was prepared to help me in every
way - she was patient, and she explained
things to me. Nothing was too difficult
for her; she was also very pleasant to
deal with.”
across our store portfolio, with an
absolute focus on removing unnecessary
costs, while investing for growth.
In November 2018 we relaunched
the Maroochydore store after a
refurbishment. Refurbishment works at
the Castle Hill store were also completed
during the year. Together, these newly
refurbished stores demonstrate our
strong commitment to our customers
and the wider community by offering
the latest in fashion, homewares and
entertainment with refreshed product
ranges and new exclusive brands.
In May 2019 we announced that the
Belconnen store would remain open
and we have plans for its refurbishment,
reversing a previous decision that the
store would close this year. We also
announced in July this year that our
Cairns store will be refurbished. In both
instances we will reduce floor space,
whilst delivering an improved retail
whilst also looking to the future to show
how Myer is evolving and improving.
The ‘My Store’ campaign showcased
how Myer has been, and will continue
to be, a part of the Australian way of life.
Naughty or Nice – the smart Christmas
decoration
For Christmas 2018 Myer partnered
with Clemenger BBDO Melbourne to
introduce the ‘Naughty or Nice Bauble’.
This bluetooth-enabled decoration
allowed the user to choose whether
it glowed red or green – naughty or
nice – via their smartphone. The bauble
and associated television campaign
resonated strongly with our customers,
with 15,000 units selling out in two
weeks. Advertising industry news
publication Mumbrella named the
campaign 2018’s Ad of the Year. The
campaign also received international
recognition at events such as the
Cannes Lions International Festival of
Creativity, and the ADC Annual Awards.
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW 8
Vero Moda was launched in Myer
in August 2018, with customers
responding positively to the
competitive price points and
accessible day wear. As a result of
its successful launch, the brand was
extended to all stores in July 2019.
ONLY AT MYER BRANDS AND
CATEGORIES
offer, with international brands that
handbags and will be ranged in all stores
are exclusive to Myer. During the year
from August 2019.
Throughout the year Myer reviewed every
aspect of our brand and product mix to
ensure we are offering our customers
more of what they want to buy, ensuring
the new, innovative and most wanted
brands are placed in the best locations.
As part of this, we launched more
than 50 new and exciting Australian
and international brands in the past
year. They included: Selected Femme,
Selected Homme, Vero Moda, Jack
London, Twisted Tailor and Acqua di
Parma. This is expected to increase to
over 90 new brands arriving in-store
by Christmas 2019.
We expanded several of our most
successful brands to additional stores,
including: Polo Ralph Lauren, Rodd
& Gunn, Tommy Hilfiger, Calvin Klein,
Levi’s, Forever New, Sunglass Hut,
Ferrari and Bestseller Group.
Similarly, a number of brands that were
not performing were exited from stores;
this reflects our commitment not to
chase unprofitable sales and to also
ensure space in our stores is used in the
most productive and profitable way.
Implemented during the year the
store merchandise relay program has
significantly enhanced customers’ in-store
experience. The program has provided
additional space in our core categories of
menswear and womenswear, optimising
the brand flow and allowing the prominent
display of quality brands that are exclusive
to Myer. The program was implemented in
34 stores.
The introduction of Selected Femme
and the expansion of Vero Moda enables
Myer to differentiate our womenswear
the women’s fast fashion offer was
further enhanced with the arrival of
international brands Girls on Film,
Warehouse and Oasis.
Beauty Emporium by Myer
Karl Largerfeld Paris
Karl Largerfeld Paris was launched
in March 2019 in women’s apparel,
footwear and handbags, offering
customers accessibly priced products
Developed during the year and launched
from an iconic fashion brand name.
in Melbourne City, Sydney City and
Initially available in 11 stores, it will be
Chadstone, Beauty Emporium by Myer
expanded to 30 stores.
is a fresh approach to our beauty
business. It offers over 80 innovative
brands and incorporates new global
trends including wellness, beauty with a
conscience products, emerging Korean,
Japanese and indie brands and travel
retail. Impulse purchase stations are also
featured. Complementing this are our
newly trained beauty experts, ready to
serve and educate our customers in all
things beauty.
Aesop
In September 2018 Myer secured Aesop as
an exclusive Australian department store
brand. This agreement includes expanding
the brand’s presence to 18 stores.
Selected Femme & Selected Homme
Selected is a modern fashion brand from
Denmark. Owned by Bestseller Group
(the parent company of other exclusive
to Myer brands Jack and Jones, Only,
Vero Moda, Y.A.S., Name It, and Only
Carmakoma), Selected is new to the
Australian market and exclusive to Myer,
offering both womenswear (Femme) and
menswear (Homme).
Radley
Customers have responded well to the
high quality British handbag brand, with
classic styling that is both quirky and
unique. It is one of the top brands in
Warehouse
Warehouse was introduced into our fast
fashion department online and in 20
stores in April 2019. This UK brand has
been offering the latest catwalk trends
at great prices for over 40 years. Based
on positive customer response we plan
to extend the brand to 50 stores in
February 2020.
Jack London
Jack London was secured as an exclusive
to Myer menswear brand during
the year and is now available online
and in 12 stores. The brand creates
contemporary clothes and accessories
inspired by the sleek and sharp styles
worn in the rock scene of the ‘60s.
Twisted Tailor
Launched in March 2019, online and in
10 stores, Twisted Tailor compliments
Myer’s existing suiting business by
offering younger fashionable customers
an alternative to traditional tailoring,
featuring slim fitting suits, shirts
and outerwear.
Name It
Popular Danish childrenswear brand
Name It launched in 20 stores and
online in July 2019. The brand is
known for its fun loving prints, vibrant
We have also made progress in closing
EFFICIENCY LEVERS
9
colours and detailed styling for both
the gap between our in-store and online
boys and girls aged 5-10 years. For
ranges with the implementation of
more than 30 years, Name It has been
the Myer Product Enrichment Portal.
creating contemporary and affordable
The portal simplifies and automates
merchandise for kids and tweens.
the process of getting products from
Store transformation
Stores were transformed during the year
to better meet customer expectations,
delivering an elevated shopping
experience and refreshed apparel ranges.
These transformations saw the
introduction of new, desirable designer
brands into womenswear, menswear,
and childrenswear.
These changes, whilst significant in the
eyes of our customers, were implemented
with minimal capital expenditure and
focused on product range, merchandise
layout and department adjacencies.
Range additions have proven popular
with customers keen to shop the newly
introduced brands and customers have
also responded positively to the new store
layouts that bring related departments
together, in one location.
CONTINUE TO ENHANCE MYER.COM.AU
The digital experience
Throughout the year we have continued
working to improve the customer’s
digital shopping experience, following
the launch of the new website in
September 2018. We have enhanced
the experience by addressing customer
feedback, building new features
and implementing incremental
improvements to the site and overall
online customer journey.
registration to selling online, resulting
in significant savings in time and costs
for the merchandise and online teams,
as well as streamlining the process for
our suppliers. As of July 2019, all eligible
suppliers are using the portal to upload
rich product content and imagery, with
39,000 products being published via this
process in 2H2019.
The portal was recognised at the
2019 Akeneo PIM Summit, winning the
‘Best B2C PIM Project’ award. Myer
also received a nomination as ‘Digital
Commerce Retailer of the Year’ at the
2018 Australian Retail Awards.
The Myer Market continued to grow
during the year, with over 145 sellers and
58,000 products now available. This,
combined with a growing range of ‘online
only’ products, is expanding the Myer
range well beyond what would be possible
in a physical store, enabling us to test new
brands and categories quickly and easily.
Popular online shopping events Black
Friday (November 2018) and Boxing Day
(December 2018) were our two largest
online trading days for the year. On
both occasions, the site experienced a
significant uplift in traffic, orders and
sales. Our investment in the new website
and underlying cloud based technology
meant that the site performed very
well on these two occasions and
demonstrates that we are well placed to
meet continued growth during FY2020.
Support Office efficiency
We continued to make progress in our
efficiency agenda, vacating further
space at the Docklands Support
Office in July 2019. Together with the
space handbacks that have previously
occurred, our Support Office now
occupies 30% less space, providing
further cost efficiencies.
RFID smart labels
Myer collaborated with Checkpoint
Systems and GS1 Australia to improve
stock availability and online sales with
the trial of radio frequency identification
(RFID) smart label merchandise tagging.
This end-to-end solution improves
inventory management whilst minimising
product loss.
RFID smart labels allow Myer to ensure
that our inventory is accurate and is
able to meet our customers’ needs as
and when they choose to buy from us.
With RFID, we can now track movements
of a product at all stages of its journey.
If an item is RFID tagged at source, it
can be tracked from the manufacturer
all the way to the shop floor. RFID
technology allows us to know exactly
which individual SKUs we have available
in-store or online and where they
are located, ensuring an even better
customer experience.
COMMU N ICATING
WI TH OU R TEAM
Throughout the year we made
further enhancements to our team
member communications app.
This has revolutionised the way we
communicate by digitising all store
communications and delivering
content directly to team members’
mobile phones. It allows timely
communication to store teams and
ensures leaders have more time on
the shop floor leading their teams
and focusing on the customer.
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW 10
SUS TA IN A B IL IT Y
AT M Y ER
At Myer, sustainability is about responsible business growth and
development that considers and addresses the environmental, ethical,
economic and social impacts of our business operations and strategies.
Sustainability is about maximising
feedback directly to team members’
measurable objectives in terms of
positive outcomes and the impact
mobile phones.
we have on our internal and external
stakeholders and the environment.
Our Sustainability Strategy has
five focus areas: Customer, Team,
Environment, Community and Business.
During the second half of the year,
Myer commenced a review of the
Sustainability Strategy, ensuring that it
aligns with our Customer First Plan.
As part of this review, we are taking into
consideration Myer’s business activities
and impacts, internal risk assessment,
and our stakeholder concerns and
interests. We will review and identify
relevant metrics to enable us to measure
and track our performance.
CUSTOMER
Myer’s customers are key to our
sustainability as a business and our
MYER one loyalty program has more
than five million membership cards
in circulation. We continue to work
hard to delight them with our product
TEAM
Myer team members are our most
important resource. We are committed
to offering our more than 10,900 team
members a supportive, challenging and
rewarding workplace that enables them
to contribute and develop to their full
potential.
At Myer, we understand the value
of diversity and inclusion and we
continue to focus on the delivery of our
commitment. Throughout the year, we
delivered a range of initiatives including
participation in the Diversity Council
Australia’s inaugural Workplace Inclusion
Survey, rolling out flexible work options
at the Support Office, facilitating
unconscious bias education, trialing
cultural awareness tools, partnering with
Pride in Diversity, celebrating key events
such as National Carer’s Week and
delivering the Myer Academy diversity
masterclass series.
range, services and reward them for
Myer aspires to create and maintain a
succession planning, parental leave and
leadership development metrics.
Our commitment to developing the
capability of our team was also reflected
with the introduction of Certificate
IV in Retail Management, as well as
Merchandiser in Training and Planner
in Training programs during the year.
Improving the safety, mental health
and wellbeing of our team has also
been a key focus throughout the year.
We have implemented safety training
programs and invested in mental health
awareness training for our people
leaders, having delivered this training
to 415 people leaders in FY2019. We
have also implemented programs and
systems to improve safety governance
and address our critical risks, including
a new online incident reporting system.
Our safety performance over the year
demonstrated a small improvement in
the number of injuries incurred with a
decrease in the Total Recordable Injury
Frequency Rate result of 22.5.
There was a marginal increase in Lost
Time Injuries in FY2019 with a Lost Time
Injury Frequency rate score of 6.0.
their loyalty.
Under the Customer First Plan, several
pilot initiatives have been conducted to
improve service, layouts, ranging and the
appearance of stores, with better store
communication and product knowledge
collaborative and inclusive workplace
to reflect the diversity of our customers
and our community, to enable all team
members and people leaders to reach
ENVIRONMENT
their full potential and to contribute
to Myer’s success.
Reducing energy usage and associated
greenhouse gas emissions continues to
supporting these initiatives.
The business focuses on three key
be a focus for the business.
We have also worked with brand
partners and team members to improve
customer service and enhance the
inclusion priorities being cultural
diversity, LGBTI inclusion and female
representation at senior leadership levels.
This year Myer’s total energy use for
the year reduced by 6.6% to 558,620 GJ,
resulting in 124,023 tonnes of carbon
overall in-store experience. We have
The Group’s workforce composition
dioxide equivalent greenhouse gas
made significant changes to the way we
at 27 July 2019 was 80.2% female,
emissions which is a reduction of 8.6%
communicate with team members in
with 55.5% of leadership roles and
from FY2018. The energy intensity of our
stores, introducing an app that provides
up to date operational information,
57.1% of our Non-Executive Directors
being female. Myer monitors progress
business further reduced by 6.5% from
FY2018.
product knowledge and customer
in female representation through
Since the commencement of the
sustaining effective re-use systems
BUSINESS
11
sustainability strategy in 2014, we
including cardboard and paper, clear
have achieved a 22% reduction in
flexible plastics, apparel hangers,
total net company overall energy use,
29% reduction in CO2 emissions and
19% reduction in our energy intensity.
We will continue to drive operational
efficiencies including the implementation
of the Energy Resource Advisor reporting
tool, in partnership with Schneider
Electric, allowing us to monitor ongoing
daily energy performances and action
both short-term and long-term initiatives
to control and optimise energy use. This
year, we have been able to benchmark
our overnight ‘base load energy’ usage
and target further energy savings during
non-trading periods.
We have set conservative energy
targets for FY2020 with a view to hold
current results as we continue to work
through and reset our ongoing long-
term strategy and identify energy
reduction opportunities relative to
investment returns.
Myer continues its commitment to adopt
the Australian Packaging Covenant (APC),
Sustainable Packaging Guidelines and
related product stewardship. The APC is a
key partner with government and industry
to help optimise the packaging practices,
damaged and unsold stock, timber
pallets and security tags.
COMMUNITY
Myer has a longstanding history of
community investment and partnerships
that are mainly aligned with the theme
‘empowering and supporting women;
strengthening families’. This year,
Myer is committed to the highest
levels of integrity and ethics in our
business operations and we work
with partners that share our values of
accountability, corporate responsibility,
and sustainability in the industry.
This commitment is embedded in our
code of conduct and whistle-blower
program, supplier terms and Ethical
Sourcing Policy.
Myer continued to support the Myer
Myer understands the importance of
Community Fund, which worked with
sourcing products in a responsible
its stakeholders to contribute a total of
manner and integrating an effective
$1.9 million to our local communities.
and sustainable supply chain within our
In 2019 the Precious Metal
Ball supported the Australian
Childhood Foundation, with
funds raised going towards
the ‘Bringing Up Great Kids
- Parenting After Family
Violence’ program.
business. Business partners must adhere
to Myer’s Ethical Sourcing Policy which
covers a range of key labour indicators
such as wages and benefits, working
hours and discrimination. The policy
requires business partners to ensure
that workers are treated fairly, with
respect, are paid fairly and work in a safe
and hygienic environment. The Policy
prohibits the use of forced or slave
labour, child labour and acts of bribery.
In FY2019, we reviewed audits from
243 business partners (366 factory
audits) within our Myer Exclusive Brand
network. Our review identified no Zero
Tolerance issues and 64 High Risk issues,
reduce the environmental impact of
In May 2019, the Myer Community Fund
which primarily related to excessive
packaging in Australian communities and
hosted the Precious Metal Ball, which is
overtime hours and the need for safety
increase recycling diversion.
the most successful fundraising activity
improvements. Myer is continuing its
In FY2019 the Company’s total waste
generation fell by approximately 8.5%
which was driven primarily by an overall
reduction in waste sent to landfill, while
on the Myer Community Fund calendar.
working relationships with the factories
We are proud to have supported the
to address the High Risk issues.
Fund in raising more than $9 million over
the past 13 years to aid those in need.
SUSTAINABILITY PERFORMANCE AND TARGETS
Focus area
Key measure
Customer
Net Promoter Score
Team
Diversity and inclusion
(% female senior managers)
Workplace safety (LTIFR)
Community Direct community contribution (% EBIT)
Environment Greenhouse gas emissions reduction (%)(2)
Energy intensity (kJ/m2.opening hour)(2)
Recycling rate (%)
Business
New suppliers agreed to
Ethical Sourcing Policy (%)
Code of Conduct training
(% of required team members trained)
Improved / met target
Did not reach target
FY2017
FY2018
FY2019
Performance
Performance
Performance
FY2020
Target(1)
Target not met
Achieved
Achieved
Improvement
51
5.8
1.4
7.7
166.6
57
100
85.9
57
5.4
3.0
7.4
156.5
60
100
82.5
55
6.0
1.2
8.6
146.4
64
100
83.8
≥50
<5.7
>0.5
≥1.0
≤146.0
≥60
100
≥80.0
(1) Previous financial year targets are available in Myer Annual Reports available on our Investor Centre website
(2) Energy and emission data reported from 1 July to 30 June fiscal year
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW 12
D IR EC TOR S’ R EP OR T
DIRECTORS’ REPORT
Your Directors present their report on the consolidated entity consisting of Myer Holdings Limited ABN 14 119 085 602 (the Company
or Myer) and the entities it controlled (collectively referred to as the Group) at the end of, or during the financial period ended,
27 July 2019.
1. DIRECTORS
The following persons were Directors of the Company during the financial period and/or up to the date of this Directors’ Report:
Director
Garry Hounsell
Position
Independent Non-Executive Director
Deputy Chairman from 20 September 2017 to 23 November
2017
Chairman from 24 November 2017 and from 4 June 2018
Executive Chairman from 14 February 2018 to 3 June 2018
John King
CEO and Managing Director
Lyndsey Cattermole AM
Independent Non-Executive Director
Ian Cornell
Independent Non-Executive Director
Julie Ann Morrison
Independent Non-Executive Director
Jacquie Naylor
Independent Non-Executive Director
JoAnne Stephenson
Independent Non-Executive Director
Dave Whittle
Independent Non-Executive Director
Chris Froggatt
Independent Non-Executive Director
Bob Thorn
Independent Non-Executive Director
Date appointed
20 September 2017
4 June 2018
15 October 2018
6 February 2014
17 October 2017
27 May 2019
28 November 2016
30 November 2015
9 December 2010
6 February 2014
Chris Froggatt retired from the Board with effect from 30 November 2018. Bob Thorn resigned from the Board with effect from
24 February 2019. All Directors other than Ms Cattermole AM, Ms Froggatt, Ms Naylor, and Mr Thorn served as Directors of the
Company for the whole financial period and until the date of this Directors’ Report. Details of the qualifications, experience, and special
responsibilities of each current Director are as follows.
GARRY HOUNSELL
Chairman
JOHN KING
Chief Executive Officer & Managing Director
•
Independent Non-Executive Director
• Member of the Board since 4 June 2018
• Member of the Board since 20 September 2017
• Chairman from 24 November 2017 and from 4 June 2018
•
Executive Chairman from 14 February 2018 to 3 June 2018
• Chairman – Nomination Committee
• Member – Audit, Finance and Risk Committee
Garry has been Chairman of Spotless Holdings Limited,
PanAust Limited and eMitch Limited and Deputy Chairman of
Mitchell Communications Group Limited. He has also been a
Director of Qantas Airways Limited, Orica Limited, Nufarm
Limited, Integral Diagnostics Limited and DuluxGroup Limited.
Garry was also a Director of the Burnet Institute Limited and
Methodist Ladies’ College Limited. He was an Advisory Board
member of PanAust Limited and Rothschild Australia Limited.
Garry is a former Chief Executive Officer and Country Managing
Partner of Arthur Andersen and a Senior Partner of Ernst &
Young. He is a Fellow of Australian Institute of Company
Directors and a Fellow of Chartered Accountants Australia and
New Zealand. Garry resides in Victoria.
Other current directorships
Garry is the Chairman of Helloworld Travel Limited and a
Director of Treasury Wine Estates Limited. He is also a Director
of Commonwealth Superannuation Corporation Limited.
John was appointed CEO & Managing Director on 4 June 2018.
In this role John has overall accountability for Myer strategy and
performance. John brings to the role more than 30 years’ retail
experience in merchandising and management roles across a
variety of retail sectors, including department stores, value retail
and wholesale apparel.
Most recently John led the successful turnaround of House of
Fraser from 2006 to 2015. During his tenure he improved the
product differentiation, decreased debt, improved EBITDA and
repositioned the business as one of the leading premium
department stores in the UK.
John also successfully led Matalan from 2003 - 2006, an apparel
and housewares retailer based in the UK. In this role, John
launched new brands, opened 20 new stores and successfully
sold the company back to the founder. He started his career at
Sainsbury’s and also worked for Marks & Spencer before taking
senior roles in the manufacturing and wholesale sector in the UK
and the USA. John resides in Victoria.
DIRECTORS’ REPORT
Continued
13
LYNDSEY CATTERMOLE AM
Independent Non-Executive Director
IAN CORNELL
Independent Non-Executive Director
• Member of the Board since 15 October 2018
• Member of the Board since 6 February 2014
• Member – Nomination Committee
• Chairman – Human Resources and Remuneration
Committee
• Member – Nomination 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 prior to that he spent 22
years at Woolworths, including his role as Chief General
Manager Supermarkets.
Ian has previously been a director of Goodman Fielder Limited.
Ian is also a Fellow of the Institute of Management, a Fellow of
the Human Resources Institute, a member of the Australian
Institute of Company Directors, and a graduate of the Advanced
Management Programme at Harvard. Ian resides in New South
Wales.
Other current directorships
Ian is the Non-Executive Chairman of Baby Bunting Group
Limited and a Non-Executive Director of Inglis Bloodstock, as
well as the PKD Foundation of Australia, a charitable foundation
raising funds for medical research into kidney disease.
• Member – Human Resources and Remuneration
Committee
Lyndsey founded one of Australia’s largest and most successful
IT businesses, Aspect Computing, which operated for almost
thirty years before being sold to the ASX listed company KAZ
Group. Aspect Computing specialised in IT consulting, program
development and product development, including retail and
training. Aspect Computing developed international award
winning systems and created one of Australia’s biggest software
product exports, LANSA. In 2002, Lyndsey became a Non-
Executive Director of KAZ Group following its purchase of
Aspect Computing.
She has significant board experience including at Foster’s
Group Ltd, Treasury Wine Estates Ltd, Tatts Group Ltd and the
Victorian Major Events Corporation. Lyndsey also has extensive
experience on State and Federal Government committees and
boards, including the Federal Government’s Electronic,
Electrical and Information Industry Board and the Prime
Minister’s Science and Engineering Council. In Victoria, she was
a member of the Premier’s Business Round Table.
Lyndsey was a Director of the Heide Museum for Modern Art,
the Melbourne Theatre Company and has spent over ten years
involved with community health, including at the Royal
Children’s Hospital Foundation and as Chairman for the
Women’s and Children’s Health Care Network. She was
instrumental in merging the Royal Children’s Hospital Research
Institute and the Murdoch Research Institute to form the
Murdoch Children’s Research Institute; which is now one of
Australia’s largest biomedical research institutes.
For her significant community involvement Lyndsey has been
awarded an Order of Australia (AM). She is also a Fellow of the
Australian Computer Society recognising her distinguished
contribution to the Australian IT industry. Lyndsey resides in
Victoria.
Other current directorships
Lyndsey is a director of PACT Group Holdings Ltd, Florey
Neurosciences, and the Melbourne Rebels.
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW
14
D I R EC TO R S’ R E P O R T
DIRECTORS’ REPORT
Continued
Continued
JULIE ANN MORRISON
Independent Non-Executive Director
• Member of the Board since 17 October 2017
• Member – Human Resources and Remuneration
Committee
• Member – Nomination Committee
Julie Ann has over 30 years’ retail experience in brands, fashion
and cosmetics from the sales floor through to buying, marketing,
HR and as a managing director.
Julie Ann was Managing Director of Bulgari UK (2012 to 2014)
concurrent with being Managing Director of Bulgari Australia
(2007 to 2014), part of the LVMH Group. She was also the
Managing Director of FJB Australia, the then largest luxury
goods company in Australia, which had franchise rights for
brands including Gucci, Guess, Moschino, Lanvin and Fendi in
South East Asia and Australia. While at FJB, she established
and headed up an international licensing business for local and
US brands overseeing offices in Italy and New York with
production in China. Julie Ann was a finalist in the BRW/Qantas
Business Woman of the Year and went on to establish a
management consulting business specialising in retail and
brands. She holds a Master of Arts, Creative Media from RMIT
University and a Diploma of Arts, RMIT University. She has
been a member of the Institute of Directors (UK) and is currently
a member of the Australian Institute of Company Directors.
From February 2017 to June 2018, Julie Ann was Non-
Executive Chair of Myer subsidiary boards overseeing the sass
& bide, Marcs and David Lawrence brands where she set brand
and business strategies. In June 2018 she handed responsibility
for overseeing these brands to the incoming CEO, John King.
Julie Ann is an advisory board member and consultant to Carla
Zampatti Pty Ltd. She also consults on projects specialising in
fashion, retail, brands and the arts. Julie Ann resides in Victoria.
JACQUIE NAYLOR
Independent Non-Executive Director
• Member of the Board since 27 May 2019
• Member – Nomination Committee
• Member – Human Resources and Remuneration
Committee
Jacquie was appointed as a Non-Executive Director on 27 May
2019. Jacquie brings to the role a wealth of experience and
knowledge of both women’s and men’s apparel, homewares and
outdoor brands. She has been an owner, director and executive
at some of the most iconic Australian retailers including as an
Executive Director and Non-Executive Director at The PAS
Group. In addition, Jacquie was a Non-Executive Director of one
of the world’s most trusted outdoor brands, Macpac, which is
sold in more than thirty countries.
At the Just Jeans Group, Jacquie was a Group Executive
Director and responsible for driving the merchandise, marketing
and brand strategies of their key brands including Just Jeans,
Jay Jays, Portmans, Jacqui E and Dotti.
Jacquie brings to the Myer Board considerable eCommerce
experience from her retail career and as a strategic adviser at
Practicology, a digital marketing and eCommerce agency.
Jacquie was a Non-Executive Director of the Virgin Australia
Melbourne Fashion Festival for more than 12 years and remains
committed to showcasing the fashion industry as well as new
and emerging talent. Jacquie is also a member of the Australian
Institute of Company Directors and of the International Women’s
Forum. Jacquie resides in Victoria.
Other current directorships
Jacquie is a Non-Executive Director of Cambridge Clothing Ltd.
JOANNE STEPHENSON
Independent Non-Executive Director
• Member of the Board since 28 November 2016
• Chairman – Audit, Finance and Risk Committee
• Member – Nomination Committee
JoAnne has extensive experience spanning over 25 years
across a range of industries. JoAnne was previously a senior
client partner in the Advisory division at KPMG and has key
strengths in finance, accounting, risk management and
governance. JoAnne holds a Bachelor of Commerce and
Bachelor of Laws (Honours) from The University of Queensland.
She is also a member of both the Australian Institute of
Company Directors and Chartered Accountants Australia and
New Zealand. JoAnne resides in Victoria.
Other current directorships
JoAnne is an Independent Non-Executive Director of Challenger
Limited, Asaleo Care Limited and Japara Healthcare Limited.
