Premier Investments Limited
Annual Report 2015

Plain-text annual report

Annual Report 2015 Annual Report 2015 1 John Cheston Managing Director, Smiggle Solomon Lew Chairman Mark McInnes CEO Premier Retail FRONT COVER: International model and Brand Ambassador Portmans, Jessica Hart. Chairman’s Report The Directors of Premier Investments Limited (“Premier”) are pleased to submit to shareholders the Annual Report for the financial year ended 25 July 2015 which has again been a year of strong financial performance by your company. STRONG FINANCIAL PERFORMANCE Premier reported consolidated underlying net profit before tax (NPBT) of $118.6 million, up 11.9% on the previous financial year despite increasing competition for the consumer dollar and the impact of a weaker Australian Dollar. Premier’s reported net profit after tax (NPAT) of $88.1 million represents growth of 20.7% compared with the previous financial year. The Group consolidated result was underpinned by the strong performance of our core operating business unit, Premier Retail. Under the leadership of Premier Retail CEO, Mark McInnes, the 2015 financial year achieved record results in sales, margins and profit. Premier Retail’s underlying profit before tax (PBT) increased 16.0% to $100.9 million1, reflecting the momentum created by the growth platforms of Smiggle, Peter Alexander and Online as well as the continued rejuvenation of Premier’s Retail’s core brands. Full year sales for the Group increased by 6.4% (second half up 8.3%) to $945.7 million and like for like (LFL) sales increased by 2.2% across the Group with all brands achieving sales growth for the year2. Premier Retail underlying earnings before interest and tax (EBIT) was $105.7 million, an increase of 13.9% with underlying EBIT margin up 74bps to 11.2%3. GROWTH INITIATIVES DELIVER During financial year 2015, Premier Retail continued to implement its growth plans driven by the expansion of our online platform, growing Peter Alexander across Australia and New Zealand and the continued roll-out of the unique Smiggle brand and store network across the United Kingdom and Singapore. In a year of many highlights, your Directors are pleased to particularly note the following achievements for the financial year: » Peter Alexander sales increased by 14.9% to $140.5 million (up 40% in only two years) » We opened 14 new Peter Alexander stores including the Brisbane CBD flagship store » Smiggle achieved global sales of $132.6 million, up 26% on financial year 2014 (second half up 36%) » We opened 25 new Smiggle stores across Australia, New Zealand, United Kingdom and Singapore including major new stores in internationally renowned shopping centres–ION in Singapore, Westfield London and Bluewater in the United Kingdom » Total online sales grew 31% on last year (second half up 38%) and we enhanced our international online capabilities through the launch of “dotti.co.nz” and “smiggle.co.uk”. Online sales remain on track to achieve the aspiration of 10% of total group sales. Smiggle has plans to open 16 new stores in the United Kingdom during the first half of the new financial year including the first store in Wales. We will continue to open new stores in the second half of the financial year 2016 including the first store in Scotland as Smiggle progresses towards its objective of 200 stores in the United Kingdom market. The Board remains confident of achieving the objective of 200 stores in the United Kingdom generating sales of $200 million of annual sales within five years. I was also delighted to recently announce the expansion of the Smiggle footprint in Asia through entry into two new markets, Malaysia and Hong Kong. The objective is to have 50 Smiggle stores operating, between these two markets, within five years. Peter Alexander will also continue to grow store numbers aiming for between 10 and 15 new stores over next two years in Australia and New Zealand. 1 Underlying NPBT, underlying PBT and underlying EBIT excludes non-recurring costs in 2015 financial year associated with exit from Jay Jays South Africa joint venture ($1.7m) and in 2014 financial year non-recurring costs associated with Smiggle UK market entry ($3.1m) and supply chain transformation ($4.5m). 3 South Africa joint venture, underlying EBIT excludes non-recurring costs in 2015 financial year associated with exit from Jay Jays South Africa joint venture ($1.7m) and in 2014 financial year non-recurring costs associated with Smiggle UK market entry ($3.1m) and supply chain transformation ($4.5m). 2 Excluding sales to Jay Jays South African joint venture. Annual Report 2015 1 Chairman’s Report continued CORE BRAND TRANSFORMATION Premier’s core brands again reported solid results for the year. The results reflect returns on carefully targeted investments made in line with the previously announced transformation initiatives: rejuvenation of core apparel brands; gross margin expansion; organisation-wide cost efficiency and; supply chain transformation. The Board is particularly delighted with the significant improvements achieved in the performance and market positioning of the Jay Jays brand. All seven Premier Retail brands are now operating from the new Australian Distribution Centre which should result in a cost saving of more than $2 million per annum over the first three years. The new distribution centre also has the scale, capacity and technology to handle future growth from online and other multi-channels. BALANCE SHEET STRENGTH AND DIVIDENDS At the end of the financial year, Premier’s balance sheet reported free cash of $281.6 million and its equity accounted investment in Breville at $209.5 million. The market value of Premier’s holding in Breville was $228.9 million at 24 July 20154. The strong balance sheet, the underlying financial performance of Premier Retail and a franking credit pool at 2015 financial year end of $208.2 million, allowed the Board to again increase dividends for the year. The Board declared: » an interim ordinary dividend of 21 cents per share fully franked in March 2015, » a special fully franked dividend of 9 cents per share in March 2015 as part of Premier’s capital management strategy, and » a final fully franked ordinary dividend of 21 cents per share in September 2015. In total the Board declared 51 cents per share fully franked for the financial year (2014: 40 cents per share). We will continue to leverage our balance sheet capacity to fund the expansion of growth brands, while still retaining a substantial capacity to pursue opportunities that may arise in the future. Your Board will also continue to be disciplined in its approach to investment and will only act where we believe there is a clear and long-term benefit for shareholders. PREMIER TEAM AND BOARD CHANGES On behalf of the Board and all Shareholders, I would like to thank Premier Retail CEO Mark McInnes, his senior team and our approximately 6,000 dedicated employees across Australia, New Zealand, Singapore and the United Kingdom for delivering another strong result in a challenging environment. I believe we have in place a top class retail team that has enabled us to continue to grow our business in an increasingly competitive environment. I would also like to thank my fellow directors for their contribution and service over the last year and specifically mention Mr. Frank Jones who retired from the Board in July 2015. Mr. Jones is a former Chairman of the Group and a former Chairman of the Audit and Risk Committee. He was Deputy Chairman from 2008 until his retirement. He has been instrumental in all key events in Premier’s history including the original floating of Premier in 1987, the selling of Premier’s substantial shareholding in Coles Group Limited and the acquisition of Just Group Limited. He has made a significant contribution to the substantial growth in shareholder wealth for Premier shareholders and has been an invaluable contributor to the Board. Shareholders will have the opportunity to thank Mr. Jones for his contribution at the upcoming Annual General Meeting. Dr David Crean was appointed Independent Deputy Chairman following Mr Jones’ retirement. Dr. Crean has been on the Premier Board as a Non-Executive Independent Director since 2009 and Chairman of the Audit and Risk Committee since August 2010. I am sure you will join me in congratulating Dr. Crean on his appointment. Finally, thank you to all our shareholders for your continued support and investment. The Premier Board acknowledge that as shareholders, you are the owners of this company and we are committed to acting in your best interests and investing your funds with a focus on long-term sustainable growth and wealth creation. I encourage all shareholders to attend the annual general meeting on 27 November 2015 and look forward to your participation. 4 Based on share price of $6.40 on 24 July 2015. Solomon Lew Chairman and Non-Executive Director 2 Premier Investments Limited The Directors Solomon Lew Chairman and Non-Executive Director Frank W. Jones FCA, CPA, ACIS (Resigned 25 July 2015) Deputy Chairman and Non-Executive Director David M. Crean Deputy Chairman and Non-Executive Director Timothy Antonie Non-Executive Director Lindsay E. Fox AC Non-Executive Director Sally Herman Non-Executive Director Henry D. Lanzer AM B. COM., LLB (Melb) Non-Executive Director Mark McInnes Executive Director Michael R.I. McLeod Non-Executive Director Gary H. Weiss LLM, J.S.D. Non-Executive Director Annual Report 2015 3 Chairman’s Report continued Solomon Lew Mr. Lew was appointed as Non-Executive Director and Chairman of Premier on 31 March 2008. For many years, Mr. Lew has been a director of Century Plaza Investments Pty. Ltd., the largest shareholder in Premier and was previously Chairman of Premier from 1987 to 1994. Mr. Lew has over 50 years’ experience in the manufacture, importation, wholesaling and retailing of textiles, apparel and general merchandise. Mr. Lew’s success in the clothing industry has been largely due to his ability to read fashion trends and interpret them in the Australian market and to efficiently and cost-effectively produce quality garments. Property development and the acquisition and disposal of equity investments have proven to be a profitable and consistent activity for Mr. Lew’s family entities. He has, through those family entities, made a number of investments in publicly listed companies over the years, including investments in Coles Myer Limited, Colorado Group Limited and Country Road Limited to name a few. Where these investments have been sold, it has resulted in substantial profits. In December 2013, Mr. Lew was appointed to the Australian Prime Minister’s Business Advisory Council. He was the inaugural Chairman of the Mount Scopus College Foundation and server for 26 years (1987 – 2013). He is a member of the Board of Trustees of the Sport and Tourism Youth Foundation, a life member of The Duke of Edinburgh’s Award World Fellowship, a Patron of Opera Australia and a Chairman or director of several philanthropic organisations. Mr. Lew was a director of Coles Myer Limited from 1985 to 2002, serving as Vice Chairman from 1989, Chairman from 1991 to 1995, Executive Chairman in 1995 and Vice Chairman in 1995 and 1996. He was also a director of the Reserve Bank of Australia from 1992 to 1997. Frank W. Jones FCA, CPA, ACIS Mr. Jones is a Fellow of Chartered Accountants Australia and New Zealand and an Associate of CPA Australia and the Governance Institute of Australia. Mr. Jones has extensive experience as a financial and general advisor to some of Australia’s leading importing and retailing companies. Mr. Jones served as Chairman of Premier from 1999 to 2002 and, more recently, from 2007 to 2008. He was a member of the Audit and Risk Committee of Premier until October 2014 and was the Committee’s chairman until 31 July 2010. Mr. Jones retired from the Premier Board on 25 July 2015. Dr. David M. Crean Dr. Crean has been an Independent Non-Executive Director of Premier since December 2009, Deputy Chairman since July 2015 and is currently the Chairman of Premier’s Audit and Risk Committee (appointed August 2010). Dr. Crean was Chairman of the Hydro Electric Corporation (Hydro Tasmania) from September 2004 until October 2014 and was also Chairman of the Business Risk Committee at Hydro Tasmania, member of the Audit Committee and Chairman of the Corporate Governance Committee. Dr. Crean was State Treasurer from August 1998 to his retirement from the position in February 2004. He was also Minister for Employment from July 2002 to February 2004. He was a Member for Buckingham in the Legislative Council from 1992 to February 1999, and then for Elwick until May 2004. From 1989 – 1992 he was the member for Denison in the House of Assembly. From 1993 – 1998 he held Shadow Portfolios of State Development, Public Sector Management, Finance and Treasury. Dr. Crean is also a Board member of the Linfox Foundation. Dr. Crean graduated from Monash University in 1976 with a Bachelor of Medicine and Bachelor of Surgery. Timothy Antonie Mr. Antonie was appointed to the Board of Directors on 1 December 2009. He holds a Bachelor of Economics degree from Monash University and qualified as a Chartered Accountant with Price Waterhouse. He has 20 years’ experience in investment banking and formerly held positions of Managing Director from 2004 to 2008 and Senior Adviser in 2009 at UBS Investment Banking, with particular focus on large scale mergers and acquisitions and capital raisings in the Australian retail, consumer, media and entertainment sectors. Mr Antonie is also a non-executive director of Village Roadshow Limited and Breville Group Limited. Lindsay E. Fox AC Mr. Fox has extensive experience in all aspects of the transport, distribution and warehousing industries. He is the founder of the Linfox Group of Companies. Today, the Linfox Group operates one of the largest supply chain services businesses with operations in 10 countries. The Linfox Group employs over 23,000 people, operates 4.8 million square metres of warehouses and a fleet of more than 5,000 vehicles and carries out distribution operations for leading companies across the Asia-Pacific region. The Linfox Group includes operations in the areas of transport and logistics, airports, property development and cash management services. Mr. Fox has extensive involvement in Australian and international circles and, apart from his business interests, is well recognised and active in sport and charity work. In 2010, Victoria University admitted Mr. Fox to the degree of Doctor of the University honoris causa for his outstanding achievements in the transport industry, for his contribution to the community through his sustained efforts to reduce unemployment and his campaign against youth suicide. In January 2008, Mr Fox was awarded a Companion of the Order of Australia (AC) for continued service to the transport and logistics industries, to business through the development and promotion of youth traineeships and to the community through a range of philanthropic endeavours. 4 Premier Investments Limited He was awarded an Officer of the Order of Australia (AO) in 1992 for his contribution to the transport industry and the community and he received a Centenary Medal for services to the transport industry in 2001. From September 1992 to December 1993, Mr. Fox together with Mr. Bill Kelty introduced a national campaign called ‘Work for Australia’. This campaign encouraged companies and local communities to generate jobs for unemployed with the aid of government subsidies and programs. More than 60,000 jobs were pledged through their efforts and Mr. Fox and Mr. Kelty were awarded ‘Victorians of the Year’ by the Sunday Age. Sally Herman Sally Herman is an experienced Non-Executive Director in the fields of financial services, retail, manufacturing and property. She had a successful executive career spanning 25 years in financial services in both Australia and the US, transitioning in late 2010 to a full time career as a Non-Executive Director. Prior to that, she had spent 16 years with the Westpac Group, running major business units in most operating divisions of the Group as well as heading up Corporate Affairs and Sustainability through the merger with St. George and the global financial crisis. Ms. Herman now sits on both listed and unlisted Boards, including Breville Group Limited, ME Bank Limited, FSA Group Limited (retired 28 November 2014) and Investec Property Limited. She also Chairs the Board of Urbis Pty. Limited, a leading property advisory firm, and is Chair of an independent girls’ school in Sydney. Ms. Herman holds a BA from the University of NSW and is a Graduate of the Australian Institute of Company Directors. Henry D. Lanzer AM B. COM., LLB (Melb) Henry Lanzer AM is Managing Partner of Arnold Bloch Leibler, a leading Australian commercial law firm. Henry has over 30 years’ experience in providing legal, corporate finance and strategic advice to some of Australia’s leading companies. Mr. Lanzer is a Director of Just Group Limited, Thorney Opportunities Limited and the TarraWarra Museum of Art and also a Life Governor of the Mount Scopus College Council. He is also Chairman of the Remuneration and Nomination Committee for Premier Investments Limited. In June 2015, Henry was appointed as a Member of the Order of Australia. Mark McInnes Mr. McInnes is a career retailer with a long track record of success in every role he has occupied. Like many great retailers, Mark started his career from the shop floor as a company cadet for Grace Brothers. Mark has been directly responsible for some of Australia’s greatest retail success stories – including as a co-founder of the Officeworks concept which is today Australia’s largest office supply superstore. Prior to joining Premier, Mark led David Jones to its most successful time as a public listed company. Mark spent 13 years at David Jones – 6 years as Merchandise & Marketing Director and 7 years as CEO. From 2003 to 2010, Mark as CEO and Executive Director of David Jones turned the company into a fashion and financial powerhouse, creating in excess of $2 billion of shareholder value. Mark was appointed CEO of Premier Retail in April 2011, and has set about transforming the company to compete in an industry under great structural pressure. Premier Retail today has a clear path and a clear focus. In December 2012, Mark was appointed as an Executive Director of Premier Investments Limited. Mark holds an MBA from the University of Melbourne. Michael R.I. McLeod Mr. McLeod is a former Executive Director of the Century Plaza Group and has been involved with the Group since 1996 as an advisor in the areas of corporate strategy, investment and public affairs. He has been a Non-Executive Director of Premier Investments Limited since 2002 and was a Non-Executive Director of Just Group Limited from 2007 to 2013. Past experience includes the Australian Board of an international funds manager, chief of staff to a Federal Cabinet Minister and statutory appointments including as a Commission Member of the National Occupational Health and Safety Commission. He holds a Bachelor of Arts (First Class Honours and University Medal) from the University of New South Wales. Gary H. Weiss LL.M, J.S.D. Dr. Weiss holds the degrees of LL.B (Hons) and LL.M (with distinction) from Victoria University of Wellington, as well as a Doctor of Juridical Science (JSD) from Cornell University, New York. Dr. Weiss has extensive international business experience and has been involved in numerous cross-border mergers and acquisitions. Dr. Weiss is Chairman of Clearview Wealth Limited and Ridley Corporation Limited, Executive Director of Ariadne Australia Limited, and a director of Premier Investments Limited, Pro-Pac Packaging Limited, Tag Pacific Limited, Thorney Opportunities Limited and The Straits Trading Company Limited. He was Chairman of Coats Plc from 2003 until April 2012 and executive director of Guinness Peat Group Plc from 1990 to April 2011 and has held directorships of numerous companies, including Mercantile Investment Company Limited (retired 25 February 2015) Westfield Group, Tower Australia Limited, Australian Wealth Management Limited, Tyndall Australia Limited (Deputy Chairman), Joe White Maltings Limited (Chairman), CIC Limited, Whitlam Turnbull & Co Limited and Industrial Equity Limited. He has authored numerous articles on a variety of legal and commercial topics. Annual Report 2015 5 Strategic Review Premier Retail Management continued the rigorous implementation of the six key initiatives outlined in the 2011 Strategic Review. Focus Area Status 1 Rejuvenate and reinvigorate all five core apparel brands. 2 Organisation-wide cost efficiency program. 3 4 Two phase gross margin expansion program. Expand and grow the internet business. 5 Grow Peter Alexander significantly. 6 Grow Smiggle significantly. 6 Premier Investments Limited Continued solid results were achieved in all five core brands in financial year 2015 (FY15). Jay Jays turnaround strategy is on track delivering positive sales growth, whilst Dotti and Portmans achieved a strong second half 2015 (2H15) and Just Jeans and Jacqui E both continued to deliver growth for the year. The group continues to invest in upgrading its existing store network through targeted investment that deliver strong returns to shareholders. Costs of doing business continue to be well controlled despite strategic investment in growth initiatives, including online, Peter Alexander and Smiggle UK. Store rent declined for established brands in FY15 despite inflationary pressures built into leases. Total store rent increased due to the ongoing growth of Peter Alexander in Australia and New Zealand and Smiggle globally. Salaries continued to be tightly controlled with improved labour productivity for the established brands. During the year, 15 loss making stores were closed, as part of an ongoing program to improve the portfolio profitability. Our new Australian national distribution centre is now complete with all seven brands and online operating out of the Premier Investments owned facility based in Melbourne. Premier Retail’s gross margin expanded during the year despite the weaker AUD and highly competitive market. Strategies to offset the impact of the weaker AUD have been effectively implemented across all brands and markets. Direct sourcing initiatives continuing to deliver benefits from new suppliers and countries, which combined with our ongoing focus on markdown management is expected to support margin going forward. Total online sales for FY15 were up 31% – well ahead of market growth. The online channel remains extremely profitable. Investment is continuing in technology, people and marketing to achieve our aspirational goal of 10% of total group sales from online sales. Peter Alexander remains on track to achieve the three year strategic growth plan with sales growth of 14.9% in FY15, and almost 40% over the last two years. 14 new stores were opened in FY15, including a new flagship Brisbane CBD store. Peter Alexander is an established destination during key gift giving times which remains a focus alongside delivering unique customer experiences every day in store and online. Smiggle global sales grew by 26% in FY15, with strong sales growth in all markets. The expansion into the UK continues to be a success with 24 stores and online trading at end of FY15 and a further 16 stores targeted to open by Christmas 2015. The UK market has enormous potential with the personal stationery market valued at $2.4 billion. Brand Performance Premier Retail Peter Alexander delivered outstanding growth of 14.9% in FY15. Judy Coomber, Managing Director Peter Alexander and Peter Alexander, Creative Director are firmly on track to deliver our three year plan objectives. 14 new stores were opened during the year (10 in Australia and 4 in New Zealand). Smiggle achieved exceptional growth of 26% in FY15 with strong growth in all markets. Led by John Cheston, Managing Director Smiggle, it has been an exceptional year for the brand with a focus on innovative product which continues to be well received in the established markets and has been embraced by the UK fans. 24 stores plus online were trading in the UK at the end of FY15, with a further 16 targeted to open by Christmas 2015. Dotti, led by David Bull, delivered another strong result in a highly competitive market, particularly in the 2H15 via a reinvigorated core merchandise strategy. The brand has a world class digital platform which delivered 29% growth on last year. A New Zealand dedicated website was also launched which has traded ahead of plan since operations commenced. “Dotti Girls” social media program continues to enhance customer engagement. Portmans, under the leadership of Jade Holgate, delivered an impressive result in 2H15 through a strong recovery in all apparel categories, particularly seasonal categories of coats and knitwear. The group continues to invest in ensuring our multi-channel capability is world class, with Portmans achieving 41% growth on last year from the online channel. The investment in Jess Hart as Brand Ambassador continues to deliver a strong brand campaign. Jacqui E delivered profit growth in FY15 under Karen Russell’s leadership. The focus on product excellence delivered a strong performance in the “pants perfected range”, the dress category and with a focus on item work wear jackets. Supported by a strong brand campaign, led by our ambassador Tara Moss, the band continues to build a destination for work wear. Under Matthew McCormack’s leadership, the brand continues to implement its “Anchored in Denim” strategy that has delivered strong denim growth over the year. The new branded denim ranges (e.g. Guess) have delivered solid results. A new store format will be launched in first half financial year 2016 with the opening of a new Sydney CBD store. The Jay Jays turnaround is on track with sales growth throughout FY15. The brand’s new store format has been well received in the 6 stores completed in 2H15, with a further 6 stores to be upgraded to the new format in first half financial year 2016. Annual Report 2015 7 Internet Online sales up for the financial year – well ahead of market growth. ONLINE SALES GROWTH FY15 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% +31% +8.6% NAB Australian Fashion Online Sales Growth Just Group FY15 Annual Online Sales Growth Rest of the world 14% Note: NAB Online Retail Sales Index – July 2015, published 1 September 2015. Reported Australian online retail sales in the fashion category grew by 8.6% in the 12 months to July 2015 China 86% » All brands significantly outperformed the market. Portmans grew at 41%, Dotti grew at 29% and Just Jeans at 26%. Peter Alexander, our most established online business had growth at 21% » Online channel remains extremely profitable » Now trading online in 3 markets with the successful launch of “smiggle.co.uk” » Successful launch of “dotti.co.nz” » Investment continuing in technology, people and marketing. The FY15 result has been delivered through new initiatives including: – Mobile & desktop optimised sites and email program – Optimised affiliate program acquiring new customers – Customer re-targeting programs driving repeat visitation and loyalty – Personalised product and content recommendations driving conversion – Optimised companywide online events » Multi channel initiatives continue to provide valuable sales growth and enhanced customer experiences: – “Store to door” delivering incremental sales – Ongoing growth of customer databases and personalised content supporting sales growth across all channels – New Australian distribution centre to support significant further growth. 8 Premier Investments Limited Smiggle International Growth Continued success in rolling out the Smiggle brand in the United Kingdom, following the launch of the first store at Westfield Stratford in February 2014. The company’s plans are well underway. » 16 new stores in the UK in FY15, with 24 stores operating by the end of FY15 » Launched a dedicated UK online store - smiggle.co.uk » A further 16 new stores targeted to open by Christmas 2015 » The management team continues to believe that the potential exists for 200 stores across the UK with sales of $200 million over the next five years » First stores in Wales and Scotland planned to open in financial year 2016 » John Cheston, Managing Director of Smiggle has a proven track record of success in all four countries we operate in. Annual Report 2015 9 Peter Alexander Growth The brand’s three year growth plan is well underway delivering 40% growth over the last two financial years, with total sales growth of 14.9% in FY15. » 14 new stores opened » 89 stores now operating » Potential for a further 10-15 new stores across Australia and New Zealand over the next 2 years, with 8 confirmed to open prior to Christmas 2015 » Online sales growth of 21% » Database growth of 53%, Facebook followers increased by 19% » New product initiatives include bed linen, bridal, footsies, with continued focus on Childrenswear » Continued investment in existing store portfolio to support further growth and improve operations, capacity and store appearance. 10 Premier Investments Limited Our Commitment To Business Sustainability Premier acknowledges the importance of respecting our stakeholders, including employees, shareholders, customers and suppliers. PEOPLE COMMUNITY ENVIRONMENT ETHICAL SOURCING » Attraction and retention » Development » Reward and recognition » Workplace Safety » Peter Alexander and RSPCA/ PAW JUSTICE » Smiggle Community Partnerships » Support Centre Charity Events » Packaging Stewardship » Waste and Recycling » Energy efficiency » Our sourcing models, principles & policies » Our Assurances » Membership of the Alliance for Bangladesh Worker Safety » Our activities in Bangladesh » Ethical Raw Material Procurement We are committed to a long term goal of delivering sustainable value through the effective use of our resources and relationships. This goal influences how we behave and impacts everything we do. OUR COMMITMENT TO OUR PEOPLE Our goal is for Premier to attract, retain and motivate high calibre employees. Our outstanding leadership team have developed and nurtured a culture that supports our success. We value speed, integrity, energy, and results. We have a ‘can do’ culture in which employees see the difference they make. TOTAL EMPLOYEES % FEMALE RETENTION RATE IMPROVEMENT 7,000+ 90% 13% ATTRACTION AND RETENTION At the end of the financial year, Premier employed over 6,000 staff across four countries. By Christmas 2015, Premier will employ over 7,000 staff. Premier believes that it is important to ensure that all team members enjoy a workplace which is free from discrimination; we believe our staff perform the best when they can be themselves at work and so we strongly support gender, age, sexual orientation, disability and cultural diversity at work. In FY2015, 90% of our total team members are woman, who held 68% of the positions in our senior management team. We rely on the passion and commitment of our employees to achieve the results we do. We value and respect our talented people and were pleased to achieve a year on year improved retention rate in Australia of 13% and 9% in New Zealand. DEVELOPMENT Premier provides ongoing and regular training opportunities throughout the year to develop and support our future aspiring leaders. This year we held up to 100 training and development workshops led by our People & Culture Managers and Senior Leaders. REWARD AND RECOGNITION We recognise and reward outstanding contributions to our group results, both individually and for team performance. Our annual awards in FY15 celebrated a total of 119 employees for their excellent performance and contribution to achieving our goals. In addition, we reward our top stores and staff across all seven brands globally via our annual ‘Just Group Excellence Awards’. The top performing Regional Managers, Store Managers and Visual Merchandiser Managers for each of our brands are rewarded publicly amongst their peers for their great leadership and delivery of the FY15 results. WORKPLACE SAFETY Premier is committed to the prevention of workplace injury and lost time. We want to create a culture where all employees feel responsible for all aspects of health and safety. ‘Play it Safe’ has become part of our culture. Workplace safety is considered in all our business decisions, including workplace design and development, supply chain, visual merchandising and store planning. We have clear and measurable performance targets. However, in the event that a work related injury or illness occurs, we are also committed to supporting affected employees to return to work and continuing their career. We will continue to develop Premier as a great place to work, and a great company in which our team build their careers. Annual Report 2015 11 Our Commitment to the Community Premier has a long history of philanthropic support, particularly with our Peter Alexander and Smiggle brands. PETER ALEXANDER AND THE RSPCA As much as Peter Alexander has become famous for his pyjamas, he has also become known for his dogs, and is a huge supporter of animal welfare organisations. Peter Alexander has worked closely for the last 10 years with the RSPCA in Australia, and for the last two years with Paw Justice in New Zealand. Our work has included a variety of fundraising activities which raise awareness for animal charities. Working with the RSPCA, Peter has raised over $460,000 contributing to RSPCA shelters, which care for more than 140,000 animals every year supporting rescue, rehabilitation and rehoming unwanted, stray and injured animals. Peter has been awarded the status of RSPCA Ambassador in recognition of his efforts. PETER HAS RAISED OVER $479,000 CONTRIBUTING TO RSPCA SHELTERS IN AUSTRALIA AND PAW JUSTICE IN NEW ZEALAND. SMIGGLE COMMUNITY PARTNERSHIPS Premier and our Smiggle brand also support a number of children’s charities, organisations and educational programs. Plus, countless community fundraising initiatives both locally and abroad, for schools, sporting, and educational events. In last financial year we have donated over $102,000 in products across four countries. Peter Alexander with Butch on his right and Betty on his lap. PETER ALEXANDER AND PAW JUSTICE In 2014, aligned with the growing presence of Peter Alexander in New Zealand, we partnered with the NZ animal charity Paw Justice, and over the last 2 years have raised close to $25,000. Paw Justice works to stop violent animal abuse; and they have been instrumental in focusing the New Zealand public’s attention on the need for reform of animal welfare laws through youth education and advocacy for pets. PETER ALEXANDER AND THE HARGREAVES ESTATE Each year Peter dreams up a new and creative way to fundraise through Peter Alexander stores. In FY15, he approached Mr Men & Little Miss author Roger Hargreaves’ estate to raise money for animal charities. The limited edition ‘Little Miss Hug and Penny the Dog’ book featured the Peter Alexander brand ambassador Penny in a story about celebrating equality and promoting acceptance of people’s differences. All money raised from the books went directly to the RSPCA in Australia and Paw Justice in New Zealand. In the last financial year we have helped raise close to $110,000 for the RSPCA in Australia and over $19,000 for Paw Justice in New Zealand. 12 Premier Investments Limited Our Commitment To The Environment replace paper based reporting and provided all staff with tablets. This has delivered 2.1 tonne reduction in paper usage. All weekly retail reporting, forms, reference and administrative material is now stored and accessible via mobile technology. Across our network of stores, reuse is always our first option. Specific initiatives relate to plastic hangers and carton packaging. In store, plastic hangers are first reused, and if there is an oversupply our supplier collects and repackages those hangers for reuse or to be fully recycled. Additionally, all cartons are reused to facilitate movement of stock between our stores. In the balance of instances we will utilise our shopping centre recycling facilities. ENERGY EFFICIENCY Premier recognises the importance of energy efficient, low environmental impact lighting systems and since 2012 have adhered to new improved lighting standards to efficiently manage our energy consumption in all of our stores. This has resulted in an investment to our store network and upgrade of 175 stores to LED lighting. This initiative has subsequently meant less heat, thereby reducing the overall heat load on our stores and reduced investment in cooling requirements. In addition this has led to a dramatic reduction in ongoing maintenance and light bulb replacement. This standard has been maintained for all 143 new store fit-outs. Across our existing store network all old bulbs are recycled and we are looking to complete a “like for like” conventional to LED lamp replacement program. For example our Southland Just Jeans Store replaced existing lights with LED lamps and achieved 62% reduction in electricity consumption. With the active participation of our employees, we believe that our focus on environmental issues will make our business more efficient, drive customer and employee connection, and have a positive impact in the communities in which we operate. PACKAGING STEWARDSHIP Premier is committed to managing and reducing the impact our business operations have on the environment. Premier is a signatory to the Australian Packaging Covenant, a voluntary agreement between government and industry which provides companies with the tools to be more involved in reducing their impact on the environment through sustainable packaging design, recycling and product stewardship. Premier has submitted a 5 year Action Plan outlining its objectives in relation to: 1. Optimising packaging to reduce environmental impacts; 2. Increasing the collection and recycling of packaging; 3. Commitment to product stewardship; and 4. Implementation of Sustainable Packaging Guidelines. All plastic shopping bags used by the group are made using EPI technology designed to control and manage the lifetime of products made from the most common plastics to assist in the breakdown, degrade and subsequent biodegrade process. WASTE AND RECYCLING Premier has extensive recycling and sustainable practices across our network of Stores, Distribution Centres and Support Centre. Our Distribution Centres executes on-site recovery systems for recycling used packaging and follows Sustainable Packaging Guidelines. All carton packaging uses recycled content. Cartons are reused to facilitate the replenishment of stock, or where necessary waste packaging is compacted and collected for recycling. We have partnered with Orora, a signatory to the Australian Packaging Covenant, to collect and process in line with their recycling procedures. Orora’s recycling business specialises in paper and cardboard, among others, which is then used as the major input at their recycled paper mill, to produce 100% recycled paper. Our Support Centre recycles all paper and has commenced new co-mingled recycling program for glass and plastics on every floor in our entire building. All paper purchased for our Support Centre, is accredited from The Forest Stewardship Council sources, an international network which promotes responsible management of the world’s forests. All necessary printing at our support centre is activated by personalised swipe access only to release print. This initiative has seen a significant reduction in waste paper printing, as it removes entirely non- collection of printouts. For our state management teams we developed a web based retail reporting suite to Annual Report 2015 13 Our Commitment to Ethical Sourcing Premier commits to the highest standards of ethical conduct and responsible product sourcing practices. We support this commitment by our models for sourcing products, the principles that back up those models, together with our policies and assurance program. OUR SOURCING MODELS, PRINCIPLES & POLICIES We share our customers’ full engagement in understanding where products come from, how products are made and the way that people who manufacture those products are treated. With this in mind, we use the following sourcing models: » direct sourcing from factories with whom we work in close partnership » through Li & Fung, the world’s largest sourcing company for major retailers and brands around the world In addition, we work with known established and trusted Australian importers. We currently source products in the following countries: Bangladesh, China, India, Indonesia, Italy, Korea, Sri Lanka, Taiwan, Vietnam. +30.8% SOURCE COUNTRIES (THE JUST GROUP, UNITS) Rest of the world 14% +8.6% NAB Australian Fashion Online Sales Growth Just Group FY15 Annual Online Sales Growth 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% China 86% Our Ethical Sourcing and Supply Code (Code) supports our commitment to sourcing merchandise that is produced according to these principles, regardless of origin. All suppliers must sign our supply terms and conditions, of which the Code is part, prior to any orders being placed. We will not do business with a supplier who does not comply with the Code. Among other things, we note that our supply terms and the Code: » requires compliance with all laws (and/or requires our suppliers to meet higher standards) » insists on the free association of workers, including the right to collectively bargain and be represented » requires labour to be voluntary, without workers being required to lodge deposits (eg. for recruitment fees etc.) 14 Premier Investments Limited In each case our model is supported by the following strict sourcing principles: 1. We comply with all laws in the countries we source from and operate. 2. We insist on workers’ legal rights – including worker empowerment and free association. 3. We have zero tolerance for child labour. 4. We have zero tolerance for bribery and corruption. 5. We have zero tolerance for animal cruelty. » prohibits forced labour (including child labour) » insists on worker rights such as the right to work in safe, hygienic premises where working hours are not excessive » requires the payment of the minimum national legal standards or local benchmark standards (whichever is higher), and, in relation to full time workers, sufficient to meet basic needs and to provide discretionary income » prohibits unauthorised sub-contracting – meaning that we have a fully transparent relationship with our suppliers » prohibits discrimination on the basis of personal attributes as well as union membership or political affiliations ASSURANCES WHICH SUPPORT OUR SOURCING PRINCIPLES Background checks. We conduct thorough and ongoing compliance activities of all suppliers directly and through Li & Fung and qualified audit firms. Factory inspections. Senior management personally inspect all factories that manufacture for us. We continue factory visits throughout our relationship with our suppliers to ensure our principles are strictly adhered to. BANGLADESH SOURCING Background Bangladesh’s economic and social development relies on the expansion and strength of the garment sector, including through investment by international retailers. The garment industry comprises around 80% of all Bangladesh export earnings, is a significant contributor to GDP, and employs over 4 million workers, most of whom are women. Premier currently sources a portion of its Just Jeans and Jay Jays branded products in Bangladesh and we highlight our program in this country in the interest of full transparency. MEMBERSHIP OF THE ALLIANCE FOR BANGLADESH WORKER SAFETY Since 2013 we have been a proud signatory to the Alliance for Bangladesh Worker Safety. This is a legally binding five year commitment to work with some of the world’s largest apparel retailers including the following companies: Nordstrom, Gap, Target, Sears, J.C. Penney, Hudson’s Bay and Macy’s. Together we will invest in worker safety, improved conditions and transparent reporting in a results oriented, measurable and verifiable way. While much progress has been made by the industry in Bangladesh, challenges remain. To this end, the Alliance’s achievements to date include: » inspection of 100% of member factories (including all of our factories) » publication on the Alliance website of all factory inspection results, along with corrective action plans for any factories requiring remediation (including all of our factories) » in partnership with the International Finance Corporation, a $50 million low-cost long-term facility to assist factories to undertake remediation » an anonymous worker helpline program in over 400 member factories, with completion across all factories expected to take place by January 2016 (including all of our factories) » Fire and safety training for 1.1 million workers in all member factories (including all of our factories). Plus following the Nepal Earthquake, the Alliance is now integrating earthquake preparedness into their training programs. Further, the Alliance for Bangladesh Worker Safety collaborates with all parties in country – including the Bangladesh government, NGOs, factory workers and the Accord on Fire & Building Safety in Bangladesh. Both the Alliance and the Accord share common priorities, including a relentless focus on workers generally, as well as building integrity and safety – all supported by financial commitments and good governance. All initiatives of the Alliance are publicly available at www.bangaladeshworkersafety.org OUR ACTIVITIES IN BANGLADESH Our operational processes have included the establishment of our own office in Bangladesh, which we opened in March 2014. Our investment in on the ground infrastructure in Bangladesh, including employing staff at our sourcing office directly, supports our audit and compliance activities in that market with particular focus on social compliance and safety which includes: 1. Senior management personally inspect ALL factories that manufacture for us prior to commencing business. We continue factory visits throughout our relationship with our suppliers to ensure our principles are strictly adhered to. Our Code includes the ability for us to make unannounced visits in Bangladesh for the purposes of our audit and compliance activities. 2. Prior to placing orders with any factory, we also engage independent internationally recognised qualified assessment and audit firms to verify compliance with all local laws and safety conditions, in relation to labour and safety issues including fire and building integrity. 3. During manufacturing, our globally independent audit firm Intertek inspect all orders. To-date we have achieved a 100% inspection rate of all our orders in all of our factories. 4. In addition, if the factories are not member factories of either the Alliance or the Accord, then we will not conduct business with them. Factories must be inspected for compliance with Alliance safety standards before they can be approved by the Alliance for production. As noted; the Alliance has conducted fire safety training at all factories we source from and all employed staff have received this training. We are fully engaged in this process with a committed and responsible work program in Bangladesh. ETHICAL RAW MATERIAL PROCUREMENT Our sourcing commitment is supported by the following initiatives relating to fibre procurement: » Rabbit angora We confirm that we will not source products containing rabbit angora until we can be completely confident that the ethical standards of rabbit angora farming are assured and independently audited. » Cotton We will not source cotton harvested in Uzbekistan. We will maintain this position until the government of Uzbekistan ends the practice of forced child and adult labour in its cotton sector. To this end, we recently signed the Pledge against Child and Adult Forced Labour in Uzbek Cotton. » Azo Dyes We have voluntarily adopted the EU standard whereby we prohibit the manufacture and sale of goods which contain prohibited levels of the specific aromatic amines originating from a small number of azo dyes. » Sandblasted denim The harmful practice of ‘sandblasting’ denim with silica based powders has been discontinued in our business since 2011. Annual Report 2015 15 Our Business CODE OF CONDUCT Premier acknowledges the importance of respecting our stakeholders, including team members, shareholders, customers and suppliers. We also know that by respecting and working with the communities in which we operate we can make an impact. Our Code of Conduct outlines our legal, moral and ethical obligations which are underpinned by the behaviours we expect of all of our stakeholders. The principles ensure that we: » Foster a culture in which all stakeholders including customers, shareholders and fellow team members are treated with respect » Comply with the law and Premier policies » Protect company assets, information and reputation » Provide a safe workplace for our team members and visitors » Develop a culture where professional integrity and ethical behaviour is valued. As part of this focus, team members are regularly required to complete the Code of Conduct training. In addition, we have an Advisory Line telephone service for all issues and complaints under this Code. SHRINKAGE Shrinkage is the loss of merchandise that can be attributed to product theft or through administrative handling process. Premier has a shrinkage reduction strategy in place with processes and education aimed at reducing these losses. In the last financial year, Premier delivered the fifth consecutive year of improved shrinkage results and we will continue to maintain this focus into the future. 16 Premier Investments Limited Premier Investments Limited A.C.N. 006 727 966 Financial Report For the Period 27 July 2014 To 25 July 2015 Annual Report 2015 A Contents Directors’ Report Auditor’s Independence Declaration Statement of Comprehensive Income Statement of Financial Position Statement of Cash Flows Statement of Changes In Equity Notes to the Financial Statements Directors’ Declaration Independent Auditor’s Report to the Members of Premier Investments Limited Corporate Governance Statement ASX Additional Information as at 30 September 2015 Corporate Directory 2 34 35 36 37 38 39 102 103 105 121 123 DIRECTORS’ REPORT The Board of Directors of Premier Investments Limited (A.B.N. 64 006 727 966) has pleasure in submitting its report in respect of the financial year ended 25 July 2015. The directors present their report together with the consolidated financial report of Premier Investments Limited (the “Company”) and its controlled entities (the “Group”) for the period 27 July 2014 to 25 July 2015, together with the independent audit report to the members thereon. DIRECTORS The names and details of the Company’s Directors in office during the financial year and until the date of the report are as follows. Directors were in office for this entire period unless otherwise stated. Solomon Lew Chairman and Non-Executive Director Mr. Lew was appointed as Non-Executive Director and Chairman of Premier on 31 March 2008. For many years, Mr. Lew has been a director of Century Plaza Investments Pty. Ltd., the largest shareholder in Premier and was previously Chairman of Premier from 1987 to 1994. Mr. Lew has over 50 years’ experience in the manufacture, importation, wholesaling and retailing of textiles, apparel and general merchandise. Mr. Lew’s success in the clothing industry has been largely due to his ability to read fashion trends and interpret them in the Australian market and to efficiently and cost-effectively produce quality garments. Property development and the acquisition and disposal of equity investments have proven to be a profitable and consistent activity for Mr. Lew’s family entities. He has, through those family entities, made a number of investments in publicly listed companies over the years, including investments in Coles Myer Limited, Colorado Group Limited and Country Road Limited to name a few. Where these investments have been sold, it has resulted in substantial profits. In December 2013, Mr. Lew was appointed to the Australian Prime Minister’s Business Advisory Council. He was the inaugural Chairman of the Mount Scopus College Foundation and server for 26 years (1987 – 2013). He is a member of the Board of Trustees of the Sport and Tourism Youth Foundation, a life member of The Duke of Edinburgh’s Award World Fellowship, a Patron of Opera Australia and a Chairman or director of several philanthropic organisations. Mr. Lew was a director of Coles Myer Limited from 1985 to 2002, serving as Vice Chairman from 1989, Chairman from 1991 to 1995, Executive Chairman in 1995 and Vice Chairman in 1995 and 1996. He was also a director of the Reserve Bank of Australia from 1992 to 1997. Frank W. Jones FCA, CPA, ACIS Deputy Chairman and Non-Executive Director (Resigned 25 July 2015) Mr. Jones is a Fellow of Chartered Accountants Australia and New Zealand and an Associate of CPA Australia and the Governance Institute of Australia. Mr. Jones has extensive experience as a financial and general advisor to some of Australia’s leading importing and retailing companies. Mr. Jones served as Chairman of Premier from 1999 to 2002 and, more recently, from 2007 to 2008. He was a member of the Audit and Risk Committee of Premier until October 2014 and was the Committee’s chairman until 31 July 2010. Mr. Jones retired from the Premier Board on 25 July 2015. 1 Premier Investments Limited 2   DIRECTORS’ REPORT The Board of Directors of Premier Investments Limited (A.B.N. 64 006 727 966) has pleasure in submitting its report in respect of the financial year ended 25 July 2015. The directors present their report together with the consolidated financial report of Premier Investments Limited (the “Company”) and its controlled entities (the “Group”) for the period 27 July 2014 to 25 July 2015, together with the independent audit report to the members thereon. DIRECTORS The names and details of the Company’s Directors in office during the financial year and until the date of the report are as follows. Directors were in office for this entire period unless otherwise stated. Solomon Lew Chairman and Non-Executive Director Mr. Lew was appointed as Non-Executive Director and Chairman of Premier on 31 March 2008. For many years, Mr. Lew has been a director of Century Plaza Investments Pty. Ltd., the largest shareholder in Premier and was previously Chairman of Premier from 1987 to 1994. Mr. Lew has over 50 years’ experience in the manufacture, importation, wholesaling and retailing of textiles, apparel and general merchandise. Mr. Lew’s success in the clothing industry has been largely due to his ability to read fashion trends and interpret them in the Australian market and to efficiently and cost-effectively produce quality garments. Property development and the acquisition and disposal of equity investments have proven to be a profitable and consistent activity for Mr. Lew’s family entities. He has, through those family entities, made a number of investments in publicly listed companies over the years, including investments in Coles Myer Limited, Colorado Group Limited and Country Road Limited to name a few. Where these investments have been sold, it has resulted in substantial profits. In December 2013, Mr. Lew was appointed to the Australian Prime Minister’s Business Advisory Council. He was the inaugural Chairman of the Mount Scopus College Foundation and server for 26 years (1987 – 2013). He is a member of the Board of Trustees of the Sport and Tourism Youth Foundation, a life member of The Duke of Edinburgh’s Award World Fellowship, a Patron of Opera Australia and a Chairman or director of several philanthropic organisations. Mr. Lew was a director of Coles Myer Limited from 1985 to 2002, serving as Vice Chairman from 1989, Chairman from 1991 to 1995, Executive Chairman in 1995 and Vice Chairman in 1995 and 1996. He was also a director of the Reserve Bank of Australia from 1992 to 1997. Frank W. Jones FCA, CPA, ACIS Deputy Chairman and Non-Executive Director (Resigned 25 July 2015) Mr. Jones is a Fellow of Chartered Accountants Australia and New Zealand and an Associate of CPA Australia and the Governance Institute of Australia. Mr. Jones has extensive experience as a financial and general advisor to some of Australia’s leading importing and retailing companies. Mr. Jones served as Chairman of Premier from 1999 to 2002 and, more recently, from 2007 to 2008. He was a member of the Audit and Risk Committee of Premier until October 2014 and was the Committee’s chairman until 31 July 2010. Mr. Jones retired from the Premier Board on 25 July 2015. Annual Report 2015 2 2   DIRECTORS’ REPORT DIRECTORS’ REPORT (CONTINUED) (CONTINUED) DIRECTORS’ REPORT (CONTINUED) Dr. David M. Crean Deputy Chairman (appointed 25 July 2015) and Non-Executive Director Dr. David M. Crean Deputy Chairman (appointed 25 July 2015) and Non-Executive Director Lindsay E. Fox AC Non-Executive Director Dr. Crean has been an Independent Non-Executive Director of Premier since December 2009, Deputy Dr. Crean has been an Independent Non-Executive Director of Premier since December 2009, Deputy Chairman since July 2015 and is currently the Chairman of Premier’s Audit and Risk Committee (appointed Chairman since July 2015 and is currently the Chairman of Premier’s Audit and Risk Committee (appointed August 2010). August 2010). Dr. Crean was Chairman of the Hydro Electric Corporation (Hydro Tasmania) from September 2004 until Dr. Crean was Chairman of the Hydro Electric Corporation (Hydro Tasmania) from September 2004 until October 2014 and was also Chairman of the Business Risk Committee at Hydro Tasmania, member of the October 2014 and was also Chairman of the Business Risk Committee at Hydro Tasmania, member of the Audit Committee and Chairman of the Corporate Governance Committee. Audit Committee and Chairman of the Corporate Governance Committee. Dr. Crean was State Treasurer from August 1998 to his retirement from the position in February 2004. He Dr. Crean was State Treasurer from August 1998 to his retirement from the position in February 2004. He was also Minister for Employment from July 2002 to February 2004. He was a Member for Buckingham in the was also Minister for Employment from July 2002 to February 2004. He was a Member for Buckingham in the Legislative Council from 1992 to February 1999, and then for Elwick until May 2004. From 1989 – 1992 he Legislative Council from 1992 to February 1999, and then for Elwick until May 2004. From 1989 – 1992 he was the member for Denison in the House of Assembly. From 1993 – 1998 he held Shadow Portfolios of was the member for Denison in the House of Assembly. From 1993 – 1998 he held Shadow Portfolios of State Development, Public Sector Management, Finance and Treasury. State Development, Public Sector Management, Finance and Treasury. Dr. Crean is also a Board member of the Linfox Foundation. Dr. Crean graduated from Monash University in Dr. Crean is also a Board member of the Linfox Foundation. Dr. Crean graduated from Monash University in 1976 with a Bachelor of Medicine and Bachelor of Surgery. 1976 with a Bachelor of Medicine and Bachelor of Surgery. Mark McInnes Executive Director Mark McInnes Executive Director Mr. McInnes is a career retailer with a long track record of success in every role he has occupied. Like many Mr. McInnes is a career retailer with a long track record of success in every role he has occupied. Like many great retailers, Mark started his career from the shop floor as a company cadet for Grace Brothers. Mark has great retailers, Mark started his career from the shop floor as a company cadet for Grace Brothers. Mark has been directly responsible for some of Australia’s greatest retail success stories – including as a co-founder of been directly responsible for some of Australia’s greatest retail success stories – including as a co-founder of the Officeworks concept which is today Australia’s largest office supply superstore. the Officeworks concept which is today Australia’s largest office supply superstore. Prior to joining Premier, Mark led David Jones to its most successful time as a public listed company. Mark Prior to joining Premier, Mark led David Jones to its most successful time as a public listed company. Mark spent 13 years at David Jones – 6 years as Merchandise & Marketing Director and 7 years as CEO. From spent 13 years at David Jones – 6 years as Merchandise & Marketing Director and 7 years as CEO. From 2003 to 2010, Mark as CEO and Executive Director of David Jones turned the company into a fashion and 2003 to 2010, Mark as CEO and Executive Director of David Jones turned the company into a fashion and financial powerhouse, creating in excess of $2 billion of shareholder value. financial powerhouse, creating in excess of $2 billion of shareholder value. Mark was appointed CEO of Premier Retail in April 2011, and has set about transforming the company to Mark was appointed CEO of Premier Retail in April 2011, and has set about transforming the company to compete in an industry under great structural pressure. Premier Retail today has a clear path and a clear compete in an industry under great structural pressure. Premier Retail today has a clear path and a clear focus. focus. In December 2012, Mark was appointed as an Executive Director of Premier Investments Limited. Mark holds In December 2012, Mark was appointed as an Executive Director of Premier Investments Limited. Mark holds an MBA from the University of Melbourne. an MBA from the University of Melbourne. Prior to that, she had spent 16 years with the Westpac Group, running major business units in most operating divisions of the Group as well as heading up Corporate Affairs and Sustainability through the merger with Timothy Antonie Non-Executive Director and Lead Independent Director Timothy Antonie Non-Executive Director and Lead Independent Director Mr. Antonie was appointed to the Board of Directors on 1 December 2009. He holds a Bachelor of Economics Mr. Antonie was appointed to the Board of Directors on 1 December 2009. He holds a Bachelor of Economics degree from Monash University and qualified as a Chartered Accountant with Price Waterhouse. He has 20 degree from Monash University and qualified as a Chartered Accountant with Price Waterhouse. He has 20 years’ experience in investment banking and formerly held positions of Managing Director from 2004 to 2008 years’ experience in investment banking and formerly held positions of Managing Director from 2004 to 2008 and Senior Adviser in 2009 at UBS Investment Banking, with particular focus on large scale mergers and and Senior Adviser in 2009 at UBS Investment Banking, with particular focus on large scale mergers and acquisitions and capital raisings in the Australian retail, consumer, media and entertainment sectors. Mr acquisitions and capital raisings in the Australian retail, consumer, media and entertainment sectors. Mr Antonie is also a non-executive director of Village Roadshow Limited and Breville Group Limited. Antonie is also a non-executive director of Village Roadshow Limited and Breville Group Limited. Mr. Fox has extensive experience in all aspects of the transport, distribution and warehousing industries. He is the founder of the Linfox Group of Companies. Today, the Linfox Group operates one of the largest supply chain services businesses with operations in 10 countries. The Linfox Group employs over 23,000 people, operates 4.8 million square metres of warehouses and a fleet of more than 5,000 vehicles and carries out distribution operations for leading companies across the Asia-Pacific region. The Linfox Group includes operations in the areas of transport and logistics, airports, property development and cash management services. Mr. Fox has extensive involvement in Australian and international circles and, apart from his business interests, is well recognised and active in sport and charity work. In 2010, Victoria University admitted Mr. Fox to the degree of Doctor of the University honoris causa for his outstanding achievements in the transport industry, for his contribution to the community through his sustained efforts to reduce unemployment and his campaign against youth suicide. In January 2008, Mr Fox was awarded a Companion of the Order of Australia (AC) for continued service to the transport and logistics industries, to business through the development and promotion of youth traineeships and to the community through a range of philanthropic endeavours. He was awarded an Officer of the Order of Australia (AO) in 1992 for his contribution to the transport industry and the community and he received a Centenary Medal for services to the transport industry in 2001. From September 1992 to December 1993, Mr. Fox together with Mr. Bill Kelty introduced a national campaign called ‘Work for Australia’. This campaign encouraged companies and local communities to generate jobs for unemployed with the aid of government subsidies and programs. More than 60,000 jobs were pledged through their efforts and Mr. Fox and Mr. Kelty were awarded ‘Victorians of the Year’ by the Sunday Age. Sally Herman Non-Executive Director Sally Herman is an experienced Non-Executive Director in the fields of financial services, retail, manufacturing and property. She had a successful executive career spanning 25 years in financial services in both Australia and the US, transitioning in late 2010 to a full time career as a Non-Executive Director. St.George and the global financial crisis. Ms. Herman now sits on both listed and unlisted Boards, including Breville Group Limited, ME Bank Limited, FSA Group Limited (retired 28 November 2014) and Investec Property Limited. She also Chairs the Board of Urbis Pty. Limited, a leading property advisory firm, and is Chair of an independent girls’ school in Sydney. Ms. Herman holds a BA from the University of NSW and is a Graduate of the Australian Institute of Company Directors. Henry D. Lanzer AM B.COM., LLB (Melb) Non-Executive Director Henry Lanzer AM is Managing Partner of Arnold Bloch Leibler, a leading Australian commercial law firm. Henry has over 30 years’ experience in providing legal, corporate finance and strategic advice to some of Australia’s leading companies. Mr. Lanzer is a Director of Just Group Limited, Thorney Opportunities Limited and the TarraWarra Museum of Art and also a Life Governor of the Mount Scopus College Council. He is also Chairman of the Remuneration and Nomination Committee for Premier Investments Limited. In June 2015, Henry was appointed as a Member of the Order of Australia. 3 Premier Investments Limited 3 3 4       DIRECTORS’ REPORT (CONTINUED) Lindsay E. Fox AC Non-Executive Director Mr. Fox has extensive experience in all aspects of the transport, distribution and warehousing industries. He is the founder of the Linfox Group of Companies. Today, the Linfox Group operates one of the largest supply chain services businesses with operations in 10 countries. The Linfox Group employs over 23,000 people, operates 4.8 million square metres of warehouses and a fleet of more than 5,000 vehicles and carries out distribution operations for leading companies across the Asia-Pacific region. The Linfox Group includes operations in the areas of transport and logistics, airports, property development and cash management services. Mr. Fox has extensive involvement in Australian and international circles and, apart from his business interests, is well recognised and active in sport and charity work. In 2010, Victoria University admitted Mr. Fox to the degree of Doctor of the University honoris causa for his outstanding achievements in the transport industry, for his contribution to the community through his sustained efforts to reduce unemployment and his campaign against youth suicide. In January 2008, Mr Fox was awarded a Companion of the Order of Australia (AC) for continued service to the transport and logistics industries, to business through the development and promotion of youth traineeships and to the community through a range of philanthropic endeavours. He was awarded an Officer of the Order of Australia (AO) in 1992 for his contribution to the transport industry and the community and he received a Centenary Medal for services to the transport industry in 2001. From September 1992 to December 1993, Mr. Fox together with Mr. Bill Kelty introduced a national campaign called ‘Work for Australia’. This campaign encouraged companies and local communities to generate jobs for unemployed with the aid of government subsidies and programs. More than 60,000 jobs were pledged through their efforts and Mr. Fox and Mr. Kelty were awarded ‘Victorians of the Year’ by the Sunday Age. Sally Herman Non-Executive Director Sally Herman is an experienced Non-Executive Director in the fields of financial services, retail, manufacturing and property. She had a successful executive career spanning 25 years in financial services in both Australia and the US, transitioning in late 2010 to a full time career as a Non-Executive Director. Prior to that, she had spent 16 years with the Westpac Group, running major business units in most operating divisions of the Group as well as heading up Corporate Affairs and Sustainability through the merger with St.George and the global financial crisis. Ms. Herman now sits on both listed and unlisted Boards, including Breville Group Limited, ME Bank Limited, FSA Group Limited (retired 28 November 2014) and Investec Property Limited. She also Chairs the Board of Urbis Pty. Limited, a leading property advisory firm, and is Chair of an independent girls’ school in Sydney. Ms. Herman holds a BA from the University of NSW and is a Graduate of the Australian Institute of Company Directors. Henry D. Lanzer AM B.COM., LLB (Melb) Non-Executive Director Henry Lanzer AM is Managing Partner of Arnold Bloch Leibler, a leading Australian commercial law firm. Henry has over 30 years’ experience in providing legal, corporate finance and strategic advice to some of Australia’s leading companies. Mr. Lanzer is a Director of Just Group Limited, Thorney Opportunities Limited and the TarraWarra Museum of Art and also a Life Governor of the Mount Scopus College Council. He is also Chairman of the Remuneration and Nomination Committee for Premier Investments Limited. In June 2015, Henry was appointed as a Member of the Order of Australia. Annual Report 2015 4 4   DIRECTORS’ REPORT (CONTINUED) Michael R.I. McLeod Non-Executive Director Mr. McLeod is a former Executive Director of the Century Plaza Group and has been involved with the Group since 1996 as an advisor in the areas of corporate strategy, investment and public affairs. He has been a Non-Executive Director of Premier Investments Limited since 2002 and was a Non-Executive Director of Just Group Limited from 2007 to 2013. Past experience includes the Australian Board of an international funds manager, chief of staff to a Federal Cabinet Minister and statutory appointments including as a Commission Member of the National Occupational Health and Safety Commission. He holds a Bachelor of Arts (First Class Honours and University Medal) from the University of New South Wales. Dr. Gary H. Weiss LL.M, J.S.D. Non-Executive Director Dr. Weiss holds the degrees of LL.B (Hons) and LL.M (with distinction) from Victoria University of Wellington, as well as a Doctor of Juridical Science (JSD) from Cornell University, New York. Dr. Weiss has extensive international business experience and has been involved in numerous cross-border mergers and acquisitions. Dr. Weiss is Chairman of Clearview Wealth Limited and Ridley Corporation Limited, Executive Director of Ariadne Australia Limited, and a director of Premier Investments Limited, Pro-Pac Packaging Limited, Tag Pacific Limited, Thorney Opportunities Limited and The Straits Trading Company Limited. He was Chairman of Coats Plc from 2003 until April 2012 and executive director of Guinness Peat Group Plc from 1990 to April 2011 and has held directorships of numerous companies, including Mercantile Investment Company Limited (retired 25 February 2015) Westfield Group, Tower Australia Limited, Australian Wealth Management Limited, Tyndall Australia Limited (Deputy Chairman), Joe White Maltings Limited (Chairman), CIC Limited, Whitlam Turnbull & Co Limited and Industrial Equity Limited. He has authored numerous articles on a variety of legal and commercial topics. COMPANY SECRETARY Kim F. Davis Non-Executive Alternate Director (resigned as alternate director 25 July 2015) Mr. Davis was retired as Alternate Director for Mr. Jones on 25 July 2015. Mr. Davis has been the Company Secretary of Premier Investments Limited for 21 years. Prior to holding this position, Mr Davis had 15 years’ experience within the accounting industry as a tax and financial