She is also Chair of the Victorian Major Transport Infrastructure
Board and the Melbourne Chamber Orchestra.
D I R EC TO R S’ R E P O R T
DIRECTORS’ REPORT
Continued
Continued
15
DAVE WHITTLE
Independent Non-Executive Director
• Member of the Board since 30 November 2015
• Member – Audit, Finance and Risk Committee
• Member – Nomination Committee
Dave has considerable marketing, data, technology,
eCommerce and digital transformation experience. Over the last
five years Dave has led Lexer, a global data analytics software
company helping innovative retail brands genuinely understand
and engage their customers.
Previously, Dave spent 10 years with global advertising group
M&C Saatchi in a number of local and international leadership
roles, culminating in three years as Managing Director in
Australia. Prior to joining M&C Saatchi, Dave was the first
employee of a marketing services group that built four digital
service and software businesses.
Dave has a Bachelor of Arts and a Bachelor of Commerce from
Deakin University. Dave resides in New South Wales.
Other current directorships
Dave is a director of Lexer Pty Ltd.
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW
16
DIRECTORS’ REPORT
D I R EC TO R S’ R E P O R T
Continued
Continued
2. DIRECTORSHIPS OF OTHER LISTED COMPANIES
The following table shows, for each Director, all directorships of companies that were listed on the ASX, other than the Company, since
26 July 2016, and the period during which each directorship has been held.
Director
Listed entity
Garry Hounsell
Helloworld Travel Limited
Integral Diagnostics Limited
Spotless Group Holdings Limited
Treasury Wine Estates Limited
DuluxGroup Limited
John King
-
Lyndsey Cattermole AM
PACT Group Holdings Limited
Ian Cornell
Baby Bunting Group Limited
Julie Ann Morrison
Jacquie Naylor
JoAnne Stephenson
Dave Whittle
Chris Froggatt
Bob Thorn
-
-
Challenger Limited
Asaleo Care Limited
Japara Healthcare Limited
-
-
Period directorship held
October 2016 – present
October 2015 – March 2017
March 2014 – August 2017
September 2012 – present
July 2010 – December 2017
-
November 2013 – present
January 2015 – present
-
-
October 2012 – present
May 2014 – present
September 2015 – present
-
-
MotorCycle Holdings Limited
PWR Holdings Limited
March 2016 – July 2016
August 2015 – March 2017
3. MEETINGS OF DIRECTORS AND BOARD COMMITTEES
The number of meetings of the Board and of each Board Committee held during the period ended 27 July 2019 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 Board Committee is shown in the table below:
Director
Meetings of
Directors**
Audit, Finance and
Risk Committee
Human Resources
and Remuneration
Committee
Nomination
Committee
Meetings
Held*
Attended
Meetings
Held*
Attended
Meetings
Held*
Attended
Meetings
Held*
Attended
Garry Hounsell
John King
Lyndsey Cattermole AM
Ian Cornell
Julie Ann Morrison
Jacquie Naylor
JoAnne Stephenson
Dave Whittle
Chris Froggatt
Bob Thorn
12
12
10
12
12
2
12
12
4
7
12
12
10
12
12
2
12
12
4
7
1
-
-
-
-
1
4
4
-
2
1
-
-
-
-
1
4
4
-
2
3
-
2
5
-
-
5
-
3
-
3
-
2
5
-
-
5
-
3
-
3
-
2
3
3
1
3
3
1
1
3
-
2
3
3
1
3
2
1
0
* Number of meetings held during the time the Director held office or was a member of the Committee during the year
** Teleconferences outside of scheduled Board meetings have not been included in the table above
DIRECTORS’ REPORT
D I R EC TO R S’ R E P O R T
Continued
Continued
17
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
Garry Hounsell
John King
Lyndsey Cattermole AM
Ian Cornell
Julie Ann Morrison
Jacquie Naylor
JoAnne Stephenson
Dave Whittle
Ordinary Shares
Performance
Rights
Performance
Options
1,000,000
Nil
Nil
400,000
659,996
266,000
124,788
Nil
95,000
66,666
2,432,432
9,032,258
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
5. COMPANY SECRETARY AND OTHER OFFICERS
Jonathan Garland was promoted to Company Secretary of the Company effective 31 July 2018 and General Counsel effective
1 September 2018. Prior to joining Myer, Jonathan Garland worked for leading law firms Clayton Utz, Linklaters in London and Norton
Rose Fulbright.
Prior to this, Richard Amos was Chief General Counsel and Company Secretary of the Company from 6 July 2015 to 31 July 2018.
Myer’s Chief Financial Officer is Nigel Chadwick. Details of Nigel Chadwick’s experience and background are set out in the Executive
Management Team section of Myer’s Investor Centre website.
6. PRINCIPAL ACTIVITIES
During the financial period, the principal activity of the Group was the operation of the Myer department store business.
7. OPERATING AND FINANCIAL REVIEW
SUMMARY OF FINANCIAL RESULTS FOR 52 WEEKS ENDED 27 JULY 2019
•
Total sales declined by 3.5% to $2,991.8 million, with comparable store sales down 1.3% excluding sales in Apple products
(exited May 2019). The sales result, in part, reflects the focus on profitable sales
• Online sales were up 25.6% to $262.3 million (includes Marcs and David Lawrence (MDL) and sass & bide online sales, Myer
Market but excludes $29.8 million via in-store iPads). Digital sales were up 21.9% to $292.1 million (comprises online sales and
sales via in-store iPads), now representing our largest store and 9.8% of total sales
• Operating gross profit (OGP) declined by 1.9% to $1,162.4 million, and OGP margin increased by 65 basis points to 38.85%. The
improved OGP margin was driven by improved Myer Exclusive Brands (MEBs) mix as well as lower promotional markdowns and
shrinkage
• Cost of doing business (CODB) decreased by 3.1% to $1,002.4 million. This has been driven by improved efficiencies both in
store and Support Office, and cost savings achieved in IT, occupancy and marketing
•
EBITDA increased by 7.2% to $160.1 million
• NPAT pre implementation costs and individually significant items increased by 2.2% to $33.2 million, despite increased
depreciation and finance costs
•
•
•
Implementation costs and individually significant items (post-tax) totalled $8.7 million and included redundancies reflecting the
simplification of the organisational structure, as well as an onerous lease and impairment of assets for an additional level vacated
at the Support Office
Statutory NPAT was $24.5 million, compared to a $486.0 million loss in FY2018
Inventory was down 5.4% to $346.9 million
• Operating cash flow (before interest and tax) increased by $8 million to $138 million with total net debt reduced by $69 million
•
The dividend continues to be suspended
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW
18
DIRECTORS’ REPORT
D I R EC TO R S’ R E P O R T
Continued
Continued
INCOME STATEMENT FOR THE 52 WEEKS TO 27 JULY 2019
Total Sales
Concessions
Myer Exclusive Brands
National Brands and other
Operating Gross Profit
Operating Gross Profit margin
Cost of Doing Business
Cost of Doing Business/Sales
EBITDA*
EBITDA margin*
Depreciation and amortisation
EBIT*
Net Finance Costs
Net Profit Before Tax*
Tax*
2019
$m
2018
$m
Change
($m)
Change
(%)
2,991.8
3,100.6
(108.8)
612.2
527.2
654.0
517.2
1,852.4
1,929.4
1,162.4
38.85%
1,184.4
38.20%
(1,002.4)
33.50%
(1,035.0)
33.38%
160.1
5.35%
(101.6)
58.5
(11.5)
47.0
149.4
4.82%
(94.0)
55.4
(9.0)
46.4
(41.8)
10.0
(77.0)
(21.9)
(32.6)
10.7
7.6
3.1
2.5
0.6
(3.5%)
(6.4%)
+1.9%
(4.0%)
(1.9%)
+65bps
(3.1%)
+12bps
+7.2%
+53bps
+8.1%
+5.5%
+27.0%
+1.3%
(13.8)
(13.9)
(0.1)
(0.7%)
Net Profit After Tax (NPAT) (pre implementation costs
and individually significant items)
33.2
32.5
0.7
+2.2%
Implementation costs and individually significant items
(post-tax)
(8.7)
(518.5)
509.8
nm**
NPAT (post implementation costs and individually
significant items)
* Excluding implementation costs and individually significant items
** not meaningful
24.5
(486.0)
510.5
nm**
DIRECTORS’ REPORT
D I R EC TO R S’ R E P O R T
Continued
Continued
19
BALANCE SHEET AS AT 27 JULY 2019
Inventory
Creditors
Other Assets
Other Liabilities
Property
Fixed Assets
Intangibles
Total Funds Employed
Debt
Less Cash
Net (Debt) / Cash
Equity
CASH FLOW FOR THE 52 WEEKS TO 27 JULY 2019
EBITDA*
Working capital movement
Operating cash flow (before interest and tax)
Conversion
Tax paid
Interest paid
Operating cash flow
Capex**
Free cash flow before dividends
Dividends
Other
Net cash flow
July 2019
$m
July 2018
$m
346.9
(372.7)
41.1
(225.8)
22.7
360.8
467.6
640.7
(86.1)
47.4
(38.7)
602.1
2019
$m
151.0
(12.5)
138.5
91.7%
(13.6)
(9.3)
115.6
(44.7)
70.9
-
(0.4)
70.6
2019
8.8%
6.0%
0.27x
366.8
(381.2)
35.1
(238.7)
23.2
400.9
485.2
691.4
(149.2)
41.8
(107.4)
584.0
2018
$m
135.0
(4.4)
130.6
96.7%
(12.3)
(8.7)
109.6
(86.8)
22.8
(16.4)
(0.2)
6.2
2018
5.9%**
15.5%**
0.72x
* EBITDA includes implementation costs and individually significant items with the exception of non-cash asset impairments
** Net of landlord contributions
OTHER STATISTICS AND FINANCIAL RATIOS
Return on Total Funds Employed*
Gearing
Net Debt/EBITDA*
*Calculated on a rolling 12 months basis
**ROFE 4.7% and Gearing 9.0% if goodwill and brand impairment is excluded from total funds employed
SHARES AND DIVIDENDS
Shares on Issue
Basic EPS*
Dividend per share
2019
821.3 million
4.0 cents
Nil
2018
821.3 million
4.0 cents
Nil
* Calculated on weighted average number of shares of 821.0 million (FY2018: 821.3 million) and based on NPAT pre implementation costs and individually
significant items
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW
20
DIRECTORS’ REPORT
D I R EC TO R S’ R E P O R T
Continued
Continued
NON-IFRS FINANCIAL MEASURES
The Company’s results are reported under International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board. The Company discloses certain non-IFRS measures in this Directors’ Report, that are not audited or
reviewed by the Group’s auditor, which can be reconciled to the Financial Statements as follows:
Income Statement reconciliation
$ millions
Statutory reported result
Add back: implementation costs and individually significant
items
Restructuring and redundancy costs
Store exit costs / (reversals) and other asset impairments
Support Office onerous lease expenses and impairment of
assets
Underlying result
FY2019 OPERATIONS
EBIT
46.0
INTEREST
(11.5)
7.8
(0.8)
5.5
58.5
-
-
-
TAX
10.0
(2.3)
0.2
(1.7)
NPAT
24.5
5.5
(0.6)
3.8
33.2
(11.5)
(13.8)
During the period the Board strengthened the Executive team with a number of new appointments:
• Mr Geoff Ikin as Chief Customer Officer, responsible for key customer facing functions of online, MYER one, marketing,
advertising, public relations, social media, corporate affairs and communications
• Mr Paul Goodall as Executive General Manager Store Design and Development, responsible for store design, space planning,
project management and visual merchandising
• Ms Tabitha Pearson as Executive General Manager People and Culture, responsible for all aspects of Myer's human resources
including organisational development, sourcing and talent strategies, industrial relations, and risk and safety
During FY2019 there were a number of achievements including:
•
•
•
•
•
•
Progress was made working with landlords, through a portfolio partnership approach, to reduce Myer’s footprint, refurbish stores
to transform the customer experience, whilst simultaneously delivering material cost savings
Improved store layouts and brand adjacencies in 34 stores, which in many stores also included the introduction of new brands
•
• Myer’s Logan store closed in January 2019
•
•
Announced a plan to refurbish the Belconnen store to create an enhanced shopping experience across a reduced floor space
Agreed to hand back a floor and refurbish the Cairns store from January 2020 and agreed to exit level four of Emporium in
Melbourne from May 2020
Extended the lease of the historic Ballarat store, and will be embarking on store improvements
Vacated another level at the Support Office
Added more than 50 new brands, which is expected to increase to 90 by Christmas 2019. New brands include Oasis, Warehouse,
Karl Lagerfeld Paris, Selected Femme, Selected Homme, Vero Moda, Fiorucci, Rotate by Birger Christensen, Jack London,
Twisted Tailor and Acqua di Parma
• Continued to improve the customer’s digital shopping experience, following the launch of Myer’s new website in September 2018,
and increased the products available online including the addition of several concessions.
In addition to these achievements, section 8 and 9 provide an outline of Myer’s corporate developments and strategy. These should be
read in conjunction with section 10, which describes factors that could impact Myer’s results.
8. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS IN FY2019
The following significant changes occurred during FY2019:
Tabitha Pearson was appointed Executive General Manager People and Culture in September 2018
A new Director, Lyndsey Cattermole AM, was appointed to the Board of Myer in October 2018. Her background, experience and
particular skills that she brings to the Board are set out on page 13
Paul Goodall was appointed Executive General Manager Store Design and Development in October 2018
A debt refinancing was completed in November 2018
•
•
• Chris Froggatt retired from the Board with effect from 30 November 2018
• Geoff Ikin was appointed Chief Customer Officer in January 2019
•
•
Bob Thorn resigned from the Board with effect from 24 February 2019
A new Director, Jacquie Naylor, was appointed to the Board of Myer in May 2019. Her background, experience and particular
skills that she brings to the Board are set out on page 14
DIRECTORS’ REPORT
D I R EC TO R S’ R E P O R T
Continued
Continued
21
9. BUSINESS STRATEGIES AND FUTURE DEVELOPMENTS
The Board and the Executive Management Group continue to focus on delivery against the Customer First Plan as follows:
Focus areas:
Transform customer experience in store;
‘Only at Myer’ brands and categories; value for money; and
•
•
• Continue enhancing myer.com.au.
Efficiency levers:
•
•
•
Simplified business processes;
Efficient from factory to customer; and
Accelerated cost reduction.
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 a structured proactive risk management framework 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 below.
EXTERNAL RISKS
Macro-economic factors such as the fluctuation of the Australian dollar and interest rates; poor consumer confidence; changes in
government policies; external, natural or unforeseen events, such as an act of terrorism or national strike; transition to a lower carbon
economy; physical impacts of climate change and weakness in the global economy could adversely impact the Company’s ability to
achieve financial and trading objectives. Myer regularly analyses and monitors economic and other available data to help mitigate the
future impact on sales, and has implemented conservative hedging, capital management, and marketing and merchandise initiatives to
address the cyclical nature of the business.
COMPETITIVE LANDSCAPE RISKS
The Australian retail industry in which Myer operates remains highly competitive. The Company’s competitive position may be
negatively impacted by new entrants to the market, existing competitors, changes to consumer demographics and increased online
competition, which could impact sales. To mitigate these risks, Myer continues to select optimal merchandise assortment with the right
categories and brands.
TECHNOLOGY RISKS, INCLUDING CYBER SECURITY
With Myer’s increasing reliance on technology in a rapidly changing digital environment, there is a risk that the malfunction of IT
systems, outdated IT infrastructure, a cyber-security violation or a data breach of personal information 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
technology capabilities and engage with reputable third-party IT service providers to ensure that we have reliable IT systems and issue
management processes in place.
BRAND REPUTATION RISKS
Myer’s strong brand reputation is crucial for building positive relationships with customers, suppliers and contractors which in turn
generates sales and goodwill towards the Company. A significant event or issue could attract strong criticism of the Myer brand, which
could impact sales or our share price. Myer has a range of policies and initiatives to mitigate brand risk, including a Code of Conduct, a
Whistleblower Policy, an Ethical Sourcing Policy, marketing campaigns, and ongoing environmental and sustainability initiatives.
STRATEGIC AND BUSINESS PLAN RISKS
A failure to deliver our strategic plan could impact sales, profitability, share price, and our reputation. The cornerstone of our strategic
plan is the ‘customer’ and ensuring every decision made puts the customer first. It includes that all team members, brand partners and
suppliers provide our customers with the service, brands and products they desire and expect, both in store and online.
PEOPLE MANAGEMENT RISKS
Myer needs to attract and retain talented senior managers to ensure that our leadership team has the right skills and experience to
deliver our strategy. Failure to do so may adversely impact Myer’s ability to deliver on its strategic imperatives. During the year, we
made a number of new appointments to our Executive Management Group, and we provided our team members with access to training
and development to further develop their skills.
Safety is a high priority at Myer to ensure the wellbeing of all of our team members, customers, and suppliers. Failure to manage health
and safety risks could have a negative effect on Myer’s reputation and performance. We conduct regular detailed risk assessments at
each store, distribution centre, and at our Support Office, as well as regular education sessions.
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW
22
REGULATORY RISKS
DIRECTORS’ REPORT
D I R EC TO R S’ R E P O R T
Continued
Continued
From time to time, Myer may be subject to regulatory investigations and disputes, including by the Australian Taxation Office (ATO),
Federal or State regulatory bodies including the Australian Competition and Consumer Commission (ACCC), the Australian Securities
and Investments Commission (ASIC), the Australian Securities Exchange (ASX) and Federal and State work, health and safety
authorities. The outcome of any such investigations or disputes may have a material adverse effect on Myer’s operating and financial
performance. Myer has an established governance framework to monitor, assess and report on such occurrences to senior
management when they arise.
LITIGATION
On 23 December 2016, legal proceedings were served against Myer Pty Ltd by Perpetual Limited and Bridgehead Pty Ltd (the
Landlord) in relation to the Myer Chadstone store. The Landlord alleged that there was a mutual mistake in the drafting of the variable
outgoings provisions in the lease for the Myer Chadstone store or that those provisions had been misinterpreted. The Landlord sought,
amongst other things, rectification of the lease and payment of alleged unpaid outgoings in respect of a period between 2000 and 2016
totalling $19.14 million, plus GST, as well as interest and costs. On 29 January 2018, the Supreme Court of Victoria handed down
judgement in favour of Myer and dismissed the claims made by the Landlord. The Landlord’s attempt to appeal this decision was
rejected by the Court of Appeal on 7 May 2019.
On 30 December 2016, proceedings were served against Myer by a former shareholder, TPT Patrol Pty Ltd as trustee for the Amies
Superannuation Fund (TPT Patrol), bringing a group action for itself and on behalf of a defined (but unnamed) group of shareholders in
the Federal Court. These proceedings were filed on behalf of TPT Patrol by Portfolio Law Pty Ltd. TPT Patrol alleges loss and damage
said to have resulted from statements made in the context of Myer’s full year FY2014 results. Myer believes the TPT Patrol claim has
no proper basis, denies any liability under it and is vigorously defending it. The hearing concluded on 21 December 2018, with the
decision being reserved. No provisions have been recognised at 27 July 2019 in respect of the TPT Patrol dispute.
11. MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
Tony Carr was appointed Executive General Manager Supply Chain and is expected to commence in October 2019.
Ian Cornell has advised the Board that he will be retiring from the Board at this year’s Annual General Meeting of the Company.
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, and which 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; or
(c) the Group’s state of affairs in future financial years.
12. DIVIDENDS
The Board determined that no final dividend would be paid for the period ending 28 July 2018.
The Board determined that no interim dividend would be paid for the period ending 26 January 2019.
The Board determined that no final dividend would be paid for the period ending 27 July 2019.
Further information regarding dividends is set out in the Financial Statements (at note F3).
13. PERFORMANCE RIGHTS AND OPTIONS GRANTED OVER UNISSUED SHARES
The Myer Long Term Incentive Plan (LTIP) operates for selected senior executives and has been in operation since December 2006.
Under the LTIP, the Company has granted eligible executives performance options in FY2019 and rights in previous years over
unissued ordinary shares of the Company, subject to certain vesting conditions. Shares delivered to senior executives as a result of the
vesting of performance options and rights can either be issued as new shares or purchased on market.
Each performance right entitles the holder to acquire one ordinary fully paid share in the Company (subject to the adjustments outlined
below).
Performance options vest and are automatically exercised on a net settlement basis. The executive is allocated the total number of
shares that would have been allocated upon exercise, less the number of shares equal to the value of the aggregated exercise price
payable (and the exercise price is not required to be paid). The number of shares delivered by the Company represents the value
above the exercise price in accordance with the formula below:
(A - B) / C, where:
A = Aggregate value of vested performance options (based on the market value of a share)
B = Aggregate exercise price payable
C = Market value of a share
DIRECTORS’ REPORT
D I R EC TO R S’ R E P O R T
Continued
Continued
23
The net settlement method ensures that executive reward is aligned to shareholder value creation by only rewarding executives if there
is a growth in the share price and material reward can be earned only if there is a significant growth to share price. This settlement
approach is considered to be appropriate during the turnaround phase of the business.
During FY2019, the Company granted 9,032,258 performance options to the CEO under the FY2019 LTIP; and 26,801,304
performance options were granted to other selected senior executives under the FY2019 LTIP (Offer); totalling 35,833,562
performance options granted.
The performance options and rights granted under each offer are subject to different performance conditions.
No performance options or rights have been granted since the end of the financial period ended 27 July 2019.
In September 2018, a total of 3,104,342 performance rights granted under the LTIP in FY2016 lapsed following testing against the
performance criteria. 173,913 performance rights granted to Mr Devonport were linked to his continuous service, these rights vested
and ordinary shares were granted in FY2019.
During FY2018, the Company granted 2,432,432 alignment rights to the CEO, and 555,555 alignment rights to the Chief Merchandise
Officer. During FY2019, the Company granted 192,307 alignment rights to a person who was not a Key Management Personnel (KMP)
executive. 810,804 alignment rights vested to the CEO, 185,184 rights vested to the Chief Merchandise Officer and 43,073 rights
vested to the non-KMP executive. No shares were issued under the alignment rights plans.
The table in section 14 below sets out the details of performance options and rights that have been granted under the LTIP and the
alignment rights plans and which remain on issue as at the date of this Directors’ Report.
A holder of a performance option or right may only participate in new issues of securities of the Company if the performance option or
right has been exercised, participation is permitted by its terms, and the shares in respect of the performance options or rights have
been allocated and transferred to the performance right holder before the record date for determining entitlements to the new issue.
Further information about performance options and rights issued under the LTIP (including the performance conditions attached to the
performance options and rights granted under the LTIP, and the performance options and rights granted to the KMP of the Company) is
included in the Remuneration Report.
14. SHARES ISSUED ON THE EXERCISE OF PERFORMANCE RIGHTS AND 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 LTIP. To calculate the issue price of shares issued to the
Trust, the Company uses the five-day volume weighted average price of the Company’s shares as at the close of trading on the date of
issue.
During the period ended 27 July 2019, 504,356 fully paid ordinary shares were purchased on market by the Trust and 173,913 shares
were transferred from the Trust for performance rights issued to Mr Devonport which were linked to his continuous service. Since 27
July 2019, no shares have been issued to or otherwise acquired by the Trust, and no fully paid ordinary shares of the Company held by
the Trust were transferred to participants in the LTIP.
Date performance rights or options granted
Expiry date
Issue price
22 December 2016 (rights grant to senior executives under the LTIP Offer)
31 Oct 2019
21 December 2017 (rights grant to senior executives under the LTIP Offer)
31 Oct 2020
4 June 2018 (rights grant to CEO under Alignment Rights Plan)(2)
4 Jun 2021
25 June 2018 (rights grant to senior executive under Alignment Rights Plan)(3)
25 Jun 2021
10 October 2018 (rights grant to senior executive under Alignment Rights Plan)(4)
10 Oct 2021
24 December 2018 (options grant to CEO under the FY19 LTIP Offer)
24 Dec 2022
24 December 2018 (options grant to senior executives under the FY19 LTIP Offer)
24 Dec 2022
nil
nil
nil
nil
nil
nil
nil
Closing balance of rights and options
Number of
performance
rights or
options
remaining on
issue(1)
1,148,812
4,491,531
2,432,432
555,555
192,307
9,032,258
25,240,014
43,092,909
(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 outcomes. Performance options vest and are automatically exercised on a net settlement basis. The executive is
allocated the total number of shares that would have been allocated upon exercise, less the number of shares equal to the value of the
aggregated exercise price payable (and the exercise price is not required to be paid). The number of shares delivered by the Company
represents the value above the exercise price in accordance with the formula overleaf:
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW
24
DIRECTORS’ REPORT
D I R EC TO R S’ R E P O R T
Continued
Continued
(A - B) / C, where:
A = Aggregate value of vested performance options (based on the market value of a share)
B = Aggregate exercise price payable
C = Market value of a share
The number of performance options or rights that a holder is entitled to receive on the exercise of a performance options or right may
also 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.
(2) Mr King was appointed as CEO and Managing Director on 4 June 2018. The performance rights referred to in this table were rights
granted upon his appointment. These rights vest in equal monthly instalments over the period 4 June 2018 to 4 June 2021.
(3) Mr Winstanley was appointed as Chief Merchandise Officer on 25 June 2018. The performance rights referred to in this table were
rights granted upon his appointment. These rights vest in equal monthly instalments over the period 25 June 2018 to 25 June 2021.
(4) The performance rights referred to in this table were rights granted upon the appointment of a non-KMP executive. These rights vest
in equal monthly instalments over the period 10 October 2018 to 10 October 2021.
15. REMUNERATION REPORT
The Remuneration Report, which forms part of this Directors’ Report, is presented separately from page 27.
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 the 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 directors’ and officers’ 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 2001 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 period, 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.
The Group’s auditor is PricewaterhouseCoopers (PwC). No payment has been made to indemnify PwC during or since the financial
period end. No premium has been paid by the Group in respect of any insurance for PwC. No officers of the Group were partners or
directors of PwC whilst PwC conducted audits of the Group.
17. PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the
Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the
Company for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Company with the leave of the court under section 237 of the
Corporations Act 2001.
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 (the NGER Act).
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 tenth report to the Clean Energy Regulator in October 2018 and is due to submit its 11th report by 31 October 2019.
No significant environmental incidents have been reported internally, and no breaches have been notified to the Group by any
government agency.
The Group is a signatory to the Australian Packaging Covenant, which is a national co-regulatory initiative in place of state-based
regulatory arrangements for sustainable packaging management. Members are required to adhere to the covenant commitments,
which include development and implementation of an action plan and report annually on progress. Myer submitted its 12th annual
report in March 2019.
DIRECTORS’ REPORT
D I R EC TO R S’ R E P O R T
Continued
Continued
25
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 financial period are set
out in the Financial Statements (at note H5).
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 2001. 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 2001 for the following reasons:
•
•
all non-audit services have been reviewed by the Audit, Finance and Risk Committee to ensure that 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 2001 is attached to this
Directors’ Report.