advisor. DIRECTORS’ REPORT (CONTINUED) PRINCIPAL ACTIVITIES The consolidated entity operates a number of specialty retail fashion chains within the specialty retail fashion markets in Australia, New Zealand, Singapore and the United Kingdom. The Group also has significant investments in listed securities and money market deposits. DIVIDENDS Final Dividend recommended for 2015 Dividends paid in the year: Interim for the half-year  Special for the half-year Final for 2014 shown as recommended in the 2014 report OPERATING AND FINANCIAL REVIEW Group Overview: CENTS 21.00 21.00 $’000 32,840 32,823 9.00 14,067 20.00 31,143 The Company acquired a controlling interest in Just Group Limited (“Just Group”), a listed company on the Australian Securities Exchange in August 2008. Subsequent to the acquisition, Just Group delisted from the Australian Securities Exchange. Just Group is a leading speciality fashion retailer in Australia, New Zealand, Singapore and the United Kingdom. Just Group has a portfolio of well-recognised retail brands, consisting of Just Jeans, Jay Jays, Jacqui E, Portmans, Dotti, Peter Alexander and Smiggle. Currently, these seven unique brands are trading from more than 1,000 stores across four countries and online. Smiggle United Kingdom completed its first full year of operations, with 24 stores operating in the United Kingdom at the end of the 2015 financial year. The Group’s emphasis is on a range of brands that provide diversification through breadth of target demographic and sufficiently broad appeal to enable a national footprint. Over 90% of the product range is designed, sourced and sold under its own brands. There is a continuing investment in these brands to ensure they remain relevant to changing customer tastes and remain at the forefront of their respective The Group’s reported revenue from the sale of goods, total income and net profit after income tax for the 52 week period ended 25 July 2015 (2014: 52 week period ended 26 July 2014) are summarised below: target markets. Group Operating Results: Revenue from the sale of goods Total interest income Total other income and revenue Total income 2015 $’000 2014 $’000 % CHANGE 947,662 9,828 4,379 961,869 892,570 11,139 2,383 906,092 6.2% (11.8%) 83.8% 6.2% Net profit after income tax 88,102 73,000 20.7% 5 Premier Investments Limited 5 6     DIRECTORS’ REPORT (CONTINUED) PRINCIPAL ACTIVITIES The consolidated entity operates a number of specialty retail fashion chains within the specialty retail fashion markets in Australia, New Zealand, Singapore and the United Kingdom. The Group also has significant investments in listed securities and money market deposits. DIVIDENDS Final Dividend recommended for 2015 Dividends paid in the year: Interim for the half-year  Special for the half-year Final for 2014 shown as recommended in the 2014 report OPERATING AND FINANCIAL REVIEW Group Overview: CENTS 21.00 21.00 $’000 32,840 32,823 9.00 14,067 20.00 31,143 The Company acquired a controlling interest in Just Group Limited (“Just Group”), a listed company on the Australian Securities Exchange in August 2008. Subsequent to the acquisition, Just Group delisted from the Australian Securities Exchange. Just Group is a leading speciality fashion retailer in Australia, New Zealand, Singapore and the United Kingdom. Just Group has a portfolio of well-recognised retail brands, consisting of Just Jeans, Jay Jays, Jacqui E, Portmans, Dotti, Peter Alexander and Smiggle. Currently, these seven unique brands are trading from more than 1,000 stores across four countries and online. Smiggle United Kingdom completed its first full year of operations, with 24 stores operating in the United Kingdom at the end of the 2015 financial year. The Group’s emphasis is on a range of brands that provide diversification through breadth of target demographic and sufficiently broad appeal to enable a national footprint. Over 90% of the product range is designed, sourced and sold under its own brands. There is a continuing investment in these brands to ensure they remain relevant to changing customer tastes and remain at the forefront of their respective target markets. Group Operating Results: The Group’s reported revenue from the sale of goods, total income and net profit after income tax for the 52 week period ended 25 July 2015 (2014: 52 week period ended 26 July 2014) are summarised below: Revenue from the sale of goods Total interest income Total other income and revenue Total income 2015 $’000 2014 $’000 % CHANGE 947,662 9,828 4,379 961,869 892,570 11,139 2,383 906,092 6.2% (11.8%) 83.8% 6.2% Net profit after income tax 88,102 73,000 20.7% Annual Report 2015 6 6   DIRECTORS’ REPORT (CONTINUED) DIRECTORS’ REPORT (CONTINUED) OPERATING AND FINANCIAL REVIEW (CONTINUED) GROUP PERFORMANCE Group Operating Results (continued): Retail Segment: As Premier’s core business, Just Group was the key contributor to the Group’s operating results for the financial year. Key financial indicators for the retail segment are highlighted below: RETAIL SEGMENT Sale of goods Total segment revenue 2015 $’000 2014 $’000 % CHANGE 947,662 952,191 892,570 895,387 6.2% 6.3% Expense associated with disposal of asset held for sale 1,724 - Segment net profit before income tax 98,958 79,299 24.8% Capital expenditure 36,526 48,164 The Retail Segment contributed $99.0 million to the Group’s net profit before income tax, up 24.8% on the prior financial year. Growth in sales, combined with gross margin expansion contributed to the improvement in segment profit before income tax. The increase in profit before income tax is a reflection of the Group’s continued efforts to transform its core brands, the implementation of its organisation-wide cost efficiency program, as well as the focus on its growth initiatives, both locally and internationally. The increase in sales is as a result of all brands reporting positive sales growth for the year. In addition, the Retail Segment delivered growth of 31% in online sales, with the Group now trading in three online markets, with the successful launch of a dedicated Smiggle UK online store – www.smiggle.co.uk. During the financial year, the Retail Segment incurred non-recurring expenses of $1.7 million associated with the Group’s disposal of its 50% interest in its joint venture, Just Kor Fashion Group (Pty) Ltd, which is involved in the retailing of the Jay Jays concept in South Africa. The non-recurring expenses comprised an impairment loss of $765,000 on revaluing its investment previously classified as held for sale at fair value and other expenses of $959,000 associated with the sale of the investment. The commercial terms of the sale were agreed before year-end, with settlement of the fair value amount completed in August 2015. The Group incurred an impairment loss of $765,000 on revaluing its investment classified as held for sale at fair value. Other expenses associated with the sale of the investment amounted to $959,000. The Group is pleased to report that despite tough economic conditions, it continued to generate strong returns to shareholders. The dividends declared for the year reaffirm the confidence the Directors have in the future performance and underline Premier’s commitment to enhancing shareholder value through capital management and business investment. 2015 2014 2013 2012 2011 Closing share price at end of financial year $13.43 $9.34 $7.68 $4.88 $5.54 Basic earnings per share (cents) 56.5 47.0 112.4 44.0 26.1 Dividend paid per share (cents) 50.0 39.0 37.0 36.0 36.0 Return on equity (%) 6.6% 5.6% 13.4% 5.5% 3.4% Net debt/equity ratio (%) (13.2%) (14.9%) (16.2%) (13.7%) (14.6%) SHARES ISSUED DURING THE FINANCIAL YEAR A total of 665,201 shares (2014: 454,396) were issued during the year pursuant to the Group’s Performance Rights Plan. 25 July 2015. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS There have been no significant changes in the state of affairs of the Group during the financial year ended SIGNIFICANT EVENTS AFTER THE REPORTING DATE On 17 September 2015, the Directors of Premier Investments Limited declared a final dividend in respect of the 2015 financial year. The total amount of the dividend is $32,840,000 (2014: $31,143,000) which represents a fully franked dividend of 21 cents per share (2014: 20 cents per share). The dividend has not been provided for in the 25 July 2015 financial statements. During August 2015, Just Jeans Group Pty Ltd, a subsidiary of Premier Investments Limited, completed the sale of a 50% interest in a joint venture entity, Just Kor Fashion Group (Pty) Ltd, a company incorporated in South Africa. The full settlement, representing the fair value of the investment in Just Kor Fashion Group (Pty) Ltd was received subsequent to year-end. Refer to note 11 of the financial statements for further details. LIKELY DEVELOPMENTS AND EXPECTED RESULTS Certain likely developments in the operations of the Group and the expected results of those operations in financial years subsequent to the period ended 25 July 2015 are referred to in the preceding operating and financial review. No additional information is included on the likely developments in the operations of the economic entity and the expected results of those operations as the Directors reasonably believe that the disclosure of such information would be likely to result in unreasonable prejudice to the economic entity if included in this report, and it has therefore been excluded in accordance with section 299(3) of the Corporations Act 2001. ENVIRONMENTAL REGULATION AND PERFORMANCE The Group’s operations are not subject to any significant environmental obligations or regulations. 7 Premier Investments Limited 7 8     DIRECTORS’ REPORT (CONTINUED) GROUP PERFORMANCE The Group is pleased to report that despite tough economic conditions, it continued to generate strong returns to shareholders. The dividends declared for the year reaffirm the confidence the Directors have in the future performance and underline Premier’s commitment to enhancing shareholder value through capital management and business investment. 2015 2014 2013 2012 2011 Closing share price at end of financial year $13.43 $9.34 $7.68 $4.88 $5.54 Basic earnings per share (cents) 56.5 47.0 112.4 44.0 26.1 Dividend paid per share (cents) 50.0 39.0 37.0 36.0 36.0 Return on equity (%) 6.6% 5.6% 13.4% 5.5% 3.4% Net debt/equity ratio (%) (13.2%) (14.9%) (16.2%) (13.7%) (14.6%) SHARES ISSUED DURING THE FINANCIAL YEAR A total of 665,201 shares (2014: 454,396) were issued during the year pursuant to the Group’s Performance Rights Plan. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS There have been no significant changes in the state of affairs of the Group during the financial year ended 25 July 2015. SIGNIFICANT EVENTS AFTER THE REPORTING DATE On 17 September 2015, the Directors of Premier Investments Limited declared a final dividend in respect of the 2015 financial year. The total amount of the dividend is $32,840,000 (2014: $31,143,000) which represents a fully franked dividend of 21 cents per share (2014: 20 cents per share). The dividend has not been provided for in the 25 July 2015 financial statements. During August 2015, Just Jeans Group Pty Ltd, a subsidiary of Premier Investments Limited, completed the sale of a 50% interest in a joint venture entity, Just Kor Fashion Group (Pty) Ltd, a company incorporated in South Africa. The full settlement, representing the fair value of the investment in Just Kor Fashion Group (Pty) Ltd was received subsequent to year-end. Refer to note 11 of the financial statements for further details. LIKELY DEVELOPMENTS AND EXPECTED RESULTS Certain likely developments in the operations of the Group and the expected results of those operations in financial years subsequent to the period ended 25 July 2015 are referred to in the preceding operating and financial review. No additional information is included on the likely developments in the operations of the economic entity and the expected results of those operations as the Directors reasonably believe that the disclosure of such information would be likely to result in unreasonable prejudice to the economic entity if included in this report, and it has therefore been excluded in accordance with section 299(3) of the Corporations Act 2001. ENVIRONMENTAL REGULATION AND PERFORMANCE The Group’s operations are not subject to any significant environmental obligations or regulations. Annual Report 2015 8 8   DIRECTORS’ REPORT DIRECTORS’ REPORT (CONTINUED) (CONTINUED) SHARE OPTIONS SHARE OPTIONS Unissued Shares: Unissued Shares: As at the date of this report, there were 1,365,510 unissued ordinary shares under options/performance rights As at the date of this report, there were 1,365,510 unissued ordinary shares under options/performance rights (1,365,510 at the reporting date). Refer to the remuneration report for further details of the options (1,365,510 at the reporting date). Refer to the remuneration report for further details of the options outstanding. outstanding. Shares Issued as a Result of the Exercise of Options: Shares Issued as a Result of the Exercise of Options: A total of 665,201 shares (2014: 454,396) were issued as a result of the exercise of options during the A total of 665,201 shares (2014: 454,396) were issued as a result of the exercise of options during the financial year and to the date of this report. financial year and to the date of this report. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS To the extent permitted by law, the company indemnifies every person who is or has been a director or officer To the extent permitted by law, the company indemnifies every person who is or has been a director or officer of the company or of a wholly-owned subsidiary of the company against liability for damages awarded or of the company or of a wholly-owned subsidiary of the company against liability for damages awarded or judgments entered against them and legal defence costs and expenses, arising out of a wrongful act, incurred judgments entered against them and legal defence costs and expenses, arising out of a wrongful act, incurred by that person whilst acting in their capacity as a director or officer provided there has been no admission, or by that person whilst acting in their capacity as a director or officer provided there has been no admission, or judgment, award or other finding by a court, tribunal or arbitrator which establishes improper use of position, judgment, award or other finding by a court, tribunal or arbitrator which establishes improper use of position, or committing of any criminal, dishonest, fraudulent or malicious act. or committing of any criminal, dishonest, fraudulent or malicious act. The officers include the Directors, as named earlier in this report, the Company Secretary and other officers, The officers include the Directors, as named earlier in this report, the Company Secretary and other officers, being the executive senior management team. Details of the nature of the liabilities covered or the amount of being the executive senior management team. Details of the nature of the liabilities covered or the amount of the premium paid in respect of the Directors, and Officers, liability insurance contracts are not disclosed as the premium paid in respect of the Directors, and Officers, liability insurance contracts are not disclosed as such disclosure is prohibited under the terms of the contracts. such disclosure is prohibited under the terms of the contracts. INDEMNIFICATION OF AUDITORS INDEMNIFICATION OF AUDITORS To the extent permitted by law, the company has agreed to indemnify its auditors, Ernst & Young, as part of To the extent permitted by law, the company has agreed to indemnify its auditors, Ernst & Young, as part of the terms of its audit engagement agreement against claims by third parties arising from the audit (for an the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify Ernst & Young during or since the financial unspecified amount). No payment has been made to indemnify Ernst & Young during or since the financial year. year. INTERESTS IN SHARES AND RIGHTS OF THE COMPANY INTERESTS IN SHARES AND RIGHTS OF THE COMPANY At the date of this report, the interests of the Directors in the shares and rights of the company were: At the date of this report, the interests of the Directors in the shares and rights of the company were: Mr. S. Lew Mr. S. Lew 4,437,699 ordinary shares** 4,437,699 ordinary shares** DIRECTORS’ REPORT DIRECTORS’ REPORT (CONTINUED) (CONTINUED) DIRECTORS’ MEETINGS DIRECTORS’ MEETINGS The number of meetings of the Board of Directors during the financial year, and the number of meetings The number of meetings of the Board of Directors during the financial year, and the number of meetings attended by each director were as follows: attended by each director were as follows: BOARD MEETINGS BOARD MEETINGS AUDIT AND RISK COMMITTEE AUDIT AND RISK COMMITTEE REMUNERATION AND REMUNERATION AND NOMINATION COMMITTEE NOMINATION COMMITTEE MEETINGS MEETINGS HELD WHILE A HELD WHILE A DIRECTOR DIRECTOR NUMBER NUMBER ATTENDED ATTENDED MEETINGS MEETINGS ATTENDED AS ATTENDED AS COMMITTEE COMMITTEE MEMBER MEMBER NUMBER NUMBER ATTENDED ATTENDED MEETINGS MEETINGS ATTENDED AS ATTENDED AS COMMITTEE COMMITTEE MEMBER MEMBER NUMBER NUMBER ATTENDED ATTENDED 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 - - 1 1 - - 3 3 4 4 - - 3 3 - - - - 1 1 - - 4 4 - - 4 4 4 4 - - 4 4 2 2 - - 1 1 3 3 - - - - - - - - - - - - 3 3 - - 3 3 3 3 - - - - - - - - - - - - 3 3 - - 3 3 DIRECTOR DIRECTOR Mr. S. Lew Mr. S. Lew Mr. F. W. Jones Mr. F. W. Jones Mr. M. McInnes Mr. M. McInnes Mr. T. Antonie Mr. T. Antonie Dr. D. Crean Dr. D. Crean Mr. L. E. Fox Mr. L. E. Fox Ms. S. Herman Ms. S. Herman Mr. H. D. Lanzer Mr. H. D. Lanzer Mr. M. R. I. McLeod Mr. M. R. I. McLeod Dr. G. H. Weiss Dr. G. H. Weiss ROUNDING ROUNDING The company is a company of the kind specified in Australian Securities and Investment Commission’s class The company is a company of the kind specified in Australian Securities and Investment Commission’s class order 98/0100. In accordance with that class order amounts in the financial statements and the Directors’ order 98/0100. In accordance with that class order amounts in the financial statements and the Directors’ Report have been rounded to the nearest thousand dollars unless specifically stated to be otherwise. Report have been rounded to the nearest thousand dollars unless specifically stated to be otherwise. The Directors received the declaration on page 34 from the auditor of Premier Investments Limited. The Directors received the declaration on page 34 from the auditor of Premier Investments Limited. AUDITOR INDEPENDENCE AUDITOR INDEPENDENCE NON-AUDIT SERVICES NON-AUDIT SERVICES The Directors are satisfied that the provision of non-audit services is compatible with the general standard of The Directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The nature and scope of each type of non- independence for auditors imposed by the Corporations Act 2001. The nature and scope of each type of non- audit service provided means that independence was not compromised. audit service provided means that independence was not compromised. Details of non-audit services provided by the entity’s auditor, Ernst & Young, can be found in Note 25 of the Details of non-audit services provided by the entity’s auditor, Ernst & Young, can be found in Note 25 of the Mr. F.W. Jones Mr. F.W. Jones 207,592 ordinary shares (resigned 25 July 2015) 207,592 ordinary shares (resigned 25 July 2015) Financial Report. Financial Report. Mr. L.E. Fox Mr. L.E. Fox Ms. S. Herman Ms. S. Herman Mr. H.D. Lanzer Mr. H.D. Lanzer 2,577,014 ordinary shares 2,577,014 ordinary shares 8,000 ordinary shares 8,000 ordinary shares 27,665 ordinary shares 27,665 ordinary shares Mr. M.R.I. McLeod Mr. M.R.I. McLeod 28,186 ordinary shares 28,186 ordinary shares Dr. G. H. Weiss Dr. G. H. Weiss Mr. M. McInnes Mr. M. McInnes 6,000 ordinary shares 6,000 ordinary shares 400,000 ordinary shares, and 400,000 performance rights 400,000 ordinary shares, and 400,000 performance rights **Mr. Lew is an associate of Century Plaza Investments Pty. Ltd. and Metrepark Pty. Ltd (Associated Entities). **Mr. Lew is an associate of Century Plaza Investments Pty. Ltd. and Metrepark Pty. Ltd (Associated Entities). The Associated Entities, collectively, have a relevant interest in 59,804,731 shares in the company. However, The Associated Entities, collectively, have a relevant interest in 59,804,731 shares in the company. However, Mr. Lew does not have a relevant interest in the shares of the company held by the Associated Entities. Mr. Lew does not have a relevant interest in the shares of the company held by the Associated Entities. 9 Premier Investments Limited 9 9 10 10         DIRECTORS’ REPORT DIRECTORS’ REPORT (CONTINUED) (CONTINUED) DIRECTORS’ MEETINGS DIRECTORS’ MEETINGS The number of meetings of the Board of Directors during the financial year, and the number of meetings The number of meetings of the Board of Directors during the financial year, and the number of meetings attended by each director were as follows: attended by each director were as follows: BOARD MEETINGS BOARD MEETINGS AUDIT AND RISK COMMITTEE AUDIT AND RISK COMMITTEE REMUNERATION AND REMUNERATION AND NOMINATION COMMITTEE NOMINATION COMMITTEE MEETINGS MEETINGS HELD WHILE A HELD WHILE A DIRECTOR DIRECTOR NUMBER NUMBER ATTENDED ATTENDED MEETINGS MEETINGS ATTENDED AS ATTENDED AS COMMITTEE COMMITTEE MEMBER MEMBER NUMBER NUMBER ATTENDED ATTENDED MEETINGS MEETINGS ATTENDED AS ATTENDED AS COMMITTEE COMMITTEE MEMBER MEMBER NUMBER NUMBER ATTENDED ATTENDED 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 - - 1 1 - - 3 3 4 4 - - 3 3 - - - - 1 1 - - 4 4 - - 4 4 4 4 - - 4 4 2 2 - - 1 1 3 3 - - - - - - - - - - - - 3 3 - - 3 3 3 3 - - - - - - - - - - - - 3 3 - - 3 3 DIRECTOR DIRECTOR Mr. S. Lew Mr. S. Lew Mr. F. W. Jones Mr. F. W. Jones Mr. M. McInnes Mr. M. McInnes Mr. T. Antonie Mr. T. Antonie Dr. D. Crean Dr. D. Crean Mr. L. E. Fox Mr. L. E. Fox Ms. S. Herman Ms. S. Herman Mr. H. D. Lanzer Mr. H. D. Lanzer Mr. M. R. I. McLeod Mr. M. R. I. McLeod Dr. G. H. Weiss Dr. G. H. Weiss ROUNDING ROUNDING The company is a company of the kind specified in Australian Securities and Investment Commission’s class The company is a company of the kind specified in Australian Securities and Investment Commission’s class order 98/0100. In accordance with that class order amounts in the financial statements and the Directors’ order 98/0100. In accordance with that class order amounts in the financial statements and the Directors’ Report have been rounded to the nearest thousand dollars unless specifically stated to be otherwise. Report have been rounded to the nearest thousand dollars unless specifically stated to be otherwise. AUDITOR INDEPENDENCE AUDITOR INDEPENDENCE The Directors received the declaration on page 34 from the auditor of Premier Investments Limited. The Directors received the declaration on page 34 from the auditor of Premier Investments Limited. NON-AUDIT SERVICES NON-AUDIT SERVICES The Directors are satisfied that the provision of non-audit services is compatible with the general standard of The Directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The nature and scope of each type of non- independence for auditors imposed by the Corporations Act 2001. The nature and scope of each type of non- audit service provided means that independence was not compromised. audit service provided means that independence was not compromised. Details of non-audit services provided by the entity’s auditor, Ernst & Young, can be found in Note 25 of the Details of non-audit services provided by the entity’s auditor, Ernst & Young, can be found in Note 25 of the Financial Report. Financial Report. Annual Report 2015 10 10 10     DIRECTORS’ REPORT DIRECTORS’ REPORT (CONTINUED) (CONTINUED) DIRECTORS’ REPORT (CONTINUED) REMUNERATION REPORT (AUDITED) REMUNERATION REPORT (AUDITED) REMUNERATION REPORT (AUDITED) (CONTINUED) This remuneration report for the 52 weeks ended 25 July 2015 outlines the remuneration arrangement of the Group This remuneration report for the 52 weeks ended 25 July 2015 outlines the remuneration arrangement of the Group in accordance with the requirements of the Corporations Act 2001 (Cth), as amended (the Act) and its Regulations. in accordance with the requirements of the Corporations Act 2001 (Cth), as amended (the Act) and its Regulations. This information has been audited as required by section 308 (3C) of the Act. This information has been audited as required by section 308 (3C) of the Act. The remuneration report is presented under the following headings: The remuneration report is presented under the following headings: 1. INTRODUCTION (CONTINUED) KEY MANAGEMENT PERSONNEL (CONTINUED) (ii) Executive Directors 1. 1. Introduction Introduction 2. Remuneration Governance 2. Remuneration Governance 3. Executive remuneration arrangements:- 3. Executive remuneration arrangements:- A. Remuneration principles and strategy A. Remuneration principles and strategy B. Approach to setting remuneration B. Approach to setting remuneration C. Fixed remuneration objectives C. Fixed remuneration objectives D. Details of incentive plans D. Details of incentive plans 4. Executive remuneration outcomes (including link to performance) 4. Executive remuneration outcomes (including link to performance) 5. Executive service agreements 5. Executive service agreements 6. Non-Executive Director remuneration arrangements 6. Non-Executive Director remuneration arrangements 7. Remuneration of Key Management Personnel 7. Remuneration of Key Management Personnel 8. Additional disclosures relating to Rights and Shares 8. Additional disclosures relating to Rights and Shares 9. Additional disclosure relating to transactions and balances with Key Management Personnel 9. Additional disclosure relating to transactions and balances with Key Management Personnel 1. INTRODUCTION 1. INTRODUCTION The remuneration report details the remuneration arrangement for Key Management Personnel (“KMP”) who are The remuneration report details the remuneration arrangement for Key Management Personnel (“KMP”) who are defined as those persons having authority and responsibility for planning, directing and controlling the major activities defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Group, directly or indirectly including any director (whether executive or otherwise) of the parent of the Group, directly or indirectly including any director (whether executive or otherwise) of the parent The table below outlines the KMP of the Group during the 52 weeks ended 25 July 2015. Unless otherwise indicated, The table below outlines the KMP of the Group during the 52 weeks ended 25 July 2015. Unless otherwise indicated, the individuals were KMP for the entire financial year. the individuals were KMP for the entire financial year. For the purposes of this report, the term “executive” refers to executive KMP’s named in this report. For the purposes of this report, the term “executive” refers to executive KMP’s named in this report. KEY MANAGEMENT PERSONNEL KEY MANAGEMENT PERSONNEL (i) Non-Executive Directors (i) Non-Executive Directors Mr. S. Lew Mr. S. Lew Chairman and Non-Executive Director Chairman and Non-Executive Director Mr. F.W. Jones Mr. F.W. Jones Deputy Chairman and Non-Executive Director (Resigned: 25 July 2015) Deputy Chairman and Non-Executive Director (Resigned: 25 July 2015) Dr. D. Crean Dr. D. Crean Mr. T. Antonie Mr. T. Antonie Mr. L.E. Fox Mr. L.E. Fox Ms. S. Herman Ms. S. Herman Mr. H.D. Lanzer Mr. H.D. Lanzer Deputy Chairman (appointed: 25 July 2015) and Non-Executive Director Deputy Chairman (appointed: 25 July 2015) and Non-Executive Director Non-Executive Director and Lead Independent Director Non-Executive Director and Lead Independent Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Mr. M.R.I. McLeod Mr. M.R.I. McLeod Non-Executive Director Non-Executive Director Dr. G.H. Weiss Dr. G.H. Weiss Non-Executive Director Non-Executive Director Mr. M. McInnes Executive Director and Chief Executive Officer Premier Retail (iii) Executives Mr. K.F. Davis Company Secretary and Non-Executive Alternate Director (resigned as alternate director: 25 July 2015) Mr. A. Gardner Chief Financial Officer, Just Group Limited Ms. C. Garnsey Core Brand Director, Just Group Limited Other than noted above, there were no changes to key management personnel after the reporting date and before the date the financial report was authorised for issue. 2. REMUNERATION GOVERNANCE Remuneration and Nomination Committee The remuneration and nomination committee (“Committee”) of the Board of Directors of the Group comprises three Non-Executive Directors. The Committee has delegated decision-making authority for some matters related to the remuneration arrangements for KMP and is required to make recommendations to the Board on other matters. Specifically, the Board approves the remuneration arrangements of the Chief Executive Officer Premier Retail (“CEO Premier Retail”) and other executives, including awards made under the short-term incentive (“STI”) and long-term incentive (“LTI”) plans, following recommendations from the Committee. The Board also sets the aggregate remuneration for Non-Executive Directors (which is subject to shareholder approval) and Non-Executive Director fee levels. The Committee approves, having regard to recommendations made by the CEO Premier Retail, the level of the Group STI pool. The Committee meets regularly. The CEO Premier Retail attends certain committee meetings by invitation, where management input is required. The CEO Premier Retail is not present during discussions relating to his own Further information relating to the Committee’s role, responsibilities and membership can be seen at remuneration arrangements. www.premierinvestments.com.au. Use of remuneration advisors The Committee seeks, from time to time, external remuneration advice to ensure it is fully informed when making remuneration decisions. Remuneration advisors are engaged by, and report directly to, the Committee. During the 2015 financial year, the Committee approved the engagement of Ernst & Young to provide a remuneration report regarding appropriate comparator groups for remuneration benchmarking and remuneration mix for the Group LTI scheme. Both Ernst & Young and the Committee are satisfied that the advice received from Ernst & Young is free from undue influence from the KMP to whom the remuneration report apply. The remuneration report was provided to the Committee as an input into decision making only. The Committee considered the report findings, along with other factors, in making its remuneration decisions. The fees paid to Ernst & Young for the remuneration report findings were $53,251. 11 Premier Investments Limited 11 11 12       DIRECTORS’ REPORT (CONTINUED) REMUNERATION REPORT (AUDITED) (CONTINUED) 1. INTRODUCTION (CONTINUED) KEY MANAGEMENT PERSONNEL (CONTINUED) (ii) Executive Directors Mr. M. McInnes Executive Director and Chief Executive Officer Premier Retail (iii) Executives Mr. K.F. Davis Company Secretary and Non-Executive Alternate Director (resigned as alternate director: 25 July 2015) Mr. A. Gardner Chief Financial Officer, Just Group Limited Ms. C. Garnsey Core Brand Director, Just Group Limited Other than noted above, there were no changes to key management personnel after the reporting date and before the date the financial report was authorised for issue. 2. REMUNERATION GOVERNANCE Remuneration and Nomination Committee The remuneration and nomination committee (“Committee”) of the Board of Directors of the Group comprises three Non-Executive Directors. The Committee has delegated decision-making authority for some matters related to the remuneration arrangements for KMP and is required to make recommendations to the Board on other matters. Specifically, the Board approves the remuneration arrangements of the Chief Executive Officer Premier Retail (“CEO Premier Retail”) and other executives, including awards made under the short-term incentive (“STI”) and long-term incentive (“LTI”) plans, following recommendations from the Committee. The Board also sets the aggregate remuneration for Non-Executive Directors (which is subject to shareholder approval) and Non-Executive Director fee levels. The Committee approves, having regard to recommendations made by the CEO Premier Retail, the level of the Group STI pool. The Committee meets regularly. The CEO Premier Retail attends certain committee meetings by invitation, where management input is required. The CEO Premier Retail is not present during discussions relating to his own remuneration arrangements. Further information relating to the Committee’s role, responsibilities and membership can be seen at www.premierinvestments.com.au. Use of remuneration advisors The Committee seeks, from time to time, external remuneration advice to ensure it is fully informed when making remuneration decisions. Remuneration advisors are engaged by, and report directly to, the Committee. During the 2015 financial year, the Committee approved the engagement of Ernst & Young to provide a remuneration report regarding appropriate comparator groups for remuneration benchmarking and remuneration mix for the Group LTI scheme. Both Ernst & Young and the Committee are satisfied that the advice received from Ernst & Young is free from undue influence from the KMP to whom the remuneration report apply. The remuneration report was provided to the Committee as an input into decision making only. The Committee considered the report findings, along with other factors, in making its remuneration decisions. The fees paid to Ernst & Young for the remuneration report findings were $53,251. Annual Report 2015 12 12   DIRECTORS’ REPORT (CONTINUED) DIRECTORS’ REPORT (CONTINUED) REMUNERATION REPORT (AUDITED) (CONTINUED) REMUNERATION REPORT (AUDITED) (CONTINUED) 2. REMUNERATION GOVERNANCE (CONTINUED) Remuneration Report approval at 2014 Annual General Meeting (AGM) The Remuneration Report for the 52 weeks ended 26 July 2014 received positive shareholder support at the 2014 AGM with proxies of 91% voting in favour. 3. EXECUTIVE REMUNERATION ARRANGEMENTS 3A. Remuneration principles and strategy The Group’s executive remuneration strategy is designed to attract, motivate and retain high performing individuals and align the interests of executives with shareholders. The Group operates mainly in the Retail Industry, with revenues earned in its traditional markets of Australia and New Zealand, whilst currently increasing its revenues from international markets. The industry in Australia and New Zealand has seen significant structural change over recent years from changes in technology, increased international competitors entering the Australian and New Zealand Retail Industry and significant changes in the general consumer sentiment. At the same time, the market for skilled and experienced executives in the industry has become increasingly competitive and international in nature. The Board believes that, given these structural changes and growth of the Group’s international business, it is critical and in the best interest of shareholders to attract and retain the best possible executive team by offering appropriate remuneration packages. The diagram on the following page illustrates how the Group’s remuneration strategy aligns with the strategic direction and links remuneration outcomes to performance. 13 Premier Investments Limited 13 3. EXECUTIVE REMUNERATION ARRANGEMENTS (CONTINUED) 3A. Remuneration principles and strategy (continued) Group Objective To be recognised as a leader in our industry and build long-term value for our shareholders Remuneration strategy linkages to Group objective Align the interests of executives with shareholders Attract, motivate and retain high performing  The remuneration framework incorporates “at- individuals risk” components, through STI and LTI plans.  The remuneration offering is competitive for  Performance is assessed against a suite of companies of a similar industry, size and financial and non-financial measures relevant complexity. to the success of the Group and generating  Longer-term remuneration encourages returns for shareholders. retention and multi-year performance focus. Component Vehicle Purpose Link to performance Fixed remuneration  Comprises base salary, superannuation contributions and other benefits  To provide competitive  Group and individual performance fixed remuneration set with reference to role, market and experience. are considered during regular reviews. STI  Paid in cash  Rewards executives for  Underlying earnings before interest LTI  Awarded in performance rights their contribution to and tax of each business segment achievement of Group and are the key financial metrics. business unit outcomes.  