21. ROUNDING OF AMOUNTS
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 relating to
the ‘rounding off’ of amounts in the Directors’ Report and, in accordance with that instrument, amounts in the Directors’ Report have
been rounded off to the nearest thousand dollars, or in certain cases, to the nearest dollar.
22. ANNUAL GENERAL MEETING
The Annual General Meeting of the Company will be held on Wednesday 30 October 2019.
The Directors’ Report is made in accordance with a resolution of Directors.
Garry Hounsell
Chairman
Melbourne, 4 September 2019
CORPORATE GOVERNANCE STATEMENT
To view our Corporate Governance Statement please visit myer.com.au/investor.
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW
26
Auditor’s Independence Declaration
As lead auditor for the audit of Myer Holdings Limited for the period 29 July 2018 to 27 July 2019, I
declare that to the best of my knowledge and belief, there have been:
(a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Myer Holdings Limited and the entities it controlled during the
period.
Jason Perry
Partner
PricewaterhouseCoopers
Melbourne
4 September 2019
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
REMUNERATION REPORT
R EMUNER ATION R EP OR T
27
Dear Shareholder,
On behalf of the Board, I am pleased to present the FY2019 Remuneration Report. This report sets out the remuneration information for
our Non-Executive Directors and Executive KMP and describes our remuneration framework. Our remuneration strategy has been set to
align with our broader business strategy to turnaround the business and deliver shareholder value. Through short and long-term variable
reward programmes, it aims to reward Executives for delivering superior financial outcomes and shareholder value.
During FY2019, further changes have been made to strengthen the Executive team by recruiting Geoff Ikin as Chief Customer Officer,
Tabitha Pearson as Executive General Manager People and Culture and Paul Goodall as Executive General Manager Store Design
and Development. These appointments add strong customer, marketing, advertising, people and culture and store design experience
to our Executive team and ensure we have the skills and experience needed to deliver the Customer First Plan.
Executive Remuneration outcomes in FY2019
Myer Holdings Limited (the Company or Myer) performance is reflected in the FY2019 remuneration outcomes.
The Short Term Incentive (STI) plan requires that the Net Proft After Tax (NPAT) gateway is achieved before any payments are made.
The gateway was not achieved in FY2018, and accordingly no STI was paid to the Executive Management Group, including Executive
KMP during FY2019.
Performance rights granted to the Executive KMP under the FY2016 Long Term Incentive (LTI) plan were tested for vesting post the
release of our results in September 2018. The Return on Funds Employed (ROFE) and growth in sales per square metre hurdles were
not met, and accordingly the rights under the FY2016 plan have not vested.
Despite the 7.2 percent increase in Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) and the 3.1 percent decline
in cost of doing business, under the FY2019 STI plan, the NPAT gateway was not exceeded sufficiently to allow a bonus pool to be
created, without causing the NPAT gateway to fail. Accordingly, no award was payable to Executive KMP.
Performance options under the FY2019 LTI plan were granted to Executives, including the Executive KMP. Two performance hurdles,
designed to reflect long-term performance will apply to the performance options – relative Total Shareholder Return (TSR) and
Earnings per Share (EPS). The hurdles have been chosen to align with shareholder returns and the delivery of shareholder value over
the performance period. Further information on the LTI is detailed in Section 3.3.
Given the focus on prudent cost management, in the 2019 annual fixed remuneration review we made no changes to the fixed
remuneration of Executive KMPs with the exception of Mr Chadwick who took on additional responsibilities post the departure of Mr
Cripsey from the role of Chief Operating Officer. There was no change made to the fees of Chairman or Non-Executive Directors in
FY2019, noting that in FY2018 there was a decrease made to both Chairman and Non-Executive Director fees.
Response to second strike
At the 2018 Annual General Meeting (AGM), the majority of shareholder votes cast (62.46 percent) were in favour of adopting the 2018
Remuneration Report. However, 37.54 percent of the votes cast were against the Remuneration Report, constituting a second strike
under the Corporations Act 2001.
We have made a number of changes to our remuneration structure during FY2019 to better align the remuneration of our Executives
with the interest of our shareholders and will continue to do so going into FY2020. A notable change in the FY2020 STI plan is that
members of the Executive Management Group will have a portion of their STI deferred in equity. In the FY2019 STI plan, 40 percent of
any award payable to members of the Executive Management Group was deferred for 12 months following the end of the performance
period and paid in cash following the end of the deferral period. For FY2020, 40 percent of the award payable will continue to be
deferred for 12 months with 50 percent of the deferred component provided as restricted shares and the remaining 50 percent paid in
cash.
We believe the Company’s approach to Executive KMP remuneration, clearly outlined in the Remuneration Report, will support them in
delivering a strategy that will importantly put our customers first and ultimately deliver value to our shareholders.
Finally, I would like to acknowledge the many stakeholders who have shared their feedback with us over the past year. I can assure
you that we are committed to ensuring the needs of our shareholders are front and centre in the development of our remuneration
approach.
Yours faithfully,
Ian Cornell
Chairman, Human Resources and Remuneration Committee
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW
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Continued
CONTENTS
1.
2.
3.
4.
Introduction
Snapshot of Remuneration Report
Executive KMP Remuneration
Executive KMP Service Agreements
5. Non-Executive Director Remuneration
6. Remuneration Governance
7.
8.
9.
Executive KMP Statutory Disclosures
Equity
Loans
10. Dealing in Securities
1.
INTRODUCTION
28
29
33
39
40
42
43
46
48
48
The Directors of the Company present the Remuneration Report for the financial period ended 27 July 2019 prepared in accordance
with the requirements of the Corporations Act 2001 and its regulations.
This report outlines the remuneration strategy, framework and other conditions of employment for Executive KMP and Non-Executive
Directors, and details the role and accountabilities of the Board and relevant Committees that support the Board on these matters.
The information provided within this report has been audited as required by section 308(3C) of the Corporations Act 2001 and forms
part of the Directors’ Report. The table below details the Company’s Executive KMP and Non-Executive Directors during FY2019:
Name
Role
Non-Executive Directors
G Hounsell
I Cornell
J Morrison
J Stephenson
D Whittle
Chairman, Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Appointment Date(1)
End Date
L Cattermole AM
Independent Non-Executive Director
J Naylor
Independent Non-Executive Director
15 October 2018
27 May 2019
Former Non-Executive Directors
C Froggatt
B Thorn
Executive Directors
J King
Executive KMP
N Chadwick
A Sutton
A Winstanley
Independent Non-Executive Director
Independent Non-Executive Director
30 November 2018
24 February 2019
Chief Executive Officer and Managing Director
Chief Financial Officer
Executive General Manager Stores
Chief Merchandise Officer
Former Disclosed Executive KMP
M Cripsey(2)
(1) For new appointments during the period only.
(2) Mr Cripsey stepped down as Chief Operating Officer on 31 October 2018 and was paid the minimum payment required under
Chief Operating Officer
31 October 2018
the terms of his employment.
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R EMUN E R AT I O N R E P O R T
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29
2. SNAPSHOT OF REMUNERATION REPORT
2.1 OBJECTIVE AND GUIDING PRINCIPLES
Our remuneration objective is to support Executive KMP in delivering a business strategy that will put our customers first and ultimately
deliver value to our shareholders.
GUIDING PRINCIPLES TO DELIVER OUR OBJECTIVE
Align Executive KMP
and stakeholder
interests through
rewarding Executive
KMP for long-term
shareholder value.
Pay for performance.
Remunerate and reward
based on Company
performance against
financial and non-
financial measures.
Attract and retain high
calibre talent by
rewarding competitively
in markets in which
Myer competes for
talent.
Reward outcomes that
reinforce our Customer
First Plan through the
inclusion of customer
experience and profit
preservation metrics in
the FY2020 STI plan.
2.2 RESPONSE TO THE SECOND STRIKE
Following feedback from shareholders with regard to the FY2018 Remuneration Report, we have reviewed our remuneration
frameworks and taken action to address the issues appropriately. The Company will continue to engage proactively with stakeholders
to ensure that any concerns can be discussed at the earliest opportunity.
Summary of responses to concerns raised in relation to the FY2018 Remuneration Report
Fixed Pay
Concern
Level of CEO
fixed
remuneration
sits higher
against a
comparator
group based on
market
capitalisation.
Response
Executive KMP remuneration is principally benchmarked against companies in the retail industry. Mr King’s
package was set with reference to the skills and experience required to turn around the company’s
performance in what is a very challenging time in the retail industry. It must also be noted that Myer is
competing for talent in a very small pool of international candidates and the current package was necessary to
attract and retain a high quality, experienced CEO of Mr King’s calibre. Mr King’s fixed remuneration was set at
the same level as the previous CEO, which had not been reviewed since 2015.
In FY2019, some of Mr King’s notable achievements have been:
•
•
•
•
Progress made working with landlords, through a portfolio partnership approach, to reduce Myer’s
footprint, refurbish stores to transform the customer experience, whilst simultaneously delivering material
cost savings.
Added more than 50 new brands, and this is expected to increase to more than 90 by Christmas 2019.
There were continued improvements to the customer’s digital shopping experience, following the launch
of Myer’s new website in September 2018 and the product available online was increased, including the
addition of several concessions.
Costs were reduced by $32.6 million, reflecting the enhanced new staffing model in store, more focused
marketing spend, store occupancy savings, as well as efficiencies and reduced waste across all areas of
the business.
Mr King did not receive an increase to his Fixed Remuneration in FY2019.
Long Term Incentive
Concern
Response
TSR comparator
group comprises
companies that
are outside the
retail industry
and not
comparable to
Myer.
The peer group constituents for the relative TSR measure for the FY2018 and FY2019 plan consists of S&P
ASX 200 companies excluding companies in the:
•
Financials, Health Care, Utilities, Consumer Staples, Energy and Telecommunication Services Global
Industry Classification Standard (GICS) Sectors; and
• Metals & Mining GICS Industry.
Based on investor feedback the comparator group has been amended to include a more relevant base of listed
companies from the retail and consumer services sector. The constituents are: Accent Group, Adairs, AP
Eagers, Automotive Holdings, Baby Bunting, Bapcor, Beacon Lighting, Coles Group, Collins Foods, Corporate
Travel Management, Domino’s Pizza Enterprises, Flight Centre Travel Group, Harvey Norman Holdings,
Helloworld Travel, JB Hi-Fi, Kogan, Lovisa Holdings, Metcash, Michael Hill International, Motorcycle Holdings,
National Tyre & Wheel, Nick Scali, Noni B, Premier Investments, Super Retail Group, Webjet, Wesfarmers and
Woolworths Group.
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Normalised EPS
Hurdle does not
include write-
downs.
When determining normalised EPS for LTI purposes, statutory earnings is adopted as the base and the Board
will allow adjustments to be made for significant items on a case-by-case basis. To the extent a write-down
occurs that is considered to have been within management’s control, it will form a part of the EPS calculation.
Each year in the Remuneration Report, Myer will communicate its approach to the treatment of write downs as
they relate to remuneration outcomes.
Lack of
transparency on
disclosure of the
fair value
methodology
used to value
CEO
performance
options under
the LTI plan.
Mr King is entitled to performance options under the FY2020 LTI plan to the maximum value of 90 percent of
fixed remuneration. The number of performance options to be granted will be determined by reference to the
maximum value of the proposed grant (being $1,080,000) divided by the value attributed to the performance
options. The value attributed to the performance options will be calculated using the Black Scholes option
valuation approach, consistent with market practice. An ‘indicative’ number of options will be disclosed in the
Notice of Meeting. To avoid any unfair advantage or disadvantage to the CEO by artificially setting a price, the
actual valuation and the number of options granted will be dependent on the share price at the grant date (after
the AGM).
2.3 REMUNERATION STRUCTURE FOR FY2019
Strategic objectives & performance link
Performance measures
Total Fixed
compensation
(TFC)
> To attract and retain high calibre talent.
> Provides ‘predictable’ base level of reward.
> Set with reference to market using external
benchmark data.
> Varies based on employee’s experience, skills
and performance.
> Consideration is given to both internal and
external relativities across retail and other
relevant sectors.
Short Term
Incentive
Long Term
Incentive
> Delivered in cash, with a portion deferred.
The CEO did not participate in the FY2019
plan. Deferral of 40 percent of the award is
made in cash for other members of the
Executive Management Group.
> Designed to drive the short-term financial
and strategic objectives of the Company,
which are aligned to creating shareholder
value.
> An NPAT gateway ensures a minimum
acceptable level of Company profit before
Executive KMP receive any STI award.
> Supports retention and encourages focus on
long-term value in addition to annual results,
through a deferred component.
> NPAT ‘gateway’ – minimum threshold
performance level below which no STI is paid.
> Once the gateway is achieved, performance is
assessed against a set of measures outlined
below:
•
•
Company EBITDA accounts for up to 80
percent of the maximum STI.
Individual objectives, relevant to the
specific role, account for at least 20
percent of the maximum STI. Individual
objectives are aligned to the strategy by
including measures related to inventory
management, customer experience, cash
flow, gross profit and occupancy costs.
> Delivered in equity, in the form of
performance options, to align Executive KMP
with shareholder interests. Options ensure
that Executives are only rewarded for a
growth in share price from the grant date.
> Focused on delivery of long term business
strategy and shareholder value.
> Measures complement those in the STI to
provide a holistic and aligned reward offer.
> Supports ongoing, sustainable performance
and the retention of key talent.
> Performance measures:
• Relative TSR (50 percent of award)
•
EPS compound annual growth
(50 percent of award)
> Performance measured over a 3 year
performance period (FY2019 – FY2021)
> Shares provided on vesting subject to
restriction for 1 year, making the total alignment
period with shareholders 4 years. For the CEO
and Chief Merchandise Officer vesting period is
4 years and no further restriction period applies.
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31
2.4 COMPANY PERFORMANCE AND REMUNERATION OUTCOMES FOR FY2019
The Company’s remuneration structure aligns Executive KMP remuneration with shareholder interests over the short and long term and
provides an appropriate reward on delivering our strategy.
Key aspects of the FY2019 performance include:
•
Total sales declined by 3.5% to $2,991.8 million, with comparable store sales down 1.3% excluding sales in Apple products
(exited May 2019). The sales result, in part, reflects the focus on profitable sales
• Online sales were up 25.6% to $262.3 million (includes Marcs and David Lawrence (MDL) and sass & bide online sales, Myer
Market but excludes $29.8 million via in-store iPads). Digital sales were up 21.9% to $292.1 million (comprises online sales and
sales via in-store iPads), now representing our largest store and 9.8% of total sales
• Operating gross profit (OGP) declined by 1.9% to $1,162.4 million, and OGP margin increased by 65 basis points to 38.85%. The
improved OGP margin was driven by improved Myer Exclusive Brands (MEBs) mix as well as lower promotional markdowns and
shrinkage
• Cost of doing business (CODB) decreased by 3.1% to $1,002.4 million. This has been driven by improved efficiencies both
in-store and Support Office, and cost savings achieved in IT, occupancy and marketing
• NPAT pre implementation costs and individually significant items increased by 2.2% to $33.2 million, despite increased
depreciation and finance costs
•
Statutory NPAT was $24.5 million, compared to a $486.0 million loss in FY2018
• Operating cash flow (before interest and tax) increased by $8 million to $138 million with total net debt reduced by $69 million
•
•
Announced the refurbishment of the Belconnen store to create an enhanced shopping experience across a reduced floor space
Agreed to hand back a floor and refurbish the Cairns store from January 2020 and agreed to exit level four of Emporium in
Melbourne from May 2020
• Myer’s Logan store closed in January 2019
• Continued to improve the customer’s digital shopping experience, following the launch of Myer’s new website in September 2018.
Increased the product available online including the addition of several concessions.
The table below presents the Company’s annual performance against key financial metrics since 2015.
Basic EPS (cents)
Basic EPS (cents) – adjusted(2)
NPAT (pre implementation costs and individually
significant items) ($m)
NPAT (post implementation costs and individually
significant items) ($m)
Dividends (cents per share)
Share price at beginning of year ($)
Share price at end of year ($)
FY2015 FY2016(1)
7.7
5.1
FY2017
1.5
FY2018
(59.2)
FY2019
3.0
13.2
77.5
29.8
7.0
2.24
1.18
8.8
69.3
60.5
5.0
1.18(3)
1.34(4)
8.3
67.9
4.0
32.5
4.0
33.2
11.9
(486.0)
24.5
5.0
1.34
0.77
-
0.77
0.46
-
0.46
0.53
Market capitalisation ($m)
(1) FY2016 results were impacted by the fully underwritten accelerated pro rata non-renounceable Entitlement Offer completed by
1,100.5
632.4
435.3
377.8
694.0
the Company in September 2015. The Entitlement Offer resulted in the issue of 234,661,660 new shares at $0.94 per share.
(2) Basic EPS is adjusted to exclude implementation costs and individually significant items. Refer to section 7 of the Directors’
Report for further details. The directors believe this metric is more relevant as it excludes individually significant items that may
not recur and may not be predictive of future performance.
(3) Share price before the Entitlement Offer completed in September 2015.
(4) Share price after the Entitlement Offer completed in September 2015.
Remuneration outcomes for FY2019
Executive KMP and TFC
Short Term Incentive
Long Term Incentive
During the year, Mr Cripsey stepped
down from the role of Chief Operating
Officer and ceased to be an Executive
KMP.
There was no change to the TFC for
Executive KMP effective in FY2019
with the exception of Mr Chadwick
who took on additional responsibilities
after the departure of Mr Cripsey.
The NPAT gateway condition was not
achieved in FY2018, and accordingly
no STI was paid during FY2019 to the
Executive Management Group,
including Executive KMP.
The LTI awards under the FY2016
plan did not meet the required
performance hurdles and hence no
performance rights under the FY2016
plan have vested.
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2.5 PAYMENTS TO EXECUTIVE KMP IN FY2019
The table below sets out the actual remuneration received by Executive KMP in FY2019. The table has not been prepared in
accordance with accounting standards but has been provided to outline clearly the remuneration outcomes for Executive KMP.
Remuneration outcomes prepared in accordance with the accounting standards are provided in Section 7.
Name
Executive Directors
J King(6)
Executive KMP
N Chadwick(7)
A Sutton
A Winstanley(8)
Former Disclosed Executive KMP
M Cripsey(9)
156,980
Cash
salary(1)
$
Super-
annuation(2)
$
1,200,000
-
755,679
639,429
795,000
20,571
20,571
-
5,133
Short Term Incentive
STI
deferred
from
prior
year(4)
$
FY2018
STI(3)
$
Long
Term
Incentive
Vested &
exercised
LTI(5)
$
Termination
and other
payments
$
Actual
FY2019
Remuneration
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,200,000
776,250
660,000
795,000
334,734
496,847
R Umbers(10)
G Devonport(11)
(1) Cash salary includes short-term compensated absences and any salary sacrifice arrangement implemented by the Executive
753,178
88,696
3,462
-
-
-
-
-
-
-
-
-
756,640
88,696
KMP, including additional superannuation contributions.
(2) Executive KMP receive a statutory superannuation contribution up to a threshold limit in line with the ATO published maximum
superannuation contribution base.
(3) STI payments relating to FY2018 performance and conditions, but paid during FY2019. Includes only the non-deferred
component.
(4) Deferred STI relating to FY2017 performance and conditions, paid during FY2019.
(5) The number of performance rights vested and exercised under the FY2016 LTI plan multiplied by the Myer share price at vesting
(calculation assumes share price of $0.51). Mr King and Mr Winstanley had rights vest under their alignment equity plans; these
rights are not exercisable until the end of the three-year performance period.
(6) Mr King does not receive superannuation contributions due to his tax status. As per the terms of his employment contract, and
consistent with market practice, Mr King is entitled to relocation and expatriate support, including rental assistance. This support
has not been included in this table. More details can be found in Section 7.
(7) Mr Chadwick’s TFC was increased by 10.4 percent in FY2019 as a result of additional responsibilities performed by him post the
departure of Mr Cripsey in the role of Chief Operating Officer. Mr Chadwick took over responsibility for Myer’s entire Information
Technology function from Mr Cripsey. In addition, he took on responsibility for the Myer legal function in FY2019.
(8) Mr Winstanley does not receive superannuation contributions due to his tax status. As per the terms of his employment contract,
and consistent with market practice, Mr Winstanley is entitled to relocation and expatriate support, including rental assistance.
This support has not been included in this table. More details can be found in Section 7.
(9) Mr Cripsey stepped down as Chief Operating Officer on 31 October 2018 and was paid the minimum payment required under
the terms of his employment.
(10) Mr Umbers stepped down as CEO and Managing Director on 14 February 2018, and his notice period concluded on 31 July
2018. His termination payment consists of all payments made in FY2019, which were the minimum payments required under the
terms of his employment.
(11) Mr Devonport stepped down as Chief Financial Officer on 28 January 2018, and his notice period concluded on 21 March 2018.
Mr Devonport had sign on rights vest in FY2019. The figure reported in the table above, refers to the number of performance
rights vested and exercised multiplied by the Myer share price at vesting (calculation assumes a share price of $0.51).
2.6 EQUITY VESTED IN FY2019
Following the release of our financial results in September 2018, the performance rights granted to Executive KMP in January 2016
were tested against the two hurdles of ROFE and growth in sales per square metre. Both hurdles were not met, and accordingly the
rights granted to Executive KMP under the FY2016 LTI plan lapsed.
In addition to the FY2016 LTI plan, in January 2016 Mr Devonport was granted performance rights in recognition of significant incentive
arrangements forfeited upon leaving his previous employer to join Myer. As part of the terms of Mr Devonport’s separation, these rights
granted to him vested in FY2019.
On commencement, Mr King and Mr Winstanley were granted share rights, creating an immediate alignment between them and
shareholders. These rights vest on a monthly basis, in 36 equal tranches and will convert to ordinary Myer shares at the end of the
three year period. Mr King was granted 2,432,432 share rights worth $900,000 at the time of announcement of his appointment and
Mr Winstanley was granted 555,555 share rights worth $250,000 at the time of announcement of his appointment. During FY2019, Mr
King and Mr Winstanley had rights vest under their alignment equity plans; these rights are not exercisable until the end of the three-
year performance period.
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33
3. EXECUTIVE KMP REMUNERATION
Executive KMP remuneration is delivered through a mix of fixed and variable (or ‘at risk’) pay, and a blend of short and longer-term
incentives. As outlined in the Remuneration Structure in Section 2.3, Executive KMP remuneration is made up of three components:
•
•
•
Total Fixed Compensation;
Short-Term Incentives; and
Long-Term Incentives.
The combination of these components comprises an Executive KMP’s total remuneration.
3.1 TOTAL FIXED COMPENSATION
TFC provides the base level of reward and is set at a level to attract and retain high calibre Executives.
Features of Total Fixed Compensation
What is
included in
TFC?
TFC is structured as a total fixed remuneration package, made up of base salary, superannuation, other
benefits and Fringe Benefits Tax, where applicable. 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).
How is TFC
reviewed?
TFC levels for each Executive KMP are set with reference to the market, the scope and nature of each role, the
incumbent’s experience and individual performance.
The Human Resources and Remuneration Committee (Committee) typically reviews and makes
recommendations to the Board regarding TFC for Executive KMP annually, having regard to Company and
individual performance and relevant comparative remuneration in the market. However, given current financial
performance, the Board decided not to increase TFC as part of the annual remuneration review in FY2019.
The Board may also consider adjustments to Executive KMP remuneration outside the annual remuneration
review process as recommended by the CEO, such as on promotion or as a result of additional duties
performed by the Executive KMP. Where new Executive KMP join the Company or existing Executive KMP are
appointed to new roles, a review and benchmarking of fixed and total remuneration is conducted prior to the
offer and execution of a new employment contract. Mr Chadwick’s TFC was increased by 10.4 percent in
FY2019 as a result of additional responsibilities performed by him post the departure of Mr Cripsey in the role of
Chief Operating Officer. Mr Chadwick took over responsibility for Myer’s entire Information Technology function
from Mr Cripsey. In addition, he took on responsibility for the Myer legal function in FY2019.
Which
benchmarks are
used?
Remuneration for Executive KMP is considered in the context of the skills and experience being sought and the
global senior retail market, as well as in relation to the other industries where we are increasingly seeking
talent. Benchmarking is also undertaken against local industry peer groups and companies with a similar
market capitalisation to Myer where relevant for the roles under review.
3.2 SHORT TERM INCENTIVE PLAN
Myer’s STI plan for Executive KMP and other senior Executives operates on an annual basis subject to Board review and approval.
The FY2019 STI applied to all eligible Executives, including Executive KMP, subject to certain conditions and performance criteria
being met which are reviewed and approved annually by the Board.
Form and purpose of the plan
What is the STI
plan?
The STI plan is an annual, at risk component of an Executive KMP’s reward opportunity, designed to put a
meaningful part of the Executive KMP’s remuneration at risk. Payment under the STI is subject to achieving
pre-determined Company and individual performance criteria. All senior managers, including Executive KMP,
participate in the STI, with the exception, initially, of Mr King. Mr King is entitled to participate in the STI starting
in FY2020.
What is the
value of the STI
opportunity?
Does the STI
include a
deferred
component?
STI targets are set as a percentage of the Executive KMP’s TFC. The current maximum levels for Executive
KMP are set out below.
• CEO – Not participating in FY2019; 80 percent of TFC in FY2020
• Other Executive KMP – 60 percent of TFC.
40 percent of any award payable to members of the Executive Management Group, is deferred for 12 months
following the end of the performance period. The deferred component is paid in cash following the end of the
deferral period. The CEO did not participate in the FY2019 STI plan.
For FY2020, the deferred component of the CEO’s STI will be provided as restricted shares while 50 percent of
the deferred component (i.e. 20 percent of any award) for other members of the Executive Management Group,
including Executive KMP, will be provided as restricted shares. The remaining 50 percent of the deferred
component will be paid in cash.
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Gateway and performance measures
Is there a
performance
‘gateway’ and
how is it
determined?
What were the
FY2019
performance
measures?
Why were the
performance
measures
selected?
Are the STI
performance
measures and
targets
disclosed?
Governance
When are
performance
targets set and
reviewed?
How is
performance
measured?
The Board considers it critical that the Company should achieve a minimum acceptable level of profit before any
payments are made under the STI plan, to reflect the focus on returns to shareholders. No STI is awarded to
any participants if minimum performance across the Company does not reach the pre-determined threshold
NPAT level.
The NPAT gateway is determined by the Board each year, with reference to the annual business plan,
economic conditions and other relevant factors.
The FY2019 STI was structured around two key components:
• Company EBITDA accounts for 80 percent of the STI scorecard for Executive KMP.
•
Key financial and strategic objectives aligned to the strategy account for the remaining 20 percent of the
STI scorecard. It includes measures related to inventory management, customer experience, cash flow,
gross profit and occupancy costs.
Overall performance measures are selected to align with annual and long-term business plans. Details of the
FY2019 performance measures, and the strategic objectives they are aligned to, are set out in Section 2.3
The Board believes that the largest component of an Executive KMP’s STI award should be driven by the
financial performance of the Company, and accordingly 80 percent of the STI is dependent on Company
EBITDA, providing close alignment with shareholder outcomes.