Linked to other internal financial and non-financial measures.  Rewards executives for  Vesting of grants is dependent on their contribution to the creation of shareholder value over the longer term. both the Total Shareholder Return (“TSR”) performance being positive (absolute measure) and relative to a peer group (relative measure). Discretionary  Awarded by way  Rewards executives in  Granted at the discretion of the Bonus of cash or performance rights exceptional circumstances Board of Directors upon linked to long term recommendation of the Committee. shareholder outcomes. It is the intention that discretionary bonuses only be given in exceptional circumstances when in the best interests of the Group. No discretionary bonuses were paid or issued during the 2015 or 2014 financial years. 14     DIRECTORS’ REPORT (CONTINUED) REMUNERATION REPORT (AUDITED) (CONTINUED) 3. EXECUTIVE REMUNERATION ARRANGEMENTS (CONTINUED) 3A. Remuneration principles and strategy (continued) Group Objective To be recognised as a leader in our industry and build long-term value for our shareholders Remuneration strategy linkages to Group objective Align the interests of executives with shareholders  The remuneration framework incorporates “at- risk” components, through STI and LTI plans.  Performance is assessed against a suite of financial and non-financial measures relevant to the success of the Group and generating returns for shareholders. Attract, motivate and retain high performing individuals  The remuneration offering is competitive for companies of a similar industry, size and complexity.  Longer-term remuneration encourages retention and multi-year performance focus. Component Vehicle Purpose Link to performance Fixed remuneration  Comprises base salary, superannuation contributions and other benefits STI  Paid in cash LTI  Awarded in performance rights  To provide competitive fixed remuneration set with reference to role, market and experience.  Group and individual performance are considered during regular reviews.  Rewards executives for their contribution to achievement of Group and business unit outcomes.  Underlying earnings before interest and tax of each business segment are the key financial metrics.  Linked to other internal financial and non-financial measures.  Rewards executives for their contribution to the creation of shareholder value over the longer term.  Vesting of grants is dependent on both the Total Shareholder Return (“TSR”) performance being positive (absolute measure) and relative to a peer group (relative measure). Discretionary Bonus  Awarded by way  Rewards executives in  Granted at the discretion of the of cash or performance rights exceptional circumstances linked to long term shareholder outcomes. Board of Directors upon recommendation of the Committee. It is the intention that discretionary bonuses only be given in exceptional circumstances when in the best interests of the Group. No discretionary bonuses were paid or issued during the 2015 or 2014 financial years. Annual Report 2015 14 14   DIRECTORS’ REPORT (CONTINUED) REMUNERATION REPORT (AUDITED) (CONTINUED) 3. EXECUTIVE REMUNERATION ARRANGEMENTS (CONTINUED) 3B. Approach to setting remuneration For the financial year ended 25 July 2015, the executive remuneration framework comprised fixed remuneration, STI and LTI as outlined below. The Group aims to reward executives with a level and mix of remuneration appropriate to their position and responsibilities, while being competitive and linked to shareholder value creation. 3C. Fixed remuneration objectives Fixed remuneration is reviewed by the Committee. The process consists of a review of the Group, business unit and individual performance, relevant comparative remuneration externally and internally and, where appropriate, external advice on policies and practices. The Committee has access to external advice independent of management. During the 2011 financial year, the Board reviewed the structural issues and opportunities facing the Group and the industry in which it operates. The Board made a key strategic decision to appoint Mr. McInnes as CEO of Premier Retail. Mr. McInnes has a long track record of success in every role he has occupied. He was directly responsible for some of Australia’s greatest retail success stories – including as co-founder of the Officeworks concept. Prior to being appointed as CEO of Premier Retail, Mr. McInnes led David Jones to its most successful time as a public listed company. From 2003 to 2010, he was CEO and executive Director of David Jones turning David Jones into a fashion and financial powerhouse, creating in excess of $2 billion of shareholder value. The Board believes that Mr. McInnes’ remuneration package is appropriate for an executive of his skills and experience. 3D. Detail of incentive plans Short-term incentive (STI) The Group operates an annual STI program available to executives and awards a cash incentive subject to the attainment of clearly defined Group and business unit measures. Who participates? Executives How is STI delivered? Cash What is the STI opportunity? Executives have a STI opportunity of earning between 0% and 100% of fixed remuneration. What are the performance conditions for each financial year? Actual STI payments awarded to each executive depend on the extent to which specific targets set are met. The targets consist of key performance indicators (“KPI’s”) covering financial and non-financial, Group and business unit measures of performance. The financial performance measures were chosen as they represent the key drivers for the short-term success of the business and provide a framework for delivering long-term value. 15 Premier Investments Limited 15   DIRECTORS’ REPORT (CONTINUED) REMUNERATION REPORT (AUDITED) (CONTINUED) 3. EXECUTIVE REMUNERATION ARRANGEMENTS (CONTINUED) 3D. Detail of incentive plans (continued) Short-term incentive (STI) (continued) What are the performance conditions for each financial year? (continued) The non-financial component of the STI plan is measured with reference to an assessment against a range of measures. The measures (and their intended objectives) are as follows:  Market and competitive positioning: to focus on preserving the Group’s market share.  Customer service: to focus on the retention of existing customers.  Implementation of key growth initiatives: to focus on the Group’s growth objectives.  Safety: to focus on continuous improvement in safety performance.  Leadership / team contribution: to focus on the growth and development of our talent as a means of leadership succession. Mr. McInnes’ STI performance condition is based on the annual growth of Premier Retail’s Earnings Before Interest and Taxation (“EBIT”). Ms. Garnsey’s and Mr. Gardner’s primary performance condition is the achievement of specific targets and growth in Premier Retail underlying EBIT, and within their functional areas of accountability they have specific financial and non-financial measures which must be achieved. Refer to page 25 for a reconciliation between underlying EBIT and reported segment results How is performance assessed? After the end of the financial year and after consideration of performance against KPI’s:   the remuneration committee recommends the amount of STI to be paid to the CEO Premier Retail for board approval, and for the other executives, the remuneration committee will seek recommendations from the CEO Premier Retail as appropriate. Long-term incentive (LTI) LTI grants are made to executives in order to align remuneration with the creation of shareholder value over the long term. Generally the rights are granted annually and are eligible to vest three years from the date of the grant, with the exception of grants given to Mr. Mark McInnes and Ms. Colette Garnsey. The performance rights issued to Mr. McInnes on 10 May 2011 are eligible to vest in three tranches; on 4 April 2014, 4 April 2015 and 4 April 2016. The performance rights issued to Ms. Colette Garnsey on 18 April 2013 were issued to replace vesting performance rights that she was entitled to in her previous employment. The performance rights issued to Ms. Garnsey are eligible to vest in three tranches on 20 June 2015, 20 June 2016 and 20 June 2017. During the 2015 financial year, the Group engaged the services of Ernst & Young to report on the LTI plan against market comparables including aspects such as the number of participants, allocation methodology, award vehicle, performance and vesting period, performance measures including the possibility of an absolute test based on earnings, peer group for TSR testing and re-testing. Annual Report 2015 16 16   DIRECTORS’ REPORT (CONTINUED) DIRECTORS’ REPORT (CONTINUED) REMUNERATION REPORT (AUDITED) (CONTINUED) REMUNERATION REPORT (AUDITED) (CONTINUED) 3. EXECUTIVE REMUNERATION ARRANGEMENTS (CONTINUED) 3. EXECUTIVE REMUNERATION ARRANGEMENTS (CONTINUED) 3D. Detail of incentive plans (continued) Long-term incentive (LTI) (continued) 3D. Detail of incentive plans (continued) Long-term incentive (LTI) (continued) Following on from the Ernst & Young review, the Committee, having regard for shareholder outcomes, the structure of Premier Investments Limited and market segment, made the following changes to the plan: When does the LTI The performance rights generally will vest over a period of three years subject vest? to meeting performance measures. The testing period for Mr. McInnes and Ms. Garnsey are detailed on page 20. The performance rights issued in the 2015 financial year have no opportunity to re-test. The rights issued prior to the 2015 financial year are re-tested a year later if the TSR when first tested is between the 40th and 50th percentile. How are grants treated Generally, all outstanding unvested rights are forfeited upon an executive on termination? resigning from the Group. In the event of Mr. McInnes resigning such that his contractual notice period would expire within a 14 day period prior to a particular vesting date, those performance rights issued on 10 May 2011 to Mr. McInnes which would have been eligible to vest on that vesting date will be unaffected by the resignation. All other outstanding unvested rights are forfeited. May participants enter Executives are prohibited from entering into transactions to hedge or limit the into hedging arrangements? economic risk of the securities allocated to them under the Performance Rights Plan, either before vesting or after vesting while the securities are held subject to restriction. Executives are only able to hedge securities that have vested and continue to be subject to a trading restriction and a seven-year lock, with the prior consent of the Board. No employees have any hedging arrangements in place. Are there restrictions Once rights have been allocated, disposal of performance shares is subject to on disposals? restrictions whereby board approval is required to sell shares granted within seven years under this plan. Do participants receive Participants do not receive distributions or dividends on unvested LTI grants. distributions or dividends on unvested LTI grants?   allocation to be done on face value, and no re-testing allowed. What were the performance conditions for the 2014 and 2015 financial year grants? The Group uses TSR as the performance measure for the LTI plan applying both an absolute and relative test. The absolute test requires that over the testing period, the TSR needs to be positive. If the TSR is negative over the testing period then the Performance Rights lapse. If the TSR is positive, the Group then uses a relative TSR compared to a peer group. The peer group chosen for comparison is the S&P/ASX200 Industrials, excluding overseas and resource companies. This peer group was chosen as it reflects the Group's competitors for capital and talent. The Group's performance against the measure is determined according to Premier Investment Limited’s ranking against the companies in the TSR peer group over the performance period. The vesting schedule is as follows: Target Below 50th percentile 50th percentile Between 50th and 62.5th percentile 62.5th percentile Between 62.5th and 75th percentile 75th percentile and above Conversion ratio of rights to shares available to vest under the TSR Performance Condition 0% 25% Pro Rata 50% Pro Rata 100% The absolute positive TSR was selected to ensure that absolute wealth creation is always aligned between shareholders and executives. Relative TSR was selected as the LTI performance measure as TSR provides an alignment between comparative shareholder return and reward for executives. How is performance assessed? TSR performance is calculated by an independent external adviser at the end of each performance period. Section 8, “Additional disclosures relating to rights and shares” provides details of performance rights granted, vested, exercised and lapsed during the year. 17 Premier Investments Limited 17 18     DIRECTORS’ REPORT (CONTINUED) REMUNERATION REPORT (AUDITED) (CONTINUED) 3. EXECUTIVE REMUNERATION ARRANGEMENTS (CONTINUED) 3D. Detail of incentive plans (continued) Long-term incentive (LTI) (continued) When does the LTI vest? How are grants treated on termination? May participants enter into hedging arrangements? The performance rights generally will vest over a period of three years subject to meeting performance measures. The testing period for Mr. McInnes and Ms. Garnsey are detailed on page 20. The performance rights issued in the 2015 financial year have no opportunity to re-test. The rights issued prior to the 2015 financial year are re-tested a year later if the TSR when first tested is between the 40th and 50th percentile. Generally, all outstanding unvested rights are forfeited upon an executive resigning from the Group. In the event of Mr. McInnes resigning such that his contractual notice period would expire within a 14 day period prior to a particular vesting date, those performance rights issued on 10 May 2011 to Mr. McInnes which would have been eligible to vest on that vesting date will be unaffected by the resignation. All other outstanding unvested rights are forfeited. Executives are prohibited from entering into transactions to hedge or limit the economic risk of the securities allocated to them under the Performance Rights Plan, either before vesting or after vesting while the securities are held subject to restriction. Executives are only able to hedge securities that have vested and continue to be subject to a trading restriction and a seven-year lock, with the prior consent of the Board. No employees have any hedging arrangements in place. Are there restrictions on disposals? Once rights have been allocated, disposal of performance shares is subject to restrictions whereby board approval is required to sell shares granted within seven years under this plan. Do participants receive distributions or dividends on unvested LTI grants? Participants do not receive distributions or dividends on unvested LTI grants. Annual Report 2015 18 18   DIRECTORS’ REPORT (CONTINUED) (CONTINUED) Group performance and its link to LTI The performance measure which drives LTI vesting is the Group’s Total Shareholder Return (“TSR”) performance in absolute terms being positive and relates to the companies within the S&P/ASX 200 Industrials, excluding overseas and resource companies. The table below indicates the outcomes of the TSR testing performed during the 2014 and 2015 financial years: Testing Period Share price Share price at start of at end of testing period testing period Dividends TSR TSR paid percentage percentile 1 Oct 2010 to 30 Sept 2013 $7.15 $8.59 24 Mar 2011 to 3 Apr 2014 $5.91 $9.84 1 Oct 2011 to 30 Sept 2014 $5.20 $10.20 24 Mar 2011 to 3 Apr 2015 $5.91 $12.92 19 Jun 2012 to 19 Jun 2015 $4.49 $13.29 $1.19 fully franked $1.10 fully franked $1.12 fully franked $1.50 fully franked $1.26 fully franked 42.6% 95.3% 133.4% 166.0% 241.8% 58th 85th 85th 89th 96th The below chart shows the Premier Share performance against the S&P/ASX200 Index, from 4 April 2011 to 24 July 2015: DIRECTORS’ REPORT (CONTINUED) REMUNERATION REPORT (AUDITED) (CONTINUED) REMUNERATION REPORT (AUDITED) (CONTINUED) 4. EXECUTIVE REMUNERATION OUTCOMES (INCLUDING LINK TO PERFORMANCE) 4. EXECUTIVE REMUNERATION OUTCOMES (INCLUDING LINK TO PERFORMANCE) Group performance and its link to STI The financial performance measures driving STI payment outcomes are primarily Premier Retail Underlying Earnings before Interest and Taxation (EBIT) and annual Premier Retail Underlying EBIT growth. The following chart shows Premier Retail underlying EBIT for the five years since the appointment of Mr. McInnes as CEO Premier Retail. Premier Retail Underlying EBIT 120 100 80 60 40 20 0 $ million FY11 $65.3 FY12 $80.4 FY13 $83.7 FY14 $92.8 FY15 $105.7 Note: The term underlying EBIT is not an IFRS defined term. Please refer to page 25 for a reconciliation between Underlying EBIT and Statutory reported operating profit before tax for the Retail Segment. Performance compared to STI payments made during the financial year ended 25 July 2015 and 26 July 2014 STI payments to Mr. McInnes During the financial year ended 26 July 2014, an STI payment of $1,800,000 was paid to Mr. McInnes in relation to the growth achieved in Premier Retail underlying EBIT for the 2012 financial year. During the 2015 financial year, two STI payments were made to Mr. McInnes. An STI payment of $1,100,000 was paid in relation to the growth achieved in Premier Retail underlying EBIT for the 2013 financial year. Another STI payment of $2,000,000 was paid in relation to growth achieved in Premier Retail Underlying EBIT for the 2014 financial year. The historical growth in Premier Retail underlying EBIT is detailed in the graph above. STI payments to Ms. Garnsey An STI payment of $300,000 was paid to Ms. Garnsey due to the achievement of her KPI’s, including growth in Underlying EBIT and performance met on other brands for the 2014 financial year. 19 Premier Investments Limited 19 20         DIRECTORS’ REPORT (CONTINUED) REMUNERATION REPORT (AUDITED) (CONTINUED) 4. EXECUTIVE REMUNERATION OUTCOMES (INCLUDING LINK TO PERFORMANCE) (CONTINUED) Group performance and its link to LTI The performance measure which drives LTI vesting is the Group’s Total Shareholder Return (“TSR”) performance in absolute terms being positive and relates to the companies within the S&P/ASX 200 Industrials, excluding overseas and resource companies. The table below indicates the outcomes of the TSR testing performed during the 2014 and 2015 financial years: Testing Period Share price at start of testing period Share price at end of testing period Dividends paid TSR percentage TSR percentile 1 Oct 2010 to 30 Sept 2013 $7.15 $8.59 24 Mar 2011 to 3 Apr 2014 $5.91 $9.84 1 Oct 2011 to 30 Sept 2014 $5.20 $10.20 24 Mar 2011 to 3 Apr 2015 $5.91 $12.92 19 Jun 2012 to 19 Jun 2015 $4.49 $13.29 $1.19 fully franked $1.10 fully franked $1.12 fully franked $1.50 fully franked $1.26 fully franked 42.6% 95.3% 133.4% 166.0% 241.8% 58th 85th 85th 89th 96th The below chart shows the Premier Share performance against the S&P/ASX200 Index, from 4 April 2011 to 24 July 2015: Premier Investments Limited Total Shareholder Return (TSR) from 4 April 2011 to 24 July 2015 260 210 160 110 60 PMV TSR from 4 April 2011 S&P/ASX200 Accumulating Index Annual Report 2015 20 20     DIRECTORS’ REPORT (CONTINUED) DIRECTORS’ REPORT (CONTINUED) REMUNERATION REPORT (AUDITED) (CONTINUED) REMUNERATION REPORT (AUDITED) (CONTINUED) 4. EXECUTIVE REMUNERATION OUTCOMES (INCLUDING LINK TO PERFORMANCE) 4. EXECUTIVE REMUNERATION OUTCOMES (INCLUDING LINK TO PERFORMANCE) (CONTINUED) LTI vesting outcomes Executive KMP performance rights tested during the 2015 financial year October 2014 During October 2014, a tranche of 85,878 LTI performance rights issued to Mr. Gardner during the 2012 financial year was tested. The testing period began on 1 October 2011. At this date, Premier Investments’ share price was $5.20 per share. During the three year testing period, Premier Investments paid a total of $1.12 fully franked dividends per share. The historical data concerning the Group in respect of the 2015 financial year and the four previous financial years are set out on page 8 of the Director’s Report, under the heading “Group Performance”. The underlying performance of Premier Retail is detailed on page 19 and details of all TSR testing is detailed on page 20. The testing period ended on 30 September 2014 when the share price was $10.20 per share. The Group received an independent assessment of the performance over the three year testing period. The assessment concluded that Premier Investments’ TSR was both positive and above the 75th percentile of the comparator group. As a result, 85,878 performance rights vested and converted into 85,878 newly issued ordinary shares. This is in line with the LTI scheme rules and represent a 100% conversion ratio. March 2015 During April 2014, a first tranche of 600,000 LTI performance rights issued to Mr. McInnes in May 2011 were tested. The testing period began on 24 March 2011, being the day prior to the announced appointment of Mr. McInnes. At this date, Premier Investments’ share price was $5.91 per share. During the three year testing period, Premier Investments paid a total of $1.10 fully franked dividends per share. The historical data concerning the Group in respect of the 2015 financial year and the four previous financial years is set out on page 8 of the Directors’ Report under the heading “Group Performance”, the underlying performance of Premier Retail is detailed on page 19 and details of all TSR testing is detailed on page 20. The testing period ended on 3 April 2014 when the share price was $9.84 per share. The Group received an independent assessment of the performance over the three year testing period. The assessment concluded that Premier Investments’ TSR was both positive and above the 75th percentile of the comparator group. Under the LTI scheme rules, a test above the 75th percentile would have resulted in 100% conversion and vesting into 600,000 ordinary shares. However, in terms of Mr. McInnes’ contract in relation to this tranche of performance rights, one third of the performance rights had an additional 12 month retention clause. As a result, 400,000 performance rights vested and converted into 400,000 newly issued ordinary shares. The balance of 200,000 performance rights, in relation to this specific tranche, having already passed the 100% qualifying TSR test, passed the additional retention test in March 2015 and therefore the 200,000 performance rights vested and converted into 200,000 newly issued ordinary shares. April 2015 In April 2015, a second tranche of 300,000 LTI performance rights issued to Mr. McInnes in May 2011 were tested. The testing period began on 24 March 2011, being the day prior to the announced appointment of Mr. McInnes. At this date, Premier Investments’ share price was $5.91 per share. During the four year testing period, Premier Investments paid a total of $1.50 fully franked dividends per share. The historical data concerning the Group in respect of the 2015 financial year and the four previous financial years is set out on page 8 of the Directors’ Report under the heading “Group Performance”, the underlying performance of Premier Retail is detailed on page 19 and details of all TSR testing is detailed on page 20. The testing period ended on 3 April 2015 when the share price was $12.92 per share. (CONTINUED) comparator group. June 2015 comparator group. ordinary shares. October 2013 Executive KMP performance rights tested during the 2015 financial year (continued) The Group received an independent assessment of the performance over the four year testing period. The assessment concluded that Premier Investments’ TSR was both positive and above the 75th percentile of the Under the LTI scheme rules, a test above the 75th percentile would have resulted in 100% conversion and vesting into 300,000 ordinary shares. However, in terms of Mr. McInnes’ contract in relation to this tranche of performance rights, one half of the performance rights had an additional 12 month retention clause. As a result, 200,000 performance rights vested and converted into 200,000 newly issued ordinary shares. The balance of 100,000 performance rights, in relation to this specific tranche, having already passed the 100% qualifying TSR test, will now be subject to a retention test to be performed in March 2016. In June 2015, a first tranche of 80,000 LTI performance rights issued to Ms. Garnsey in June 2012 were tested. The testing period began on 19 June 2012. At this date, Premier Investments’ share price was $4.49 per share. During the three year testing period, Premier Investments paid a total of $1.26 fully franked dividends per share. The historical data concerning the Group in respect of the 2015 financial year and the four previous financial years is set out on page 8 of the Directors’ Report under the heading “Group Performance”, the underlying performance of Premier Retail is detailed on page 19 and details of all TSR testing is detailed on page 20. The testing period ended on 19 June 2015 when the share price was $13.29 per share. The Group received an independent assessment of the performance over the three year testing period. The assessment concluded that Premier Investments’ TSR was both positive and above the 75th percentile of the Under the LTI scheme rules, a test above the 75th percentile resulted in 100% conversion and vesting into 80,000 Executive KMP performance rights tested during the 2014 financial year In October 2013, a tranche of 62,587 LTI performance rights issued to Mr. Gardner during the 2011 financial year was tested. The testing period began on 1 October 2010. At this date, Premier Investments’ share price was $7.15 per share. During the three year testing period, Premier Investments paid a total of $1.19 fully franked dividends per share. The historical data concerning the Group in respect of the 2014 financial year and the four previous financial years is set out on page 8 of the Directors’ Report under the heading “Group Performance”, the underlying performance of Premier Retail is detailed on page 19 and details of all TSR testing is detailed on page 20. The testing period ended on 30 September 2013 when the share price was $8.59 per share. The Group received an independent assessment of the performance over the three year testing period. The assessment concluded that Premier Investments’ TSR was both positive and between the 50th and 62.5th percentile of the comparator group. As a result, 25,235 performance rights vested and converted into 25,235 newly issued ordinary shares. This is in line with the LTI scheme rules and represents a 40.3% conversion ratio. The balance of 37,352 performance rights lapsed. 21 Premier Investments Limited 21 22     DIRECTORS’ REPORT (CONTINUED) REMUNERATION REPORT (AUDITED) (CONTINUED) 4. EXECUTIVE REMUNERATION OUTCOMES (INCLUDING LINK TO PERFORMANCE) (CONTINUED) Executive KMP performance rights tested during the 2015 financial year (continued) The Group received an independent assessment of the performance over the four year testing period. The assessment concluded that Premier Investments’ TSR was both positive and above the 75th percentile of the comparator group. Under the LTI scheme rules, a test above the 75th percentile would have resulted in 100% conversion and vesting into 300,000 ordinary shares. However, in terms of Mr. McInnes’ contract in relation to this tranche of performance rights, one half of the performance rights had an additional 12 month retention clause. As a result, 200,000 performance rights vested and converted into 200,000 newly issued ordinary shares. The balance of 100,000 performance rights, in relation to this specific tranche, having already passed the 100% qualifying TSR test, will now be subject to a retention test to be performed in March 2016. June 2015 In June 2015, a first tranche of 80,000 LTI performance rights issued to Ms. Garnsey in June 2012 were tested. The testing period began on 19 June 2012. At this date, Premier Investments’ share price was $4.49 per share. During the three year testing period, Premier Investments paid a total of $1.26 fully franked dividends per share. The historical data concerning the Group in respect of the 2015 financial year and the four previous financial years is set out on page 8 of the Directors’ Report under the heading “Group Performance”, the underlying performance of Premier Retail is detailed on page 19 and details of all TSR testing is detailed on page 20. The testing period ended on 19 June 2015 when the share price was $13.29 per share. The Group received an independent assessment of the performance over the three year testing period. The assessment concluded that Premier Investments’ TSR was both positive and above the 75th percentile of the comparator group. Under the LTI scheme rules, a test above the 75th percentile resulted in 100% conversion and vesting into 80,000 ordinary shares. Executive KMP performance rights tested during the 2014 financial year October 2013 In October 2013, a tranche of 62,587 LTI performance rights issued to Mr. Gardner during the 2011 financial year was tested. The testing period began on 1 October 2010. At this date, Premier Investments’ share price was $7.15 per share. During the three year testing period, Premier Investments paid a total of $1.19 fully franked dividends per share. The historical data concerning the Group in respect of the 2014 financial year and the four previous financial years is set out on page 8 of the Directors’ Report under the heading “Group Performance”, the underlying performance of Premier Retail is detailed on page 19 and details of all TSR testing is detailed on page 20. The testing period ended on 30 September 2013 when the share price was $8.59 per share. The Group received an independent assessment of the performance over the three year testing period. The assessment concluded that Premier Investments’ TSR was both positive and between the 50th and 62.5th percentile of the comparator group. As a result, 25,235 performance rights vested and converted into 25,235 newly issued ordinary shares. This is in line with the LTI scheme rules and represents a 40.3% conversion ratio. The balance of 37,352 performance rights lapsed. Annual Report 2015 22 22   DIRECTORS’ REPORT (CONTINUED) REMUNERATION REPORT (AUDITED) (CONTINUED) 4. EXECUTIVE REMUNERATION OUTCOMES (INCLUDING LINK TO PERFORMANCE) (CONTINUED) Executive KMP performance rights tested during the 2014 financial year (continued) April 2014 In April 2014, a first tranche of 600,000 LTI performance rights issued to Mr. McInnes in May 2011 were tested. The testing period began on 24 March 2011, being the day prior to the announced appointment of Mr. McInnes. At this date, Premier Investments’ share price was $5.91 per share. During the three year testing period, Premier Investments paid a total of $1.10 fully franked dividends per share. The historical data concerning the Group in respect of the 2014 financial year and the four previous financial years is set out on page 8 of the Directors’ Report under the heading “Group Performance”, the underlying performance of Premier Retail is detailed on page 19 and details of all TSR testing is detailed on page 20. The testing period ended on 3 April 2014 when the share price was $9.84 per share. The Group received an independent assessment of the performance over the three year testing period. The assessment concluded that Premier Investments’ TSR was both positive and above the 75th percentile of the comparator group. Under the LTI scheme rules, a test above the 75th percentile would have resulted in 100% conversion and vesting into 600,000 ordinary shares. However, in terms of Mr. McInnes’ contract in relation to this tranche of performance rights, one third of the performance rights had an additional 12 month retention clause. As a result, 400,000 performance rights vested and converted into 400,000 newly issued ordinary shares. The balance of 200,000 performance rights, in relation to this specific tranche, having already passed the 100% qualifying TSR test, was subject to a retention test performed in March 2015. 23 Premier Investments Limited 23   Executive KMP performance rights tested during the 2014 financial year (continued) (CONTINUED) April 2014 $9.84 per share. comparator group. In April 2014, a first tranche of 600,000 LTI performance rights issued to Mr. McInnes in May 2011 were tested. The testing period began on 24 March 2011, being the day prior to the announced appointment of Mr. McInnes. At this date, Premier Investments’ share price was $5.91 per share. During the three year testing period, Premier Investments paid a total of $1.10 fully franked dividends per share. The historical data concerning the Group in respect of the 2014 financial year and the four previous financial years is set out on page 8 of the Directors’ Report under the heading “Group Performance”, the underlying performance of Premier Retail is detailed on page 19 and details of all TSR testing is detailed on page 20. The testing period ended on 3 April 2014 when the share price was The Group received an independent assessment of the performance over the three year testing period. The assessment concluded that Premier Investments’ TSR was both positive and above the 75th percentile of the Under the LTI scheme rules, a test above the 75th percentile would have resulted in 100% conversion and vesting into 600,000 ordinary shares. However, in terms of Mr. McInnes’ contract in relation to this tranche of performance rights, one third of the performance rights had an additional 12 month retention clause. As a result, 400,000 performance rights vested and converted into 400,000 newly issued ordinary shares. The balance of 200,000 performance rights, in relation to this specific tranche, having already passed the 100% qualifying TSR test, was subject to a retention test performed in March 2015. DIRECTORS’ REPORT (CONTINUED) DIRECTORS’ REPORT (CONTINUED) REMUNERATION REPORT (AUDITED) (CONTINUED) REMUNERATION REPORT (AUDITED) (CONTINUED) 4. EXECUTIVE REMUNERATION OUTCOMES (INCLUDING LINK TO PERFORMANCE) 5. EXECUTIVE SERVICE AGREEMENTS Remuneration and other terms of employment for key management personnel and other executives are formalised in written service agreements (with the exception of Mr. Kim Davis, whose relevant terms of employment are set out below). Major provisions of the agreements are set out below: Termination benefits Start date Term of agreement Review period Period of written notice required from the company Mr. M. McInnes 04-Apr- 2011 Open Annual 12 months Upon company initiated Upon diminution of role Nil 12 months TFR including notice Mr. K. F. Davis Mr. A. Gardner 17-Nov- 1993 02-Jan- 2007 Open Annual 3 months Nil Open Annual 12 months Period of written notice required from employee 6 months (in first 12 months of employment) 12 months thereafter 3 months 12 months Ms. C. Garnsey 20-Sep- 2012 Open Annual 12 months Nil 12 months Nil Nil 12 months TFR including notice 12 months TFR including notice 6. NON-EXECUTIVE DIRECTOR FEE ARRANGEMENTS Determination of fees and maximum aggregate non-executive director remuneration The Board seeks to set Non-Executive Director fees at a level which provides the Group with the ability to attract and retain Non-Executive Directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders. The Group’s constitution and the ASX listing rules specify that the Non-Executive Director maximum aggregate remuneration shall be determined from time to time by a general meeting. The latest determination was at the 2008 Annual General Meeting held on 25 November 2008 when shareholders approved an aggregate remuneration of an amount not exceeding $1,000,000 per year. The Chairman of the Group, consistent with his past practice, has declined to accept any remuneration for his role as a director or for his role on any committees. Fee policy Non-Executive Directors fees consist of base fees and committee fees. The payment of committee fees recognises the additional time commitment required by Non-Executive Directors who serve on Board committees. Non-Executive Directors may be reimbursed for expenses reasonably incurred in attending to the Group’s affairs. Non-Executive Directors do not participate in any incentive programs. Premier has not established any schemes for retirement benefits for Non-Executive Directors (other than superannuation). 