Other financial and strategic objectives in the performance scorecard are set by the CEO (and approved by the
the Committee and the Board), and, combined with the Company EBITDA measure, are intended to drive our
strategy and deliver our financial results. These objectives and their targets align with our key financial metrics
and strategic goals, and the measures selected for each Executive KMP are determined by reference to the
specific objectives of their role for the financial year.
The disclosure of prospective STI measures and targets would provide the market and our competitors with our
financial forecasts, and it is for this reason that we do not disclose them in advance. We will disclose outcomes
and/or performance against targets in instances where the disclosure would not involve the release of
commercially sensitive information.
Performance objectives and targets are set at the beginning of the financial year, while performance against
these targets is reviewed following the end of the financial year.
The Committee determines whether, or the extent to which, each target is satisfied following the end of the
financial year, once the Company’s annual accounts are audited and have been approved by the directors.
If the gateway is satisfied, an STI may be paid to participating Executive KMP and other Executives. The
quantum of any STI reward provided will depend on the extent to which the maximum reward is achieved. A
minimum threshold is also set, below which no STI reward will be provided. Once it has been determined
whether each objective has been satisfied, the Committee will make a recommendation to the Board for
approval of the STI awards to be paid to the CEO, Executive KMP and other Executives.
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 awards are only made once the Company’s financial performance has been verified by internal and external
audit. The Committee has the discretion to recommend to the Board an adjustment to any award in light of
unexpected or unintended circumstances.
When are
incentives paid?
The component of the STI awards approved by the Board that is not subject to deferral is paid to participating
Executive KMP and other Executives in the month following the release of the Company’s results to the ASX.
When eligible to participate in FY2020, the deferred component of the CEO’s STI will be provided as Restricted
Shares, which the CEO will not be able to trade during the 12-month deferral period. In FY2019, the deferred
component of other Executive KMP is paid in cash following the end of the 12-month deferral period. In FY2020,
50 percent of the deferred component (i.e. 20 percent of any award) of other Executive KMP will be provided in
Restricted Shares. The remaining 50 percent of the deferred component will be provided in cash.
REMUNERATION REPORT
Continued
R EMUN E R AT I O N R E P O R T
Continued
35
Cessation of employment, clawback or change of control
Participants leaving employment during the performance year are generally not eligible to receive an award
under the STI. In certain circumstances (such as redundancy), the Board may consider eligibility for a pro rata
payment.
The STI Plan allows the Board to take any steps that it determines appropriate to recover from the individual
Executives 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 who were Executives of the
Company at the time the financial statements were approved by the Board and issued by the Company.
The Board has absolute discretion in relation to the treatment, payment or provision of STI awards on a change
of control, which it would exercise in the best interests of the Company. The Board may also give the CEO
notice that the restriction period for any restricted shares will end if certain change of control events occur.
If an individual
ceases
employment
during the
performance
year, will they
receive a
payment?
Does a
‘clawback’
apply?
How would a
change of
control impact
on STI
entitlements?
FY2019 Outcome
The NPAT gateway condition was not exceeded sufficiently to allow a bonus pool to be created, without causing the NPAT gateway to
fail and accordingly no STI was payable to the Executives, including Executive KMP.
3.3 FY2019 LONG TERM INCENTIVE PLAN
Features of the LTI plan applicable in respect of FY2019 are outlined in the table below. In FY2019, the Board granted performance
options under the LTI plan to Executive KMP and other Senior Executives.
Form and purpose of the plan
What is the LTI
plan?
The LTI plan is an incentive that is intended to promote alignment between Executives and shareholder
interests over the longer term. Under the LTI plan, performance options may be offered annually to the CEO
and nominated Executives, including Executive KMP. The employees invited to participate in the plan include
Executives who are considered to play a leading role in achieving the Company’s long-term strategic and
operational objectives.
Performance options were chosen as the vehicle to deliver equity to ensure that participants are only rewarded
for an increase in share price from the grant date, further strengthening the alignment between Executive
remuneration and growth in shareholder value.
How is the LTI
plan delivered?
The LTI plan is delivered via a grant of performance options. The number of performance options that vest is
not determined until after the end of the performance period.
The performance options will therefore not provide any value to the holder between the dates the performance
options are granted and the end of the vesting period and restriction period (if applicable), and then only if the
performance hurdles are satisfied and there has been share price growth over the exercise price.
Performance options do not carry entitlements to ordinary dividends or other shareholder rights until the
performance options vest and shares are provided. Accordingly, participating Executives do not receive
dividends during the vesting Period.
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW
36
REMUNERATION REPORT
R EMUN E R AT I O N R E P O R T
Continued
Continued
How was the
number of
performance
options
determined?
The number of performance options for each Executive was determined as part of the calculation of total
remuneration for an Executive role. The Committee determined LTI plan awards by assessing the quantum
required to provide a market competitive total remuneration level, for on target performance.
The number of performance options granted was determined by reference to the maximum value of the grant.
The maximum value was determined by a fixed percentage of the Executive’s TFC. The CEO was entitled to a
maximum value of $1,400,000 in FY2019, and in subsequent years, to 90 percent of TFC. Executive KMP are
entitled to a maximum value of 60 percent of TFC. The maximum value divided by the value attributed to the
performance option was used to determine the exact number of performance options granted. The value
attributed to the performance option was calculated using the Black-Scholes option valuation approach as at
the grant date.
The exercise price was set based on the volume weighted average price (VWAP) of the Company’s shares
over the five trading days up to and including the day before the closing date of the grant.
Vesting and performance hurdles
What is the
performance
period?
The performance period commences at the beginning of the financial year in which the performance options
are granted. For the performance options granted under the FY2019 LTI plan, the performance period started
on 29 July 2018 and ends after three years on 31 July 2021. Following the end of the performance period and
after the Company has lodged its audited financial results for FY2021 with the ASX, the Board will test the
performance hurdles that apply to the FY2019 LTI plan offer and will determine how many performance options
(if any) are eligible to vest.
What are the
performance
hurdles?
Why were the
performance
hurdles chosen?
The performance measures approved by the Board for the FY2019 LTI plan offer were EPS and relative TSR:
•
•
50 percent of the award is subject to the EPS hurdle
50 percent of the award is subject to the TSR hurdle
The hurdles were chosen to align shareholder returns with Executive reward outcomes over the three year
performance period and to complement the STI plan measures.
The Board considers EPS the most effective measure for determining the underlying profitability of the
business. When determining normalised EPS for LTI purposes statutory earnings is adopted as the base and
the Board will allow adjustments to be made for significant items on a case-by-case basis. To the extent a
write-down occurs that is considered to have been within management’s control, it will form a part of the EPS
calculation.
The TSR hurdle was selected to ensure alignment between comparative shareholder return and reward for
Executives. This measure also provides a direct comparison of the Company's performance over the
performance period against a comparator group of companies that would, broadly, be expected to be similarly
impacted by changes in market conditions. For FY2019, the comparator group selected consists of S&P ASX
200 companies excluding companies in the:
•
Financials, Health Care, Utilities, Consumer Staples, Energy and Telecommunication Services Global
Industry Classification Standard (GICS) Sectors; and
• Metals & Mining GICS Industry.
Based on investor feedback, for FY2020, the comparator group (see section 2.2) has been amended to include
a more relevant base of listed companies from the retail and consumer services sector.
REMUNERATION REPORT
R EMUN E R AT I O N R E P O R T
Continued
Continued
37
What is the
vesting
framework?
The number of performance options that vest will depend on how well Myer has performed during the
performance period. For superior performance, 100 percent of the performance options will vest. Only a
percentage of performance options will vest for performance below that level. If Myer does not achieve certain
minimum thresholds then all the applicable performance options will lapse, and no performance options can
vest.
For the FY2019 LTI plan offer, the following vesting hurdles apply:
Performance options subject to the EPS hurdle (50 percent of the Award)
The EPS hurdle will be tested over the performance period by calculating the compound annual growth rate in
the Company’s EPS using EPS at the end of FY2018 as the base year. The resulting growth rate will be used
to determine the level of vesting for the performance options subject to the EPS Hurdle.
The Board has determined that the write-down incurred during FY2018 will be excluded from the calculation of
EPS for the purpose of the FY2019 LTI plan. This has the effect of increasing the base year EPS, from which
growth rates will be measured.
The table below sets out the percentage of performance options subject to the EPS Hurdle that can vest
depending on the Company’s growth in EPS:
Growth in EPS from base year EPS
% of performance options subject to the EPS
Hurdle that will vest
(rounded down to the nearest whole number)
Below 13% compound annual growth
At 13% compound annual growth
Nil
50%
Between 13% and 20% (inclusive) compound annual
growth
Straight line pro-rata vesting between 50% and 100%
At or above 20% compound annual growth
100%
Performance options subject to the TSR Hurdle (50 percent of the Award)
The TSR Hurdle will be tested following the end of the performance period by comparing the Company’s total
shareholder return performance over the performance period relative to a set peer group. The peer group for
the FY2019 Grant will consist of S&P ASX 200 companies excluding companies in the:
•
Financials, Health Care, Utilities, Consumer Staples, Energy and Telecommunication Services Global
Industry Classification Standard (GICS) Sectors; and
• Metals & Mining GICS Industry.
The comparator group may, at the discretion of the Board, be adjusted to take into account events during the
performance period including, but not limited to, takeovers, mergers, de-mergers and de-listings.
The table below sets out the percentage of performance rights subject to the TSR Hurdle that can vest depending
on the Company’s relative TSR performance:
TSR performance relative to peer group
% of performance options subject to the TSR
Hurdle that will vest
(rounded down to the nearest whole number)
Below the 50th percentile
At the 50th percentile
Nil
50%
Between the 50th percentile and the 75th percentile Straight line pro-rata vesting between 50% and 100%
At or above the 75th percentile
100%
For the CEO and Chief Merchandise Officer the vesting period is 4 years during which a continuous service
condition applies.
No. Each performance hurdle is only tested once at the end of the performance period.
Are the
performance
hurdles subject
to retesting?
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW 38
REMUNERATION REPORT
R EMUN E R AT I O N R E P O R T
Continued
Continued
How are shares
allocated?
Under the plan, following vesting, shares are allocated on a net settlement basis, where the Executive is
allocated the total number of shares that would have been allocated upon exercise less the number of shares
equal to the value of the aggregated exercise price. The number of shares delivered by the Company
represents the value above the exercise price in accordance with the formula below:
(A - B) / C, where:
A = Aggregate value of vested performance options (based on the market value of a share)
B = Aggregate exercise price payable
C = Market value of a share
This approach ensures that Executives are only rewarded for the increase to share price from the grant date,
thereby strengthening the alignment between Executive remuneration and growth in shareholder value. The
exercise price of $0.42 for the FY2019 LTI plan was calculated using the VWAP of a share over the five
trading days up to and including the day before the closing date of the grant.
Do any
restrictions apply
once the options
vest?
Any shares provided on vesting of the performance options will be subject to a restriction period of one year,
during which they cannot be sold, transferred or otherwise dealt with. A continuous service restriction will also
apply during the restriction period. For the CEO and Chief Merchandise Officer, the vesting period is 4 years
and there is no additional restriction period following the vesting.
Cessation of employment, change of control, clawback, forfeiture, participation in future issues and hedging
arrangements
Cessation of
employment
The treatment of performance options on cessation of employment will depend on the date as well as the
circumstances of cessation. Generally, if an Executive ceases employment on or before the end of the
restriction period due to resignation, termination for cause or gross misconduct, they will forfeit any interest in
the options. If employment ceases on or before the end of the restriction period for other reasons, the
Executive KMP will retain an interest in the vested shares. Subject to applicable law, the Board has the
discretion to allow different treatment (although the discretion is only likely to be exercised in exceptional
circumstances).
The Board has absolute discretion to allow full or pro-rated accelerated vesting of performance options in the
event of certain change of control events, and would exercise this discretion in the best interests of the
Company.
The LTI plan includes provisions for options to lapse and interests in shares allocated and subject to restriction
to be forfeited, at the Board’s discretion, if options or shares are granted, eligible to vest or allocated as a result
of a material misstatement in, or omission from, the Company’s financial statements. The Myer Board would
only exercise this discretion in respect of those Executives who were Executives of the Company at the time
the financial statements were approved by the Board and issued by the Company.
The options and entitlements attaching to performance options may be adjusted if the Company undertakes a
bonus or rights issue or a capital reconstruction in relation to the Company's shares. For example, in the event
of a rights issue, the number of shares which an Executive is entitled to be allocated on the exercise of
performance options may be changed in a manner determined by the Myer Board and consistent with the ASX
Listing Rules.
The expiry date for performance options under the FY2019 LTI plan is 24 December 2022.
Executives are forbidden from entering into any hedging arrangements affecting their economic exposure to
performance options or restricted shares.
Executives are also forbidden from entering into transactions or arrangements prohibited under the Company’s
Securities Dealing Policy.
How would a
change of
control impact
LTI plan
entitlements?
Does a
‘clawback’
and/or forfeiture
apply?
How would a
bonus or rights
issue impact
performance
options under
the LTI plan?
Do performance
options expire?
Do any other
restrictions apply
to performance
options prior to
vesting or
subject to
restriction?
REMUNERATION REPORT
R EMUN E R AT I O N R E P O R T
Continued
Continued
39
In FY2019, Executive KMP and other senior Executives received a grant of performance options. 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
table below.
The following table summarises the FY2019 performance options granted to Executive KMP:
Total value of
performance
options at grant
date
$
1,400,000
Valuation of each
performance
option at grant
date(1)
$
0.1246
Name
J King
Number of
performance
options granted
4,516,129
Exercise
price
$
0.42
Applicable
hurdles
EPS
N Chadwick
477,000
A Sutton
396,000
A Winstanley
477,000
0.1203
0.1246
0.1203
0.1246
0.1203
0.1246
0.1203
4,516,129
1,538,710
1,538,710
1,277,419
1,277,419
1,538,710
1,538,710
0.42
0.42
0.42
0.42
0.42
0.42
0.42
TSR
EPS
TSR
EPS
TSR
EPS
TSR
End of
performance
period
31 July 2021
31 July 2021
31 July 2021
31 July 2021
31 July 2021
31 July 2021
31 July 2021
31 July 2021
(1) The valuation is calculated in accordance with AASB 2 Share Based Payment.
4. EXECUTIVE KMP SERVICE AGREEMENTS
Remuneration and other terms of employment for the CEO and other Executive KMP are formalised in service agreements. The
termination provisions for Executive KMP, as set out in their service agreements, are described below:
Name
J King
N Chadwick
A Sutton
A Winstanley
Former Disclosed Executive KMP
M Cripsey(1)
Contract type
Rolling contract
Rolling contract
Rolling contract
Rolling contract
Rolling contract
Termination notice period
initiated by Executive KMP
12 months
Termination notice period, or
payment in lieu of notice,
initiated by Company
12 months
6 months
3 months
6 months
6 months
6 months
6 months
6 months
6 months
R Umbers(2)
(1) Mr Cripsey stepped down as Executive KMP on 31 October 2018 and was paid the minimum payment required under the terms
Rolling contract
12 months
6 months
of his employment.
(2) Mr Umbers stepped down as Executive KMP on 14 February 2018 and his notice period concluded on 31 July 2018.
The agreements also provide for an Executive KMP’s participation in the STI and LTI plans subject to Board approval of their eligibility
and in accordance with the terms and conditions of the respective plans.
In addition, Mr King and Mr Winstanley have been provided with support relating to their relocations, and are entitled to the following
benefits:
• Coverage of costs associated with moving personal and household items, and tax services for the first year of their assignments;
and
• Ongoing rental assistance, health care coverage and two return flights for self and spouse to and from the USA or the United
Kingdom annually, and other costs related to their Australian residency.
The cost to the Company in providing this support for the period ended 27 July 2019 is summarised in Section 7.
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW
40
REMUNERATION REPORT
R EMUN E R AT I O N R E P O R T
Continued
Continued
5. NON-EXECUTIVE DIRECTOR REMUNERATION
Fees and payments to Non-Executive Directors reflect the demands upon and responsibilities of those directors. The Board, on the
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 AGM. The maximum aggregate limit includes superannuation contributions for the benefit of Non-Executive
Directors and any fees which a Non-Executive irector 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.
Base fees for Non-Executive Directors include payment for participation on Board Committees; however, an additional payment is
made to those who serve as Chairman on a Committee to recognise the additional responsibility and time requirements involved in
chairing a Committee.
In FY2018, the Chairman and Non-Executive Directors’ fees had been reduced to align them with market benchmarks for companies
with a similar market capitalisation. The Chairman fee was initially reduced from $400,000 in FY2017 to $350,000 from the start of
FY2018. From 21 March 2018, the Chairman fee was subsequently further reduced from $350,000 to $300,000, Non-Executive
Directors’ fees were reduced from $150,000 to $120,000, the Audit Finance and Risk Committee Chairman fees were reduced from
$30,000 to $20,000 and Human Resources and Remuneration Committee Chairman fees were reduced from $22,500 to $20,000. No
change was made to the fee structure in FY2019.
The following yearly fees applied in FY2019:
Base annual fees
Chairman (all inclusive)
Other Non-Executive Directors
Additional annual fees
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
$
300,000
120,000
20,000
-
20,000
-
-
-
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.
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 trading ‘windows’ for share trading consistent with the Company’s Securities Dealing
Policy.
Each Non-Executive Director will target the purchase of a shareholding in the Company that, as at the date of the last purchase, is
equivalent to at least one year’s Non-Executive Director’s base fees, progressively over three years from the date of their appointment,
for new Non-Executive Directors, and within three years from April 2018 for Non-Executive Directors appointed before this date.
REMUNERATION REPORT
R EMUN E R AT I O N R E P O R T
Continued
Continued
41
The table below shows the remuneration amounts recorded in the financial statements in the period for Non-Executive Directors:
Name
Non-Executive Directors
G Hounsell(1)
I Cornell(2)
J Morrison(3)
J Stephenson
D Whittle
L Cattermole AM
J Naylor
FY
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
Former Non-Executive Directors
C Froggatt(4)
B Thorn(5)
P McClintock(6)
A Brennan(7)
Total Non-Executive
Directors
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
Myer Holdings
Limited Board &
Committee Fees
$
Additional fees
$
Superannuation
$
279,429
146,896
126,700
125,877
108,600
97,596
126,700
141,098
108,600
125,877
86,565
-
20,067
-
35,567
145,417
61,540
125,877
-
104,786
-
51,832
953,768
-
294,378
-
-
-
140,178
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,065,256
434,556
20,571
16,748
13,300
13,214
11,400
10,245
13,300
14,811
11,400
13,214
9,087
-
2,107
-
15,265
6,460
13,214
-
6,683
-
5,441
87,625
108,835
Total
$
300,000
458,022
140,000
139,091
120,000
248,019
140,000
155,909
120,000
139,091
95,652
-
22,174
-
35,567
160,682
68,000
139,091
-
111,469
-
57,273
1,041,393
1,608,647
(1) During FY18, Mr Hounsell commenced as a Non-Executive Director and Deputy Chairman on 20 September 2017; was appointed
Chairman on 24 November 2017; and was appointed Executive Chairman on 14 February 2018 for the period until 3 June 2018,
and he reverted to Non-Executive Chairman on 4 June 2018. Mr Hounsell was a paid a fee of $83,333 per month for the period he
was Executive Chairman. The Company paid $587 FBT in relation to car parking provided to Mr Hounsell.
(2) Mr Cornell will retire as a Non-Executive Director on 30 October 2019.
(3) During FY18, Ms Morrison commenced as a Non-Executive Director on 17 October 2017. In addition to her Non-Executive
Director fees, Ms Morrison was paid $68,075 for her role as a Director of the sass & bide and Marcs and David Lawrence entities
during the period up until 4 June 2018, and $72,103 for marketing consulting services provided to the Company.
(4) Ms Froggatt retired as Non-Executive Director on 30 November 2018.
(5) Mr Thorn retired as Non-Executive Director on 24 February 2019.
(6) Mr McClintock retired as Non-Executive Director on 24 November 2017.
(7) Ms Brennan retired as Non-Executive Director on 24 November 2017.
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW
42
REMUNERATION REPORT
R EMUN E R AT I O N R E P O R T
Continued
Continued
6. REMUNERATION GOVERNANCE
6.1 HUMAN RESOURCES AND REMUNERATION COMMITTEE
The Board reviews its role, responsibilities, and performance annually to ensure that the Company continues to maintain and improve
its governance standards.
The Board is responsible for ensuring the Company’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 made up of Non-Executive Directors only. The Committee charter
is available on the Company’s Investor Centre website.
When making remuneration decisions, the Committee will also consider the Company’s internal succession plan and capability profile.
Mr Ian Cornell has served as Chairman of the Committee since July 2018. Mr Gary Hounsell stepped down as a Committee member in
March 2019 and Ms Lyndsey Cattermole was appointed to the Committee from March 2019. Ms JoAnne Stephenson was a member of
the Committee throughout FY2019.
In performing its role, the Committee has the responsibility to make recommendations to the Board on:
• Non-Executive Director fees;
•
Executive remuneration (for the CEO and Managing Director and other Executives) including specific recommendations on
remuneration packages and other terms of employment;
the overarching remuneration framework including the policy, strategy and practices for fixed reward and both short and long term
incentive plans and performance hurdles; and
the health of the organisation, suitable succession coverage, organisational culture and diversity.
•
•
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 will be set out in the Corporate Governance Statement (available on
the Company’s website) and the Directors’ Report.
The CEO and the Executive General Manager Human Resources 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 he is not available, a Committee member, will attend the AGM and be available to answer any
questions from shareholders about the Committee’s activities or, if appropriate, the Company’s remuneration arrangements.
6.2 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. The Company’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 the Committee Chairman, and report directly to the Committee. As part of this engagement,
an agreed set of protocols to be followed by the consultants, the Committee, and management, have been devised that determine the
way in which remuneration recommendations are developed and provided to the Board. This process is intended to ensure that any
recommendation made by a remuneration consultant is free from undue influence by the Executive KMP to whom any
recommendations may relate.
During FY2019, the Board continued to engage Ernst & Young (EY) to provide various remuneration advice, including benchmarking
data, market commentary and professional guidance regarding Myer’s Executive remuneration and incentive plans. During this
engagement, no remuneration recommendations as defined by the Corporations Act 2001 were provided to the Company by EY.
%
7
2
%
8
3
%
0
1
%
3
1
%
2
1
%
4
2
%
3
1
%
4
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A
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW
44
Footnotes
REMUNERATION REPORT
R EMUN E R AT I O N R E P O R T
Continued
Continued
(1) Cash salary includes short-term compensated absences and any salary sacrifice arrangement implemented by the Executive
KMPs, including additional superannuation contributions.
(2) STI payments relate to program performance and conditions for the year they were earned, not the year of actual payment.
(3) Other short-term employee benefits include the movement in annual leave accrual, and Fringe Benefits Tax paid by the
Company in respect of Company provided car parking up to the end of March 2019 (in accordance with the FBT year), mobile
phone expenses and expatriate support for Mr King and Mr Winstanley.
(4) There were no post-employment benefits other than superannuation.
(5) Executive KMPs receive a statutory superannuation contribution up to a threshold limit in line with the ATO published maximum
superannuation contribution base, with the exception of Mr King and Mr Winstanley, who do not receive superannuation due to
their tax status.
(6) This benefit includes the movement in long service leave accrual.
(7) The share based payment expense 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
rights and 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 Executive KMP
ultimately realises is likely to be different to the amount disclosed in a particular year. The amount disclosed does not represent
cash payments received in the period, and if vesting conditions are not met, may result in reversal of the remuneration amount in
a future period. There were no other equity-settled share based payments and there were no cash-settled share based
payments.
(8) Mr King's other short-term benefits include annual leave accrual, and allowances for rental assistance and health insurance, and
return flights home under the expatriate terms of his employment contract.
(9) Mr Chadwick’s TFC was increased by 10.4 percent in FY2019 as a result of additional responsibilities performed by him post the
departure of Mr Cripsey in the role of Chief Operating Office. Mr Chadwick took over responsibility for Myer’s entire Information
Technology function from Mr Cripsey. In addition, he also took on responsibility for the Myer legal function in FY2019.
(10) Mr Winstanley's other short-term benefits include annual leave accrual, and allowances for rental assistance and health
insurance, and return flights home under the expatriate terms of his employment contract.
(11) Mr Cripsey stepped down as Chief Operating Officer on 31 October 2018 and was paid the minimum payment required under
the terms of his employment.
(12) Mr Umbers stepped down as CEO and Managing Director on 14 February 2018, and his notice period concluded on 31 July
2018. His termination payment consists of all payments made post 14 February 2018, which were the minimum payments
required under the terms of his employment.
(13) Mr Devonport stepped down as Chief Financial Officer on 28 January 2018, and his notice period concluded on 21 March 2018.
His termination payments were made in FY2018, which were the minimum payments required under the terms of his
employment. In January 2016, Mr Devonport was granted performance rights in recognition of significant incentive arrangements
forfeited upon leaving his previous employer to join Myer. As part of the terms of Mr Devonport’s separation 173,913 rights
valued at $88,696 granted to him vested in FY2019.
(14) Mr Bracken stepped down as Chief Merchandise and Marketing Officer on 19 July 2017, and his notice period concluded on 19
January 2018. His termination payment was the minimum amount required under the terms of his employment.
7.1 UNVESTED PERFORMANCE RIGHTS AND OPTIONS
Details of performance rights and options granted to Executive KMP under the previous equity incentive plans that remain unvested as
at 27 July 2019 are set out in the table below.
Grant type
Rights (ROFE hurdle)
Rights (EPS hurdle)
Rights (TSR hurdle)
Rights (ROFE hurdle)
Rights (EPS hurdle)
Rights (TSR hurdle)
Rights
(CEO only service hurdle)
Rights
(CMO only service hurdle)
Options (EPS hurdle)(1)
Options (TSR hurdle) (1)
Grant date
22-Dec-16
22-Dec-16
22-Dec-16
21-Dec-17
21-Dec-17
21-Dec-17
Number of
instruments
243,374
121,687
121,689
756,439
378,220
378,219
4-Jun-18
1,554,061
25-Jun-18
24-Dec-18
24-Dec-18
370,371
8,870,968
8,870,968
Value per
instrument at
grant date
$
$1.25
Vesting date (if holder remains
employed by a Myer Group
company)
End of performance period
$1.25
$0.84
$0.47
$0.21
$0.47
$0.29
$0.35
$0.12
$0.12
End of performance period
End of performance period
End of performance period
End of performance period
End of performance period
End of performance period
End of performance period
End of vesting period
End of vesting period
Total
(1) Performance options granted on 24 December 2018 will expire on 24 December 2022.
21,665,996
Details of performance rights or options over ordinary shares in the Company currently provided as remuneration and granted during
FY2019 to Executive KMP are set out overleaf. Further information on the LTI plan is set out in note H4 of the Financial Statements.