23 Annual Report 2015 24 24     DIRECTORS’ REPORT (CONTINUED) REMUNERATION REPORT (AUDITED) (CONTINUED) RECONCILIATION BETWEEN UNDERLYING PREMIER RETAIL EARNINGS BEFORE INTEREST AND TAXATION (EBIT) AND REPORTED RETAIL SEGMENT RESULT IFRS financial information is financial information that is presented in accordance with all relevant accounting standards. Non-IFRS information is financial information that is presented other than in accordance with all relevant accounting standards. STI payments are paid based on Non-IFRS financial information. The table below reconciles the Non-IFRS financial term “Premier Retail Underlying EBIT” to the Reported Retail Segment Result for each of the financial years: 2011 $’000 2012 $’000 2013 $’000 2014 $’000 2015 $’000 Reported Retail Segment Operating Profit before Taxation 39,796 69,988 76,686 79,299 98,958 Adjusted for: Finance costs and other inter-segment adjustments 9,688 10,386 7,018 5,829 5,065 One-off costs related to strategic review 15,771 One-off Smiggle UK market entry expense One-off supply chain transformation expense One-off exit of South African Joint Venture - - - - - - - - - - - - 3,193 4,482 - - - - 1,724 Underlying Premier Retail EBIT 65,255 80,374 83,704 92,803 105,747 Underlying Premier Retail EBIT, expressed in $’ millions 65.3 80.4 83.7 92.8 105.7 25 Premier Investments Limited 25   DIRECTORS’ REPORT (CONTINUED) REMUNERATION REPORT (AUDITED) (CONTINUED) RECONCILIATION BETWEEN UNDERLYING PREMIER RETAIL EARNINGS BEFORE INTEREST AND TAXATION (EBIT) AND REPORTED RETAIL SEGMENT RESULT IFRS financial information is financial information that is presented in accordance with all relevant accounting standards. Non-IFRS information is financial information that is presented other than in accordance with all relevant accounting standards. STI payments are paid based on Non-IFRS financial information. The table below reconciles the Non-IFRS financial term “Premier Retail Underlying EBIT” to the Reported Retail Segment Result for each of the financial years: Taxation Adjusted for: Reported Retail Segment Operating Profit before 2011 $’000 2012 $’000 2013 $’000 2014 $’000 2015 $’000 39,796 69,988 76,686 79,299 98,958 Finance costs and other inter-segment adjustments 9,688 10,386 7,018 5,829 5,065 One-off costs related to strategic review 15,771 One-off Smiggle UK market entry expense One-off supply chain transformation expense One-off exit of South African Joint Venture - - - - - 3,193 4,482 - - - - - 1,724 - - - - - - Underlying Premier Retail EBIT 65,255 80,374 83,704 92,803 105,747 Underlying Premier Retail EBIT, expressed in $’ millions 65.3 80.4 83.7 92.8 105.7 T R O P E R ’ S R O T C E R D I ) I D E U N T N O C ( : s w o l l o f s a e r a r a e y l i a c n a n i f e h t n i i d a p p u o r G e h t f o s e v i t u c e x e d n a l e n n o s r e p t n e m e g a n a m y e k r o f i s e c v r e s r o f n o i t a s n e p m o c f o t n e m e e l h c a e f o t n u o m a d n a e r u t a n e h t f o s l i t a e D L E N N O S R E P T N E M E G A N A M Y E K F O N O T A R E N U M E R I . 7 ) I D E U N T N O C ( ) I D E T D U A ( T R O P E R N O T A R E N U M E R I e c n a m r o f r e P d e s a b e r a h S m r e t - g n o L l t n e m y o p m e - t s o P m r e t t r o h S y r a t e n o M - n o N % - - - - - - - - - - 6 0 3 6 . 2 8 2 1 . 5 6 8 2 . 6 2 t d e a e r l $ - 0 0 0 0 2 1 , 0 0 0 0 1 1 , 0 0 0 0 2 1 , 0 0 0 0 8 , 0 0 0 5 9 , 0 0 0 0 8 , 0 0 0 , 0 8 0 0 0 0 2 1 , 0 0 0 5 0 8 , 0 0 0 0 4 4 , 2 7 3 2 3 6 , , 0 5 8 4 1 4 5 , , 3 7 9 5 1 5 1 , l t a o T , 5 9 1 3 0 0 8 , , 5 9 1 8 0 8 8 , $ - - - - - - - - - - - 0 5 8 4 1 3 , 9 6 0 1 8 , 1 0 3 , 4 3 1 0 2 2 0 3 5 , 0 2 2 0 3 5 , $ - - - - - - - - - - - - - - - - $ - - 5 0 2 , 5 1 1 4 , 0 1 1 1 4 , 0 1 1 4 9 , 6 2 4 2 , 8 1 4 9 , 6 1 1 9 , 1 3 2 6 0 , 0 8 0 0 0 , 0 3 3 8 7 , 8 1 1 1 2 , 5 2 9 3 0 , 5 3 3 3 0 , 9 0 1 5 9 0 , 9 8 1 $ - - - - - - - - - - - - 3 1 0 , 8 4 9 3 3 , 8 4 1 2 5 3 , 6 9 1 2 5 3 , 6 9 1 $ - - - - - - - - - - $ - 9 8 5 , 9 0 1 5 9 7 , 4 0 1 9 8 5 , 9 0 1 9 5 0 , 3 7 8 5 7 , 6 8 0 0 0 , 0 8 9 8 0 , 8 8 9 5 0 , 3 7 8 3 9 , 4 2 7 2 0 0 0 , 0 0 1 , 3 0 0 0 , 0 7 9 , 1 - - 3 0 0 0 , 0 0 3 0 0 0 , 0 0 4 , 3 0 0 0 , 0 0 4 , 3 7 1 2 , 1 2 4 9 7 0 , 8 7 4 4 9 2 , 8 9 8 0 9 5 , 7 6 7 , 3 8 2 5 , 2 9 4 , 4 s e v i t n e c n i n o i t i a n m r e T n o i t a u n n a r e p u S s t i f e n e B h s a C e e F / y r a a S l e v i t u c e x e - n o N s r o t c e r i D w e L . S . r M s e n o J . W . F . r M 5 1 0 2 i e n o n A t . T . r M d o e L c M . I . R . M . r M i s s e W . H . G . r D 1 r e z n a L . D . H . r M n a m r e H S . s M e v i t u c e x e - n o n l a t o T n a e r C . D . r D x o F . E . L . r M s e n n I c M . M . r M i s v a D . F . K . r M r e n d r a G . A . r M y e s n r a G . C . s M e v i t u c e x e l a t o T 5 1 0 2 L A T O T s e v i t u c e x E s r o t c e r i D s e n n I c M . r M r o f s t n e m y a p I T S e h t o t g n i t a e r l n o i t a m r o f n i r e h t r u f r o f 9 1 e g a p o t r e f e R y e s n r a G . s M r o f t n e m y a p I T S e h t o t g n i t a e r l n o i t a m r o f n i r e h t r u f r o f 9 1 e g a p o t r e f e R i l l r e b e L h c o B d o n r A o t d a p i l e r e w s e e f s ’ r o t c e r i d s ’ r e z n a L . r M 1 2 3 25 Annual Report 2015 26       % - - - - - - - - - - 7 1 4 5 . 0 9 4 1 . 6 1 4 1 . 7 2 e c n a m r o f r e P d e s a b e r a h S m r e t - g n o L l t n e m y o p m e - t s o P m r e t t r o h S y r a t e n o M - n o N t d e a e r l l t a o T s e v i t n e c n i n o i t i a n m r e T n o i t a u n n a r e p u S s t i f e n e B h s a C e e F / y r a a S l $ - 0 0 0 0 2 1 , 0 0 0 0 8 , 0 0 0 0 2 1 , 0 0 0 0 8 , 0 0 0 0 8 , 0 0 0 0 8 , 0 0 0 , 0 8 0 0 0 0 2 1 , 0 0 0 0 6 7 , 0 0 0 0 4 4 , 3 0 4 6 4 6 , 8 4 2 1 5 9 , , 0 9 0 4 6 3 4 , , 1 4 7 1 0 4 6 , , 1 4 7 1 6 1 7 , $ - - - - - - - - - - - 0 9 0 4 6 5 , 9 1 3 6 9 , 2 1 7 4 3 1 , 1 2 1 5 9 7 , 1 2 1 5 9 7 , $ - - - - - - - - - - - - - - - - $ - 1 1 4 , 0 1 7 8 7 , 6 1 8 1 , 0 1 7 8 7 , 6 7 8 7 , 6 - 7 8 7 , 6 4 3 3 , 9 1 4 7 0 , 7 6 7 1 4 , 5 2 5 7 7 , 7 1 3 8 0 , 5 2 9 7 1 , 5 2 4 5 4 , 3 9 8 2 5 , 0 6 1 $ - - - - - - - - - - - - 1 4 0 , 7 4 0 4 4 , 6 1 1 8 4 , 3 6 1 8 4 , 3 6 $ - - - - - - - - - - $ - 9 8 5 , 9 0 1 3 1 2 , 3 7 9 1 8 , 9 0 1 3 1 2 , 3 7 3 1 2 , 3 7 0 0 0 , 0 8 3 1 2 , 3 7 6 6 6 , 0 0 1 6 2 9 , 2 9 6 5 0 0 0 , 0 0 8 1 , 3 8 5 , 4 7 9 , 1 - - - 0 0 0 , 0 0 8 , 1 0 0 0 , 0 0 8 , 1 5 2 2 , 2 2 4 0 6 9 , 7 7 4 7 1 9 , 4 7 7 5 8 6 , 9 4 6 , 3 1 1 6 , 2 4 3 , 4 e v i t u c e x e - n o N s r o t c e r i D w e L . S . r M s e n o J . W . F . r M 4 1 0 2 i e n o n A t . T . r M d o e L c M . I . R . M . r M i s s e W . H . G . r D 4 r e z n a L . D . H . r M n a m r e H S . s M e v i t u c e x e - n o n l a t o T n a e r C . D . r D x o F . E . L . r M s e n n I c M . M . r M i s v a D . F . K . r M r e n d r a G . A . r M y e s n r a G . C . s M s e v i t u c e x E s r o t c e r i D s e v i t u c e x e l a t o T 4 1 0 2 L A T O T ) D E U N T N O C I ( L E N N O S R E P T N E M E G A N A M Y E K F O N O T A R E N U M E R I . 7 ) I D E U N T N O C ( ) I D E T D U A ( T R O P E R N O T A R E N U M E R I T R O P E R ’ S R O T C E R D I ) I D E U N T N O C ( 27 Premier Investments Limited s e n n I c M . r M r o f t n e m y a p I T S e h t o t g n i t a e r l n o i t a m r o f n i r e h t r u f r o f 9 1 e g a p o t r e f e R l i l r e b e L h c o B d o n r A o t d a p l i e r e w s e e f s ’ r o t c e r i d s ’ r e z n a L . r M 4 5     8 2 d e s p a l d n a d e t s e v s t h g R i r a e y e h t g n i r u d s t h g R i d e s p a l s t h g R i d e t s e v e h t g n i r u d e h t g n i r u d r a e y . o N r a e y . o N i e s c r e x e t s a L i e s c r e x e t s r i F s n o i t i d n o c d n a s m r e T e u a v l r i a F t a t h g i r r e p e t a d t n a r g t e a d t e a d e t a d y r i p x E $ e t a d t n a r G s t h g R i d e d r a w a e h t g n i r u d r a e y . o N r a e Y d e t n a r g - - - - - 8 7 8 5 8 , 0 0 0 0 8 , 0 0 0 0 0 4 , - - - - 4 1 0 2 - r p A - 4 0 - - 1 1 0 2 - y a M - 0 1 - 7 1 0 2 - t c O - 1 4 1 0 2 - t c O - 1 5 1 0 2 - n u J - 0 2 - - - - 2 1 0 2 - y a M - 5 2 3 1 0 2 - r p A - 8 1 - - 7 1 0 2 - t c O - 1 4 3 . 0 1 5 1 0 2 - n u J - 2 2 9 9 2 , 3 1 1 1 0 2 5 1 0 2 2 1 0 2 3 1 0 2 t n e m e g a n a m y e K l e n n o s r e p s e n n I c M . M . r M r e n d r a G . A . r M y e s n r a G . C . s M 5 1 0 2 : r a e y e h t g n i r u d d e s p a l d n a d e t s e v s t h g i r f o r e b m u n e h t s a l l e w s a , 5 1 0 2 l y u J 5 2 d e d n e r a e y l i a c n a n i f e h t r o f n o i t a r e n u m e r s a s e v i t u c e x e o t d e t n a r g s t h g i r e r a h s f o r e b m u n e h t l i s e s o c s d w o e b l l e b a t e h T I I S E R A H S D N A S T H G R O T G N T A L E R S E R U S O L C S D L A N O T D D A I I I r a e y e h t g n i r u d d e s p a l d n a d e t s e v , d e d r a w a s t h g R i ) a . 8 Annual Report 2015 28 ) I D E U N T N O C ( ) I D E T D U A ( T R O P E R N O T A R E N U M E R I T R O P E R ’ S R O T C E R D I ) I D E U N T N O C (   DIRECTORS’ REPORT (CONTINUED) REMUNERATION REPORT (AUDITED) (CONTINUED) 8. ADDITIONAL DISCLOSURES RELATING TO RIGHTS AND SHARES (CONTINUED) b) Value of rights awarded, exercised and lapsed during the year 2015 Key management personnel Mr. M. McInnes Mr. A. Gardner Ms. C. Garnsey Value of rights granted during the year $ Value of rights exercised during the year $ Value of rights lapsed during the year $ Remuneration consisting of rights for the year % - 137,498 - 5,242,000 869,085 1,063,200 - - - 5.81 12.82 8.86 There were no alterations to the terms and conditions of rights awarded as remuneration since their award date. c) Shares issued on exercise of rights 2015 Key management personnel Mr. M. McInnes Mr. A. Gardner Ms. C. Garnsey Shares issued No Paid per share $ Unpaid per share $ 400,000 85,878 80,000 - - - - - - There were no alterations to the terms and conditions of rights awarded as remuneration since their award date. 29 Premier Investments Limited 29   0 3 0 0 0 0 0 4 , 4 7 8 2 7 1 , 0 0 0 0 6 1 , - - - 0 0 0 0 0 4 , 4 7 8 2 7 1 , 0 0 0 0 6 1 , 0 0 0 0 0 4 , 4 7 8 2 7 1 , 0 0 0 0 6 1 , - - - ) 8 7 8 , 5 8 ( ) 0 0 0 , 0 8 ( ) 0 0 0 , 0 0 4 ( - - 9 9 2 , 3 1 0 0 0 , 0 0 8 3 5 4 , 5 4 2 0 0 0 , 0 4 2 l i e b a s c r e x e t o N i l e b a s c r e x E l t a o T t a e c n a a B l 5 1 0 2 y u J l 5 2 s t h g R i d e s p a l s t h g R i i d e s c r e x e s a d e t n a r G t a e c n a a B l n o i t a r e n u m e r 4 1 0 2 y u J 7 2 l t n e m e g a n a m y e K l e n n o s r e p 5 1 0 2 s e n n I c M . M . r M r e n d r a G . A . r M y e s n r a G C . s M . l i n a P s t h g R e c n a m r o f r e P s p u o r G e h t ’ f o i s n o s v o r p i e h t h t i w e c n a d r o c c a n i e d a m e r e w l e n n o s r e p t n e m e g a n a m y e k o t d e t n a r g s t h g R i 5 1 0 2 y u J l 5 2 t A l e n n o s r e p t n e m e g a n a m y e k f o i s g n d o h l s t h g R i ) d ) D E U N T N O C I ( I I S E R A H S D N A S T H G R O T G N T A L E R S E R U S O L C S D L A N O T D D A I I I . 8 Annual Report 2015 30 ) I D E U N T N O C ( ) I D E T D U A ( T R O P E R N O T A R E N U M E R I T R O P E R ’ S R O T C E R D I ) I D E U N T N O C (   DIRECTORS’ REPORT (CONTINUED) DIRECTORS’ REPORT (CONTINUED) REMUNERATION REPORT (AUDITED) (CONTINUED) REMUNERATION REPORT (AUDITED) (CONTINUED) 8. ADDITIONAL DISCLOSURES RELATING TO RIGHTS AND SHARES (CONTINUED) 9. ADDITIONAL DISCLOSURES RELATING TO TRANSACTIONS AND BALANCES WITH KEY e) Number of Shares held in Premier Investments Limited BALANCE 27 JULY 2014 ORDINARY SHARE PURCHASE ORDINARY SHARES ACQUIRED UNDER PERFORMANCE RIGHTS PLAN ORDINARY NET CHANGE OTHER ORDINARY BALANCE 25 JULY 2015 ORDINARY 4,437,699 207,592 - - 2,577,014 8,000 27,665 28,186 10,000 400,000 - 109,998 - 7,806,154 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (4,000) 4,437,699 207,592 - - 2,577,014 8,000 27,665 28,186 6,000 400,000 (400,000) 400,000 - 85,878 80,000 - (82,610) - - 113,266 80,000 565,878 (486,610) 7,885,422 2015 NON-EXECUTIVE DIRECTORS Mr. S. Lew * Mr. F.W. Jones Mr. T. Antonie Dr. D.M. Crean Mr. L.E. Fox Ms. S. Herman Mr. H.D. Lanzer Mr. M.R.I. McLeod Dr. G.H. Weiss EXECUTIVES Mr. M. McInnes Mr. K.F. Davis Mr. A. Gardner Ms. C. Garnsey ** TOTAL * Mr. Lew is an associate of Century Plaza Investments Pty. Ltd. and Metrepark Pty. Ltd (Associated Entities). The Associated Entities, collectively, have a relevant interest in 59,804,731 (2014: 59,804,731) shares in the company. However, Mr. Lew does not have a relevant interest in the shares in the company held by the Associated Entities. ** Subsequent to year-end Ms. Garnsey disposed of 40,000 ordinary shares. 9. ADDITIONAL DISCLOSURES RELATING TO TRANSACTIONS AND BALANCES WITH KEY MANAGEMENT PERSONNEL a) Details and terms and conditions of other transactions and balances with key management personnel and their related parties Mr. Lanzer is a partner of the legal firm Arnold Bloch Leibler. Group companies use the services of Arnold Bloch Leibler from time to time. Legal services totalling $1,250,763 (2014: $1,216,100), including Mr. Lanzer's Directors fees, GST and disbursements were invoiced by Arnold Bloch Leibler to the consolidated group, with $101,748 (2014: $nil) remaining outstanding at year-end. The fees paid for these services were all at arm's length and on normal commercial terms. MANAGEMENT PERSONNEL (CONTINUED) a) Details and terms and conditions of other transactions and balances with key management personnel and their related parties (continued) Mr. Lanzer is a director of Loch Awe Pty Ltd. During the year operating lease payments totalling $393,774 (2014: $378,629) including GST was paid to Loch Awe Pty Ltd. The payments were at arm’s length and on normal commercial terms. Mr. Lew is a director of Voyager Distributing Company Pty Ltd and family companies associated with Mr. Lew have a controlling interest in Playcorp Pty Ltd and Sky Chain Trading Limited. During the year, purchases totalling $18,831,141 (2014: $20,332,905) including GST have been made by Group companies from Voyager Distributing Co. Pty Ltd, Playcorp Pty Ltd and Sky Chain Trading Limited, with $1,232,020 (2014: $1,436,941) remaining outstanding at year-end. The purchases were all at arm’s length and on normal commercial terms. Mr. Lew is a director of Century Plaza Trading Pty. Ltd. The company and Century Plaza Trading Pty Ltd are parties to a Services Agreement to which Century Plaza Trading agrees to provide certain services to the company to the extent required and requested by the company. The company is required to reimburse Century Plaza Trading for costs it incurs in providing the company with the services under the Service Agreement. The company reimbursed a total of $391,480 (2014: $412,718) costs including GST incurred by Century Plaza Trading Pty Ltd. Amounts recognised in the financial report at the reporting date in relation to other transactions: i) Amounts included within Assets and Liabilities Current Liabilities Trade and other payables ii) Amounts included within Profit or Loss Expenses Purchases/ Cost of goods sold Operating lease rental expense Legal fees Other expenses Total expenses 2015 $’000 1,334 1,334 2015 $’000 17,355 358 1,137 391 19,241 31 Premier Investments Limited 31 32     DIRECTORS’ REPORT (CONTINUED) REMUNERATION REPORT (AUDITED) (CONTINUED) 9. ADDITIONAL DISCLOSURES RELATING TO TRANSACTIONS AND BALANCES WITH KEY MANAGEMENT PERSONNEL (CONTINUED) a) Details and terms and conditions of other transactions and balances with key management personnel and their related parties (continued) Mr. Lanzer is a director of Loch Awe Pty Ltd. During the year operating lease payments totalling $393,774 (2014: $378,629) including GST was paid to Loch Awe Pty Ltd. The payments were at arm’s length and on normal commercial terms. Mr. Lew is a director of Voyager Distributing Company Pty Ltd and family companies associated with Mr. Lew have a controlling interest in Playcorp Pty Ltd and Sky Chain Trading Limited. During the year, purchases totalling $18,831,141 (2014: $20,332,905) including GST have been made by Group companies from Voyager Distributing Co. Pty Ltd, Playcorp Pty Ltd and Sky Chain Trading Limited, with $1,232,020 (2014: $1,436,941) remaining outstanding at year-end. The purchases were all at arm’s length and on normal commercial terms. Mr. Lew is a director of Century Plaza Trading Pty. Ltd. The company and Century Plaza Trading Pty Ltd are parties to a Services Agreement to which Century Plaza Trading agrees to provide certain services to the company to the extent required and requested by the company. The company is required to reimburse Century Plaza Trading for costs it incurs in providing the company with the services under the Service Agreement. The company reimbursed a total of $391,480 (2014: $412,718) costs including GST incurred by Century Plaza Trading Pty Ltd. Amounts recognised in the financial report at the reporting date in relation to other transactions: i) Amounts included within Assets and Liabilities Current Liabilities Trade and other payables ii) Amounts included within Profit or Loss Expenses Purchases/ Cost of goods sold Operating lease rental expense Legal fees Other expenses Total expenses 2015 $’000 1,334 1,334 2015 $’000 17,355 358 1,137 391 19,241 Annual Report 2015 32 32   DIRECTORS’ REPORT (CONTINUED) AUDITOR INDEPENDENCE A copy of the Auditor’s Independence Declaration in relation to the audit for the financial year is provided on page 34 of this report. Signed in accordance with a resolution of the Board of Directors. Solomon Lew Chairman 1 October 2015 33 Premier Investments Limited 33   8 Exhibition Street Melbourne VIC 3000 Australia GPO Box 67 Melbourne VIC 3001 8 Exhibition Street Melbourne VIC 3000 Australia GPO Box 67 Melbourne VIC 3001 Tel: +61 3 9288 8000 Fax: +61 3 8650 7777 ey.com/au Tel: +61 3 9288 8000 Fax: +61 3 8650 7777 ey.com/au Auditor’s Independence Declaration to the Directors of Premier Investments Limited Auditor’s Independence Declaration to the Directors of Premier In relation to our audit of the financial report of Premier Investments Limited for the financial year ended Investments Limited 25 July 2015 to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct. In relation to our audit of the financial report of Premier Investments Limited for the financial year ended 25 July 2015 to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct. Ernst & Young Ernst & Young Rob Perry Partner Melbourne 1 October 2015 Rob Perry Partner Melbourne 1 October 2015 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Annual Report 2015 34 STATEMENT OF COMPREHENSIVE INCOME STATEMENT OF COMPREHENSIVE INCOME FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 STATEMENT OF FINANCIAL POSITION AS AT 25 JULY 2015 AND 26 JULY 2014 CONSOLIDATED CONSOLIDATED NOTES NOTES 2015 $’000 2015 $’000 2014 $’000 2014 $’000 NOTES CONSOLIDATED 2015 $’000 Continuing operations Continuing operations Revenue from sale of goods Revenue from sale of goods Other revenue Other revenue Total revenue Total revenue Other income Other income Total income Total income Changes in inventories of finished goods and work in progress and Changes in inventories of finished goods and work in progress and raw materials used raw materials used Employee expenses Employee expenses Operating lease rental expense Operating lease rental expense Depreciation, impairment and amortisation Depreciation, impairment and amortisation Advertising and direct marketing Advertising and direct marketing Finance costs Finance costs Supply chain transformation Supply chain transformation Expense associated with disposal of asset held for sale Expense associated with disposal of asset held for sale Other expenses Other expenses Total expenses Total expenses Share of profit of associates Share of profit of associates Profit from continuing operations before income tax Profit from continuing operations before income tax Income tax expense Income tax expense Net profit for the period attributable to owners Net profit for the period attributable to owners Other comprehensive income (loss) Other comprehensive income (loss) Items that may be reclassified subsequently to profit or loss Cash flow hedges Items that may be reclassified subsequently to profit or loss Cash flow hedges Foreign currency translation Foreign currency translation Net movement in other comprehensive income of associates Net movement in other comprehensive income of associates Income tax on items of other comprehensive income Income tax on items of other comprehensive income Other comprehensive income (loss) for the period, net of tax Other comprehensive income (loss) for the period, net of tax TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ATTRIBUTABLE TO THE OWNERS TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ATTRIBUTABLE TO THE OWNERS Earnings per share for profit from continuing operations Earnings per share for profit from continuing operations attributable to the ordinary equity holders of the parent: attributable to the ordinary equity holders of the parent: 4 4 4 4 4 4 5 5 5 5 5 5 5 5 5 5 14 14 6 6 20 20 20 20 20 20 20 20 947,662 947,662 10,230 10,230 957,892 957,892 3,977 3,977 961,869 961,869 (350,894) (350,894) (240,469) (240,469) (193,812) (193,812) (22,677) (22,677) (12,879) (12,879) (5,738) (5,738) - - (1,724) (1,724) (29,875) (29,875) 892,570 892,570 11,624 11,624 904,194 904,194 1,898 1,898 906,092 906,092 (341,078) (341,078) (225,716) (225,716) (182,183) (182,183) (21,941) (21,941) (12,193) (12,193) (6,311) (6,311) (4,482) (4,482) - - (26,608) (26,608) (858,068) (858,068) (820,512) (820,512) 13,144 13,144 116,945 116,945 (28,843) (28,843) 12,785 12,785 98,365 98,365 (25,365) (25,365) 88,102 88,102 73,000 73,000 35,374 35,374 1,418 1,418 2,728 2,728 (10,612) (10,612) 28,908 28,908 (21,436) (21,436) 728 728 (896) (896) 6,431 6,431 (15,173) (15,173) 117,010 117,010 57,827 57,827 - basic for profit for the year (cents per share) - basic for profit for the year (cents per share) - diluted for profit for the year (cents per share) - diluted for profit for the year (cents per share) 31 31 31 31 56.49 56.49 55.92 55.92 46.98 46.98 46.36 46.36 The accompanying notes form an integral part of this Statement of Comprehensive Income. The accompanying notes form an integral part of this Statement of Comprehensive Income. 1,338,307 1,298,529 The accompanying notes form an integral part of this Statement of Financial Position. 35 Premier Investments Limited 35 35 ASSETS Current assets Cash and cash equivalents Trade and other receivables Inventories Other financial instruments Other current assets Asset classified as held for sale Total current assets Non-current assets Trade and other receivables Property, plant and equipment Intangible assets Deferred tax assets Investments in associates Other financial instruments Total non-current assets TOTAL ASSETS LIABILITIES Current liabilities Trade and other payables Interest-bearing liabilities Other financial instruments Income tax payable Provisions Other current liabilities Total current liabilities Non-current liabilities Interest-bearing liabilities Deferred tax liabilities Provisions Other Other financial instruments Total non-current liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Reserves Retained earnings TOTAL EQUITY 1,193,241 1,639,072 1,165,248 1,595,939 26 8 9 30 10 11 8 12 13 6 14 30 15 16 30 17 18 16 6 17 30 18 19 20 21 281,572 14,341 111,814 30,795 6,309 1,000 445,831 - 123,537 854,711 3,745 209,477 1,771 73,723 14 117 31,781 16,097 5,635 127,367 104,641 54,554 1,782 10 12,411 173,398 300,765 1,338,307 608,615 32,223 697,469 2014 $’000 313,308 12,155 98,496 1,517 5,215 - 430,691 1,004 109,028 854,572 12,147 188,418 79 62,520 100,529 6,798 24,642 16,558 4,221 215,268 19,014 52,586 1,462 3 9,077 82,142 297,410 1,298,529 608,615 2,514 687,400 36       STATEMENT OF COMPREHENSIVE INCOME FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 STATEMENT OF FINANCIAL POSITION AS AT 25 JULY 2015 AND 26 JULY 2014 NOTES CONSOLIDATED 2015 $’000 ASSETS Current assets Cash and cash equivalents Trade and other receivables Inventories Other financial instruments Other current assets Asset classified as held for sale Total current assets Non-current assets Trade and other receivables Property, plant and equipment Intangible assets Deferred tax assets Investments in associates Other financial instruments Total non-current assets TOTAL ASSETS LIABILITIES Current liabilities Trade and other payables Interest-bearing liabilities Other financial instruments Income tax payable Provisions Other current liabilities Total current liabilities Non-current liabilities Interest-bearing liabilities Deferred tax liabilities Provisions Other financial instruments Other Total non-current liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Reserves Retained earnings TOTAL EQUITY 26 8 9 30 10 11 8 12 13 6 14 30 15 16 30 17 18 16 6 17 30 18 19 20 21 The accompanying notes form an integral part of this Statement of Comprehensive Income. The accompanying notes form an integral part of this Statement of Financial Position. CONSOLIDATED NOTES 2015 $’000 2014 $’000 Continuing operations Revenue from sale of goods Other revenue Total revenue Other income Total income Changes in inventories of finished goods and work in progress and raw materials used Employee expenses Operating lease rental expense Depreciation, impairment and amortisation Advertising and direct marketing Finance costs Supply chain transformation Expense associated with disposal of asset held for sale Other expenses Total expenses Share of profit of associates Profit from continuing operations before income tax Income tax expense Net profit for the period attributable to owners Other comprehensive income (loss) Items that may be reclassified subsequently to profit or loss Cash flow hedges Foreign currency translation Net movement in other comprehensive income of associates Income tax on items of other comprehensive income Other comprehensive income (loss) for the period, net of tax TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ATTRIBUTABLE TO THE OWNERS Earnings per share for profit from continuing operations attributable to the ordinary equity holders of the parent: - basic for profit for the year (cents per share) - diluted for profit for the year (cents per share) 4 4 4 5 5 5 5 5 14 6 20 20 20 20 31 31 947,662 10,230 957,892 3,977 961,869 (350,894) (240,469) (193,812) (22,677) (12,879) (5,738) - (1,724) (29,875) (858,068) 13,144 116,945 (28,843) 88,102 35,374 1,418 2,728 (10,612) 28,908 117,010 57,827 56.49 55.92 46.98 46.36 892,570 11,624 904,194 1,898 906,092 (341,078) (225,716) (182,183) (21,941) (12,193) (6,311) (4,482) - (26,608) (820,512) 12,785 98,365 (25,365) 73,000 (21,436) 728 (896) 6,431 (15,173) 35 2014 $’000 313,308 12,155 98,496 1,517 5,215 - 430,691 1,004 109,028 854,572 12,147 188,418 79 281,572 14,341 111,814 30,795 6,309 1,000 445,831 - 123,537 854,711 3,745 209,477 1,771 1,193,241 1,639,072 1,165,248 1,595,939 73,723 14 117 31,781 16,097 5,635 127,367 104,641 54,554 1,782 10 12,411 173,398 300,765 1,338,307 608,615 32,223 697,469 62,520 100,529 6,798 24,642 16,558 4,221 215,268 19,014 52,586 1,462 3 9,077 82,142 297,410 1,298,529 608,615 2,514 687,400 1,338,307 1,298,529 Annual Report 2015 36 36     STATEMENT OF CASH FLOWS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 STATEMENT OF CHANGES IN EQUITY FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 NOTES CONSOLIDATED 2015 $’000 2014 $’000 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Interest received Borrowing costs paid Income taxes paid NET CASH FLOWS FROM OPERATING ACTIVITIES 26(b) CASH FLOWS FROM INVESTING ACTIVITIES Dividends received from associates Payment for trademarks Purchase of investments Payment for property, plant and equipment and leasehold premiums NET CASH FLOWS USED IN INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Equity dividends paid Proceeds from borrowings Repayment of borrowings Payment of finance lease liabilities NET CASH FLOWS USED IN FINANCING ACTIVITIES NET (DECREASE) INCREASE IN CASH HELD Cash at the beginning of the financial year CASH AT THE END OF THE FINANCIAL YEAR 26(a) 1,051,088 (930,319) 10,294 (5,605) (22,347) 103,111 9,628 (42) (16,492) (36,122) (43,028) (78,033) 66,800 (80,530) (56) (91,819) (31,736) 313,308 281,572 985,643 (891,397) 11,692 (5,815) (13,653) 86,470 8,698 (106) - (50,294) (41,702) (60,562) 83,000 (67,000) (55) (44,617) 151 313,157 313,308 CONSOLIDATED CONTRIBUTED EQUITY CAPITAL PROFITS $’000 RESERVE $’000 PERFORMANCE CASH FLOW RIGHTS RESERVE $’000 HEDGE FOREIGN CURRENCY RESERVE TRANSLATION $’000 RESERVE $’000 RETAINED PROFITS $’000 TOTAL $’000 608,615 464 3,281 (3,565) 2,334 687,400 1,298,529 Balance as at 25 July 2015 608,615 464 4,082 21,197 6,480 697,469 1,338,307 At 27 July 2014 Net Profit for the period Other comprehensive income Total comprehensive income for the period Transactions with owners in their capacity as owners: Performance rights issued Dividends Paid At 28 July 2013 Net Profit for the period Other comprehensive loss Total comprehensive income (loss) for the period Transactions with owners in their capacity as owners: Performance rights issued Dividends Paid - - - - - - - - - - - - - - - - - - - - - - - - - 801 - 898 - - - 88,102 24,762 4,146 - 88,102 28,908 24,762 4,146 88,102 117,010 - 801 (78,033) (78,033) - - - - - - - - - 608,615 464 2,383 11,440 2,502 674,962 1,300,366 - 73,000 73,000 (15,005) (168) - (15,173) - (15,005) (168) 73,000 57,827 Balance as at 26 July 2014 608,615 464 3,281 (3,565) 2,334 687,400 1,298,529 - 898 (60,562) (60,562) The accompanying notes form an integral part of this Statement of Cash Flows. The accompanying notes form an integral part of this Statement of Changes in Equity 37 Premier Investments Limited 37 38     STATEMENT OF CHANGES IN EQUITY STATEMENT OF CHANGES IN EQUITY FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 CONSOLIDATED CONSOLIDATED CONTRIBUTED CONTRIBUTED EQUITY EQUITY $’000 $’000 CAPITAL CAPITAL PROFITS PROFITS RESERVE RESERVE $’000 $’000 PERFORMANCE PERFORMANCE RIGHTS RIGHTS RESERVE RESERVE $’000 $’000 CASH FLOW CASH FLOW HEDGE HEDGE RESERVE RESERVE $’000 $’000 FOREIGN FOREIGN CURRENCY CURRENCY TRANSLATION TRANSLATION RESERVE RESERVE $’000 $’000 RETAINED RETAINED PROFITS PROFITS $’000 $’000 TOTAL TOTAL $’000 $’000 At 27 July 2014 At 27 July 2014 Net Profit for the period Net Profit for the period Other comprehensive income Other comprehensive income Total comprehensive income Total comprehensive income 608,615 608,615 464 464 3,281 3,281 (3,565) (3,565) 2,334 2,334 687,400 687,400 1,298,529 1,298,529 - - - - - - - - - - - - - - - - 88,102 88,102 88,102 88,102 24,762 24,762 4,146 4,146 - - 28,908 28,908 for the period for the period - - - - - - 24,762 24,762 4,146 4,146 88,102 88,102 117,010 117,010 Transactions with owners Transactions with owners in their capacity as owners: in their capacity as owners: Performance rights issued Performance rights issued Dividends Paid Dividends Paid - - - - - - - - 801 801 - - - - - - - - - - - - 801 801 (78,033) (78,033) (78,033) (78,033) Balance as at 25 July 2015 Balance as at 25 July 2015 608,615 608,615 464 464 4,082 4,082 21,197 21,197 6,480 6,480 697,469 697,469 1,338,307 1,338,307 At 28 July 2013 At 28 July 2013 Net Profit for the period Net Profit for the period Other comprehensive loss Other comprehensive loss Total comprehensive income Total comprehensive income 608,615 608,615 464 464 2,383 2,383 11,440 11,440 2,502 2,502 674,962 674,962 1,300,366 1,300,366 - - - - - - - - - - - - - - - - 73,000 73,000 73,000 73,000 (15,005) (15,005) (168) (168) - - (15,173) (15,173) (loss) for the period (loss) for the period - - - - - - (15,005) (15,005) (168) (168) 73,000 73,000 57,827 57,827 Transactions with owners Transactions with owners in their capacity as owners: in their capacity as owners: Performance rights issued Performance rights issued Dividends Paid Dividends Paid - - - - - - - - 898 898 - - - - - - - - - - - - 898 898 (60,562) (60,562) (60,562) (60,562) Balance as at 26 July 2014 Balance as at 26 July 2014 608,615 608,615 464 464 3,281 3,281 (3,565) (3,565) 2,334 2,334 687,400 687,400 1,298,529 1,298,529 The accompanying notes form an integral part of this Statement of Changes in Equity The accompanying notes form an integral part of this Statement of Changes in Equity Annual Report 2015 38 38 38     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 1 CORPORATE INFORMATION The financial report of Premier Investments Limited for the 52 weeks ended 25 July 2015 was authorised for issue in accordance with a resolution of the Directors on 1 October 2015. Premier Investments Limited is a for profit company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange. The nature of the operations and principal activities of the Group are described in the Directors’ Report. 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES The consolidated financial report is prepared for the 52 weeks beginning 27 July 2014 to 25 July 2015. (a) BASIS OF PREPARATION The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. The financial report has been prepared on a historical cost basis, except for other financial instruments and assets classified as held for sale, which have been measured at fair value as explained in the accounting policies below. The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($’000) under the option available to the company under Australian Securities and Investments Commission (ASIC) Class Order 98/0100. The Group is an entity to which the Class Order applies. (b) STATEMENT OF COMPLIANCE The financial report complies with Australian Accounting Standards and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). (c) NEW ACCOUNTING STANDARDS AND INTERPRETATIONS Changes in accounting policies, disclosures, standards and interpretations The accounting policies adopted are consistent with those of the previous financial year except as follows: As of the beginning of the financial year, the Group has adopted the following new and amended Australian Accounting Standards and AASB Interpretations that are relevant to the Group and its operations and that are effective for the current annual reporting period. (i) AASB 2012-3 Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities: The Standard addresses inconsistencies in current practice when applying some of the offsetting criteria in AASB 132 Financial Instruments: Presentation, and clarified the meaning of “currently has a legally enforceable right to set-off”. 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (c) NEW ACCOUNTING STANDARDS AND INTERPRETATIONS (CONTINUED) (ii) AASB 2013-4 Amendments to Australian Accounting Standards – Novation of Derivatives and Continuation of Hedge Accounting: The amendments permit the continuation of hedge accounting in specified circumstances where a derivative, which has been designated as a hedging instrument, is novated from one counterparty to a central counterparty as a consequence of laws or regulations. (iii) AASB 1031 Materiality: The revised AASB 1031 is an interim standard that cross- references to other standards and the Framework (issued December 2013) that contain guidance on Materiality. AASB 1031 will be withdrawn when references to AASB 1031 in all Standards and Interpretations have been removed. AASB 2014-1 Amendments to Australian Accounting Standards [Part C – Materiality], issued in June 2014, makes amendments to particular Australian Accounting Standards to delete references to AASB 1031. (iv) AASB 2013-9 Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instruments: The Standards contains three main parts and makes amendments to a number of other Standards and Interpretations. Part B makes amendments to particular Australian Accounting Standards to delete references to AASB 1031 Materiality, and also makes minor editorial changes to other standards, while Part C makes amendments to a number of Australian Accounting Standards, including incorporating Chapter 6 Hedge Accounting into AASB 9 Financial Instruments. (v) Interpretation 21 Levies: This interpretation clarifies that a liability to pay a levy is only recognised when the activity that triggers the payment occurs. (vi) AASB 2014-1 Amendments to Australian Accounting Standards [Part A – Annual Improvements 2010-2012 and 2011-2013 Cycles]: Part A makes various amendments to Australian Accounting Standards arising from the IASB Annual Improvements Process. Key amendments, applicable to the Group, include:     AASB 2: Clarifies the definition of ‘vesting condition’ and ‘market condition’, and introduces definitions for ‘performance condition’ and ‘service condition’. AASB 8: Requires entities to disclose factors used to identify the entity’s reportable segments when operating segments have been aggregated. AASB 116 and AASB 138: Clarifies that the determination of accumulated depreciation does not depend on the valuation technique and that it is calculated as the difference between gross and net carrying amounts. AASB 124: Defines a management entity providing Key Management Personnel (KMP) services as a related party of the reporting entity. Payments made to a management entity in respect of KMP services should be separately disclosed. Adoption of these new and revised Standards did not have any effect on the financial position or performance of the Group. In the current financial year the Group did not elect to early adopt any new Standards or amendments issued but not yet effective. 