REMUNERATION REPORT
R EMUN E R AT I O N R E P O R T
Continued
Continued
45
7.2 EQUITY INSTRUMENTS GRANTED TO EXECUTIVE KMP IN FY2019
Name
J King(3)
N Chadwick
A Sutton
Number of
performance options
granted(1)
Value of performance
options at grant
date(2)
$
9,032,258
3,077,420
2,554,838
1,400,000
477,000
396,000
Vesting Date
1-Aug-22
1-Aug-21
1-Aug-21
Number of rights
vested during the
period
810,804
-
-
A Winstanley(4)
(1) No performance rights were granted to Non-Executive Directors during the reporting period.
(2) The Black Scholes valuation for determining the face value under the FY2019 LTI plan grant was $0.155.
(3) Mr King was appointed as CEO and Managing Director on 4 June 2018. The number of performance rights vested refer to rights
3,077,420
1-Aug-22
185,184
477,000
granted on his commencement. This plan vests monthly in 36 equal tranches.
(4) Mr Winstanley was appointed as Chief Merchandise Officer on 25 June 2018. The number of performance rights vested refer to
rights granted on his commencement. This plan vests monthly in 36 equal tranches.
7.3 SHARES PROVIDED ON EXERCISE OF RIGHTS
In January 2016, Mr Devonport was granted performance rights in recognition of significant incentive arrangements forfeited upon
leaving his previous employer to join Myer. As part of the terms of Mr Devonport’s separation, these rights granted to him vested in
FY2019 and as such 173,913 ordinary shares were provided. No other Non-Executive Directors of the company or Executive KMP
were provided ordinary shares as a result of exercise of options or rights.
7.4 PERFORMANCE OPTIONS AND PERFORMANCE RIGHTS ON ISSUE
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 service and performance criteria were not
met is set out below. Options and performance rights vest provided the vesting conditions or performance hurdles are met. 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.
Name
J King(2)
N Chadwick(4)
A Sutton
A Winstanley(6)
M Cripsey
Grant date
24-Dec-18
Equity Vehicle
Options(3)
4-Jun-18
24-Dec-18
29-Jan-18
24-Dec-18
21-Dec-17
22-Dec-16(5)
5-Jan-16
24-Dec-18
25-Jun-18
21-Dec-17
22-Dec-16
Rights
Options(3)
Rights
Options(3)
Rights
Rights
Rights
Options(3)
Rights
Rights
Rights
Maximum total
value of grant
yet to be
expensed(1)
$
612,908
Forfeited
%
-
-
-
-
-
-
-
100%
-
-
-
-
110,555
208,827
54,138
253,857
37,054
3,570
-
208,827
30,708
19,891
2,292
Vested
%
-
33%
-
-
-
-
-
-
-
33%
-
-
(1) This represents the maximum remaining accounting value of the LTI plan awards (rights and options) as at their grant date.
(2) Mr King was appointed as CEO and Managing Director on 4 June 2018. The performance rights referred to in this table were
rights granted upon his appointment. These rights vest monthly over the period 4 June 2018 to 4 June 2021.
(3) Performance options granted on 24 December 2018 will expire on 24 December 2022.
(4) Mr Chadwick was appointed as Chief Financial Officer on 29 January 2018, and was granted performance rights upon his
appointment.
(5) The grants under the FY2017 LTI plan will be tested for vesting following the release of the FY2019 results and details disclosed
in the FY2020 Remuneration Report.
(6) Mr Winstanley was appointed as Chief Merchandise Officer on 25 June 2018. The performance rights referred to in this table
were rights granted upon his appointment. These rights vest monthly over the period 25 June 2018 to 25 June 2021.
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW
46
REMUNERATION REPORT
R EMUN E R AT I O N R E P O R T
Continued
Continued
7.5 TRANSACTIONS WITH KMP
Mr King is a director of Raging Bull Group Limited and has a relevant interest in 20 percent of the shares. During the period ended 27
July 2019, Myer Pty Ltd placed orders for apparel totalling $0.5m with Raging Bull Leisure Limited, whose ultimate parent is Raging Bull
Group Limited.
The order has been placed on an arm’s length basis under a standard wholesale agreement. As at 27 July 2019, the apparel product
ordered had not been received and no payment had been made.
8. EQUITY
The number of rights and options over ordinary shares in the Company held during the financial period by Executive KMP of the
Company, including their personally related parties, are set out below. No rights or options over ordinary shares are held by Non-
Executive Directors.
Opening balance
Granted as
compensation
Exercised
Lapsed
Closing balance
Options
Rights
Options
Rights Options
Rights Options
Rights
Options
Rights
2019
J King
- 2,432,432 9,032,258
N Chadwick
-
681,818 3,077,420
A Sutton
- 1,209,471 2,554,838
A Winstanley
-
555,555 3,077,420
Former Disclosed Executive KMP
M Cripsey(1)
554,545
-
R Umbers(2)
G Devonport(3)
- 3,383,936
-
858,695
-
-
-
-
-
-
-
-
-
-
2018
J King
N Chadwick
M Cripsey
A Sutton
A Winstanley
-
-
-
834,471
-
- 2,432,432
-
-
-
-
681,818
554,545
600,000
555,555
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(173,913)
-
-
-
-
-
(19,825)
-
-
-
-
-
-
-
-
-
-
-
-
-
- 9,032,258 2,432,432
- 3,077,420
681,818
(313,042) 2,554,838
896,429
- 3,077,420
555,555
(323,485)
(3,383,936)
(684,782)
-
-
-
(205,175)
-
-
-
-
231,060
-
-
- 2,432,432
-
-
681,818
554,545
- 1,209,471
-
555,555
Former Disclosed Executive KMP
R Umbers
2,316,322
- 1,636,363
-
(295,099)
-
(273,650)
- 3,383,936
G Devonport
-
(1) Mr Cripsey's performance rights relate only to the time he was considered as Executive KMP.
(2) Mr Umbers stepped down as CEO and Managing Director on 14 February 2018, and is no longer considered Executive KMP
- 1,281,818
(2,021,019)
1,597,896
-
-
-
858,695
from this date. The performance rights held by Mr Umbers lapsed when his notice period concluded on 31 July 2018.
(3) Mr Devonport stepped down as Chief Financial Officer on 28 January 2018 and is no longer considered Executive KMP from this
date. A portion of the performance rights referred to in this table held by Mr Devonport, granted on 5 January 2016, were linked
to his continuous service, these rights vested in FY2019. All other rights were forfeited.
REMUNERATION REPORT
R EMUN E R AT I O N R E P O R T
Continued
Continued
47
The number of shares in the Company held during the financial period by each director of the Company and other Executive KMP of
the Company, including their personally related parties are set out below. There were no shares granted during the reporting period as
compensation.
Opening balance
Received on exercise
of rights and/or
options to shares
Other changes
during the year
Closing balance
2019
Directors
G Hounsell
I Cornell(1)
J Morrison
J Stephenson
D Whittle
L Cattermole AM
J Naylor
Former Directors
C Froggatt(2)
B Thorn(3)
Executive KMP
J King
N Chadwick
A Sutton
A Winstanley
Former Disclosed Executive KMP
M Cripsey(4)
2018
Directors
G Hounsell
I Cornell
C Froggatt
J Morrison
J Stephenson
B Thorn
D Whittle
Executive KMP
J King
N Chadwick
M Cripsey
A Sutton
A Winstanley
1,000,000
266,000
89,788
95,000
12,345
-
-
24,056
225,400
50,000
50,000
-
-
-
-
16,000
24,056
-
-
225,400
12,345
-
-
-
11,145
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19,825
-
Former Disclosed Executive KMP
R Umbers(5)
326,847
295,099
-
-
35,000
-
54,321
659,996
-
-
-
350,000
150,000
-
200,000
1,000,000
266,000
124,788
95,000
66,666
659,996
-
-
-
400,000
200,000
-
200,000
-
-
1,000,000
250,000
-
89,788
95,000
-
-
50,000
50,000
-
(30,970)
-
-
1,000,000
266,000
24,056
89,788
95,000
225,400
12,345
50,000
50,000
-
-
-
-
-
G Devonport(6)
(1) Mr Cornell will retire as Non-Executive Director on 30 October 2019.
(2) Ms Froggatt retired as Non-Executive Director on 30 November 2018. Her holdings for the end of the period have not been
252,000
-
-
reported in the table above.
(3) Mr Thorn retired as Non-Executive Director on 24 February 2019. His holdings for the end of the period have not been reported
in the table above.
(4) Mr Cripsey stepped down as Executive KMP on 31 October 2018. His holdings for the end of the period have not been reported
in the table above.
(5) Mr Umbers stepped down as CEO and Managing Director on 14 February 2018, and his notice period concluded on 31 July
2018. His holdings for the end of the period have not been reported in the table above.
(6) Mr Devonport stepped down as Chief Financial Officer on 28 January 2018 and his notice period concluded on 21 March 2018.
His holdings for the end of the period have not been reported in the table above.
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW
48
9.
LOANS
REMUNERATION REPORT
R EMUN E R AT I O N R E P O R T
Continued
Continued
There were no loans made to Executive KMP or entities related to them, including their personally related parties, or other transactions
at any time during FY2018 or FY2019.
10. DEALING IN SECURITIES
Under the Securities Dealing Policy, directors and senior Executives are prohibited from entering into hedging arrangements with
respect to the Company’s securities. A copy of the Securities Dealing Policy is available on the Myer Investor Centre website.
FINANCIAL STATEMENTS
for the period ended 27 July 2019
FIN A NCI A L S TATEMENT S
for the period ended 27 July 2019
49
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
A. Group performance
A1 Segment information
A2 Revenue
A3 Expenses
A4 Income tax
A5 Earnings per share
B. Working capital
B1 Trade and other receivables and prepayments
B2 Inventories
B3 Trade and other payables
C. Capital employed
C1 Property, plant and equipment
C2 Intangible assets
C3 Provisions
C4 Deferred income
D. Net debt
D1 Cash and cash equivalents
D2 Reconciliation of cash flows from operating activities
D3 Borrowings
E. Risk management
E1 Financial risk management
F. Equity
F1 Contributed equity
F2 Accumulated losses and reserves
F3 Dividends
G. Group structure
G1 Subsidiaries
G2 Deed of cross guarantee
G3 Parent entity financial information
H. Other financial information
H1 Contingencies
H2 Commitments
H3 Related party transactions
H4 Share-based payments
H5 Remuneration of auditors
H6 Events occurring after the reporting period
I. Other accounting policies
50
51
52
53
54
55
55
56
57
58
59
59
59
60
61
63
64
65
65
66
67
73
74
75
76
77
79
80
80
81
81
83
83
84
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW 50
CO N S O L I D AT E D I N CO M E S TAT EM E N T
for the period ended 27 July 2019
CONSOLIDATED INCOME STATEMENT
for the period ended 27 July 2019
Total sales
Concession sales
Sale of goods
Sales revenue deferred under customer loyalty program
Revenue from sale of goods
Other operating revenue
Cost of goods sold
Operating gross profit
Selling expenses
Administration expenses
Restructuring and store exit costs, onerous lease expense and impairment of assets
Earnings/(loss) before interest and tax
Finance revenue
Finance costs
Net finance costs
Profit/(loss) before income tax
Income tax (expense)/benefit
Profit/(loss) for the period attributable to owners of Myer Holdings Limited
Earnings/(loss) 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.
2019
52 weeks
$'000
2,991,795
(612,193)
2,379,602
(34,545)
2,345,057
153,576
(1,336,194)
1,162,439
(822,832)
(281,109)
(12,458)
46,040
556
(12,081)
(11,525)
34,515
(10,041)
24,474
Cents
3.0
3.0
2018
52 weeks
$'000
3,100,554
(653,983)
2,446,571
(36,583)
2,409,988
162,299
(1,387,903)
1,184,384
(831,192)
(297,765)
(541,190)
(485,763)
397
(9,471)
(9,074)
(494,837)
8,835
(486,002)
Cents
(59.2)
(59.2)
Notes
A2
A2
A2
A2
A3
A2
A3
A4
A5
A5
CO N S O L I D AT E D S TAT EM E N T O F CO MP R E H E N S I V E I N CO M E
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the period ended 27 July 2019
for the period ended 27 July 2019
51
Profit/(loss) for the period
Other comprehensive income/(loss)
Items that may be reclassified to profit or loss:
Cash flow hedges
Exchange differences on translation of foreign operations
Other comprehensive income/(loss) for the period, net of tax
Total comprehensive income/(loss) for the period attributable to owners of Myer Holdings Limited
Notes
F2
F2
2019
52 weeks
$'000
24,474
(1,920)
(484)
(2,404)
22,070
2018
52 weeks
$'000
(486,002)
13,552
(439)
13,113
(472,889)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW
52
CO N S O L I D AT E D B A L A N C E S H E E T
CONSOLIDATED BALANCE SHEET
as at 27 July 2019
as at 27 July 2019
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
Intangible assets
Derivative financial instruments
Other non-current assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Provisions
Deferred income
Derivative financial instruments
Current tax liabilities
Other liabilities
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Deferred income
Deferred tax liabilities
Derivative financial instruments
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Accumulated losses
Reserves
Total equity
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
Notes
2019
$'000
2018
$'000
D1
B1
B2
E1
C1
C2
E1
B3
C3
C4
E1
D3
C3
C4
A4
E1
F1
F2
F2
47,450
31,114
346,940
5,688
431,192
383,487
467,604
101
4,228
855,420
1,286,612
372,653
64,386
8,295
132
5,280
373
451,119
86,134
12,273
80,158
54,869
3
233,437
684,556
602,056
41,793
26,616
366,839
6,725
441,973
424,076
485,151
269
1,529
911,025
1,352,998
381,156
70,007
10,294
64
4,321
472
466,314
149,165
11,856
80,629
60,981
64
302,695
769,009
583,989
738,759
(138,641)
1,938
602,056
739,020
(160,282)
5,251
583,989
CO N S O L I D AT E D S TAT EM E N T O F C H A N G E S I N EQ U I T Y
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the period ended 27 July 2019
for the period ended 27 July 2019
53
Balance as at 29 July 2017
Net loss for the period
Other comprehensive income/(loss) for the period
Total comprehensive income/(loss) for the period
Transactions with owners in their capacity as owners:
Acquisition of treasury shares
Dividends paid
Employee share schemes
Balance as at 28 July 2018
Adjustment on initial application of AASB 15, net of tax
Restated balance as at 29 July 2018
Net profit for the period
Other comprehensive income/(loss) for the period
Total comprehensive income/(loss) for the period
Transactions with owners in their capacity as owners:
Acquisition of treasury shares
Employee share schemes
Balance as at 27 July 2019
Notes
Contributed
equity
$'000
739,329
F1
F3
F2
I
F1
F2
-
-
-
(309)
-
-
(309)
739,020
-
739,020
-
-
-
(261)
-
(261)
738,759
Accumulated
losses
$'000
342,146
(486,002)
-
(486,002)
-
(16,426)
-
(16,426)
(160,282)
(2,833)
(163,115)
24,474
-
24,474
-
-
-
(138,641)
Reserves
$'000
(8,607)
-
13,113
13,113
-
-
745
745
5,251
-
5,251
-
(2,404)
(2,404)
-
(909)
(909)
1,938
Total
$'000
1,072,868
(486,002)
13,113
(472,889)
(309)
(16,426)
745
(15,990)
583,989
(2,833)
581,156
24,474
(2,404)
22,070
(261)
(909)
(1,170)
602,056
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW
54
CO N S O L I D AT E D S TAT EM E N T O F C A S H FL O W S
for the period ended 27 July 2019
CONSOLIDATED STATEMENT OF CASH FLOWS
for the period ended 27 July 2019
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)
Interest paid
Tax paid
Net cash inflow from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangible assets
Lease incentives and contributions received
Interest received
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from/(repayment of) borrowings, net of transaction costs
Dividends paid to equity holders of the parent
Payment for acquisition of treasury shares
Other
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
2019
52 weeks
$'000
2,769,783
(2,631,291)
138,492
(9,815)
(13,598)
115,079
(35,647)
(17,020)
7,971
556
(44,140)
(64,915)
-
(261)
(106)
(65,282)
5,657
41,793
47,450
2018
52 weeks
$'000
2,857,300
(2,726,701)
130,599
(9,097)
(12,301)
109,201
(42,990)
(48,313)
4,455
411
(86,437)
5,000
(16,426)
(309)
173
(11,562)
11,202
30,591
41,793
D2
F3
F1
D1
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
for the period ended 27 July 2019
55
A. GROUP PERFORMANCE
This section provides additional information regarding lines in the financial statements that are most relevant to explaining the performance of the
Group during the period, including the applicable accounting policies applied and significant estimates and judgements made.
A1 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 Marcs and David
Lawrence. On the basis that these subsidiaries represent less than 10% of the total Group's operations and have similar economic characteristics to
the department store retail business, they have not been disclosed as separate reporting segments.
Accounting policy
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.
A2 REVENUE
Sales revenue
Total sales
Concession sales
Sale of goods
Sales revenue deferred under customer loyalty program
Revenue from sale of goods
Other operating revenue
Concessions revenue
Other1
Finance revenue
Interest revenue
Total revenue
2019
52 weeks
$'000
2,991,795
(612,193)
2,379,602
(34,545)
2,345,057
2018
52 weeks
$'000
3,100,554
(653,983)
2,446,571
(36,583)
2,409,988
136,815
16,761
153,576
146,331
15,968
162,299
556
2,499,189
397
2,572,684
1. Other includes revenue in relation to gift card non-redemption income, forfeited lay-by deposits and financial services income.
Accounting policy
Total sales value presented in the income statement represents proceeds from sale of goods (both from the Group and concession operators) and
prior to the deferral of revenue under the Myer customer loyalty program. Concession sales presented in the income statement represents the sales
proceeds of concession operators within Myer stores. Total sales value is disclosed to show the total sales generated by the Group and provide a
basis of comparison with similar department stores.
Revenue from sale of goods, excluding lay-by transactions, is recognised when the performance obligation has been fulfilled, which is principally at the
point of sale after deducting taxes paid, and does not include concession sales. Goods are sold to the end customer with a right of return within a
reasonable period at the Group’s discretion and in accordance with legislative requirements. A refund liability (included in trade and other payables)
and a right to returned goods (included in trade and other receivables) are recognised for the goods expected to be returned, with a corresponding
adjustment to revenue from sale of goods and cost of goods sold. The assumptions and the estimated amount of returns are based on historical
evidence and are reassessed at the end of each reporting period. Revenue from lay-by transactions is recognised as part of revenue from sale of
goods at the date upon which the customer satisfies all payment obligations and control of the goods has transferred to the customer.
Revenue from sale of goods excludes concession sales in Myer stores on the basis that the inventory sold is owned by the concession operator at the
time of sale and not the Group. The Group's share of concession sales is recognised as revenue within other operating revenue at the time the sale is
made.
Gift cards are considered a prepayment for goods or services to be delivered in the future, which creates a performance obligation for the Group. The
Group recognises a liability for the amount received in advance for the gift card and recognises revenue when the customer redeems the gift card and
the Group fulfils the performance obligation related to the transaction. The Group recognises revenue on the unredeemed value of gift cards and
rewards cards (under the Myer one loyalty program), referred to as non-redemption income. The Group recognises the expected non-redemption
amount as revenue in proportion to the pattern in which the gift card or reward card is utilised by the customer.
Interest revenue is recognised on a time proportion basis using the effective interest method.
Critical accounting estimates and judgements – customer loyalty program
The Group operates a loyalty program where customers accumulate award points for purchases made which entitle them to discounts on future
purchases. The award points are recognised as a separately identifiable component of the initial sale transaction, by allocating the fair value of the
consideration received between the award points and the other components of the sale such that the award points are recognised at their fair value.
Revenue from the award points is recognised when the points are redeemed. The amount of revenue recognised 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.
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW
56
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
for the period ended 27 July 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
A3 EXPENSES
Profit/(loss) 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
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
Restructuring and store exit costs, onerous lease expense and impairment of assets
The following individually significant items are included within restructuring and store exit costs, onerous lease
expense and impairment of assets in the consolidated income statement:
Restructuring and redundancy costs1
Store exit costs/(reversals) and other asset impairments2
Impairment of assets3
Support office onerous lease expense and impairment of assets4
Income tax benefit5
Restructuring and store exit costs, onerous lease expense and impairment of assets, net of tax
2019
52 weeks
$'000
2018
52 weeks
$'000
36,543
408,229
444,772
101,589
12,012
69
12,081
225,965
2,303
228,268
(6,301)
7,775
(786)
-
5,469
12,458
(3,737)
8,721
38,044
424,178
462,222
94,006
8,743
728
9,471
229,075
2,712
231,787
(12,085)
9,224
7,480
524,486
-
541,190
(22,713)
518,477
1. The Group has completed several restructuring programs during the period resulting in redundancy and other costs being incurred or committed but
not yet paid. Refer to note C3 for more information.
2. Store exit costs/(reversals) and other asset impairments includes net costs associated with space hand backs to be completed at the Myer Cairns
and Belconnen stores, with a reversal of the Belconnen store exit cost amount recognised in 2018, as the store was announced for closure but is now
remaining open with a space hand back to be completed. (2018: net costs associated with the announcement of closures at the Myer Colonnades,
Belconnen and Hornsby stores and space optimisation). Refer to note C1 and C3 for more information.
3. In 2018, the Group recognised an impairment of the Myer goodwill and brand name, an impairment of the Mt Gravatt store's plant and equipment
assets, and an impairment of support office software assets. Refer to note C2 for more information.
4. The Group recognised a $4.2 million onerous lease provision relating to surplus space identified at the support office due to restructuring completed.
This provision expense was partially offset by the write-back of the fixed lease rental increase provision and deferred income associated with this
space. The assets associated with this surplus space were impaired and included in this amount. Refer to note C1 and C3 for more information.
5. In 2018, the income tax benefit included a $15.1 million benefit relating to the unwind of the deferred tax liability as a result of the impairment of the
Myer brand name. Refer to note C2 for more information.
Accounting policy
The expenses disclosed above are also disclosed in the following sections of the financial statements:
• Employee benefits expenses – refer to note C3
• Depreciation and amortisation expense – refer to note C1 and C2
• Finance costs – refer to note D3 and E1
• Rental expense relating to operating leases – refer to note H2
• Net foreign exchange gains – refer to note F2
Individually Significant Items
Certain items have been separately disclosed and presented as individually significant based on the nature and/or impact these items have on the
Group’s financial performance for the period.
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
for the period ended 27 July 2019
57
A4 INCOME TAX
(a) Income tax expense/(benefit)
(i) Income tax expense/(benefit)
Current tax
Deferred tax
Income tax expense/(benefit)1
Deferred income tax expense included in income tax expense/(benefit) comprises:
(Increase)/Decrease in deferred tax assets
Increase/(Decrease) in deferred tax liabilities
(ii) Numerical reconciliation of income tax expense to prima facie tax payable
Profit/(loss) before income tax expense/(benefit)
Tax at the Australian tax rate of 30% (2018: 30%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Non-deductible asset impairments
Sundry items
Adjustments for current tax of prior periods
Income tax expense/(benefit)1
2019
52 weeks
$'000
2018
52 weeks
$'000
14,678
(4,637)
10,041
(5,570)
933
(4,637)
34,515
10,355
-
(55)
10,300
(259)
10,041
14,596
(23,431)
(8,835)
(7,623)
(15,808)
(23,431)
(494,837)
(148,451)
139,593
27
(8,831)
(4)
(8,835)
1. Income tax includes an income tax benefit of $3.7 million (2018: $22.7 million) attributable to the restructuring and store exit costs, onerous lease
expense and impairment of assets recorded during the period. Refer to note A3 for more information.
(b) Deferred tax assets
Deferred tax assets comprise temporary differences attributable to:
Employee benefits
Non-employee provisions and accruals
Amortising deductions
Property, plant, equipment and software
Trading stock
Tax losses
Total deferred tax assets
Set off of deferred tax assets pursuant to set off provisions
Net deferred tax assets
Movement
Carrying amount at beginning of period
Adjustment on initial application of AASB 15
Credited/(charged) to income statement
Credited/(charged) to other comprehensive income
Carrying amount at end of period
(c) Deferred tax liabilities
Deferred tax liabilities comprise temporary differences attributable to:
Brand names
Deferred income
Sundry items
Total deferred tax liabilities
Set off of deferred tax assets pursuant to set off provisions
Net deferred tax liabilities
Movement
Carrying amount at beginning of period
Charged/(credited) to income statement
Charged/(credited) to other comprehensive income
Carrying amount at end of period
2019
$'000
2018
$'000
14,576
15,918
962
19,370
6,391
700
57,917
(57,917)
-
51,107
1,215
5,570
25
57,917
107,330
4,991
465
112,786
(57,917)
54,869
112,088
933
(235)
112,786
15,184
12,729
1,626
13,936
6,894
738
51,107
(51,107)
-
43,432
-
7,623
52
51,107
107,330
4,012
746
112,088
(51,107)
60,981
128,006
(15,808)
(110)
112,088
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW
58
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
for the period ended 27 July 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
A4 INCOME TAX (CONTINUED)
Accounting policy
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 arise 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.
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation
authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to,
the taxation authority is included with other receivables or payables in the balance sheet.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities, which are recoverable
from, or payable to, the taxation authority, are presented as operating cash flow.
A5 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
2019
cents
3.0
3.0
2019
$'000
2018
cents
(59.2)
(59.2)
2018
$'000
24,474
(486,002)
2019
Number
2018
Number
(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 - performance rights and options
821,026,706 821,278,815
5,795,213 -
Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating
diluted earnings per share
826,821,919 821,278,815
(e) Information concerning the classification of securities
Performance rights and options granted to employees under the Myer Long Term 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 performance rights and options
granted have not been included in the determination of basic earnings per share. Details relating to performance rights and options are set out in note
H4. All performance rights and options outstanding at period end have been included in the calculation of diluted earnings per share because no rights
and options are considered antidilutive for the period ended 27 July 2019.
Potential ordinary shares are treated as dilutive when, and only when, their conversion to ordinary shares decreases earnings per share or increases
loss per share.
Accounting policy
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.
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.
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
for the period ended 27 July 2019
59
B. WORKING CAPITAL
This section provides additional information regarding lines in the financial statements that are most relevant to explaining the assets used to generate
the Group's trading performance during the period and liabilities incurred as a result, including the applicable accounting policies applied and
significant estimates and judgements made.
B1 TRADE AND OTHER RECEIVABLES AND PREPAYMENTS
Trade receivables
Loss allowance
Other receivables1
Prepayments
2019
$'000
9,512
(1,746)
7,766
11,102
12,246
23,348
31,114
2018
$'000
4,218
(854)
3,364
9,648
13,604
23,252
26,616
1. In 2019, other receivables includes an amount for the Group’s right to returned goods, which is recognised as part of accounting for refunds in
accordance with the transition to AASB 15. Refer to section I for more information.
Fair value and risk exposure
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. Information about the Group's exposure to
credit risk, foreign currency risk and interest rate risk in relation to trade and other receivables and the Group's financial risk management policy is
provided in note E1.
Accounting policy
Trade receivables are non interest-bearing and are recognised initially at fair value, and subsequently at amortised cost using the effective interest
rate method, less expected loss allowance. Cash flows relating to short term receivables are not discounted if the effect of discounting is immaterial.