39 Premier Investments Limited 39 40     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (c) NEW ACCOUNTING STANDARDS AND INTERPRETATIONS (CONTINUED) (ii) (iii) (iv) (v) (vi) AASB 2013-4 Amendments to Australian Accounting Standards – Novation of Derivatives and Continuation of Hedge Accounting: The amendments permit the continuation of hedge accounting in specified circumstances where a derivative, which has been designated as a hedging instrument, is novated from one counterparty to a central counterparty as a consequence of laws or regulations. AASB 1031 Materiality: The revised AASB 1031 is an interim standard that cross- references to other standards and the Framework (issued December 2013) that contain guidance on Materiality. AASB 1031 will be withdrawn when references to AASB 1031 in all Standards and Interpretations have been removed. AASB 2014-1 Amendments to Australian Accounting Standards [Part C – Materiality], issued in June 2014, makes amendments to particular Australian Accounting Standards to delete references to AASB 1031. AASB 2013-9 Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instruments: The Standards contains three main parts and makes amendments to a number of other Standards and Interpretations. Part B makes amendments to particular Australian Accounting Standards to delete references to AASB 1031 Materiality, and also makes minor editorial changes to other standards, while Part C makes amendments to a number of Australian Accounting Standards, including incorporating Chapter 6 Hedge Accounting into AASB 9 Financial Instruments. Interpretation 21 Levies: This interpretation clarifies that a liability to pay a levy is only recognised when the activity that triggers the payment occurs. AASB 2014-1 Amendments to Australian Accounting Standards [Part A – Annual Improvements 2010-2012 and 2011-2013 Cycles]: Part A makes various amendments to Australian Accounting Standards arising from the IASB Annual Improvements Process. Key amendments, applicable to the Group, include:     AASB 2: Clarifies the definition of ‘vesting condition’ and ‘market condition’, and introduces definitions for ‘performance condition’ and ‘service condition’. AASB 8: Requires entities to disclose factors used to identify the entity’s reportable segments when operating segments have been aggregated. AASB 116 and AASB 138: Clarifies that the determination of accumulated depreciation does not depend on the valuation technique and that it is calculated as the difference between gross and net carrying amounts. AASB 124: Defines a management entity providing Key Management Personnel (KMP) services as a related party of the reporting entity. Payments made to a management entity in respect of KMP services should be separately disclosed. Adoption of these new and revised Standards did not have any effect on the financial position or performance of the Group. In the current financial year the Group did not elect to early adopt any new Standards or amendments issued but not yet effective. Annual Report 2015 40 40   NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (c) NEW ACCOUNTING STANDARDS AND INTERPRETATIONS (CONTINUED) Title Summary Accounting Standards and Interpretations issued but not yet effective Recently issued or amended Australian Accounting Standards and Interpretations that have been identified as those which may be relevant to the Group in future reporting periods, but are not yet effective and have not been adopted by the Group for the reporting period ended 25 July 2015, are outlined in the table below: Title Summary The standard amends AASB 116 Property, Plant and Equipment and AASB 138 Intangible Assets to provide additional guidance on how the depreciation or amortisation of property, plant and equipment and intangible assets should be calculated. Impact on the Group financial report The Group has not yet determined the potential effects of the standard. AASB 2014-4 Clarification of Acceptable Methods of Depreciation and Amortisation AASB 2014- 10 Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture AASB 15 Revenue from Contracts with Customers, AASB 2014-5 Amendments to Australian Accounting Standards arising from AASB 15 41 Premier Investments Limited The standard addresses the conflict between the requirements of AASB 128 Investment in Associates and Joint Ventures and AASB 10 Consolidated Financial Statements and clarify that in a transaction involving an associate or joint venture the extent of gain or loss recognition depends on whether the assets sold or contributed constitute a business. The Group has not yet determined the potential effects of the standard. AASB 15 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and replaces AASB 111 Construction Contracts, AASB 118 Revenue, and Interpretation 13 Customer Loyalty Programmes. The core principle of AASB 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The IASB in its July 2015 meeting decided to confirm its proposal to defer the effective date of IFRS 15 (the international equivalent of AASB 15) from 1 January 2017 to 1 January 2018. The amendment to give effect to the new effective date for IFRS 15 is expected to be issued in September 2015. At this time, it is expected that the AASB will make a corresponding amendment to the effective date of AASB 15. The new standard requires extensive disclosures, including disaggregation of total revenue and key judgements and estimates. The Group is in the process of evaluating the potential impact, if any, of the new standard on the Group. Effective Dates The standard applies to annual reporting periods beginning on or after 1 January 2016. The standard is expected to be initially applied by the group for the financial year beginning 31 July 2016. The standard applies to annual reporting periods beginning on or after 1 January 2016. The standard is expected to be initially applied by the group for the financial year beginning 31 July 2016. The standard applies to annual reporting periods beginning on or after 1 January 2017. The standard is expected to be initially applied by the group for the financial year beginning 30 July 2017. Refer to the summary for a proposed deferral of the effective date of AASB 15. 41 AASB 2015-1 amends a number of pronouncements as a The Group does The standard result of the IASB’s 2012 – 2014 annual improvements cycle. Key amendments include:  AASB 7: Servicing contracts and applicability of the amendments to AASB 7 to condensed interim financial statements. Improvements  AASB 119: Discount rate; regional market issue. financial position 2016.  AASB 134: Disclosure of information ‘elsewhere in the and interim financial report’. AASB 2015-2 amends AASB 101 Presentation of Financial The Group does The standard Statements to provide clarification regarding the disclosure requirements in AASB 101. The amendments include narrow-focus amendments to address concerns about existing presentation and disclosure effect on the requirements and to ensure entities are able to use financial position 2016. judgements when applying a Standard in determining what and information to disclose in their financial statements. The Standard completes the AASB’s project to remove The Group does The standard Australian guidance on materiality from Australian Accounting Standards. AASB 2015-1 Amendments to Australian Accounting Standards – Annual to Australian Accounting Standards 2012 - 2014 Cycle AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101 AASB 2015-3 Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031 Materiality Impact on the Group financial report Effective Dates not expect the adoption of this Standard to have a material effect on the applies to annual reporting periods beginning on or after 1 January performance of the Group, but may affect future disclosures. The standard is expected to be initially applied by the group for the financial year beginning 31 July 2016. not expect the adoption of this Standard to have a material applies to annual reporting periods beginning on or after 1 January performance of the Group, but may affect future disclosures. The standard is expected to be initially applied by the group for the financial year beginning 31 July 2016. not expect the adoption of this Standard to applies to annual reporting periods have a material beginning on or effect on the after 1 July financial position 2015. and performance of the Group. The standard is expected to be initially applied by the group for the financial year beginning 27 July 2015. 42     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Title Summary AASB 2015-1 amends a number of pronouncements as a result of the IASB’s 2012 – 2014 annual improvements cycle. Key amendments include:  AASB 7: Servicing contracts and applicability of the amendments to AASB 7 to condensed interim financial statements.  AASB 119: Discount rate; regional market issue.  AASB 134: Disclosure of information ‘elsewhere in the interim financial report’. AASB 2015-2 amends AASB 101 Presentation of Financial Statements to provide clarification regarding the disclosure requirements in AASB 101. The amendments include narrow-focus amendments to address concerns about existing presentation and disclosure requirements and to ensure entities are able to use judgements when applying a Standard in determining what information to disclose in their financial statements. The Standard completes the AASB’s project to remove Australian guidance on materiality from Australian Accounting Standards. AASB 2015-1 Amendments to Australian Accounting Standards – Annual Improvements to Australian Accounting Standards 2012 - 2014 Cycle AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101 AASB 2015-3 Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031 Materiality Impact on the Group financial report The Group does not expect the adoption of this Standard to have a material effect on the financial position and performance of the Group, but may affect future disclosures. The Group does not expect the adoption of this Standard to have a material effect on the financial position and performance of the Group, but may affect future disclosures. The Group does not expect the adoption of this Standard to have a material effect on the financial position and performance of the Group. Effective Dates The standard applies to annual reporting periods beginning on or after 1 January 2016. The standard is expected to be initially applied by the group for the financial year beginning 31 July 2016. The standard applies to annual reporting periods beginning on or after 1 January 2016. The standard is expected to be initially applied by the group for the financial year beginning 31 July 2016. The standard applies to annual reporting periods beginning on or after 1 July 2015. The standard is expected to be initially applied by the group for the financial year beginning 27 July 2015. Annual Report 2015 42 42   NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Impact on the Group financial report The Group has not yet determined the potential effects of the standard. Retrospective application is generally required. Effective Dates The standard applies to annual reporting periods beginning on or after 1 January 2018. The standard is expected to be initially applied by the group for the financial year beginning 29 July 2018. Title Summary AASB 9 Financial Instruments AASB 9 (Dec 2014) is a new principal standard which replaces AASB 139. This new version supersedes AASB 9 issued in December 2009 (as amended) and AASB 9 (issued in Dec 2010) and includes a model for classification and measurement, a single forward-looking ‘expected loss’ impairment model and a substantially-reformed approach to hedge accounting. The final version of AASB 9 introduces a new expected-loss impairment model that will require more timely recognition of expected credit losses. Specifically, the new Standard requires entities to account for expected credit losses from when financial instruments are first recognised and to recognise full lifetime expected losses on a timelier basis. Amendments to AASB 9 (Dec 2009 and 2010 editions, as well as AASB 2013-9) issued in December 2013 included the new hedge accounting requirements, including changes to hedge effectiveness testing, treatment of hedge costs, risk components that can be hedged and disclosures. AASB 9 includes requirements for a simpler approach to classification and measurement of financial assets compared with the requirements of AASB 139. The main changes are described below:  Financial assets that are debt instruments will be classified based on 1) the objective of the entity’s business model for managing the financial assets; 2) the characteristics of the contractual cash flows.  Allows an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of investment.  Financial assets can be designated and measured at fair value through profit and loss at initial recognition if doing so eliminates or significantly reduces the measurement or recognition inconsistency that would arise from measuring assets or liabilities, or recognising gains and losses on them, on different bases.  Where the fair value option is used for financial liabilities the change in fair value is to be accounted for as follows:  The change attributable to changes in credit risk are presented in other comprehensive income.  The remaining change is presented in profit or loss. AASB 9 also removes the volatility in profit or loss that was caused by changes in the credit risk of liabilities elected to be measured at fair value. The change in accounting means that gains caused by deterioration of an entity’s own credit risk on such liabilities are no longer recognised in profit or loss. Consequential amendments were also made to other standards as a result of AASB 9, introduced by AASB 2009-11 and superseded by AASB 2010-7, AASB 2010-10 and AASB 2014-1 – Part E. AASB 2014-7 incorporates the consequential amendments arising from the issuance of AASB 9 in December 2014. (d) SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgement and estimates on historical experience and on other various factors it believes to be reasonable under the circumstances, the result of which form the basis of the carrying values of assets and liabilities that are not readily apparent from other sources. Management has identified the following critical accounting policies for which significant judgements, estimates and assumptions are made. Actual results may differ from those estimated under different assumptions and conditions and may materially affect financial results or the financial position reported in future periods. Further details of the nature of these assumptions and conditions may be found in the relevant notes to the financial statements. (i) Significant accounting judgements Recovery of deferred tax assets Deferred tax assets are recognised for deductible temporary differences as management considers that is it probable that future taxable profits will be available to utilise those temporary differences. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits over the next two years together with future tax planning strategies. Classification of assets and liabilities as held for sale The Group classifies assets and liabilities as held for sale when the carrying amount will be recovered through a sale transaction. The assets and liabilities must be available for immediate sale and the Group must be committed to selling the asset either through entering into a contractual sale agreement or through the activation and commitment to a program to locate a buyer and dispose of the assets and liabilities. Impairment of non-financial assets other than goodwill and indefinite life intangibles The Group assesses impairment of all assets at each reporting date by evaluating conditions specific to the Group and to the particular asset that may lead to impairment. These include product and manufacturing performance, technology, economic and political environments and future product expectations. If an impairment trigger exists, the recoverable amount of the asset is determined. Given the current uncertain economic environment, management considered that the indicators of impairment were significant enough and as such these assets have been tested for impairment in this financial year. 43 Premier Investments Limited 43 44     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (d) SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgement and estimates on historical experience and on other various factors it believes to be reasonable under the circumstances, the result of which form the basis of the carrying values of assets and liabilities that are not readily apparent from other sources. Management has identified the following critical accounting policies for which significant judgements, estimates and assumptions are made. Actual results may differ from those estimated under different assumptions and conditions and may materially affect financial results or the financial position reported in future periods. Further details of the nature of these assumptions and conditions may be found in the relevant notes to the financial statements. (i) Significant accounting judgements Recovery of deferred tax assets Deferred tax assets are recognised for deductible temporary differences as management considers that is it probable that future taxable profits will be available to utilise those temporary differences. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits over the next two years together with future tax planning strategies. Classification of assets and liabilities as held for sale The Group classifies assets and liabilities as held for sale when the carrying amount will be recovered through a sale transaction. The assets and liabilities must be available for immediate sale and the Group must be committed to selling the asset either through entering into a contractual sale agreement or through the activation and commitment to a program to locate a buyer and dispose of the assets and liabilities. Impairment of non-financial assets other than goodwill and indefinite life intangibles The Group assesses impairment of all assets at each reporting date by evaluating conditions specific to the Group and to the particular asset that may lead to impairment. These include product and manufacturing performance, technology, economic and political environments and future product expectations. If an impairment trigger exists, the recoverable amount of the asset is determined. Given the current uncertain economic environment, management considered that the indicators of impairment were significant enough and as such these assets have been tested for impairment in this financial year. Annual Report 2015 44 44   NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (d)  SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (CONTINUED) Taxation (d)  SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (CONTINUED) Estimation of useful lives of assets The Group's accounting policy for taxation requires management's judgement as to the types of arrangements considered to be a tax on income in contrast to an operating cost. Judgement is also required in assessing whether deferred tax assets and certain deferred tax liabilities are recognised in the statement of financial position. Deferred tax assets, including those arising from un-recouped tax losses, capital losses and temporary differences, are recognised only where it is considered more likely than not that they will be recovered, which is dependent on the generation of sufficient future taxable profits. Deferred tax liabilities arising from temporary differences in investments, caused principally by retained earnings held in foreign tax jurisdictions, are recognised unless repatriation of retained earnings can be controlled and are not expected to occur in the foreseeable future. Assumptions about the generation of future taxable profits and repatriation of retained earnings depend on management's estimates of future cash flows. These depend on estimates of future production and sales volumes, operating costs, restoration costs, capital expenditure, dividends and other capital management transactions. Judgements are also required about the application of income tax legislation. These judgements and assumptions are subject to risk and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets and deferred tax liabilities recognised on the statement of financial position and the amount of other tax losses and temporary differences not yet recognised. In such circumstances, some or all of the carrying amounts of recognised deferred tax assets and liabilities may require adjustment, resulting in a corresponding credit or charge to the statement of comprehensive income. (ii) Significant accounting estimates and assumptions Estimated impairment of goodwill and intangibles with indefinite useful lives The Group tests whether goodwill and intangibles with indefinite useful lives have suffered any impairment annually, in accordance with the accounting policies stated in note 2(n) and note 2(o). The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of assumptions. Refer to note 13 for details of these assumptions and the potential impact of changes to the assumptions. Share-based payment transactions The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined at grant date using the Black-Scholes Model and taking into account the terms and conditions upon which the instruments were granted. The related assumptions are detailed in note 28. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact expenses and equity. The estimation of the useful lives of assets has been based on historical experience as well as manufacturers' warranties (for plant and equipment), lease terms (for leased equipment) and turnover policies (for motor vehicles). In addition, the condition of the assets is assessed at least once per year and considered against the remaining useful life. Adjustments to useful lives are made when considered necessary. Depreciation charges are included in note 5. Estimated gift card redemption rates The key assumption in measuring the liability for gift cards and vouchers is the expected redemption rates by customers. Expected redemption rates are reviewed annually, and adjustments are made to the expected redemption rates when considered necessary. Onerous lease provisions The Group provides for onerous contracts when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The Group considers whether a lease is potentially onerous by reference to the profitability and projected profitability of a store, and whether the store has been identified for closure prior to lease expiry. The Group estimates the present value of the future lease payments that the Group is presently obligated to make under non-cancellable onerous lease contracts. Supply chain transformation provisions The Group’s consolidation process of its Australian Distribution Centres into one national distribution centre in Truganina, Victoria have resulted in a supply chain transformation provision in which judgements and estimations were made. The Group follows the guidance of AASB 137 Provisions, Contingent Liabilities and Contingent Assets to determine whether a provision is required. A restructuring provision is recognised when a detailed formal plan about the business or part of the business concerned, the location and number of employees affected, a detailed estimate of the associated costs, and appropriate time lines have been established. The people affected have a valid expectation that the restructuring is being carried out or the implementation has been initiated already. Fair value of financial instruments Some of the Group’s assets and liabilities are measured at fair value for financial reporting purposes. In estimating the fair value of an asset or a liability, the Group uses market-observable data to the extent possible, but where this is not feasible, a degree of judgement is required in establishing fair values. The fair value disclosures are detailed in note 3. 45 Premier Investments Limited 45 46     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (d)  SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (CONTINUED) Estimation of useful lives of assets The estimation of the useful lives of assets has been based on historical experience as well as manufacturers' warranties (for plant and equipment), lease terms (for leased equipment) and turnover policies (for motor vehicles). In addition, the condition of the assets is assessed at least once per year and considered against the remaining useful life. Adjustments to useful lives are made when considered necessary. Depreciation charges are included in note 5. Estimated gift card redemption rates The key assumption in measuring the liability for gift cards and vouchers is the expected redemption rates by customers. Expected redemption rates are reviewed annually, and adjustments are made to the expected redemption rates when considered necessary. Onerous lease provisions The Group provides for onerous contracts when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The Group considers whether a lease is potentially onerous by reference to the profitability and projected profitability of a store, and whether the store has been identified for closure prior to lease expiry. The Group estimates the present value of the future lease payments that the Group is presently obligated to make under non-cancellable onerous lease contracts. Supply chain transformation provisions The Group’s consolidation process of its Australian Distribution Centres into one national distribution centre in Truganina, Victoria have resulted in a supply chain transformation provision in which judgements and estimations were made. The Group follows the guidance of AASB 137 Provisions, Contingent Liabilities and Contingent Assets to determine whether a provision is required. A restructuring provision is recognised when a detailed formal plan about the business or part of the business concerned, the location and number of employees affected, a detailed estimate of the associated costs, and appropriate time lines have been established. The people affected have a valid expectation that the restructuring is being carried out or the implementation has been initiated already. Fair value of financial instruments Some of the Group’s assets and liabilities are measured at fair value for financial reporting purposes. In estimating the fair value of an asset or a liability, the Group uses market-observable data to the extent possible, but where this is not feasible, a degree of judgement is required in establishing fair values. The fair value disclosures are detailed in note 3. Annual Report 2015 46 46   NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (e) BASIS OF CONSOLIDATION (e)  BASIS OF CONSOLIDATION (CONTINUED) The consolidated financial statements are those of the consolidated entity, comprising Premier Investments Limited (the parent entity) and its subsidiaries ('the Group') as at the end of each financial year. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has: - - - Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee); Exposure, or rights, to variable returns from its involvement with the investee, and The ability to use its power over the investee to affect its returns. When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: - - - The contractual arrangement with the other vote holders of the investee; Rights arising from other contractual arrangements; The Group’s voting rights and potential voting rights. The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary. Profit or loss and each component of other comprehensive income are attributed to the equity holders of the parent of the Group and to the non-controlling interest, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. Investments in subsidiaries held by Premier Investments Limited are accounted for at cost in the separate financial statements of the parent entity less any impairment losses. Dividends received from subsidiaries are recorded as a component of other revenues in the separate income statement of the parent entity, and do not impact the recorded cost of the investment. A change in ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it: - - - - - - De-recognises the assets (including goodwill) and liabilities of the subsidiary; De-recognises the carrying amount of any non-controlling interests; De-recognises the cumulative translation differences recorded in equity; Recognises the fair value of the consideration received and of any investment retained, Recognises the surplus or deficit in profit or loss; Reclassifies the parent’s share of components previously recognised in other comprehensive income to profit or loss or retained earnings, as appropriate, as would be required if the Group had directly disposed of the related assets or liabilities. (f) INVESTMENT IN ASSOCIATES An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies. The considerations made in determining significant influence are similar to those necessary to determine control over subsidiaries. The Group’s investments in its associates are accounted for using the equity method of accounting in the consolidated financial statements. Under the equity method, investments in the associates are initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Group’s share of net assets of the associate since the acquisition date. Goodwill relating to an associate is included in the carrying amount of the investment and is not amortised. After application of the equity method, the Group determines whether it is necessary to recognise any impairment loss with respect to the Group’s net investment in the associate. The Group’s share of profit or loss of an associate is recognised in the statement of comprehensive income and represents profit or loss after tax and non-controlling interest in the subsidiaries of the associate. When there has been a change recognised directly in the equity of the associate, the Group recognises its share of any change, when applicable, in the statement of changes in equity. Dividends receivable from the associate is recognised in the parent entity’s statement of comprehensive income, while in the consolidated financial statements they reduce the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any unsecured long-term receivables and loans, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on its investment in associates. At each reporting period, the Group determines whether there is objective evidence that the investment in associate is impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value, then recognises the loss in the statement of comprehensive income. 47 Premier Investments Limited 47 48     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (e)  BASIS OF CONSOLIDATION (CONTINUED) A change in ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it: - - - - - - De-recognises the assets (including goodwill) and liabilities of the subsidiary; De-recognises the carrying amount of any non-controlling interests; De-recognises the cumulative translation differences recorded in equity; Recognises the fair value of the consideration received and of any investment retained, Recognises the surplus or deficit in profit or loss; Reclassifies the parent’s share of components previously recognised in other comprehensive income to profit or loss or retained earnings, as appropriate, as would be required if the Group had directly disposed of the related assets or liabilities. (f) INVESTMENT IN ASSOCIATES An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies. The considerations made in determining significant influence are similar to those necessary to determine control over subsidiaries. The Group’s investments in its associates are accounted for using the equity method of accounting in the consolidated financial statements. Under the equity method, investments in the associates are initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Group’s share of net assets of the associate since the acquisition date. Goodwill relating to an associate is included in the carrying amount of the investment and is not amortised. After application of the equity method, the Group determines whether it is necessary to recognise any impairment loss with respect to the Group’s net investment in the associate. The Group’s share of profit or loss of an associate is recognised in the statement of comprehensive income and represents profit or loss after tax and non-controlling interest in the subsidiaries of the associate. When there has been a change recognised directly in the equity of the associate, the Group recognises its share of any change, when applicable, in the statement of changes in equity. Dividends receivable from the associate is recognised in the parent entity’s statement of comprehensive income, while in the consolidated financial statements they reduce the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any unsecured long-term receivables and loans, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on its investment in associates. At each reporting period, the Group determines whether there is objective evidence that the investment in associate is impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value, then recognises the loss in the statement of comprehensive income. Annual Report 2015 48 48   NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (f)  INVESTMENT IN ASSOCIATE (CONTINUED) (i) OPERATING SEGMENTS Upon loss of significant influence over the associate, the Group measures and recognises any retained investment at its fair value. Any differences between the carrying amount of the associate upon loss of significant influence and the fair value of the retained investment and proceeds from disposal is recognised in profit or loss. The reporting date of the associates are currently 30 June and the associates’ accounting policies materially conform to those used by the Group for like transactions and events in similar circumstances. (g) BUSINESS COMBINATIONS Business combinations are accounted for using the acquisition method. The consideration transferred in a business combination shall be measured at fair value, which shall be calculated as the sum of the acquisition-date fair values of the assets transferred by the acquirer, the liabilities incurred by the acquirer to former owners of the acquiree and the equity issued by the acquirer, and the amount of any non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition- related costs are expensed as incurred. When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the Group’s operating and accounting policies and other pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured at fair value as at the acquisition date through profit or loss. Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance with AASB 139 either in profit or loss or in other comprehensive income. If the contingent consideration is to be classified as equity, it should not be remeasured until it is finally settled within equity. (h) CURRENT VERSUS NON-CURRENT CLASSIFICATION The Group presents assets and liabilities in the statement of financial position based on current/non-current classification. An asset is current when it is: - - Expected to be realised or intended to be sold in the normal operating cycle, or primarily held for the purpose of trading, or is expected to be realised within twelve months after the reporting period, or; Cash and cash equivalents unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current. A liability is current when it is: - - Expected to be settled in the normal operating cycle, or primarily held for the purpose of trading, or is due to be settled within twelve months after the reporting period, or; There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified as non-current. Deferred tax assets and liabilities are classified as non-current. (j) FOREIGN CURRENCY TRANSLATION The Group determines and presents operating segments based on the information that is internally provided and used by the chief operating decision maker in assessing the performance of the entity and in determining the allocation of resources. An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. All operating segments’ operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discreet financial information is available. Segment results that are reported to the chief operating decision maker include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly of corporate assets, head office expenses and income tax assets and liabilities. Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, and intangible assets other than goodwill. Both the functional and presentation currency of Premier Investments Limited and its Australian subsidiaries is in Australian dollars. Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date. All exchange differences in the consolidated financial report are taken to the statement of comprehensive income. The New Zealand subsidiaries’ functional currency is New Zealand Dollars. The Singapore subsidiaries’ functional currency is Singapore Dollars. The United Kingdom subsidiaries’ functional currency is Pound Sterling. Just Kor Fashion Group (Pty) Ltd, the South African joint venture, has a functional currency of South African Rand. As at the reporting date the assets and liabilities of the overseas subsidiary are translated into the presentation currency of Premier Investments Limited at the rate of exchange ruling at the reporting date and the statements of comprehensive incomes are translated at the weighted average exchange rates for the period. Exchange variations resulting from the translation are recognised in the foreign currency translation reserve in equity. (k) CASH AND CASH EQUIVALENTS Cash and cash equivalents in the statement of financial position comprise cash on hand and in banks, money market investments readily convertible to cash within two working days and short-term deposits with an original maturity of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. 49 Premier Investments Limited 49 50     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (i) OPERATING SEGMENTS The Group determines and presents operating segments based on the information that is internally provided and used by the chief operating decision maker in assessing the performance of the entity and in determining the allocation of resources. An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. All operating segments’ operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discreet financial information is available. Segment results that are reported to the chief operating decision maker include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly of corporate assets, head office expenses and income tax assets and liabilities. Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, and intangible assets other than goodwill. (j) FOREIGN CURRENCY TRANSLATION Both the functional and presentation currency of Premier Investments Limited and its Australian subsidiaries is in Australian dollars. Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date. All exchange differences in the consolidated financial report are taken to the statement of comprehensive income. The New Zealand subsidiaries’ functional currency is New Zealand Dollars. The Singapore subsidiaries’ functional currency is Singapore Dollars. The United Kingdom subsidiaries’ functional currency is Pound Sterling. Just Kor Fashion Group (Pty) Ltd, the South African joint venture, has a functional currency of South African Rand. As at the reporting date the assets and liabilities of the overseas subsidiary are translated into the presentation currency of Premier Investments Limited at the rate of exchange ruling at the reporting date and the statements of comprehensive incomes are translated at the weighted average exchange rates for the period. Exchange variations resulting from the translation are recognised in the foreign currency translation reserve in equity. (k) CASH AND CASH EQUIVALENTS Cash and cash equivalents in the statement of financial position comprise cash on hand and in banks, money market investments readily convertible to cash within two working days and short-term deposits with an original maturity of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. Annual Report 2015 50 50   NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (l) INVENTORIES (n) GOODWILL (CONTINUED) Inventories are valued at the lower of cost and net realisable value. Where the recoverable amount of the cash-generating unit is less than the carrying amount, Costs incurred in bringing each product to its present location and conditions are accounted for as follows: an impairment loss is recognised. Impairment losses recognised for goodwill are not subsequently reversed. - - Raw materials - purchase cost on a first-in, first-out basis; (o) INTANGIBLE ASSETS (excluding goodwill) Finished goods and work-in-progress - purchase cost plus a proportion of the purchasing department, freight, handling and warehouse costs incurred to deliver the goods to the point of sale. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated direct costs necessary to make the sale. (m) PROPERTY, PLANT AND EQUIPMENT Property, Plant and equipment is stated at historical cost less accumulated depreciation and any accumulated impairment losses. Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows: - - - - Buildings 40 years Store plant and equipment 3 to 10 years Leased plant and equipment 2 to 5 years Other plant and equipment 2 to 20 years Freehold land is not depreciated. The carrying values of property, plant and equipment are reviewed for impairment annually for events or changes in circumstances that may indicate the carrying value may not be recoverable. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. If an indication of impairment exists, and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount. The recoverable amount of property, plant and equipment is the greater of fair value less costs to sell and value-in-use. In assessing value-in-use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the assets. (n) GOODWILL Goodwill acquired in a business combination is initially measured at cost, being the excess of the cost of the business combination over the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. For the purposes of assessing impairment, goodwill acquired in a business combination is, from the date of acquisition, allocated to each of the Group’s cash-generating units that are expected to benefit from the synergies of the combination. Impairment is determined by assessing the recoverable amount of the cash-generating unit to which the goodwill relates. Intangible assets acquired separately or in a business combination are initially measured at cost. The cost of an intangible asset acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets are tested for impairment where an indicator of impairment exists, and in the case of intangibles with indefinite lives impairment is tested annually or where an indicator of impairment exists, either individually or at the cash-generating unit level. Where the carrying amount of an intangible asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. The recoverable amount is the asset’s value-in-use. The recoverable amount is determined for an individual asset, unless the asset’s value-in-use cannot be estimated to be close to its fair value, less costs to sell and it does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cash-generating unit to which the asset belongs. In assessing value-in-use, the estimated future cash flows are discounted to their present value using a post-tax discount rate that reflects current market assessments of the time- value of money and the risks specific to the asset. A summary of the policies applied to the Group’s intangible assets is as follows: Brands Premiums paid on Trademarks & acquisition of leaseholds Licences Useful life Indefinite Finite Indefinite Method used Internally generated/acquired Impairment test/recoverable amount testing Not amortised or Amortised over the Not amortised or revalued Acquired term of the lease Acquired revalued Acquired Annually; for indicators of impairment Annually; for indicators of impairment Amortisation method reviewed at each financial year end; reviewed annually for indicators of impairment 51 Premier Investments Limited 51 52     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (n) GOODWILL (CONTINUED) Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised. Impairment losses recognised for goodwill are not subsequently reversed. (o) INTANGIBLE ASSETS (excluding goodwill) Intangible assets acquired separately or in a business combination are initially measured at cost. The cost of an intangible asset acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets are tested for impairment where an indicator of impairment exists, and in the case of intangibles with indefinite lives impairment is tested annually or where an indicator of impairment exists, either individually or at the cash-generating unit level. Where the carrying amount of an intangible asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. The recoverable amount is the asset’s value-in-use. The recoverable amount is determined for an individual asset, unless the asset’s value-in-use cannot be estimated to be close to its fair value, less costs to sell and it does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cash-generating unit to which the asset belongs. In assessing value-in-use, the estimated future cash flows are discounted to their present value using a post-tax discount rate that reflects current market assessments of the time- value of money and the risks specific to the asset. A summary of the policies applied to the Group’s intangible assets is as follows: Brands Premiums paid on acquisition of leaseholds Trademarks & Licences Useful life Indefinite Finite Indefinite Method used Internally generated/acquired Impairment test/recoverable amount testing Not amortised or revalued Amortised over the term of the lease Not amortised or revalued Acquired Acquired Acquired Annually; for indicators of impairment Annually; for indicators of impairment Amortisation method reviewed at each financial year end; reviewed annually for indicators of impairment Annual Report 2015 52 52   NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (p) OTHER FINANCIAL ASSETS A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. (q) OTHER FINANCIAL LIABILITIES (CONTINUED) (iii) Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously. (i) Loans and Receivables (r) DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such assets are recognised at cost and amortised using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired. (ii) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments as defined by AASB 139. Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognised in profit or loss. (q) OTHER FINANCIAL LIABILITIES All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. (i) Trade and other payables Liabilities for trade creditors and other amounts are recognised and carried at original invoice cost, which is the fair value of the consideration to be paid in the future for goods and services received whether or not billed to the consolidated entity. Trade liabilities are normally settled on terms of between 7 and 90 days. (ii) Loans and borrowings All loans, borrowings and interest-bearing payables are initially recognised at the fair value of the consideration received net of issue costs associated with the borrowing. After initial recognition, such items are subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement. Fees paid on the establishment of loan facilities are amortised over the life of the facility. On-going borrowing costs are expensed as incurred. The Group uses derivative financial instruments (including forward currency contracts and foreign exchange options) to hedge its risks associated with foreign currency fluctuations. Such derivative financial instruments are initially recognised at fair value on the date on which the derivative contract is entered into and are subsequently remeasured at fair value. Any derivative financial instruments acquired through business combinations are re-designated. Derivatives are carried as financial assets when their fair value is positive and as financial liabilities when their fair value is negative. Any gains or losses arising from changes in the fair value of derivatives, except for those that qualify as cash flow hedges, are taken directly to profit or loss for the period. Cash flow hedges Cash flow hedges are hedges of the Group’s exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability that is a firm commitment and that could affect the statement of comprehensive income. The Group’s cash flow hedges that meet the strict criteria for hedge accounting are accounted for by recognising the effective portion of the gain or loss on the hedging instrument directly in equity, while the ineffective portion is recognised in profit or loss. Amounts taken to equity are transferred out of equity and included in the measurement of the hedge transaction (finance costs or inventory purchases) when the forecast transaction occurs. The Group tests each of the designated cash flow hedges for effectiveness on an ongoing basis both retrospectively and prospectively using the ratio offset method. If the testing falls within the 80% to 125% range, the hedge is considered to be highly effective and continues to be designated as a cash flow hedge. At each reporting date, the Group measures ineffectiveness using the ratio offset method. For foreign currency cash flow hedges if the risk is over-hedged, the ineffective portion is taken immediately to other income/expense in the statement of comprehensive income. If the forecast transaction is no longer expected to occur, amounts recognised in equity are transferred to the statement of comprehensive income. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked (due to being ineffective), amounts previously recognised in equity remain in equity until the forecast transaction occurs. (s) BORROWING COSTS Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of the funds. 53 Premier Investments Limited 53 54     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (q) OTHER FINANCIAL LIABILITIES (CONTINUED) (iii) Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously. (r) DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING The Group uses derivative financial instruments (including forward currency contracts and foreign exchange options) to hedge its risks associated with foreign currency fluctuations. Such derivative financial instruments are initially recognised at fair value on the date on which the derivative contract is entered into and are subsequently remeasured at fair value. Any derivative financial instruments acquired through business combinations are re-designated. Derivatives are carried as financial assets when their fair value is positive and as financial liabilities when their fair value is negative. Any gains or losses arising from changes in the fair value of derivatives, except for those that qualify as cash flow hedges, are taken directly to profit or loss for the period. Cash flow hedges Cash flow hedges are hedges of the Group’s exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability that is a firm commitment and that could affect the statement of comprehensive income. The Group’s cash flow hedges that meet the strict criteria for hedge accounting are accounted for by recognising the effective portion of the gain or loss on the hedging instrument directly in equity, while the ineffective portion is recognised in profit or loss. Amounts taken to equity are transferred out of equity and included in the measurement of the hedge transaction (finance costs or inventory purchases) when the forecast transaction occurs. The Group tests each of the designated cash flow hedges for effectiveness on an ongoing basis both retrospectively and prospectively using the ratio offset method. If the testing falls within the 80% to 125% range, the hedge is considered to be highly effective and continues to be designated as a cash flow hedge. At each reporting date, the Group measures ineffectiveness using the ratio offset method. For foreign currency cash flow hedges if the risk is over-hedged, the ineffective portion is taken immediately to other income/expense in the statement of comprehensive income. If the forecast transaction is no longer expected to occur, amounts recognised in equity are transferred to the statement of comprehensive income. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked (due to being ineffective), amounts previously recognised in equity remain in equity until the forecast transaction occurs. (s) BORROWING COSTS Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of the funds. Annual Report 2015 54 54   NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (t) LEASES Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised as an expense in profit or loss. Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term. Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. Operating lease incentives are recognised as a liability when received and subsequently reduced by allocating lease payments between rental expense and reduction of the liability. (u) PROVISIONS Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time-value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time-value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. (v) ONEROUS LEASE PROVISIONS A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from the contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net unavoidable costs of continuing with the contract. Before a provision is established, the Group recognises any impairment loss on the assets associated with the contract. (w) SUPPLY CHAIN TRANSFORMATION PROVISIONS Restructuring provisions are only recognised when general recognition criteria for provisions are fulfilled. Additionally, the Group needs to follow a detailed formal plan about the business or part of the business concerned, the location and number of employees affected, a detailed estimate of the associated costs, and appropriate time line. The people affected have a valid expectation that the restructuring is being carried out or the implementation has been initiated already. (x) EMPLOYEE BENEFITS (i) Wages, salaries and annual leave The provisions for employee entitlements to wages, salaries and annual leave represent the amount which the Group has a present obligation to pay, resulting from employees’ services provided up to the reporting date. The provisions have been calculated at nominal amounts based on current wage and salary rates, and include related on-costs. (ii) Long service leave The liability for long service leave 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 reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Related on-costs have also been included in the liability. Expected future payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity that match as closely as possible the estimated cash outflow. (iii) Retirement benefit obligations All employees of the Group are entitled to benefits from the Group’s superannuation plan on retirement, disability or death. The Group operates a defined contribution plan. Contributions to the plan are recognised as an expense as they become payable. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payment is made available. (y) DEFERRED INCOME (i) Lease Incentives (ii) Deferred rent (z) REVENUE RECOGNITION Lease incentives are capitalised in the financial statements when received and credited to rent expense over the term of the store lease to which they relate. Operating lease expenses are recognised on a straight-line basis over the lease term, which includes the impact of annual fixed rate percentage increases. Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised. (i) Sale of goods Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the customer. Risks and rewards are considered passed to the customer at the point-of-sale in retail stores and at the time of delivery to catalogue and wholesale customers. 55 Premier Investments Limited 55 56     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (x) EMPLOYEE BENEFITS (i) Wages, salaries and annual leave The provisions for employee entitlements to wages, salaries and annual leave represent the amount which the Group has a present obligation to pay, resulting from employees’ services provided up to the reporting date. The provisions have been calculated at nominal amounts based on current wage and salary rates, and include related on-costs. (ii) Long service leave The liability for long service leave 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 reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Related on-costs have also been included in the liability. Expected future payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity that match as closely as possible the estimated cash outflow. (iii) Retirement benefit obligations All employees of the Group are entitled to benefits from the Group’s superannuation plan on retirement, disability or death. The Group operates a defined contribution plan. Contributions to the plan are recognised as an expense as they become payable. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payment is made available. (y) DEFERRED INCOME (i) Lease Incentives Lease incentives are capitalised in the financial statements when received and credited to rent expense over the term of the store lease to which they relate. (ii) Deferred rent Operating lease expenses are recognised on a straight-line basis over the lease term, which includes the impact of annual fixed rate percentage increases. (z) REVENUE RECOGNITION Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised. (i) Sale of goods Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the customer. Risks and rewards are considered passed to the customer at the point-of-sale in retail stores and at the time of delivery to catalogue and wholesale customers. Annual Report 2015 56 56   NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (z) REVENUE RECOGNITION (CONTINUED) (ii) Interest revenue (aa) INCOME TAX (CONTINUED) Revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. (iii) Dividends Revenue is recognised when the Group’s right to receive the payment is established. (iv) Lay-by sales The Group has a history of most lay-by sales in retail stores being completed following receipt of an initial deposit. Therefore, the Group has elected to recognise revenue on lay-by sales upon receipt of a deposit. (v) Gift cards Revenue from the sale of gift cards is recognised upon redemption of the gift card, or when the card is no longer expected to be redeemed, based on analysis of historical non-redemption rates. (aa) INCOME TAX Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities based on the current period’s taxable income. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted by the reporting date. Current income tax relating to items recognised directly in equity is recognised in equity and not in the income statement. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences except: - - When the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and When the taxable temporary difference is associated with investments in subsidiaries, associates and interests in joint ventures, and the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry- forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax credits and unused tax losses, can be utilised except: - When the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and - Where the deductible temporary difference is associated with investments in subsidiaries, associates and interest in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised. The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. Tax consolidation Effective 1 July 2003, Premier Investments Limited and its wholly owned Australian controlled entities implemented a tax consolidation group. The head entity, Premier Investments Limited and the controlled entities continue to account for their own current and deferred tax amounts. The Group has applied the Group allocation approach to determining the appropriate amount of current taxes and deferred taxes to allocate to members of the tax consolidated group. The agreement provides for the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. At reporting date the possibility of default is remote. In addition to its own current and deferred tax amounts, Premier Investments 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. 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. 57 Premier Investments Limited 57 58     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (aa) INCOME TAX (CONTINUED) Deferred income tax assets are recognised for all deductible temporary differences, carry- forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax credits and unused tax losses, can be utilised except: - - When the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and Where the deductible temporary difference is associated with investments in subsidiaries, associates and interest in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised. The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. Tax consolidation Effective 1 July 2003, Premier Investments Limited and its wholly owned Australian controlled entities implemented a tax consolidation group. The head entity, Premier Investments Limited and the controlled entities continue to account for their own current and deferred tax amounts. The Group has applied the Group allocation approach to determining the appropriate amount of current taxes and deferred taxes to allocate to members of the tax consolidated group. The agreement provides for the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. At reporting date the possibility of default is remote. In addition to its own current and deferred tax amounts, Premier Investments 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. 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. Annual Report 2015 58 58   NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (bb) OTHER TAXES (ee) SHARE-BASED REMUNERATION SCHEMES (CONTINUED) At each subsequent reporting date until vesting, the cumulative charge to the statement of comprehensive income is the product of: (i) The grant date fair value of the award; (ii) The extent to which the vesting period has expired; and (iii) The current best estimate of the number of awards that will vest as at the grant date. The charge to profit and loss for the period is the cumulative amount as calculated above less the amounts already charged in previous periods. There is a corresponding entry to equity. No expense is recognised for awards that do not ultimately vest, except for equity settled transactions for which vesting is conditional upon a market or non-vesting condition. These are treated as vested, irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and service conditions are met. (ff) COMPARATIVES The current reporting period, 27 July 2014 to 25 July 2015, represents 52 weeks and the comparative reporting period is from 28 July 2013 to 26 July 2014 which also represents 52 weeks. From time to time, management may change prior year comparatives to reflect classifications applied in the current year. Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST) except: - - When the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position. Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. (cc) CONTRIBUTED EQUITY Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. (dd) EARNINGS PER SHARE Basic earnings per share are calculated as net profit attributable to members of the parent divided by the weighted average number of ordinary shares. Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted for costs of servicing equity, the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses, and other non- discretionary changes in revenue or expenses during the period that would result from the dilution of potential ordinary shares, divided by the weighted average number of ordinary shares and dilutive potential ordinary shares. (ee) SHARE-BASED REMUNERATION SCHEMES The Group provides benefits to its employees in the form of share-based payments, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions). The plans in place to provide these benefits are a long-term incentive plan known as the performance rights plan (“PRP”). The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instrument at the date at which they are granted. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled (the vesting period), ending on the date on which the relevant employees become fully entitled to the award (the vesting date). 59 Premier Investments Limited 59 60     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (ee) SHARE-BASED REMUNERATION SCHEMES (CONTINUED) At each subsequent reporting date until vesting, the cumulative charge to the statement of comprehensive income is the product of: (i) The grant date fair value of the award; (ii) The extent to which the vesting period has expired; and (iii) The current best estimate of the number of awards that will vest as at the grant date. The charge to profit and loss for the period is the cumulative amount as calculated above less the amounts already charged in previous periods. There is a corresponding entry to equity. No expense is recognised for awards that do not ultimately vest, except for equity settled transactions for which vesting is conditional upon a market or non-vesting condition. These are treated as vested, irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and service conditions are met. (ff) COMPARATIVES The current reporting period, 27 July 2014 to 25 July 2015, represents 52 weeks and the comparative reporting period is from 28 July 2013 to 26 July 2014 which also represents 52 weeks. From time to time, management may change prior year comparatives to reflect classifications applied in the current year. Annual Report 2015 60 60   NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 3 FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES The Group’s principal financial instruments comprise cash and short-term deposits, derivative financial instruments, receivables, payables, bank overdraft and interest-bearing liabilities. RISK EXPOSURES AND RESPONSES The Group manages its exposure to key financial risks in accordance with Board-approved policies which are reviewed annually including, liquidity risk, foreign currency risk, interest rate risk and credit risk. The objective of the policy is to support the delivery of the Group’s financial targets whilst protecting future financial security. The Group uses different methods to measure and manage different types of risks to which it is exposed. These include, monitoring levels of exposure to interest rate and foreign exchange risk and assessment of market forecasts for interest rate and foreign exchange prices. Ageing analyses and monitoring of specific credit allowances are undertaken to manage credit risk, liquidity risk is monitored through development of future cash flow forecast projections. Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2 of the financial statements. Interest rate risk The Group’s exposure to market interest rates relates primarily to its cash and cash equivalents that it holds and long term debt obligations. At reporting date, the Group had the following mix of financial assets and liabilities exposed to variable interest rate risk that are not designated in cash flow hedges: Financial Assets Cash Other receivables Financial Liabilities Bank loans AUD Bank loans (NZD 20.0 million) Net Financial Assets NOTES 26 16 16 CONSOLIDATED 2015 $’000 281,572 2,464 284,036 86,623 18,018 104,641 179,395 2014 $’000 313,308 3,596 316,904 101,000 18,477 119,477 197,427 61 Premier Investments Limited 61   NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 3 FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES RISK EXPOSURES AND RESPONSES (CONTINUED) Interest rate risk (Continued) The Group’s objective of managing interest rate risk is to minimise the entity’s exposure to fluctuations in interest rates that might impact its interest revenue and cash flow. To manage this risk, the Group locks a portion of the Group’s cash and cash equivalents into term deposits. The maturity of term deposits is determined based on the Group’s cash flow forecast. The Group has conducted a sensitivity analysis of the Group’s exposure to interest rate risk. The sensitivity analysis below has been determined based on the exposure to interest rates from financial instruments at the reporting date and the stipulated change taking place at the beginning of the financial year and being held constant throughout the reporting period, holding all other variables constant. A 100 (2014:100) basis point increase and decrease in Australian interest rates represents management's assessment of the possible change in interest rates. A positive number indicates an increase in profit after tax, whilst a negative number indicates a reduction in profit after tax. Judgements of reasonably possible movements: CONSOLIDATED +1.0% (100 basis points) -1.0% (100 basis points) POST-TAX PROFIT HIGHER/(LOWER) 2015 $000 1,236 (1,236) 2014 $000 1,357 (1,357) The movement in profits are due to lower interest expense and interest income from variable rates and net cash balances. Significant assumptions used in the interest rate sensitivity analysis include:   Reasonably possible movements in interest rates were determined based on the Group’s current credit rating and mix of debt in Australian and foreign countries, relationships with financial institutions, the level of debt that is expected to be renewed as well as a review of the last two years’ historical movements and economic forecasters’ expectations. The net exposure at reporting date is representative of what the Group was and is expecting to be exposed to in the next twelve months. Annual Report 2015 62 62   NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 3 FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES 3 FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES RISK EXPOSURES AND RESPONSES (CONTINUED) Credit risk The overwhelming majority of the Group’s sales are on cash or cash equivalent terms with settlement within 24 hours. As such, the Group’s exposure to credit risk is minimal. The Group trades only with recognised, creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant. There are no significant concentrations of credit risk within the Group and financial instruments are spread amongst a number of financial institutions. With respect to credit risk arising from the other financial assets of the Group, which comprise mainly cash and cash equivalents and certain derivative instruments, the Group’s exposure to credit risk arises from default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. Since the Group trades only with recognised creditworthy third parties, there is no requirement for collateral by either party. Credit risk for the Group also arises from financial guarantees that members of the Group act as guarantor. At 25 July 2015, the maximum exposure to credit risk of the Group is the amount guaranteed as disclosed in note 34. Foreign operations The Group has operations in New Zealand. As a result, movements in the Australian Dollar and New Zealand Dollar (“AUD/NZD”) exchange rate affect the Group’s statement of financial position and results from operations. The Group has obtained New Zealand Dollar denominated financing facilities from a financial institution to provide a natural hedge of the Group’s exposure to movements in the AUD/NZD on translation of the New Zealand statement of financial position. In addition, the Group, on occasion, hedges its cash flow exposure to movements in the AUD/NZD. The Group has an investment, classified as held for sale, and a current receivable denominated in South African Rand (ZAR) arising from its investment in Just Kor Fashion Group (Pty) Ltd. As a result of these transactions, movements in the AUD/ZAR exchange rates can affect the Group’s statement of financial position. In addition, the Group, on occasion, hedges its cash flow exposure to movements in the AUD/ZAR. The Group also has operations in Singapore. As a result, movement in the Australian Dollar and Singapore Dollar (“AUD/SGD”) exchange rates can affect the Group’s statement of financial position and results from operations. The Group, on occasion, hedges its cash flow exposure in movements in the AUD/SGD. The group commenced operations in the United Kingdom in the 2014 financial year. As a result, movement in the Australian Dollar and Pound Sterling (“AUD/GBP”) exchange rates can affect the Group’s statement of financial position and results from operations. The Group, on occasion, hedges its cash flow exposure to movements in the AUD/GBP. Foreign currency transactions The Group has exposures to foreign currencies principally arising from purchases by operating entities in currencies other than the functional currency. Approximately 60% of the Group’s purchases are denominated in USD, which is not the functional currency of the Australian, New Zealand, Singapore or United Kingdom operating entities. RISK EXPOSURES AND RESPONSES (CONTINUED) Foreign currency transactions (Continued) The Group considers its exposure to USD arising from the purchases of inventory to be a long- term and ongoing exposure. In order to protect against exchange rate movements, the Group enters into forward exchange contracts to purchase US Dollars.  