The Group applies the simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for trade receivables
based on all possible default events over the expected life of the receivable. The amount of the impairment loss is recognised as an expense in the
income statement. Subsequent recoveries of amounts previously written off are credited against expenses in the income statement.
B2 INVENTORIES
Retail inventories
2019
$'000
346,940
2018
$'000
366,839
Provision for write-down of inventories to net realisable value amounted to $10.5 million (2018: $12.1 million). This was recognised as an expense
during the period and included in cost of sales in the income statement.
Accounting policy
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.
Critical accounting estimates and judgements - 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.
B3 TRADE AND OTHER PAYABLES
Trade payables
Other payables1
2019
$'000
187,570
185,083
372,653
2018
$'000
189,989
191,167
381,156
1. In 2019, other payables includes an amount for the Group’s refund liability, which is recognised as part of accounting for refunds in accordance with
the transition to AASB 15. Refer to section I for more information.
Trade and other payables are non-interest bearing.
Accounting policy
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.
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW
60
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
for the period ended 27 July 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
C. CAPITAL EMPLOYED
This section provides additional information regarding lines in the financial statements that are most relevant to explaining the capital investment made
that allows the Group to generate its trading performance during the period and liabilities incurred as a result, including the applicable accounting
policies applied and significant estimates and judgements made.
C1 PROPERTY, PLANT AND EQUIPMENT
At 29 July 2017
Cost
Accumulated depreciation and impairment
Net book amount
Period ended 28 July 2018
Carrying amount at beginning of period
Additions
Transfer between classes
Assets written off – cost
Assets written off – accumulated
depreciation
Impairment1
Depreciation charge
Exchange differences
Carrying amount at end of period
At 28 July 2018
Cost
Accumulated depreciation and impairment
Net book amount
Period ended 27 July 2019
Carrying amount at beginning of period
Additions
Transfer between classes
Assets written off – cost
Assets written off – accumulated
depreciation
Impairment1
Depreciation charge
Exchange differences
Carrying amount at end of period
At 27 July 2019
Cost
Accumulated depreciation and impairment
Net book amount
Freehold
land
$'000
Freehold
buildings
$'000
Fixtures and
fittings
$'000
Plant and
equipment
$'000
Capital works
in progress
$'000
9,600
-
9,600
9,600
-
-
-
-
-
-
-
9,600
9,600
-
9,600
9,600
-
-
-
-
-
-
-
9,600
9,600
-
9,600
19,500
(5,446)
14,054
14,054
-
-
-
-
-
(488)
-
13,566
19,500
(5,934)
13,566
13,566
-
-
-
-
-
(488)
-
13,078
19,500
(6,422)
13,078
470,619
(305,414)
165,205
165,205
23,927
24,138
(9,666)
9,418
(6,538)
(34,672)
(60)
171,752
508,958
(337,206)
171,752
171,752
10,423
6,168
(2,936)
2,245
(3,400)
(36,531)
(40)
147,681
522,573
(374,892)
147,681
450,537
(228,976)
221,561
221,561
9,049
13,520
(26,146)
26,024
-
(29,066)
51
214,993
447,011
(232,018)
214,993
214,993
11,674
4,768
(2,538)
1,590
-
(28,146)
32
202,373
460,947
(258,574)
202,373
49,791
-
49,791
49,791
12,669
(48,295)
-
-
-
-
-
14,165
14,165
-
14,165
14,165
8,517
(11,929)
-
-
-
-
2
10,755
10,755
-
10,755
Total
$'000
1,000,047
(539,836)
460,211
460,211
45,645
(10,637)
(35,812)
35,442
(6,538)
(64,226)
(9)
424,076
999,234
(575,158)
424,076
424,076
30,614
(993)
(5,474)
3,835
(3,400)
(65,165)
(6)
383,487
1,023,375
(639,888)
383,487
1. Impairment relates to assets associated with store space hand backs and support office onerous lease provision. (2018: assets associated with
store closures and space optimisation). Refer to note A3 for more information.
Accounting policy
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 the 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
(2018: 40 years)
(2018: 3 – 12.5 years)
(2018: 10 – 20 years)
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated
recoverable amount (refer to note C2).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss.
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
for the period ended 27 July 2019
61
C2 INTANGIBLE ASSETS
At 29 July 2017
Cost
Accumulated amortisation and impairment
Net book amount
Period ended 28 July 2018
Carrying amount at beginning of period
Additions
Transfer between classes
Assets written off – cost
Assets written off – accumulated amortisation
Impairment1
Amortisation charge2
Exchange differences
Carrying amount at end of period
At 28 July 2018
Cost
Accumulated amortisation and impairment
Net book amount
Period ended 27 July 2019
Carrying amount at beginning of period
Additions
Transfer between classes
Assets written off – cost
Assets written off – accumulated amortisation
Amortisation charge2
Exchange differences
Carrying amount at end of period
At 27 July 2019
Cost
Accumulated amortisation and impairment
Net book amount
Goodwill
$’000
Brand names
and trademarks
$'000
492,131
(27,097)
465,034
465,034
-
-
-
-
(465,034)
-
-
-
492,131
(492,131)
-
-
-
-
-
-
-
-
-
492,131
(492,131)
-
437,358
(15,405)
421,953
421,953
-
-
-
-
(50,315)
-
-
371,638
437,358
(65,720)
371,638
371,638
-
-
-
-
-
-
371,638
437,358
(65,720)
371,638
Software
$'000
268,445
(169,775)
98,670
98,670
37,899
10,637
(7,200)
7,108
(4,322)
(29,318)
39
113,513
309,820
(196,307)
113,513
113,513
16,223
993
(19)
9
(34,775)
22
95,966
327,039
(231,073)
95,966
Lease
rights
$'000
25,786
(25,786)
-
-
-
-
-
-
-
-
-
-
Total
$'000
1,223,720
(238,063)
985,657
985,657
37,899
10,637
(7,200)
7,108
(519,671)
(29,318)
39
485,151
25,786
(25,786)
-
1,265,095
(779,944)
485,151
-
-
-
(7,535)
7,535
-
-
-
485,151
16,223
993
(7,554)
7,544
(34,775)
22
467,604
18,251
(18,251)
-
1,274,779
(807,175)
467,604
1. In 2018, impairment was recognised on the Myer goodwill and brand name. Refer below for more information.
2. Amortisation of $34.8 million (2018: $29.3 million) is included in administration and selling expenses in the income statement.
Impairment of non-financial assets
AASB 136 Impairment of Assets requires goodwill and intangible assets with an indefinite useful life to be assessed at the end of each reporting period
where there is any indication that an asset may be impaired. A review of indicators of impairment using both external and internal sources of
information has been undertaken.
The brand names arising on the acquisition of the Myer business amounting to $352.5 million (2018: $402.8 million) cannot be allocated to the Group’s
individual cash generating units (CGU’s) (the Group’s stores), and hence has been allocated to the Myer business as a whole.
In 2018, the carrying value exceeded the recoverable amount and an impairment charge of $515.3 million was recognised in respect of goodwill
($465.0 million) and the Myer brand name ($50.3 million). This was included within restructuring and store exit costs, onerous lease expense and
impairment of assets in the consolidated income statement.
During the period, there were indicators of impairment due to the current market capitalisation position. As a result, the recoverable amount of the
assets relating to this CGU were assessed using a value-in-use discounted cash flow model. This model uses cash flow projections based on financial
forecasts approved by management covering a five-year period. Cash flows beyond five-year periods are extrapolated using a terminal growth rate.
The key assumptions used in the model are:
Key assumption
Discount rate (pre-tax)
2019
14.8%
2018
14.8%
Approach used to determine value
The pre-tax discount rate is sourced from observable market information and is risk-
adjusted relative to the risks associated with the net pre-tax cash flows being achieved.
Terminal growth rate
1.7%
1.7%
Average EBITDA margin
5.9%
5.4%
This is the weighted average growth rate used to extrapolate cash flows beyond the five-
year forecast period.
Average annual EBITDA margin over the five-year forecast period, applied to sales
forecast consistent with external market forecasts. The average annual EBITDA margin
is based on external sources of information, past performance and management’s
expectations. This assumption incorporates anticipated market conditions, sales
channel performance, and management’s expectations of margin improvement and
future cost saving initiatives.
The headroom approximates 10% of the CGU's net carrying value. Given the recoverable amount is marginally above its carrying value, any adverse
movements in key assumptions may lead to an impairment. The recoverable amount is based on operating and cashflow performance stabilising,
however the timing of cashflow benefits arising from initiatives could be influenced by market conditions.
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW
62
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
for the period ended 27 July 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
C2 INTANGIBLE ASSETS (CONTINUED)
Impairment of non-financial assets (continued)
The recoverable amount is highly sensitive to changes in the average EBITDA margin assumption. For the recoverable amount to approximate the
carrying value, a 30 basis points decrease in the average EBITDA margin would need to occur. Any reasonable possible change in other key
assumptions would not result in an impairment.
During the period, a review of the carrying value of the assets for each Myer store was undertaken and if indicators of impairment were identified, the
recoverable amount of these store assets would be determined using a value-in-use discounted cash flow model. This model uses cash flow
projections based on financial budgets approved by management covering a five-year period. The key assumptions in the model are consistent with
those noted above. Based on this, no impairment was identified at a Myer store level. In 2018, the Group identified indicators of impairment in respect
of the Mt Gravatt store and recognised an impairment of the store’s plant and equipment of $4.2 million.
Accounting policy
(i) Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more
frequently if events or changes in circumstances indicate they might be impaired. Other non-current assets are reviewed for impairment whenever
events or changes in circumstances indicate 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.
(ii) Goodwill
Goodwill is measured as described below under business combinations. 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.
(iii) Brand names and trademarks
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.
(iv) 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, initially being up to 10 years. The
assets' residual values and useful lives are reviewed annually and adjusted if appropriate, which may result in a useful life outside of this period.
(v) 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.
Business combinations
The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are
acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and
the equity interests issued by the Group. The consideration transferred also includes the fair value of any asset or liability resulting from a contingent
consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially
at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree
either at fair value or at the non-controlling interest's proportionate share of the acquiree’s 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, 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.
Critical accounting estimates and judgements - impairment
Goodwill and intangible assets that have an indefinite life are tested annually for impairment, or more frequently if there are indicators of impairment, in
accordance with the accounting policy noted above. The recoverable amount of cash generating units have been determined at a store level. Goodwill
and certain intangibles are tested for impairment at the level of the Group as a whole, using value-in-use calculations.
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
for the period ended 27 July 2019
63
C3 PROVISIONS
Current
Employee benefits
Support office onerous lease (i)
Restructuring (ii)
Workers' compensation (iii)
Sales returns (iv)
Other
Non-current
Employee benefits
Support office onerous lease (i)
Fixed lease rental increases (v)
Other
2019
$'000
2018
$'000
45,274
2,178
4,806
10,448
-
1,680
64,386
3,312
3,499
5,406
56
12,273
47,629
818
7,775
9,959
2,216
1,610
70,007
3,151
1,513
7,139
53
11,856
(i) Support office onerous lease
The support office onerous lease provision relates to excess office space identified, due to changes completed during the period and prior periods, and
is estimated based on the discounted future contractual cash flows under a non-cancellable lease expiring in 2022, net of future expected rental
income. Refer to note A3 for more information.
(ii) Restructuring
The restructuring provision relates to redundancy costs associated with restructuring of the organisational structure and the costs associated with store
closures and space hand backs committed but not yet paid. Refer to note A3 for more information.
(iii) Workers' compensation
The amount represents a provision for workers' compensation claims in certain states, for which the Group is self insured.
(iv) Sales returns
In 2018, this amount represented a provision for expected sales returns under the Group’s returns policy. On initial application of AASB 15, this is
recognised as a refund liability in trade and other payables, with a corresponding right to returned goods recognised in trade and other receivables.
Refer to section I for more information.
(v) Fixed lease rental increases
The Group is a party to a number of leases that include fixed rental increases during their term. In accordance with AASB 117 Leases , the total rentals
over these leases are being expensed over the lease term on a straight-line basis. The above provision reflects the difference between the future
committed payments under these leases and the total future expense. Due to the provision for support office onerous lease recognised during the
period, a portion of this provision has been written-back to reflect the realigned total future expense expected over the remaining lease term. Refer to
note A3 for more information.
Movement in provisions
Movement in each class of provision during the financial period, other than employee benefits, are set out below:
Support
office
onerous
lease Restructuring
$'000
$'000
Workers'
compensation
$'000
Sales
returns
$'000
Fixed lease
rental
increases
$'000
Other
$'000
Total
$'000
2,331
7,775
9,959
2,216
7,139
1,663
31,083
-
2,331
4,164
(818)
5,677
-
7,775
2,219
(5,188)
4,806
-
9,959
3,752
(3,263)
10,448
(2,216)
-
-
(2,216)
-
-
-
-
7,139
1,663
28,867
504
(2,237)
5,406
9,282
(9,209)
1,736
19,921
(20,715)
28,073
2019
Carrying amount at beginning
of period
Adjustment on initial
application of AASB 15
Restated carrying amount at
beginning of period
Additional provisions
recognised
Amounts utilised
Carrying amount at end of
period
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
2019
$'000
19,138
2018
$'000
19,984
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW
64
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
for the period ended 27 July 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
C3 PROVISIONS (CONTINUED)
Accounting policy
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.
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 corporate bonds with terms to maturity and currency that match, as closely as possible, the
estimated future cash outflows.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least
12 months after the reporting date, regardless of when the actual settlement is expected to occur.
(iii) 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.
(iv) 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.
C4 DEFERRED INCOME
Current
Lease incentives and contributions
Non-current
Lease incentives and contributions
2019
$'000
8,295
80,158
88,453
2018
$'000
10,294
80,629
90,923
Accounting policy
A number of lease agreements for stores include cash contributions provided by the lessor for fit-outs as a lease incentive or lease contribution. The
asset additions from the fit-outs completed are recognised as fixtures and fittings at cost and depreciated on a straight-line basis over the asset's
useful life. The lease incentive or lease contribution is presented as deferred income and reversed on a straight-line basis over the lease term.
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
for the period ended 27 July 2019
65
D. NET DEBT
This section provides additional information regarding lines in the financial statements that are most relevant to explaining the net debt position and
structure of the Group's borrowings for the period, which are key to financing the Group's activities both now and for the future.
The net debt of the Group as at 27 July 2019 and 28 July 2018 is as follows:
Total borrowings
Less: cash and cash equivalents
Net debt
The movement in net debt of the Group is as follows:
Opening balance
Net (increase)/decrease in cash and cash equivalents
Proceeds from/(repayment of) borrowings, net of transaction costs
Other non-cash movements
Closing balance
D1 CASH AND CASH EQUIVALENTS
Cash on hand
Cash at bank
2019
$'000
86,134
(47,450)
38,684
107,372
(5,657)
(64,915)
1,884
38,684
2019
$'000
2,422
45,028
47,450
2018
$'000
149,165
(41,793)
107,372
112,776
(11,202)
5,000
798
107,372
2018
$'000
2,745
39,048
41,793
Accounting policy
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.
D2 RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
Profit/(loss) for the period
Depreciation, amortisation and impairment, including lease incentives and contributions
Interest income
Interest expense
Share-based payments expense
Net exchange differences
Change in operating assets and liabilities
(Increase)/decrease in trade and other receivables and prepayments
Decrease/(increase) in inventories
(Decrease)/increase in deferred tax liabilities
(Increase)/decrease in derivative financial instruments
(Decrease)/increase in trade and other payables
Increase/(decrease) in current tax payable
Increase/(decrease) in provisions
(Decrease)/increase in other liabilities
Net cash inflow from operating activities
2019
52 weeks
$'000
24,474
94,051
(556)
1,884
(1,292)
(484)
(6,757)
21,342
(5,730)
(2,148)
(5,361)
959
(5,204)
(99)
115,079
2018
52 weeks
$'000
(486,002)
611,526
(397)
798
982
(439)
976
8,004
(23,829)
(5,076)
9,936
2,694
(9,853)
(119)
109,201
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW
66
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
for the period ended 27 July 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
D3 BORROWINGS
(a) Structure of debt
The debt funding of the Group at 27 July 2019 is a syndicated facility, which contains an amortising term loan tranche and a revolving tranche. This
facility was established on 23 November 2018, and drawn down on 26 November 2018. As at 27 July 2019, the following amounts were drawn:
Bank loans
Less: transaction costs
Borrowings
2019
$'000
90,000
(3,866)
86,134
2018
$'000
150,000
(835)
149,165
The terms and conditions of the Group's revolving cash advance facility is as follows:
Amortising term loan - Tranche A1
Revolving - Tranche B2
Amount
$90 million
$300 million
Term
2.25 years
2.25 years
Expiry date
28 February 2021
28 February 2021
1. This tranche was $100 million when the facility was established and is fully drawn during its term. The limit steps down by $10 million every six
months from 31 March 2019. The Group has the discretion to draw Tranche B to at least the equivalent of the step downs in Tranche A at all times
during the next 12 months.
2. This tranche is revolving and amounts repaid may be redrawn during their term. This tranche limit steps down to $260 million from 23 May 2020 until
expiry.
(b) Security
The syndicated facility in place at 27 July 2019 is secured. The syndicated facility is subject to various representations, undertakings, events of default
and review events.
(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 borrowings are set out in note E1.
(e) Debt covenants
Under the terms of the syndicated facility, the Group is required to comply with the following financial covenants:
Net Leverage Ratio
Fixed Charge Cover Ratio (November 2018 - March 2019)
Fixed Charge Cover Ratio (April 2019 - March 2020)
Fixed Charge Cover Ratio (April 2020 - February 2021)
Minimum Shareholders' Funds
Covenant
≤ 2.25x
≥ 1.40x
≥ 1.45x
≥ 1.50x
≥ $400 million
Accounting policy
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.
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.
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
for the period ended 27 July 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
67
E. RISK MANAGEMENT
This section provides information relating to the Group's exposure to various financial risks, how they could affect the Group's financial position and
performance and how these risks are managed.
E1 FINANCIAL RISK MANAGEMENT
The Group's activities expose it to a variety of financial risks: market risk (including foreign exchange and interest rate risk), credit risk and liquidity
risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse
effects on the financial performance of the Group. The Group uses derivative financial instruments such as forward foreign exchange contracts and
interest rate swaps to hedge certain risk exposures. Derivatives are exclusively used for hedging purposes and are not used as trading or other
speculative instruments.
The Group’s financial risk management is predominantly controlled by the centralised Group Treasury function under the Group’s financial risk
management policies approved by the Board of Directors. The Group Treasury function is responsible for the identification and management of
financial risks, with the co-operation of other Group functions. 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.
Where all relevant criteria are met, hedge accounting is applied to remove the accounting mismatch between the hedging instrument and the hedged
item. This will effectively result in recognising interest expense at a fixed interest rate for the hedged floating rate borrowings and inventory at a fixed
foreign currency rate for the hedged purchases.
Financial Instruments
The Group holds the following financial instruments, classified under the categories in the table below:
At 27 July 2019
Financial assets
Cash and cash equivalents
Trade and other financial receivables
Derivative financial instruments
Total financial assets
Financial liabilities
Trade and other financial payables1
Long-term borrowings
Derivative financial instruments
Total financial liabilities
At 28 July 2018
Financial assets
Cash and cash equivalents
Trade and other financial receivables
Derivative financial instruments
Total financial assets
Financial liabilities
Trade and other financial payables1
Long-term borrowings
Derivative financial instruments
Total financial liabilities
Note
D1
B1
E1
B3
D3
E1
D1
B1
E1
B3
D3
E1
Total
$'000
47,450
18,868
5,789
72,107
282,142
86,134
135
368,411
41,793
13,012
6,994
61,799
295,636
149,165
128
444,929
Amortised
cost
Fair value
through OCI
$'000
47,450
18,868
-
66,318
282,142
86,134
-
368,276
41,793
13,012
-
54,805
295,636
149,165
-
444,801
$'000
-
-
5,789
5,789
-
-
135
135
-
-
6,994
6,994
-
-
128
128
1. Trade and other financial payables comprise trade payables, other financial payables and accruals.
(a) Market risk
(i) Foreign exchange risk
The Group is exposed to foreign exchange risk when there is mismatch between the currencies in which future commercial transactions and assets
and liabilities recognised are denominated, and the respective functional currency of the Group companies.
The focus of the Group’s foreign exchange risk management activities is on the transaction exposures that arise on the sourcing and purchasing of
inventory overseas, with these transactions primarily denominated in United States Dollar (USD) and some denominated in Euro (EUR). This risk is
hedged with the objective of minimising the volatility of the Australian Dollar (AUD) cost of highly probably forecast inventory purchases.
The Group’s treasury risk management policy is to hedge forecast USD and EUR cash flows for inventory purchases, up to 18 months in advance. The
amount of hedging required is dependent on the timing of the settlement of the forecast inventory purchases, with a higher percentage required to be
hedged for inventory purchases with an earlier settlement.
The Group uses forward foreign exchange contracts to hedge its exposure to foreign currency risk. The Group designates the forward rate of foreign
currency forwards to hedge its currency risk. The Group’s policy is for the critical terms of the forward foreign exchange contracts to align with the
hedged item.
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW
68
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
for the period ended 27 July 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
E1 FINANCIAL RISK MANAGEMENT (CONTINUED)
(a) Market risk (continued)
(i) Foreign exchange risk (continued)
At the end of the reporting period, the Group is holding the following forward foreign exchange contracts:
Carrying amount - Derivative Financial Instruments (Asset)
Carrying amount - Derivative Financial Instruments (Liability)
Notional amount
Maturity date
Change in fair value of the hedging instrument used as the basis for recognising hedge ineffectiveness
Change in value of hedged item used to determine hedge effectiveness
Weighted average hedged rate (AUD/USD)
Weighted average hedged rate (AUD/EUR)
Exposure
At the end of the reporting period, the Group’s exposure to foreign exchange risk, expressed in AUD, was as follows:
2019
$'000
5,789
69
205,112
Aug 2019 -
Dec 2020
(1,198)
1,198
0.700
0.618
2018
$'000
6,994
76
173,510
Aug 2018 -
Dec 2019
15,289
(15,289)
0.741
0.626
Cash and cash equivalents
Trade receivables
Trade payables
Forward exchange contracts
USD
$'000
2,311
2
25,536
199,062
2019
EURO
$'000
873
-
413
6,050
Other
$'000
2,513
93
98
-
USD
$'000
109
10
23,765
166,659
2018
EURO
$'000
347
-
98
6,851
Other
$'000
1,382
-
13
-
Sensitivity
As shown in the table above, the Group is primarily exposed to changes in USD/AUD and EUR/AUD exchange rates. The table below shows the
impact of reasonably possible foreign exchange movements in the USD and EUR against the AUD and the effect this would have on the measurement
of the financial instruments denominated in these currencies:
Currency
United States Dollar
United States Dollar
Euro
Euro
Sensitivity assumption
+10%
-10%
+10%
-10%
Impact directly on equity
2019
$'000
18,735
(15,297)
1,500
(1,227)
2018
$'000
16,866
(13,799)
1,048
(858)
(ii) Interest rate risk
The Group is exposed to interest rate risk from floating rate long-term bank borrowings. The Group’s policy is to maintain an appropriate mix between
fixed and floating rate borrowings through the use of interest rate swap contracts. This risk is managed through the forecasting of expected borrowings
to determine the level of exposure to floating rates.
At the end of the reporting period, the Group is holding the following interest rate swap contracts:
Carrying amount - Derivative Financial Instruments (Liability)
Notional amount
Maturity date
Change in fair value of the hedging instrument used as the basis for recognising hedge ineffectiveness
Change in value of hedged item used to determine hedge effectiveness
Weighted average hedged rate
2019
$'000
66
50,000
Aug 2019
(14)
14
4.7%
2018
$'000
52
100,000
Aug 2018 -
Aug 2019
139
(139)
3.3%
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
for the period ended 27 July 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
69
E1 FINANCIAL RISK MANAGEMENT (CONTINUED)
(a) Market risk (continued)
(ii) Interest rate risk (continued)
Exposure
At the end of the reporting period, the Group’s exposure to interest rate risk was as follows:
Cash and cash equivalents
Floating rate borrowings
2019
$'000
47,450
86,134
2018
$'000
41,793
149,165
Sensitivity
The table below shows the impact if the Group’s period end floating interest rates changed, with all other variables held constant:
Interest rate - increase 10%
Interest rate - decrease 10%
Impact on post
Impact directly
tax profit
on equity
2019
$'000
(45)
45
2018
$'000
(68)
68
2019
$'000
-
-
2018
$'000
(96)
96
This assumes that the change in interest rates is effective from the beginning of the financial period and the net debt position and fixed/floating mix is
constant over the period. However, interest rates and the debt profile of the Group are unlikely to remain constant and therefore the above sensitivity
analysis will be subject to change.
(iii) Hedge ineffectiveness
Hedge ineffectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure
that an economic relationship exists between the hedged item and hedging instrument.
For hedges of foreign currency purchases, the group enters into hedge relationships where the critical terms of the hedging instrument match exactly
with the terms of the hedged item. The Group therefore performs a qualitative assessment of effectiveness. If changes in circumstances affect the
terms of the hedged item such that the critical terms no longer match exactly with the critical terms of the hedging instrument, the Group uses the
hypothetical derivative method to assess effectiveness.
The Group enters into interest rate swaps that have similar critical terms as the hedged item, such as reference rate, payment dates, maturities and
notional amount. The Group does not hedge 100% of its loans, therefore the hedged item is identified as the proportion of the outstanding loans up to
the notional amount of the swaps. As all critical terms matched during the period, the economic relationship was 100% effective.
(b) Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. This
arises primarily from the following assets: cash and cash equivalents, trade and other receivables and derivative financial instruments.
Group Treasury manages credit risk from banks and financial institutions, in accordance with Board approved policy. The policy is to limit the Group’s
loss from default by any one counterparty by dealing only with banks and financial institution counterparties whose long-term credit rating is at or
above an 'A' rating.
Trade and other receivables balances outstanding with third parties are primarily ad-hoc in nature and the credit quality of the third party is assessed
by taking into account its financial position, past experience and other relevant factors.
Sales to retail customers are primarily required to be settled in cash or using major credit cards, mitigating credit risk. There are no significant
concentrations of credit risk, whether through exposure to individual customers, specific industry sectors and/or regions.
Exposure
At the end of the reporting period, the maximum credit risk exposure is the carrying value of the financial assets below:
Cash and cash equivalents
Trade and other financial receivables
Derivative financial instruments - assets
2019
$'000
47,450
18,868
5,789
2018
$'000
41,793
13,012
6,994
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW
70
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
for the period ended 27 July 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
E1 FINANCIAL RISK MANAGEMENT (CONTINUED)
(b) Credit risk (continued)
Trade and other receivables
The Group applies the AASB 9 simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance for all trade
and other receivables.
To measure the expected credit losses, trade and other receivables have been grouped based on shared credit risk characteristics and the days past
due. The expected credit loss rates are based on historical observed default rates, adjusted to reflect current and forward looking information on
macroeconomic factors affecting the ability of customers to settle the receivables.
The difference between the expected loss allowance under AASB 9 compared to the provision for doubtful debt under AASB 139 is not material to the
Group. Refer to note B1 for more information.
Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery
include, amongst others, the failure of a debtor to engage in a repayment plan with the Group.
(c) Liquidity risk
The Group adopts a prudent liquidity risk management strategy by seeking to maintain sufficient cash and availability of funding through an adequate
amount of committed credit facilities to meet financial obligations as and when they fall due. The Group’s objective is to maintain flexibility in funding
given the seasonal nature of the retail business.
The Group monitors forecast and actual cash flows and performs sensitivity analysis, to ensure at all times there is an appropriate minimum level of
liquidity available through committed undrawn borrowing facilities and cash and cash equivalents.
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)
Refer to note D3 for more information.
2019
$'000
-
300,000
300,000
2018
$'000
-
270,000
270,000
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
6 - 12
months
Between
1 and 2
years
Between
2 and 5
years
Over 5
years
Total
contractual
cash flows
$'000
$'000
$'000
$'000
$'000
$'000
Carrying
amount
(assets)/
liabilities
$'000
2019
Non-derivatives
Non-interest bearing
Variable rate
Total non-derivatives
Derivatives
Net settled (interest rate
swaps)
Gross settled
- (inflow)
- outflow
Total derivatives
2018
Non-derivatives
Non-interest bearing
Variable rate
Total non-derivatives
Derivatives
Net settled (interest rate
swaps)
Gross settled
- (inflow)
- outflow
Total derivatives
282,142
11,736
293,878
-
11,376
11,376
-
70,649
70,649
66
-
-
(104,684)
100,851
(3,767)
295,636
101,294
396,930
(83,567)
81,763
(1,804)
-
867
867
(22,601)
22,498
(103)
-
50,440
50,440
30
(16)
(8)
(93,297)
89,308
(3,959)
(72,889)
70,220
(2,685)
(14,239)
13,982
(265)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
282,142
93,761
375,903
282,142
90,000
372,142
66
66
(210,852)
205,112
(5,674)
(5,789)
69
(5,654)
295,636
152,601
448,237
295,636
150,000
445,636
6
52
(180,425)
173,510
(6,909)
(6,994)
76
(6,866)
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
for the period ended 27 July 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
71
E1 FINANCIAL RISK MANAGEMENT (CONTINUED)
(d) Fair value measurements
The Group has the following derivative financial instruments:
Current assets
Forward foreign exchange contracts
Total current derivative financial instrument assets
Non-current assets
Forward foreign exchange contracts
Total non-current derivative financial instrument assets
Current liabilities
Forward foreign exchange contracts
Interest rate swap contracts
Total current derivative financial instrument liabilities
Non-current liabilities
Forward foreign exchange contracts
Interest rate swap contracts
Total non-current derivative financial instrument liabilities
2019
$'000
5,688
5,688
101
101
66
66
132
-
3
3
2018
$'000
6,725
6,725
269
269
-
64
64
12
52
64
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
• Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities;
• Level 2: 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; and
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
All of the Group’s financial instruments were valued using the Level 2 technique, with no transfers between levels during the period.
The fair value of forward foreign exchange contracts is determined using the present value of future cash flows based on the forward exchange rates
at the end of the reporting period. The fair value of interest rate swaps is determined using the present value of the estimated future cash flows based
on observable yield curves.
Accounting policy - Financial assets and liabilities
Classification
From 29 July 2018, the group classifies its financial assets in the following measurement categories:
• those to be measured subsequently at fair value (either through OCI or through profit or loss); and
• those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments that are not
held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity
investment at fair value through other comprehensive income (FVOCI).
Initial recognition and measurement
At initial recognition, the group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss
(FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are
expensed in profit or loss.
(i) Financial assets at amortised cost (debt instruments)
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured
at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss
arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and losses.
Impairment losses are recognised in profit or loss. Trade receivables that do not contain a significant financing component or for which the Group has
applied the practical expedient are measured at the transaction price determined under AASB 15.
(ii) Financial assets at fair value through OCI (debt instruments)
Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments
of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment
gains or losses, interest income and foreign exchange gains and losses which are recognised in profit or loss. When the financial asset is
derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other
gains/(losses). Interest income from these financial assets is included in finance income using the effective interest rate method. Foreign exchange
gains and losses are presented in other gains/(losses) and impairment expenses are recognised in profit or loss.
(iii) Financial assets at fair value through profit or loss (debt instruments)
Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a debt investment that is subsequently
measured at FVPL is recognised in profit or loss and presented net within other gains/(losses) in the period in which it arises.
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW
72
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
for the period ended 27 July 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
E1 FINANCIAL RISK MANAGEMENT (CONTINUED)
Accounting policy - Financial assets and liabilities (continued)
(iv) Financial assets designated at fair value through OCI (equity instruments)
The Group subsequently measures all equity investments at fair value. Where the Group’s management has elected to present fair value gains and
losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition
of the investment. Dividends from such investments continue to be recognised in profit or loss as other income when the Group’s right to receive
payments is established.
Changes in the fair value of financial assets at FVPL are recognised in other gains/(losses) in profit or loss, as applicable. Impairment losses (and
reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
Derecognition
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.
Impairment
From 29 July 2018, the Group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised
cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
For trade receivables, the Group applies the simplified approach permitted by AASB 9, which requires expected lifetime losses to be recognised from
initial recognition of the receivables. Refer to note E1(b) for more information.
Accounting policy - Derivatives
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 economic 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 changes in the cash flows of the hedging instruments are expected to offset changes in the 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 hedged 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.
When forward contracts are used to hedge forecast transactions, the Group designates the full change in fair value of the forward contract (including
forward points) as the hedging instrument. Gains or losses relating to the effective portion of the change in the fair value of the entire forward contracts
are recognised in the cash flow hedge reserve within equity.
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 at the same time as the interest expense on the hedged borrowings.
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.
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
for the period ended 27 July 2019
73
F. EQUITY
This section provides additional information regarding lines in the financial statements that are most relevant to explaining the equity position of the
Group at the end of the period, including the dividends declared and/or paid during the period.
F1 CONTRIBUTED EQUITY
Ordinary shares - fully paid
Treasury shares
Opening balance
Shares acquired by Myer Equity Plans Trust on market at $0.69
Shares acquired by Myer Equity Plans Trust on market at $0.52
Shares issued for performance rights granted
Closing balance of Treasury shares
Closing balance
2019
Number of
shares
821,278,815
2018
Number of
shares
821,278,815
2019
2018
$'000
779,963
$'000
779,963
(1,553)
-
(504,356)
173,913
(331,996)
820,946,819
(11,228)
(450,000)
-
459,675
(1,553)
821,277,262
(40,943)
-
(261)
-
(41,204)
738,759
(40,634)
(309)
-
-
(40,943)
739,020
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.
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. Refer to note H4 for more information.
Employee share schemes
Information relating to the employee share-based payment schemes, including details of shares issued under the schemes, is set out in note H4.
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 27 July 2019 and 28 July 2018 were as follows:
Total borrowings (note D3)
Less: cash and cash equivalents (note D1)
Net debt
Total equity
Total capital
Gearing ratio
The decrease in the gearing ratio during 2019 was driven by the decrease in net debt.
Accounting policy
Ordinary shares are classified as equity.
2019
$'000
86,134
(47,450)
38,684
602,056
640,740
6.0%
2018
$'000
149,165
(41,793)
107,372
583,989
691,361
15.5%
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.
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW
74
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
for the period ended 27 July 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
F2 ACCUMULATED LOSSES AND RESERVES
(a) Accumulated losses
Movements in Accumulated losses were as follows:
Balance at beginning of period
Adjustment on initial application of AASB 15, net of tax
Restated balance at beginning of period
Profit/(loss) 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)
Movements in reserves were as follows:
Share-based payments
Balance at beginning of period
Share-based payments (credit)/expense recognised (note H4)
Income tax (note A4)
Balance at end of period
Cash flow hedges
Balance at beginning of period
Net gain/(loss) on revaluation
Transfer to net profit
Balance at end of period
Foreign currency translation
Balance at beginning of period
Exchange differences on translation of foreign operations during the period
Balance at end of period
2019
$'000
2018
$'000
(160,282)
(2,833)
(163,115)
24,474
-
(138,641)
27,022
4,738
(25,621)
(4,201)
1,938
27,931
(1,292)
383
27,022
6,658
(1,212)
(708)
4,738
(3,717)
(484)
(4,201)
342,146
-
342,146
(486,002)
(16,426)
(160,282)
27,931
6,658
(25,621)
(3,717)
5,251
27,186
982
(237)
27,931
(6,894)
15,428
(1,876)
6,658
(3,278)
(439)
(3,717)
(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 H4.
(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 E1. Amounts are recognised in the income statement when the associated hedged transaction affects profit or loss.
(iii) Other reserve
The Group acquired 65% of the sass & bide business in 2011, and the non-controlling shareholders held a put option over the remaining 35%. This
resulted in the Group recognising a financial liability for the put option and a corresponding amount in other reserve. In 2014, upon acquisition of the
remaining 35% of sass & bide, the cash payment of $33.4m was recorded against the 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 and accumulated in a
separate reserve within equity. The cumulative amount is reclassified to the income statement when the net investment is disposed of.
Accounting policy
(i) Functional and presentation currency
Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in
which the entity operates ('the functional currency'). The consolidated financial statements are presented in Australian dollars, which is Myer Holdings
Limited’s functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions and from the translation at end of period exchange rates of monetary
assets and liabilities denominated in foreign currencies are generally recognised in profit or loss. They are deferred in equity if they relate to 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.
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
for the period ended 27 July 2019
75
F2 ACCUMULATED LOSSES AND RESERVES (CONTINUED)
Accounting policy (continued)
(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.
F3 DIVIDENDS
(a) Ordinary shares
Final fully franked dividend for the period ending 28 July 2018 of nil (29 July 2017: 2.0 cents) per fully paid share
(2018: paid 8 November 2017)
Total dividends paid
(b) Dividends not recognised at the end of the reporting period
The directors have determined that no final dividend will be payable (2018: no final dividend)
2019
$'000
2018
$'000
-
-
16,426
16,426
(c) Franked dividends
The franked portions of final dividends recommended after 27 July 2019 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 2020
Franking credits available for subsequent financial periods based on a tax rate of 30% (2018: 30%)
54,736
40,277
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.
Accounting policy
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.
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW
76
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
for the period ended 27 July 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
G. GROUP STRUCTURE
This section summarises how the Group structure affects the financial position and performance of the Group as a whole.
G1 SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting
policy described below:
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 USA inc.
sass & bide inc.
Marcs David Lawrence Pty Ltd
Country of
incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Hong Kong
China
Australia
Australia
Australia
Australia
USA
USA
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
Equity
holdings(4)
2019
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Equity
holdings(4)
2018
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Notes
(1), (3)
(2), (3)
(2), (3)
(1), (3)
(2), (3)
(1), (3)
(1), (3)
(1), (3)
(2), (3)
(2)
(2)
(2)
(1), (3)
(1), (3)
(2), (3)
(2), (3)
(1), (3)
(1) Each of these entities has been granted relief from the necessity to prepare financial statements in accordance with ASIC Corporations (Wholly-
owned Companies) Instrument 2016/785.
(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 to note G2.
(4) The proportion of ownership interest is equal to the proportion of voting power held.
Accounting policy
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Myer Holdings Limited ('Company' or 'parent entity') as
at 27 July 2019 and the results of all subsidiaries for the period then ended.
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the
activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the
date that control ceases. The acquisition method of accounting is used to account for business combinations by the Group (refer to note C2).
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.
Employee Share Trust
The Group has 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.
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
for the period ended 27 July 2019
77
G2 DEED OF CROSS GUARANTEE
The following entities are parties to a deed of cross guarantee under which each company guarantees the debts of the others:
• Myer Holdings Limited
• NB Elizabeth Pty Ltd
• NB Russell Pty Ltd
• Myer Group Pty Ltd
• NB Lonsdale Pty Ltd
• NB Collins Pty Ltd
• Warehouse Solutions Pty Ltd
• Myer Pty Ltd
• Myer Group Finance Limited
• The Myer Emporium Pty Ltd
• Boogie & Boogie Pty Ltd
• sass & bide Pty Ltd
• sass & bide Retail Pty Ltd
• sass & bide Retail (NZ) Pty Ltd
• Marcs David Lawrence Pty Ltd
By entering into the deed, the wholly-owned entities within note reference 1 in note G1 have been relieved from the requirements to prepare a financial
report and directors' report under ASIC Corporations (Wholly-owned Companies) Instrument 2016/785.
The above companies represent a 'closed group' for the purposes of the ASIC Legislative Instrument, 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'.
(a) Consolidated income statement, statement of comprehensive income and summary of movements in consolidated accumulated losses
Set out below is a consolidated income statement, statement of comprehensive income and a summary of movements in consolidated accumulated
losses for the closed group for the period ended 27 July 2019:
Income statement
Total sales
Concession sales
Sale of goods
Sales revenue deferred under customer loyalty program
Revenue from sale of goods
Other operating revenue
Cost of goods sold
Operating gross profit
Selling expenses
Administration expenses
Restructuring and store exit costs, onerous lease expense and impairment of assets
Earnings/(loss) before interest and tax
Finance revenue
Finance costs
Net finance costs
Profit/(loss) before income tax
Income tax (expense)/benefit
Profit/(loss) for the period attributable to Deed of Cross Guarantee group
Statement of comprehensive income
Profit/(loss) for the period
Other comprehensive income/(loss)
Items that may be reclassified to profit or loss:
Cash flow hedges
Exchange differences on translation of foreign operations
Other comprehensive income/(loss) for the period, net of tax
Total comprehensive income/(loss) for the period
Summary of movements in accumulated losses
Balance at beginning of period
Adjustment on initial application of AASB 15, net of tax
Restated balance at beginning of period
Profit/(loss) for the period
Dividends paid
Balance at end of period
2019
52 weeks
$'000
2,991,795
(612,193)
2,379,602
(34,545)
2,345,057
153,576
(1,337,739)
1,160,894
(822,832)
(281,115)
(12,140)
44,807
556
(12,072)
(11,516)
33,291
(8,892)
24,399
2018
52 weeks
$'000
3,100,554
(653,983)
2,446,571
(36,583)
2,409,988
162,299
(1,387,693)
1,184,594
(831,122)
(297,736)
(541,190)
(485,454)
397
(9,471)
(9,074)
(494,528)
8,838
(485,690)
24,399
(485,690)
(1,920)
33
(1,887)
22,512
(154,708)
(2,833)
(157,541)
24,399
-
(133,142)
13,552
81
13,633
(472,057)
347,408
-
347,408
(485,690)
(16,426)
(154,708)
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW
78
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
for the period ended 27 July 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
G2 DEED OF CROSS GUARANTEE (CONTINUED)
(b) Consolidated balance sheet
Set out below is a consolidated balance sheet as at 27 July 2019 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
Property, plant and equipment
Intangible assets
Derivative financial instruments
Other non-current assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Provisions
Deferred income
Derivative financial instruments
Current tax liabilities
Other liabilities
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Deferred income
Deferred tax liabilities
Derivative financial instruments
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Accumulated losses
Reserves
Total equity
2019
$'000
2018
$'000
45,569
41,505
346,100
5,688
438,862
383,487
467,550
101
5,490
856,628
1,295,490
372,384
64,267
8,295
132
5,280
373
450,731
86,134
12,217
80,158
55,841
3
234,353
685,084
610,406
40,358
37,491
365,764
6,725
450,338
424,076
484,706
269
3,194
912,245
1,362,583
380,812
69,971
10,294
64
4,711
472
466,324
149,165
11,804
80,629
62,615
64
304,277
770,601
591,982
738,759
(133,142)
4,789
610,406
739,021
(154,708)
7,669
591,982
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
for the period ended 27 July 2019
79
G3 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 reserves
Share-based payments
Retained profits reserve - pre 2018
Accumulated losses reserve - 2018
Retained profits reserve - 2019
Profit/(loss) for the period1
Total comprehensive income/(loss) for the period
(b) Guarantees entered into by the parent entity
Carrying amount included in current liabilities
2019
$'000
162,962
541,962
20,552
106,686
2018
$'000
227,811
599,747
19,726
168,943
738,759
739,020
(82)
(2,653)
21,011
78,947
(406,747)
6,041
6,041
6,024
(65)
(2,653)
22,302
78,947
(406,747)
-
(406,747)
(406,270)
-
-
1. In 2018, the loss reflected the impairment recognised on the investments held in subsidiaries within the Group. Refer to note C2 for more
information.
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 the deed of cross guarantee. The details of the deed of cross guarantee are set out in note G2. At the end of the
reporting period, no liability has been recognised in relation to these guarantees on the basis that the potential exposure is not considered material.
(c) Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities as at 27 July 2019 or 28 July 2018.
(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 27 July 2019 or 28 July 2018.
(e) Event subsequent to balance date
Refer to note H6 for additional events which have occurred after the financial reporting date.
Accounting policy
The financial information that is disclosed for the parent entity, Myer Holdings Limited, 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.
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW
80
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
for the period ended 27 July 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
H. OTHER FINANCIAL INFORMATION
This section of the notes includes other financial information that must be disclosed to comply with the accounting standards and other
pronouncements, but that is not immediately related to individual line items in the financial statements. This section also provides information about
items that are not recognised in the financial statements as they do not (yet) satisfy the recognition criteria.
H1 CONTINGENCIES
Contingent liabilities
The Group had contingent liabilities at 27 July 2019 in respect of:
Guarantees
The Group has issued bank guarantees amounting to $26.9 million (2018: $37.0 million), of which $16.9 million (2018: $18.5 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, refer to notes G2 and G3.
There can be legal claims and exposures which arise from the ordinary course of business. There is significant uncertainty as to whether a future
liability will arise in respect of these items, or the amount of any such liability.
H2 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
(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
2019
$'000
5,795
-
-
5,795
2018
$'000
12,836
-
-
12,836
223,594
766,995
1,437,313
2,427,902
222,207
780,690
1,534,659
2,537,556
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.
A number of lease agreements for stores include cash contributions provided by the lessor for fit-outs and referred to as a lease incentive or lease
contribution. Refer to note C4 for more information.
Accounting policy
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. 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.
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
for the period ended 27 July 2019
81
H3 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 G1.
(c) Key Management Personnel
(i) Compensation
Key Management Personnel compensation for the period ending 27 July 2019 is set out below. The Key Management Personnel of the Group are
persons having the authority for planning, directing and controlling the Company's activities directly or indirectly, including the directors of Myer
Holdings Limited.
Short term employee benefits
Post employment benefits
Long term benefits
Termination and other payments
Share-based payments
2019
$
4,861,515
137,362
14,628
1,087,912
869,866
6,971,283
2018
$
4,210,571
183,409
(193,969)
2,566,873
(135,304)
6,631,580
Detailed remuneration disclosures are provided in the Remuneration Report on pages 27 to 48.
(ii) Loans
In 2019 and 2018 there were no loans made to directors of Myer Holdings Limited and other Key Management Personnel of the Group, including their
related parties.
(iii) Other transactions
The transactions with Key Management Personnel or entities related to them are as disclosed in the Remuneration Report.
(d) Transactions with other related parties
There were no material transactions with other related parties during the current period.
H4 SHARE-BASED PAYMENTS
(a) Long Term Incentive Plan
The Myer Long Term Incentive Plan (LTIP) is an incentive that is intended to promote alignment between executive and shareholder interests over the
longer term. Under the LTIP, performance rights and options may be offered annually to the Chief Executive Officer and nominated executives. The
employees invited to participate in the plan include executives who are considered to play a leading role in achieving the Company’s long term
strategic and operational objectives.
Each right offered is an entitlement to one fully paid ordinary share in the Company, subject to adjustment for capital actions, on terms and hurdles
determined by the Board, including hurdles linked to Company performance and service. Performance options vest and are automatically exercised on
a net settlement basis.
The LTIP is delivered via a grant of performance rights or options. The number of performance rights or options that vest is not determined until after
the end of the performance period. The performance right or option will therefore not provide any value to the holder between the date the performance
right or option is granted until after the end of the vesting period, if the performance hurdles and restriction period (if applicable) are satisfied.
Performance rights and options do not carry entitlements to ordinary dividends or other shareholder rights until the end of the vesting period.
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW
82
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
for the period ended 27 July 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
H4 SHARE-BASED PAYMENTS (CONTINUED)
(a) Long Term Incentive Plan (continued)
Set out below is a summary of performance rights and options granted under the plan:
2019
Performance rights
Performance options
Total
Weighted average exercise price
2018
Performance rights
Weighted average exercise price
Granted
Balance
28 July 2018
Expired and
lapsed
13,692,652 192,307 (173,913) (4,890,409)
(1,561,290)
13,692,652 36,025,869 (173,913) (6,451,699)
$0.10
35,833,562
Exercised
$0.00
$0.42
$0.00
-
-
Balance 29 July
2017
Expired and
lapsed
10,645,383 14,238,436 (459,675) (10,731,492)
$0.00
Exercised
Granted
$0.00
$0.00
$0.00
Balance
27 July 2019
8,820,637
34,272,272
43,092,909
$0.33
Balance
28 July 2018
13,692,652
$0.00
The weighted average remaining contractual life of share rights and options outstanding at the end of the period was 2.0 years (2018: 1.6 years).
Fair value of performance options granted
The assessed fair value at grant date of options 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 options, 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 option. The fair values and model inputs for performance options granted
during the period included:
(a) Fair value of performance options granted
(b) Grant date
(c) Expiry date
(d) Share price at grant date
(e) Expected price volatility of the Group’s shares
(f) Expected dividend yield
(g) Risk-free interest rate
2019 LTIP
Options (TSR)
$0.12
24-Dec-18
24-Dec-22
$0.40
48%
0%
1.88%
2019 LTIP
Options
(EPS)
$0.12
24-Dec-18
24-Dec-22
$0.40
48%
0%
1.88%
The expected price volatility is based on the historic volatility (based on the remaining life of the performance options), adjusted for any expected
changes to future volatility due to publicly available information.
Where options are issued to employees of subsidiaries within the Group, the subsidiaries compensate the Company for the amount recognised as
expense in relation to these options.
(b) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit expense were as follows:
Rights and options issued under the LTIP
2019
$'000
(1,292)
2018
$'000
982
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 rights or options 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.
Accounting policy
Share-based compensation benefits are provided to employees through the Myer Long Term Incentive Plan (LTIP).
The fair value of rights and options granted under a plan are 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 rights and 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 rights and 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
Group revises its estimates of the number of rights or 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 LTIP is administered by the Myer Equity Plan Trust (refer to note G1). When rights or options are vested, 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.
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
for the period ended 27 July 2019
83
H5 REMUNERATION OF AUDITORS
During the period, the following fees were paid or payable for services provided by the auditor of the Group, and its related practices:
(a) PwC Australia
(i) Assurance services
Audit services
Audit and review of financial statements
Other assurance services
Audit of rent certificates
Total remuneration for audit and other assurance services
(ii) Taxation services
Tax compliance services
(iii) Other services
Legal services
Consulting services
Total remuneration of PwC Australia
(b) Overseas practices of PwC
(i) Assurance services
Audit services
Audit and review of financial statements
(ii) Taxation services
Tax compliance services
Total remuneration for overseas practices of PwC
H6 EVENTS OCCURRING AFTER THE REPORTING PERIOD
Dividends on the Company's ordinary shares
The directors have determined that no final dividend will be payable for the period ended 27 July 2019.
2019
$
2018
$
428,000 487,095
57,851 48,232
485,851 535,327
43,000
2,400
- 175,855
492,627 343,676
1,021,478 1,057,258
70,719 66,888
- 13,620
70,719 80,508
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW 84
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
for the period ended 27 July 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
I. OTHER ACCOUNTING POLICIES
This section provides a list of other accounting policies adopted in the preparation of these consolidated financial statements. Specific accounting
policies are disclosed in their respective notes to the financial statements. This section also provides information on the impacts of new accounting
standards, amendments and interpretations, and whether they are effective in the current or future reporting periods.
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').
(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 2001. 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 notes A2, B2 and C2.
(b) Rounding of amounts
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191 and, except where
otherwise stated, amounts in the consolidated financial statements have been rounded off to the nearest thousand dollars, or in certain cases, to the
nearest dollar.
(c) New accounting standards and interpretations
(i) New and amended standards adopted by the Group
The Group has adopted AASB 9 Financial Instruments and AASB 15 Revenue from Contracts with Customers from 29 July 2018. None of the other
new standards or amendments to existing standards that are mandatory for the first time for the 27 July 2019 reporting period materially affected any
of the amounts recognised in the current period or any prior period, and are not likely to significantly affect future periods.
AASB 9 Financial Instruments
AASB 9 Financial Instruments has replaced AASB 139 Financial Instruments: Recognition and Measurement . The new standard has been adopted by
the Group from 29 July 2018. This standard addresses the classification, measurement and derecognition of financial assets and liabilities, and
introduces new rules for hedge accounting and a new impairment model for financial assets based on expected credit losses.
AASB 9 replaces the 'incurred loss' model under AASB 139 with an 'expected credit loss' (ECL) model. The new impairment model applies to financial
assets measured at amortised cost, including trade receivables. The Group has applied the simplified approach to measuring expected credit losses
which uses a lifetime expected loss allowance for trade receivables based on all possible default events over the expected life of the receivable. The
difference between the expected credit loss calculated under AASB 9 and the incurred loss calculated under AASB 139 is not material to the Group.
The Group had previously been accounting for the financial instruments arising from hedging activities at fair value through other comprehensive
income, therefore no changes have been required to the Group’s accounting policy in regards to hedge accounting.
AASB 9 did not have a significant impact on the Group's accounting policies. There was no material impact of adopting AASB 9 on the Group’s income
statement, balance sheet or statement of cash flows for the period ending 27 July 2019.
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
for the period ended 27 July 2019
85
I. OTHER ACCOUNTING POLICIES (CONTINUED)
(c) New accounting standards and interpretations (continued)
AASB 15 Revenue from Contracts with Customers
AASB 15 Revenue from Contracts with Customers introduces a new five step model to determine when to recognise revenue, and at what amount.
The model is based on the concept of recognising revenue for performance obligations only when they are satisfied and control of the goods or
services is transferred, for an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and
services.
The Group has adopted AASB 15 using the cumulative effect method (without practical expedients), with the effect of initially applying this standard
recognised at the date of initial application (from 29 July 2018). AASB 15 has been applied retrospectively on adoption from 29 July 2018, with no
restatement of comparatives for the 2018 financial period.
The following table summarises the impact, net of tax, of transition to AASB 15 on accumulated losses at 29 July 2018:
Accumulated losses as at 28 July 2018
Adjustment to accumulated losses on initial application of AASB 15
Non-redemption income
Related tax
Restated accumulated losses as at 29 July 2018
$'000
(160,282)
(4,048)
1,215
(163,115)
There was no material impact of adopting AASB 15 on the Group’s income statement, balance sheet or statement of cash flows for the period ending
27 July 2019.
The details of the new significant accounting policies and the nature of the changes to previous accounting policies in relation to the Group's various
goods and services are set out below.
Accounting for non-redemption income
When the Group issues gift cards, and rewards cards under the Myer one loyalty program, the Group recognises revenue on the unredeemed value of
gift cards and rewards cards, referred to as non-redemption income. Under AASB 15, the Group is required to recognise the expected non-redemption
amount as revenue in proportion to the pattern in which the gift card or reward card is utilised by the customer. To reflect this change in policy, on 29
July 2018 the Group recognised an increase to accumulated losses of $2.8m, with corresponding increases to deferred tax assets (presented within
deferred tax liabilities) of $1.2m and trade and other payables of $4.0m.
Accounting for refunds
The Group’s policy is to sell its products to the end customer with a right of return within a reasonable period at the Group’s discretion. Therefore, a
refund liability (included in trade and other payables) and a right to returned goods (included in trade and other receivables) are recognised for the
products expected to be returned. The assumptions and the estimated amount of returns are based on historical evidence and are reassessed at the
end of each reporting period. The costs to recover the product are not material because the customer usually returns the product in a saleable
condition at the store.
DIRECTORS’ REPORT MYER ANNUAL REPORT 2019REMUNERATION REPORTFINANCIAL STATEMENTSYEAR IN REVIEW 86
N OT E S TO T HE CO N S O L I D AT E D F I N A N C I A L S TAT EM E N T S
for the period ended 27 July 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 27 July 2019
I. OTHER ACCOUNTING POLICIES (CONTINUED)
In the directors’ opinion:
DIRECTORS’ DECLARATION
a)
the financial statements and notes set out on pages 49 to 86 are in accordance with the Corporations Act 2001, including:
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
financial period ended on that date; and
i)
ii)
b)
c)
payable; and
described in note G2.
giving a true and fair view of the consolidated entity’s financial position as at 27 July 2019 and of its performance for the
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
at the date of this declaration, there are reasonable grounds to believe that the members of the extended closed group will be
able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee
Note I. (a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board.
of the Corporations Act 2001.
The directors have been given the declarations by the Chief Executive Officer and the Chief Financial Officer required by section 295A
This declaration is made in accordance with a resolution of the directors.
Garry Hounsell
Chairman
Melbourne, 4 September 2019
(c) New accounting standards and interpretations (continued)
(ii) New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for the 27 July 2019 reporting period. The following
standard will have a material impact on the Group's financial statements in the period of initial application:
AASB 16 Leases
AASB 16 Leases will replace existing accounting requirements under AASB 117 Leases and related interpretations. AASB 16 eliminates the
classification between operating and finance leases and introduces a single lessee accounting model.
Under AASB 16, the Group’s accounting for operating leases as a lessee will result in the recognition of a right-of-use (ROU) asset and a
corresponding lease liability, with the exception of short-term leases under 12 months and where the underlying ROU asset is of a low value. The lease
liability represents the present value of future lease payments. There will be a separate recognition of the depreciation charge on the ROU asset and
the interest expense on the lease liability. This will result in the recognition of a front-loaded pattern of expense for most leases, even when constant
annual rentals are paid.
Transition
AASB 16 is effective for periods beginning on or after 1 January 2019 and therefore will be effective in the Group's annual reporting period ending 25
July 2020. The Group will be applying the modified retrospective approach. Under this approach, the Group will recognise a ROU asset calculated as if
AASB 16 had always applied, and a lease liability which will represent the outstanding liability under the lease arrangement using the incremental
borrowing rate at the date of transition. The difference between the ROU asset and the lease liability, adjusted for deferred tax, will be recognised as
an adjustment to the opening balance of accumulated losses for the period ending 25 July 2020, with no restatement of comparative information.
Recognition and measurement
The most significant AASB 16 judgements include the determination of the lease term when there are extension options, the selection of an
appropriate discount rate to calculate the lease liability and the impairment of ROU assets.
The Group has finalised its AASB 16 accounting policies, determined the appropriate discount rates to apply to lease payments, selected and
implemented an IT system to collate and report lease data, and established procedures and controls for accounting and reporting under AASB 16.
AASB 16 has a significant impact on reported assets, liabilities and the income statement of the Group, as well as the classification of cash flows
relating to lease contracts. The standard impacts a number of key measures such as earnings before interest and tax and cash flows from operating
and financing activities, as well as a number of alternative performance measures used by the Group.
The Group has estimated the following impacts as a result of adopting AASB 16. These estimates may be materially different to the actual impact in
the period ending 25 July 2020 due to changes in the Group's lease portfolio or changes to the material judgement areas, due to evolving
interpretations of the standard.
Estimated impact on the Balance Sheet on transition
Recognition of ROU asset
Recognition of lease liability
Derecognition of deferred income and lease provisions
Increase in deferred tax asset
Decrease in net assets (recognised as an adjustment to opening accumulated losses)
Estimated impact on the Income Statement for the period ending 25 July 2020
Increase in depreciation expense
Increase in finance costs
Decrease in operating lease expenses, and unwind of deferred income and lease provisions
Decrease in net profit before tax
Estimated impact
$'000
1,350,000 - 1,550,000
1,800,000 - 2,000,000
90,000 - 110,000
95,000 - 115,000
200,000 - 300,000
115,000 - 135,000
80,000 - 100,000
200,000 - 220,000
0 - 15,000
Estimated impact on the Statement of Cash Flows for the period ending 25 July 2020
Increase in operating cash flows
Decrease in financing cash flows
Net cash flows
120,000 - 140,000
120,000 - 140,000
-
DIRECTORS’ DECLARATION
D IR EC TOR S’ D ECL A R ATION
87
In the directors’ opinion:
a)
b)
c)
the financial statements and notes set out on pages 49 to 86 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
giving a true and fair view of the consolidated entity’s financial position as at 27 July 2019 and of its performance for the
financial period ended on that date; and
ii)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable; and
at the date of this declaration, there are reasonable grounds to believe that the members of the extended closed group will be
able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee
described in note G2.
Note I. (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 the Chief Financial Officer required by section 295A
of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
Garry Hounsell
Chairman
Melbourne, 4 September 2019
MYER ANNUAL REPORT 2019 88
Independent auditor’s report
To the members of Myer Holdings Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Myer Holdings Limited (the Company) and its controlled
entities (together the Group) is in accordance with the Corporations Act 2001, including:
(a)
giving a true and fair view of the Group's financial position as at 27 July 2019 and of its financial
performance for the period 29 July 2018 to 27 July 2019
(b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
the consolidated balance sheet as at 27 July 2019
the consolidated income statement for the period 29 July 2018 to 27 July 2019
the consolidated statement of comprehensive income for the period 29 July 2018 to 27 July
2019
the consolidated statement of changes in equity for the period 29 July 2018 to 27 July 2019
the consolidated statement of cash flows for the period 29 July 2018 to 27 July 2019
the notes to the consolidated financial statements, which include a summary of significant
accounting policies
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
Materiality
Audit scope
For the purpose of our audit we used overall Group
Our audit focused on where the Group made
materiality of $2.34 million, which represents
approximately 5% of the Group’s profit before tax,
adjusted for individually significant items
separately disclosed as restructuring and store exit
costs, onerous lease expense and impairment of
assets.
subjective judgements; for example, significant
accounting estimates involving assumptions and
inherently uncertain future events.
The Group is principally involved in retailing
through department stores across Australia and
online. The accounting processes are structured
around the Group’s finance function at the
Our audit procedures were mostly performed at
the Group’s support office. We also attended two
distribution centres and three Myer stores across
Australia to perform audit procedures over
We applied this threshold, together with
qualitative considerations, to determine the scope
Melbourne support office.
of our audit and the nature, timing and extent of
our audit procedures and to evaluate the effect of
misstatements on the financial report as a whole.
We chose adjusted Group profit before tax
because, in our view, it is the benchmark against
inventory.
which the performance of the Group is most
commonly measured. We adjusted for individually
significant items disclosed as restructuring and
store exit costs, onerous lease expense and
impairment of assets as they are unusual or
infrequently occurring items impacting the profit
and loss.
We utilised a 5% threshold based on our
professional judgement, noting it is within the
range of commonly acceptable thresholds.
89
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
Materiality
Audit scope
Our audit focused on where the Group made
subjective judgements; for example, significant
accounting estimates involving assumptions and
inherently uncertain future events.
The Group is principally involved in retailing
through department stores across Australia and
online. The accounting processes are structured
around the Group’s finance function at the
Melbourne support office.
Our audit procedures were mostly performed at
the Group’s support office. We also attended two
distribution centres and three Myer stores across
Australia to perform audit procedures over
inventory.
For the purpose of our audit we used overall Group
materiality of $2.34 million, which represents
approximately 5% of the Group’s profit before tax,
adjusted for individually significant items
separately disclosed as restructuring and store exit
costs, onerous lease expense and impairment of
assets.
We applied this threshold, together with
qualitative considerations, to determine the scope
of our audit and the nature, timing and extent of
our audit procedures and to evaluate the effect of
misstatements on the financial report as a whole.
We chose adjusted Group profit before tax
because, in our view, it is the benchmark against
which the performance of the Group is most
commonly measured. We adjusted for individually
significant items disclosed as restructuring and
store exit costs, onerous lease expense and
impairment of assets as they are unusual or
infrequently occurring items impacting the profit
and loss.
We utilised a 5% threshold based on our
professional judgement, noting it is within the
range of commonly acceptable thresholds.
MYER ANNUAL REPORT 2019
90
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context. We communicated the key audit matters to the
Audit, Finance and Risk Committee.
Key audit matter
How our audit addressed the key audit matter
Carrying value of intangible assets with
indefinite lives
(refer note C2)
At 27 July 2019 the Group recognised $371.6 million of
intangible assets with indefinite lives, representing
brands and trademarks.
In assessing the model, our audit procedures included,
amongst others:
assessing whether the allocation of the Group’s
As required by Australian Accounting Standards, the
Group assesses annually whether intangible assets that
have an indefinite useful life should continue to be
recognised or if any impairment is required. Where the
carrying value of an intangible asset is higher than its
recoverable amount, Australian Accounting Standards
require the carrying value of the intangible asset to be
written down (impaired).
The Group considers the Myer and sass & bide
businesses to be two separate cash generating units
(CGUs).
At 27 July 2019, the Group has identified indicators of
impairment due to the market capitalisation of the
Group (the value of the Group derived by multiplying
the number of shares currently issued by the share
price at period-end) being lower than the net assets of
the Group.
No indicators of impairment were identified for the
sass & bide CGU at 27 July 2019.
An impairment assessment over the intangible assets
with indefinite lives in each of the Group’s CGUs was
performed by the Group using a value in use model (the
model) at 27 July 2019. No impairment of the Group’s
intangible assets with indefinite lives was identified.
Significant judgement is required by the Group to
estimate the key assumptions in the model to
determine the recoverable amount of the intangible
intangible assets into CGUs was consistent with our
knowledge of the Group’s operations and internal
Group reporting
developing an understanding of the key relevant
internal controls over the impairment assessment
process
performing testing over the mathematical accuracy
of the models on a sample basis
comparing the Group’s forecast cash flows to Board
approved budgets, externally available economic
data and historical actual results
performing sensitivity analysis over the key
assumptions including EBITDA margin, discount
rate and long term growth rate to consider the
extent of change in those assumptions that either
individually or in combination would be required
for the intangible assets to be impaired.
Together with PwC valuation experts, we compared the
discount rate and long term growth rate applied in the
models to benchmark data.
We considered the disclosures made in note C2,
including those regarding the key assumptions and
sensitivities to changes in such assumptions, in light of
the requirements of Australian Accounting Standards.
Key audit matter
How our audit addressed the key audit matter
assets with indefinite lives and the amount of any
resulting impairment (if applicable). The key
assumptions applied by the Group include:
cash flow forecasts, including the terminal
value forecast
margin
short-term and future growth rates in EBITDA
the discount rate adopted in the model
We considered this a key audit matter because of the
magnitude of the intangible assets with indefinite lives,
the overall impairment indicators applicable to the
Group and the significant judgement applied by the
Group in estimating the future trading cash flows of the
CGUs.
Accounting estimates and disclosures relating
to strategic decisions
(Refer to note A3 and C3)
During the period ended 27 July 2019 the Group’s
To assess the Group’s accounting policies for
strategic decisions included redundancies and
calculating the strategic decision related provisions we
restructuring at the Group’s support office in
performed the following procedures amongst others:
Melbourne and changes to store sizes following various
landlord negotiations.
considered, with reference to Australian
Accounting Standards, the judgements and
These decisions resulted in restructuring, redundancy,
assumptions applied by the Group to determine the
store exits and onerous lease costs of $12.5 million
recognition of provisions based on the status of
recognised in the period to 27 July 2019 in accordance
committed and Board approved strategic action
with Australian Accounting Standards. Restructuring
plans
activity incomplete at period end required the
recognition of provisions associated with strategic
decisions of $10.5 million.
compared the Group’s judgements and
assumptions used to calculate the provisions
associated with strategic decisions to:
We considered this a key audit matter because of the
judgements and assumptions applied by the Group in
Board minutes
estimating the level of provisioning required to be
landlord agreements
recognised at 27 July 2019.
-
-
-
-
historic data, including prior store closures
and restructuring experience
other supporting audit evidence.
We assessed whether there were other provisions which
met the Group’s recognition criteria, and if they had
been recognised at 27 July 2019, by making inquiries of
91
Key audit matter
How our audit addressed the key audit matter
assets with indefinite lives and the amount of any
resulting impairment (if applicable). The key
assumptions applied by the Group include:
cash flow forecasts, including the terminal
value forecast
short-term and future growth rates in EBITDA
margin
the discount rate adopted in the model
We considered this a key audit matter because of the
magnitude of the intangible assets with indefinite lives,
the overall impairment indicators applicable to the
Group and the significant judgement applied by the
Group in estimating the future trading cash flows of the
CGUs.
Accounting estimates and disclosures relating
to strategic decisions
(Refer to note A3 and C3)
During the period ended 27 July 2019 the Group’s
strategic decisions included redundancies and
restructuring at the Group’s support office in
Melbourne and changes to store sizes following various
landlord negotiations.
These decisions resulted in restructuring, redundancy,
store exits and onerous lease costs of $12.5 million
recognised in the period to 27 July 2019 in accordance
with Australian Accounting Standards. Restructuring
activity incomplete at period end required the
recognition of provisions associated with strategic
decisions of $10.5 million.
We considered this a key audit matter because of the
judgements and assumptions applied by the Group in
estimating the level of provisioning required to be
recognised at 27 July 2019.
To assess the Group’s accounting policies for
calculating the strategic decision related provisions we
performed the following procedures amongst others:
considered, with reference to Australian
Accounting Standards, the judgements and
assumptions applied by the Group to determine the
recognition of provisions based on the status of
committed and Board approved strategic action
plans
compared the Group’s judgements and
assumptions used to calculate the provisions
associated with strategic decisions to:
-
-
-
-
Board minutes
landlord agreements
historic data, including prior store closures
and restructuring experience
other supporting audit evidence.
We assessed whether there were other provisions which
met the Group’s recognition criteria, and if they had
been recognised at 27 July 2019, by making inquiries of
MYER ANNUAL REPORT 2019
92
Key audit matter
How our audit addressed the key audit matter
Key audit matter
How our audit addressed the key audit matter
directors and key management personnel responsible
for strategic decisions and by reading minutes of Board
meetings for the full financial period.
We considered the disclosures made in note A3 and C3,
in light of the requirements of Australian Accounting
Standards.
Inventory valuation and provisions
(Refer to note B2)
The Group held inventory of $346.9 million at 27 July
2019. As described in note B2 to the financial
statements, inventories are valued at the lower of cost
and net realisable value.
To assess the Group’s judgements and assumptions
applied in calculating the value of inventory provisions
we performed the following procedures, amongst
others:
The Group recognises a provision where it expects the
net realisable value of inventory to fall below its cost
price. This will occur where inventory becomes aged,
damaged or obsolete and will be sold below its cost
price in order to clear. Inventory provisioning is also
required where inventory no longer exists due to theft
and processing errors.
We considered this a key audit matter because the
Group applies judgements and assumptions in:
forecasting future selling prices and inventory
sell through rates to estimate the value of
inventory likely to sell below cost in the future
estimating inventory shrinkage based on
actual losses realised as a result of inventory
cycle counts.
considered the design and effective operation of a
sample of relevant key inventory controls
attended inventory counts at two distribution
centres and three retail stores
assessed the Group’s inventory provisioning policy
by considering the levels of aged inventory and the
Group’s inventory clearance strategy
considered the historical accuracy of the Group’s
inventory provisioning by comparing the prior
period inventory provision to inventory sold below
cost or written off in the current period.
We considered the disclosures made in note B2, in light
of the requirements of Australian Accounting
Standards.
Supplier rebates
(Refer to note B2)
As described in note B2 to the financial statements, the
Group recognises amounts receivable from suppliers
(primarily comprising supplier promotional rebates) as
a reduction in the cost of inventory purchased and a
reduction in the cost of goods sold.
The majority of supplier rebates tend to be small in unit
value but high in volume and span relatively short
periods of time, although promotional rebates and sell
through of related inventory can run across the
financial period end.
Our procedures over supplier rebate income included,
amongst others:
agreeing a sample of supplier rebates recorded to
the relevant supplier agreements
comparing a sample of rebate terms used in the
Group’s supplier rebate calculations to relevant
supplier arrangements and the Group’s sales and
purchase data
comparing a sample of rebates to relevant supplier
We considered this to be a key audit matter because:
arrangements to assess whether the allocation
supplier arrangements are complex in nature and
highly variable between suppliers.
between the consolidated income statement and
those capitalised into inventory were in accordance
with the Group’s accounting policy and the
judgement is needed by the Group to determine
requirements of Australian Accounting Standards.
the amount of supplier rebates that should be
recognised in the consolidated income statement
We considered the disclosures made in note B2, in light
and the amounts that should be deferred to
of the requirements of Australian Accounting
inventory. This requires a detailed understanding
Standards.
of contractual arrangements with suppliers and
accurate purchase and sell through information.
AASB 16 Leases – presentation and disclosure
(Refer to note I)
The Group is required to adopt the requirements of
Our procedures over the disclosure of the impact of
AASB 16 Leases from 28 July 2019. In periods prior to
adopting AASB 16 included, but were not limited to:
magnitude of lease liabilities and right of use
probability of exercising option periods
adoption of new accounting standards, Australian
Accounting Standards require disclosure of known or
reasonably estimable information that the application
of the new standard will have on the Group’s financial
report.
The adoption of AASB 16 is expected to have a
significant impact on the presentation of the Group’s
financial report. The expected transition impact is
disclosed in Note I.
We considered this to be a key audit matter due to the:
assets expected to be recorded on the Group’s
balance sheet
significant judgements required by the Group
in determining key assumptions including
incremental borrowing rates, exercise of
option periods and lease terms.
developing an understanding of and
evaluating internal controls relating to
identifying lease contracts and maintaining
lease data
assessing whether the Group’s new accounting
policies were in accordance with the
requirements of AASB 16
evaluating the appropriateness of key
judgements applied by management in
determining incremental borrowing rates and
for a sample of lease contracts we:
o
o
o
compared lease data in the Group’s
lease management system to the
underlying lease agreement and
subsequent variations
evaluated estimates and judgement
applied by management in
determining the lease term
recalculated the right of use asset and
lease liability.
evaluating the adequacy of the disclosures
made in Note I in light of the requirements of
Australian Accounting Standards.
93
Key audit matter
How our audit addressed the key audit matter
We considered this to be a key audit matter because:
supplier arrangements are complex in nature and
highly variable between suppliers.
judgement is needed by the Group to determine
the amount of supplier rebates that should be
recognised in the consolidated income statement
and the amounts that should be deferred to
inventory. This requires a detailed understanding
of contractual arrangements with suppliers and
accurate purchase and sell through information.
AASB 16 Leases – presentation and disclosure
(Refer to note I)
The Group is required to adopt the requirements of
AASB 16 Leases from 28 July 2019. In periods prior to
adoption of new accounting standards, Australian
Accounting Standards require disclosure of known or
reasonably estimable information that the application
of the new standard will have on the Group’s financial
report.
The adoption of AASB 16 is expected to have a
significant impact on the presentation of the Group’s
financial report. The expected transition impact is
disclosed in Note I.
We considered this to be a key audit matter due to the:
magnitude of lease liabilities and right of use
assets expected to be recorded on the Group’s
balance sheet
significant judgements required by the Group
in determining key assumptions including
incremental borrowing rates, exercise of
option periods and lease terms.
arrangements to assess whether the allocation
between the consolidated income statement and
those capitalised into inventory were in accordance
with the Group’s accounting policy and the
requirements of Australian Accounting Standards.
We considered the disclosures made in note B2, in light
of the requirements of Australian Accounting
Standards.
Our procedures over the disclosure of the impact of
adopting AASB 16 included, but were not limited to:
developing an understanding of and
evaluating internal controls relating to
identifying lease contracts and maintaining
lease data
assessing whether the Group’s new accounting
policies were in accordance with the
requirements of AASB 16
evaluating the appropriateness of key
judgements applied by management in
determining incremental borrowing rates and
probability of exercising option periods
for a sample of lease contracts we:
o
o
o
compared lease data in the Group’s
lease management system to the
underlying lease agreement and
subsequent variations
evaluated estimates and judgement
applied by management in
determining the lease term
recalculated the right of use asset and
lease liability.
evaluating the adequacy of the disclosures
made in Note I in light of the requirements of
Australian Accounting Standards.
MYER ANNUAL REPORT 2019
94
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the period 29 July 2018 to 27 July 2019, but does not
include the financial report and our auditor’s report thereon. Prior to the date of this auditor's report,
the other information we obtained included the directors' report. We expect the remaining other
information to be made available to us after the date of this auditor's report.
Our opinion on the financial report does not cover the other information and we do not and will not
express an opinion or any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
When we read the other information not yet received, if we conclude that there is a material
misstatement therein, we are required to communicate the matter to the directors and use our
professional judgement to determine the appropriate action to take.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 27 to 48 of the directors’ report for the
period 29 July 2018 to 27 July 2019.
In our opinion, the remuneration report of Myer Holdings Limited for the period 29 July 2018 to 27
July 2019 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Jason Perry
Partner
Melbourne
4 September 2019
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A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 27 to 48 of the directors’ report for the
period 29 July 2018 to 27 July 2019.
In our opinion, the remuneration report of Myer Holdings Limited for the period 29 July 2018 to 27
July 2019 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Jason Perry
Partner
Melbourne
4 September 2019
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S H A R EHOL D ER INFOR M ATION
As at 12 September 2019.
Myer 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
Holders with less than a marketable parcel
Distribution of shareholders and shareholdings
Range
100,001 and over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Unmarketable parcels
Minimum $500.00 parcel at $0.62 per unit
Twenty largest shareholders
Rank Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
METALGROVE PTY LTD
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LTD
BNP PARIBAS NOMINEES PTY LTD
GLENN HARGRAVES INVESTMENTS PTY LTD
MUTUAL TRUST PTY LTD
BNP PARIBAS NOMS PTY LTD
CS THIRD NOMINEES PTY LIMITED
HAPPY SABA GROUP NO 1 PTY LTD
ARCHERFIELD AIRPORT CORPORATION PTY LTD
MR PAT O'NEILL
SANDHURST TRUSTEES LTD
SHOREFRONT NOMINEES PTY LTD
DR PETER MALCOLM HEYWORTH
NATIONAL NOMINEES LIMITED
20
ACE PROPERTY HOLDINGS PTY LTD
Total
Balance of register
Grand total
Number
821,278,815
43,352
$0.62
19,727
%
0.72
8.61
6.67
32.58
51.42
100.00
Units
648,345,153
107,921,418
22,869,997
31,290,244
10,852,003
%
78.94
13.14
2.79
3.81
1.32
821,278,815
100.00
Holders
313
3,734
2,889
14,125
22,291
43,352
Minimum
Parcel Size
Holders
Units
807
19,727
8,389,520
Units
% of Units
231,925,669
92,711,509
88,450,664
71,435,892
12,830,337
10,596,500
6,117,096
6,045,751
5,990,000
5,894,097
5,198,348
5,108,395
4,300,000
4,261,457
3,478,649
2,815,000
2,800,000
2,796,000
2,093,655
2,000,000
566,849,019
254,429,796
821,278,815
28.24
11.29
10.77
8.70
1.56
1.29
0.74
0.74
0.73
0.72
0.63
0.62
0.52
0.52
0.42
0.34
0.34
0.34
0.25
0.24
69.02
30.98
100.00
S H A R E H O L D E R I N FO R M AT I O N
Continued
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Substantial shareholders
As at 12 September 2019, there are five substantial shareholders that Myer is aware of:
Premier Investments
Investors Mutual
Wilson Asset Management
Dimensional Fund Advisors
Vinva Asset Management
Total
Date of last notice
29 March 2017
19 May 2017
27 May 2019
2 December 2016
21 September 2018
Number of securities
in last notice
88,450,664
80,897,018
63,748,538
57,539,611
44,794,586
%
10.77
9.85
7.76
7.01
5.45
40.84
The above table sets out the number and percentage of securities held by substantial shareholders in Myer as disclosed in their last
substantial shareholder’s notice. Note that those shareholders may have acquired or disposed of securities in Myer since the date of
that notice. A substantial shareholder is only required to disclose acquisitions or disposals where there has been a movement of at
least 1% in their shareholding.
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.
PERFORMANCE OPTIONS AND RIGHTS
Myer has unlisted performance options and rights on issue. As at 12 September 2019, there were 26 holders of performance options
and 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
MYER ANNUAL REPORT 2019 98
COR P OR ATE D IR EC TOR Y
MYER CUSTOMER SERVICE CENTRE
PO Box 869J
Melbourne VIC 3001
Phone: 1800 811 611 (within Australia)
Fax: +61 (0 ) 3 8667 6091
AUDITOR
PricewaterhouseCoopers
2 Riverside Quay
Southbank VIC 3006
SECURITIES EXCHANGE LISTING
Myer Holdings Limited (MYR) shares are listed
on the Australian Securities Exchange (ASX)
WEBSITES
myer.com.au
myerone.com.au
myer.com.au/investor
FIND US HERE
Facebook.com/myer
Instagram.com/myer
Twitter.com/myer
Youtube.com/myer
REGISTERED OFFICE
Myer Holdings Limited
Level 7
800 Collins Street
Docklands VIC 3008
Phone: 1800 811 611 (within Australia)
MYER POSTAL ADDRESS
Myer Holdings Limited
PO Box 869J
Melbourne VIC 3001
COMPANY SECRETARY
Jonathan Garland
General Counsel and Company Secretary
SHAREHOLDER ENQUIRIES:
SHARE REGISTRY
Link Market Services Limited
Postal Address
Locked Bag A14
Sydney South NSW 1235
MYER SHAREHOLDER INFORMATION LINE
Australian Telephone: 1300 820 260
International Telephone: +61 1300 820 260
Facsimile: 02 9287 0303
www.linkmarketservices.com.au
INVESTOR RELATIONS
Investor Relations Manager
Email: myer.investor.relations@myer.com.au
MEDIA RELATIONS
General Manager Corporate Affairs
Email: myer.corporate.affairs@myer.com.au
SUSTAINABILITY
Email: sustainability@myer.com.au
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