The Group’s foreign currency risk management policy provides guidelines for the term over which foreign currency hedging will be undertaken for part or all of the risk. This term cannot exceed two years. Factors taken into account include: the implied market volatility for the currency exposure being hedged and the cost of hedging, relative to long-term indicators; the level of the Australian Dollar, New Zealand Dollar, Singapore Dollar and Pound Sterling against the currency risk being hedged, relative to long-term indicators; - - - the Group’s strategic decision-making horizon; and - other factors considered relevant by the board. The policy requires periodic reporting to the Audit and Risk Committee, and its application is subject to oversight from the Chairman of the Audit and Risk Committee or the Chairman of the Board. The policy allows the use of forward exchange contracts and foreign currency options. At reporting date, the Group had the following exposures to movements in the United States Dollar, New Zealand Dollar, Singapore Dollar and Pound Sterling: USD EXPOSURE NZD EXPOSURE SGD EXPOSURE GBP EXPOSURE CONSOLIDATED CONSOLIDATED CONSOLIDATED CONSOLIDATED 2015 $’000 2014 $’000 2015 $’000 2014 $’000 2015 $’000 2014 $’000 2015 $’000 2014 $’000 FINANCIAL ASSETS Cash and cash equivalents Trade and other receivables 156 195 648 340 Derivative financial assets 32,566 1,596 FINANCIAL LIABILITIES 3,822 2,102 2,670 1,750 2,933 4,044 - - - - - - - - - - - - - - - - - - - - - - Trade and other payables 22,781 20,765 4,803 4,031 372 277 539 300 Derivative financial liabilities 127 6,801 Bank loans - - 18,018 18,477 Net exposure 10,009 (24,982) (18,999) (20,406) 2,298 1,473 2,394 3,744 22,908 27,566 22,821 22,508 372 277 539 300 32,917 2,584 3,822 2,102 2,670 1,750 2,933 4,044 The Group has forward currency contracts designated as cash flow hedges that are subject to movements through equity and profit and loss respectively as foreign exchange rates move (refer to Note 30). The Group has exposure to the South African Rand through trade and other receivables from Just Kor Fashion Group (Pty) Ltd totalling $1,378,000 (2014: $2,157,000). 63 Premier Investments Limited 63 64       NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 3 FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES RISK EXPOSURES AND RESPONSES (CONTINUED) Foreign currency transactions (Continued) The Group considers its exposure to USD arising from the purchases of inventory to be a long- term and ongoing exposure. In order to protect against exchange rate movements, the Group enters into forward exchange contracts to purchase US Dollars.  The Group’s foreign currency risk management policy provides guidelines for the term over which foreign currency hedging will be undertaken for part or all of the risk. This term cannot exceed two years. Factors taken into account include: - - - the implied market volatility for the currency exposure being hedged and the cost of hedging, relative to long-term indicators; the level of the Australian Dollar, New Zealand Dollar, Singapore Dollar and Pound Sterling against the currency risk being hedged, relative to long-term indicators; the Group’s strategic decision-making horizon; and - other factors considered relevant by the board. The policy requires periodic reporting to the Audit and Risk Committee, and its application is subject to oversight from the Chairman of the Audit and Risk Committee or the Chairman of the Board. The policy allows the use of forward exchange contracts and foreign currency options. At reporting date, the Group had the following exposures to movements in the United States Dollar, New Zealand Dollar, Singapore Dollar and Pound Sterling: USD EXPOSURE NZD EXPOSURE SGD EXPOSURE GBP EXPOSURE CONSOLIDATED CONSOLIDATED CONSOLIDATED CONSOLIDATED 2015 $’000 2014 $’000 2015 $’000 2014 $’000 2015 $’000 2014 $’000 2015 $’000 2014 $’000 FINANCIAL ASSETS Cash and cash equivalents Trade and other receivables 156 195 648 340 Derivative financial assets 32,566 1,596 3,822 2,102 2,670 1,750 2,933 4,044 - - - - - - - - - - - - 32,917 2,584 3,822 2,102 2,670 1,750 2,933 4,044 FINANCIAL LIABILITIES Trade and other payables 22,781 20,765 4,803 4,031 372 277 539 300 Derivative financial liabilities 127 6,801 - - Bank loans - - 18,018 18,477 - - - - - - - - Net exposure 10,009 (24,982) (18,999) (20,406) 2,298 1,473 2,394 3,744 22,908 27,566 22,821 22,508 372 277 539 300 The Group has forward currency contracts designated as cash flow hedges that are subject to movements through equity and profit and loss respectively as foreign exchange rates move (refer to Note 30). The Group has exposure to the South African Rand through trade and other receivables from Just Kor Fashion Group (Pty) Ltd totalling $1,378,000 (2014: $2,157,000). Annual Report 2015 64 64     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 3 FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES 3 FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES RISK EXPOSURES AND RESPONSES (CONTINUED) Foreign currency risk The following sensitivity is based on the foreign exchange risk exposures in existence at the reporting date: POST-TAX PROFIT HIGHER/(LOWER) OTHER COMPREHENSIVE INCOME HIGHER/(LOWER) Judgements of reasonably possible movements: CONSOLIDATED AUD/USD + 2.5% AUD/USD – 10.0% AUD/NZD + 2.5% AUD/NZD – 10.0% AUD/ZAR + 2.5% AUD/ZAR – 10.0% AUD/SGD + 2.5% AUD/SGD –10.0% AUD/GBP + 2.5% AUD/GBP –10.0% 2015 $000 (311) 1,318 463 (2,111) (34) 153 (56) 255 (58) 266 2014 $000 (105) 478 498 (2,267) (53) 240 (36) 164 (91) 416 2015 $000 (4,023) 16,997 - - - - - - - - 2014 $000 (4,063) 18,417 - - - - - - - - Significant assumptions used in the foreign currency exposure sensitivity analysis include:     Reasonably possible movements in foreign exchange rates were determined based on a review of the last two years historical movements and economic forecaster’s expectations. The net exposure at reporting date is representative of what the Group was and is expecting to be exposed to in the next twelve months from reporting date. The effect on other comprehensive income is the effect on the cash flow hedge reserve, and/or the foreign currency translation reserve. The sensitivity does not include financial instruments that are non-monetary items as these are not considered to give rise to currency risk. Liquidity risk Liquidity risk refers to the risk of encountering difficulties in meeting obligations associated with financial liabilities. Liquidity risk management is associated with ensuring that there are sufficient funds available to meet financial commitments in a timely manner and planning for unforeseen events which may curtail cash flows and cause pressure on liquidity. The Group keeps its short, medium and long term funding requirements under constant review. Its policy is to have sufficient committed funds available to meet medium term requirements, with flexibility and headroom to make acquisitions for cash in the event an opportunity should arise. RISK EXPOSURES AND RESPONSES (CONTINUED) Liquidity risk (Continued) The Group has at reporting date $35 million (2014: $27 million) cash held in deposit with 11am at call term and the remaining $246 million (2014: $286 million) cash held in deposit with maturity terms ranging from 30 to 180 days. Hence management believe there is no significant exposure to liquidity risk at 25 July 2015 and 26 July 2014. The Group aims to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans and finance leases with a variety of counterparties. The remaining contractual maturities of the Group’s financial liabilities are: Maturity < 6 months Maturity 6–12 months Maturity 12–24 months Maturity > 24 months CONSOLIDATED 2015 $’000 196,771 103,123 19,605 105,018 424,517 2014 $’000 164,807 203,773 27,565 19,000 415,145 Fair value of financial assets and liabilities The Group measures financial instruments, such as derivatives and assets held for sale, at fair value at each reporting date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place in either the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability, which is accessible to the Group. The fair value of an asset or liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. The fair value of financial assets and financial liabilities is based on market prices (where a market exists) or using other widely accepted methods of valuation. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole: Level 1 – the fair value is calculated using quoted price in active markets. Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices). Level 3 – the fair value is estimated using inputs for the asset or liability that are not based on observable market data. 65 Premier Investments Limited 65 66     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 3 FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES RISK EXPOSURES AND RESPONSES (CONTINUED) Liquidity risk (Continued) The Group has at reporting date $35 million (2014: $27 million) cash held in deposit with 11am at call term and the remaining $246 million (2014: $286 million) cash held in deposit with maturity terms ranging from 30 to 180 days. Hence management believe there is no significant exposure to liquidity risk at 25 July 2015 and 26 July 2014. The Group aims to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans and finance leases with a variety of counterparties. The remaining contractual maturities of the Group’s financial liabilities are: Maturity < 6 months Maturity 6–12 months Maturity 12–24 months Maturity > 24 months CONSOLIDATED 2015 $’000 196,771 103,123 19,605 105,018 424,517 2014 $’000 164,807 203,773 27,565 19,000 415,145 Fair value of financial assets and liabilities The Group measures financial instruments, such as derivatives and assets held for sale, at fair value at each reporting date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place in either the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability, which is accessible to the Group. The fair value of an asset or liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. The fair value of financial assets and financial liabilities is based on market prices (where a market exists) or using other widely accepted methods of valuation. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole: Level 1 – the fair value is calculated using quoted price in active markets. Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices). Level 3 – the fair value is estimated using inputs for the asset or liability that are not based on observable market data. Annual Report 2015 66 66   NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 3 FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES RISK EXPOSURES AND RESPONSES (CONTINUED) Fair value of financial assets and liabilities (Continued) The following table provides the fair value measurement hierarchy of the Group’s financial assets and liabilities: CONSOLIDATED FINANCIAL YEAR ENDED 25 JULY 2015 FINANCIAL YEAR ENDED 26 JULY 2014 QUOTED MARKET PRICE VALUATION TECHNIQUE – MARKET OBSERVABLE INPUTS VALUATION TECHNIQUE – NON MARKET OBSERVABLE INPUTS TOTAL QUOTED MARKET PRICE VALUATION TECHNIQUE – MARKET OBSERVABLE INPUTS VALUATION TECHNIQUE – NON MARKET OBSERVABLE INPUTS TOTAL (LEVEL 1) (LEVEL 2) (LEVEL 3) (LEVEL 1) (LEVEL 2) (LEVEL 3) $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 FINANCIAL ASSETS Asset classified as held for sale Foreign Exchange Contracts FINANCIAL LIABILITIES Foreign Exchange Contracts - - - - - - 1,000 1,000 32,566 - 32,566 32,566 1,000 33,566 127 127 - - 127 127 - - - - - - 1,596 1,596 6,801 6,801 - - - - - - 1,596 1,596 6,801 6,801 There have been no transfers between Level 1 and Level 2 during the financial year. At 25 July 2015 and 26 July 2014 the fair value of cash and cash equivalents, short-term receivables and payables approximates their carrying value. The carrying value of interest bearing liabilities is assumed to approximate the fair value, being the amount at which the liability could be settled in a current transaction between willing parties. Foreign exchange contracts are initially recognised in the statement of financial position at fair value on the date which the contract is entered into, and subsequently remeasured to fair value. Accordingly, the carrying amounts of forward exchange contracts approximate their fair values at the reporting date. Foreign exchange contracts are measured based on observable spot exchange rates, the yield curves of the respective currencies as well as the currency basis spread between the respective currencies. 4 REVENUE AND OTHER INCOME REVENUE Revenue from sale of goods Revenue from sale of goods to associate TOTAL REVENUE FROM SALE OF GOODS OTHER REVENUE Membership program fees Other sundry revenue INTEREST Other persons Associate Total Interest TOTAL OTHER REVENUE TOTAL REVENUE OTHER INCOME Gain on ineffective cash flow hedges Royalty and licence fees Other persons Associate Insurance proceeds Other TOTAL OTHER INCOME TOTAL INCOME CONSOLIDATED 2015 $’000 2014 $’000 945,706 1,956 947,662 385 17 9,680 148 9,828 10,230 957,892 2,224 99 - 159 1,495 3,977 961,869 888,426 4,144 892,570 465 20 10,848 291 11,139 11,624 904,194 - 821 266 427 384 1,898 906,092 67 Premier Investments Limited 67 68     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 4 REVENUE AND OTHER INCOME REVENUE Revenue from sale of goods Revenue from sale of goods to associate TOTAL REVENUE FROM SALE OF GOODS OTHER REVENUE Membership program fees Other sundry revenue INTEREST Other persons Associate Total Interest TOTAL OTHER REVENUE TOTAL REVENUE OTHER INCOME Gain on ineffective cash flow hedges Royalty and licence fees Other persons Associate Insurance proceeds Other TOTAL OTHER INCOME TOTAL INCOME CONSOLIDATED 2015 $’000 2014 $’000 945,706 1,956 947,662 385 17 9,680 148 9,828 10,230 957,892 2,224 99 - 159 1,495 3,977 961,869 888,426 4,144 892,570 465 20 10,848 291 11,139 11,624 904,194 - 821 266 427 384 1,898 906,092 Annual Report 2015 68 68   NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) CONSOLIDATED 5 EXPENSES AND LOSSES (CONTINUED) NOTES 2015 $’000 2014 $’000 5 EXPENSES AND LOSSES 12 12 12 13 EXPENSES DEPRECIATION AND IMPAIRMENT OF NON-CURRENT ASSETS Depreciation of property, plant and equipment Amortisation of property, plant and equipment under lease Impairment of property, plant and equipment TOTAL DEPRECIATION AND IMPAIRMENT OF NON-CURRENT ASSETS AMORTISATION OF NON-CURRENT ASSETS Amortisation of leasehold premiums TOTAL DEPRECIATION, IMPAIRMENT AND AMORTISATION FINANCE COSTS Finance charges payable under finance leases Interest on bank loans and overdraft Provision for discount adjustment on onerous leases TOTAL FINANCE COSTS OPERATING LEASE EXPENSES Minimum lease payments – operating leases Contingent rentals TOTAL OPERATING LEASE EXPENSES OTHER EXPENSES INCLUDE: Share-based payments expense Foreign exchange losses Loss on ineffective cash flow hedges Net loss on disposal of property, plant and equipment 21,797 21,132 47 771 47 697 22,615 21,876 62 65 22,677 21,941 28 5,697 13 5,738 163,543 30,269 193,812 801 73 - 758 25 6,245 41 6,311 154,541 27,642 182,183 898 345 625 426 SUPPLY CHAIN TRANSFORMATION In the 2014 financial year, the Group consolidated its Australian Distribution Centres into one national distribution centre in Truganina, Victoria. As a result of this transformation, expenses totalling $4.5 million were incurred in the 2014 financial year. EXPENSE ASSOCIATED WITH DISPOSAL OF ASSET HELD FOR SALE During the year, the Group resolved to dispose of its 50% interest in a joint venture entity, Just Kor Fashion Group (Pty) Ltd, which is involved in retailing of the Jay Jays concept in South Africa. The commercial terms of the sale has been agreed as at year-end, with transfer of the consideration completed in August 2015. As a result of the disposal, the Group reclassified its investment in associate to an asset classified as held for sale in the current financial year. The Group incurred an impairment loss of $765,000 on revaluing its investment classified as held for sale at fair value. Other costs associated with the sale of the investment amounted to $959,000. Refer to note 11 for further information on the asset held for sale at year-end. 6 INCOME TAX The major components of income tax expense are: (a) INCOME TAX RECOGNISED IN PROFIT AND LOSS CURRENT INCOME TAX Current income tax charge previous years DEFERRED INCOME TAX Adjustment in respect of current income tax of Relating to origination and reversal of temporary differences previous years Adjustments in respect of current income tax of INCOME TAX EXPENSE REPORTED IN THE STATEMENT OF COMPREHENSIVE INCOME (b) STATEMENT OF CHANGES IN EQUITY Deferred income tax related to items charged (credited) directly to equity: Net deferred income tax on movements on cash- CONSOLIDATED 2015 $’000 2014 $’000 30,776 (1,031) (1,057) 155 25,936 (74) (497) - 28,843 25,365 flow hedges EQUITY INCOME TAX EXPENSE (BENEFIT) REPORTED IN 10,612 10,612 (6,431) (6,431) 69 Premier Investments Limited 69 70     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 5 EXPENSES AND LOSSES (CONTINUED) EXPENSE ASSOCIATED WITH DISPOSAL OF ASSET HELD FOR SALE During the year, the Group resolved to dispose of its 50% interest in a joint venture entity, Just Kor Fashion Group (Pty) Ltd, which is involved in retailing of the Jay Jays concept in South Africa. The commercial terms of the sale has been agreed as at year-end, with transfer of the consideration completed in August 2015. As a result of the disposal, the Group reclassified its investment in associate to an asset classified as held for sale in the current financial year. The Group incurred an impairment loss of $765,000 on revaluing its investment classified as held for sale at fair value. Other costs associated with the sale of the investment amounted to $959,000. Refer to note 11 for further information on the asset held for sale at year-end. 6 (a) INCOME TAX The major components of income tax expense are: INCOME TAX RECOGNISED IN PROFIT AND LOSS CURRENT INCOME TAX Current income tax charge Adjustment in respect of current income tax of previous years DEFERRED INCOME TAX Relating to origination and reversal of temporary differences Adjustments in respect of current income tax of previous years INCOME TAX EXPENSE REPORTED IN THE STATEMENT OF COMPREHENSIVE INCOME (b) STATEMENT OF CHANGES IN EQUITY Deferred income tax related to items charged (credited) directly to equity: Net deferred income tax on movements on cash- flow hedges INCOME TAX EXPENSE (BENEFIT) REPORTED IN EQUITY CONSOLIDATED 2015 $’000 2014 $’000 30,776 (1,031) (1,057) 155 25,936 (74) (497) - 28,843 25,365 10,612 10,612 (6,431) (6,431) Annual Report 2015 70 70   NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 6 (c) INCOME TAX (CONTINUED) NUMERICAL RECONCILIATION BETWEEN AGGREGATE TAX EXPENSE RECOGNISED IN THE STATEMENT OF COMPREHENSIVE INCOME AND TAX EXPENSE CALCULATED PER THE STATUTORY INCOME TAX RATE A reconciliation between tax expense and the product of accounting profit before tax multiplied by the Group’s applicable income tax rate is as follows: Accounting profit before income tax At the Parent Entity’s statutory income tax rate of 30% (2014: 30%) Adjustment in respect of current income tax of previous years Effect of exchange rates Expenditure not allowable for income tax purposes Effect of different rates of tax on overseas income Income not assessable for tax purposes Other AGGREGATE INCOME TAX EXPENSE (d) RECOGNISED DEFERRED TAX ASSETS AND LIABILITIES DEFERRED TAX RELATES TO THE FOLLOWING: CONSOLIDATED 2015 $’000 2014 $’000 116,945 35,084 (1,031) (337) 43 (533) (3,849) (534) 28,843 98,365 29,510 (74) (358) 39 29 (3,761) (20) 25,365 Intangibles Foreign currency balances - (5) (969) 204 Potential capital gains tax on financial investments (46,322) (44,637) Deferred gains and losses on foreign exchange contracts Inventory provisions Deferred income Employee provisions Other receivables and prepayments Property, plant and equipment R&D depreciation equipment Leased plant and equipment Other Lease liability (9,731) 13 5,100 5,109 (262) (4,817) - (4) 106 4 1,589 468 3,962 4,874 (96) (6,539) (33) (18) 736 20 NET DEFERRED TAX LIABILITIES (50,809) (40,439) 6 (d) INCOME TAX (CONTINUED) RECOGNISED DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED) REFLECTED IN THE STATEMENT OF FINANCIAL POSITION AS FOLLOWS: Deferred tax assets Deferred tax liabilities NET DEFERRED TAX LIABILITIES 7 DIVIDENDS PAID AND PROPOSED RECOGNISED AMOUNTS Declared and paid during the year Interim franked dividends for 2015: 21 cents per share (2014: 20 cents) Special franked dividends for 2015: 9 cents per share (2014: nil) Final franked dividends for 2014: 20 cents per share (2013: 19 cents) UNRECOGNISED AMOUNTS Final franked dividend for 2015: FRANKING CREDIT BALANCE The amount of franking credits available for the subsequent financial year are: - - franking account balance as at the end of the financial year at 30% (2014: 30%) franking credits that will arise from the payment of income tax payable (receivable) as at the end of the financial year - franking debits that will arise from the payment of dividends as at the end of the financial year  TOTAL FRANKING CREDIT BALANCE CONSOLIDATED 2015 $’000 2014 $’000 3,745 (54,554) (50,809) 12,147 (52,586) (40,439) 32,823 14,067 31,143 31,063 - 29,499 193,190 204,477 29,042 23,035 (14,074) 208,158 (13,347) 214,165 21 cents per share (2014: 20 cents) 32,840 31,143 The tax rate at which paid dividends have been franked is 30% (2014: 30%). Dividends proposed will be franked at the rate of 30% (2014: 30%). 71 Premier Investments Limited 71 72     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 6 (d) INCOME TAX (CONTINUED) RECOGNISED DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED) REFLECTED IN THE STATEMENT OF FINANCIAL POSITION AS FOLLOWS: Deferred tax assets Deferred tax liabilities NET DEFERRED TAX LIABILITIES 7 DIVIDENDS PAID AND PROPOSED RECOGNISED AMOUNTS Declared and paid during the year Interim franked dividends for 2015: 21 cents per share (2014: 20 cents) Special franked dividends for 2015: 9 cents per share (2014: nil) Final franked dividends for 2014: 20 cents per share (2013: 19 cents) UNRECOGNISED AMOUNTS Final franked dividend for 2015: CONSOLIDATED 2015 $’000 2014 $’000 3,745 (54,554) (50,809) 12,147 (52,586) (40,439) 32,823 14,067 31,143 31,063 - 29,499 21 cents per share (2014: 20 cents) 32,840 31,143 FRANKING CREDIT BALANCE The amount of franking credits available for the subsequent financial year are: - - - franking account balance as at the end of the financial year at 30% (2014: 30%) franking credits that will arise from the payment of income tax payable (receivable) as at the end of the financial year franking debits that will arise from the payment of dividends as at the end of the financial year  TOTAL FRANKING CREDIT BALANCE 193,190 204,477 29,042 23,035 (14,074) 208,158 (13,347) 214,165 The tax rate at which paid dividends have been franked is 30% (2014: 30%). Dividends proposed will be franked at the rate of 30% (2014: 30%). Annual Report 2015 72 72   NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 8 TRADE AND OTHER RECEIVABLES CURRENT Sundry debtors Associate Carrying amount of trade and other receivables NON-CURRENT Associate Carrying amount of trade and other receivables (a) Impairment losses CONSOLIDATED 2015 $’000 2014 $’000 12,963 1,378 14,341 - - 11,002 1,153 12,155 1,004 1,004 Receivables are non-interest-bearing and are generally on 30 to 60 day terms. A provision for impairment loss is recognised where there is objective evidence that an individual receivable balance is impaired. No impairment loss has been recognised by the Group during the financial year ended 25 July 2015 (2014: $nil). During the year, no bad debt expense (2014: $nil) was recognised. Other balances within trade and other receivables do not contain impaired assets and are not past due. It is expected that these other balances will be received when due. (b) Related party receivables For terms and conditions of related party receivables refer to Note 27. (c) Fair value and credit risk Due to the short-term nature of these receivables, their carrying value is assumed to approximate their fair value. (d) Foreign exchange and interest rate risk Detail regarding foreign exchange and interest rate risk is disclosed in Note 3. CONSOLIDATED 2015 $’000 2014 $’000 9 INVENTORIES The valuation policy adopted in respect of the following is set out in Note 2(l) Raw materials Finished goods TOTAL INVENTORIES AT THE LOWER OF COST AND NET REALISABLE VALUE - 111,814 111,814 73 Premier Investments Limited 491 98,005 98,496 73 10 OTHER ASSETS CURRENT Deposits and prepayments TOTAL OTHER CURRENT ASSETS 11 ASSET CLASSIFIED AS HELD FOR SALE Investment in Just Kor Fashion Group (Pty) Ltd TOTAL ASSETS HELD FOR SALE CONSOLIDATED 2015 $’000 2014 $’000 6,309 6,309 1,000 1,000 5,215 5,215 - - INVESTMENT IN JUST KOR FASHION GROUP (PTY) LTD Just Jeans Group Pty Ltd, a subsidiary of Premier Investments Limited, has a 50% interest in a joint venture entity, Just Kor Fashion Group (Pty) Ltd, which is involved in retailing of the Jay Jays concept in South Africa. During the second half of the year, the Group resolved to dispose of its 50% interest in the joint venture entity. As a result of the disposal, the group ceased equity accounting for its investment in the joint venture and classified the fair value of the investment as an asset held for sale. The commercial terms of the sale was agreed at the end of the financial year, with settlement of the fair value completed in August 2015. As a result of the reclassification from investment in associate to asset held for sale, and the subsequent revaluing to fair value of the asset held for sale, an impairment loss of $765,000 was recognised in the current financial year. Refer to note 14 for further details of the amounts previously recognised as an investment in associate. The investment in the joint venture formed part of the Retail Operating Segment in the financial statements. Refer to note 22, Operating Segments. CONSOLIDATED 2015 $’000 2014 $’000 12 PROPERTY, PLANT AND EQUIPMENT Land – at cost Buildings – at cost Less: accumulated depreciation and impairment Plant and equipment – at cost Less: accumulated depreciation and impairment Capitalised leased assets – at cost Less: accumulated depreciation and impairment Total Total Total Capital works in progress 3,203 14,985 (432) 14,553 213,916 (110,075) 103,841 343 (331) 12 1,928 TOTAL PROPERTY, PLANT AND EQUIPMENT 123,537 109,028 3,203 14,985 (57) 14,928 192,492 (101,654) 90,838 343 (284) 59 - 74     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 10 OTHER ASSETS CURRENT Deposits and prepayments TOTAL OTHER CURRENT ASSETS 11 ASSET CLASSIFIED AS HELD FOR SALE Investment in Just Kor Fashion Group (Pty) Ltd TOTAL ASSETS HELD FOR SALE CONSOLIDATED 2015 $’000 2014 $’000 6,309 6,309 1,000 1,000 5,215 5,215 - - INVESTMENT IN JUST KOR FASHION GROUP (PTY) LTD Just Jeans Group Pty Ltd, a subsidiary of Premier Investments Limited, has a 50% interest in a joint venture entity, Just Kor Fashion Group (Pty) Ltd, which is involved in retailing of the Jay Jays concept in South Africa. During the second half of the year, the Group resolved to dispose of its 50% interest in the joint venture entity. As a result of the disposal, the group ceased equity accounting for its investment in the joint venture and classified the fair value of the investment as an asset held for sale. The commercial terms of the sale was agreed at the end of the financial year, with settlement of the fair value completed in August 2015. As a result of the reclassification from investment in associate to asset held for sale, and the subsequent revaluing to fair value of the asset held for sale, an impairment loss of $765,000 was recognised in the current financial year. Refer to note 14 for further details of the amounts previously recognised as an investment in associate. The investment in the joint venture formed part of the Retail Operating Segment in the financial statements. Refer to note 22, Operating Segments. 12 PROPERTY, PLANT AND EQUIPMENT Land – at cost Buildings – at cost Less: accumulated depreciation and impairment Total Plant and equipment – at cost Less: accumulated depreciation and impairment Total Capitalised leased assets – at cost Less: accumulated depreciation and impairment Total Capital works in progress CONSOLIDATED 2015 $’000 2014 $’000 3,203 14,985 (432) 14,553 213,916 (110,075) 103,841 343 (331) 12 1,928 3,203 14,985 (57) 14,928 192,492 (101,654) 90,838 343 (284) 59 - TOTAL PROPERTY, PLANT AND EQUIPMENT 123,537 109,028 Annual Report 2015 74 74   NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) NOTES 2015 $’000 2014 $’000 CONSOLIDATED 12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) RECONCILIATIONS Reconciliations of the carrying amounts for each class of plant and equipment are set out below: Land At beginning of the financial year Additions Net carrying amount at end of financial year Buildings At beginning of financial year Transferred from capital works in progress Additions Depreciation Net carrying amount at end of financial year Plant and equipment At beginning of the financial year Additions Disposals Exchange differences Impairment – plant and equipment Impairment – supply chain transformation Depreciation Net carrying amount at end of financial year Leased plant and equipment At beginning of the financial year Amortisation Net carrying amount at end of financial year Capital works in progress At beginning of the financial year Transferred to Buildings Additions Net carrying amount at end of financial year TOTAL PROPERTY PLANT AND EQUIPMENT 5 5 5 5 5 3,203 - 3,203 14,928 - - (375) 14,553 90,838 34,598 (857) 1,455 (771) - (21,422) 103,841 59 (47) 12 - - 1,928 1,928 123,537 - 3,203 3,203 - 2,173 12,812 (57) 14,928 81,123 32,149 (845) 433 (697) (250) (21,075) 90,838 106 (47) 59 2,173 (2,173) - - 109,028 LAND AND BUILDINGS The land and buildings with a combined carrying amount of $17,756,000 have been pledged to secure certain interest-bearing borrowings of the Group (refer to note 16). IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT On an individual store basis, identified to be the cash-generating units (CGU) of the Group’s retail segment, the recoverable amount was estimated for certain items of plant and equipment. The recoverable amount estimation was based on a value in use calculation and was determined at the CGU level. These calculations use cash flow projections based on financial budgets approved by management, covering a five year period. Cash flows beyond the five year period are extrapolated using the growth rate stated below. The growth rate does not exceed the long-term average growth rate for the business in which the CGU operates. The post-tax discount rate applied to the cash flow projections is 10.5% (2014: 10.5%) and the cash flows beyond the five year period are extrapolated using a growth rate of 3% (2014: 3%). The discount rate used reflects management’s estimate of the time value of money and risks specific to each unit not already reflected in the cash flow. In determining the appropriate discount rate, regard has been given to the weighted average cost of capital for the retail segment. When considering the recoverable amount, the net present value of cash flows has been compared to reasonable earnings multiples for comparable companies. An impairment review was conducted based on a store by store review. As a result, a net impairment loss of $771,000 was recognised during the financial year (2014: $697,000). 75 Premier Investments Limited 75 76     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) LAND AND BUILDINGS The land and buildings with a combined carrying amount of $17,756,000 have been pledged to secure certain interest-bearing borrowings of the Group (refer to note 16). IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT On an individual store basis, identified to be the cash-generating units (CGU) of the Group’s retail segment, the recoverable amount was estimated for certain items of plant and equipment. The recoverable amount estimation was based on a value in use calculation and was determined at the CGU level. These calculations use cash flow projections based on financial budgets approved by management, covering a five year period. Cash flows beyond the five year period are extrapolated using the growth rate stated below. The growth rate does not exceed the long-term average growth rate for the business in which the CGU operates. The post-tax discount rate applied to the cash flow projections is 10.5% (2014: 10.5%) and the cash flows beyond the five year period are extrapolated using a growth rate of 3% (2014: 3%). The discount rate used reflects management’s estimate of the time value of money and risks specific to each unit not already reflected in the cash flow. In determining the appropriate discount rate, regard has been given to the weighted average cost of capital for the retail segment. When considering the recoverable amount, the net present value of cash flows has been compared to reasonable earnings multiples for comparable companies. An impairment review was conducted based on a store by store review. As a result, a net impairment loss of $771,000 was recognised during the financial year (2014: $697,000). Annual Report 2015 76 76   NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 13 INTANGIBLES RECONCILIATION OF CARRYING AMOUNTS AT THE BEGINNING AND END OF THE PERIOD 13 INTANGIBLES (CONTINUED) IMPAIRMENT TESTING OF GOODWILL YEAR ENDED 25 JULY 2015 As at 27 July 2014 net of accumulated amortisation and impairment Additions Trademark registrations Amortisation Exchange differences As at 25 July 2015 net of accumulated amortisation and impairment AS AT 25 JULY 2015 Cost (gross carrying amount) Accumulated amortisation and impairment Net carrying amount YEAR ENDED 26 JULY 2014 As at 28 July 2013 net of accumulated amortisation and impairment Trademark registrations Amortisation Exchange differences As at 26 July 2014 net of accumulated amortisation and impairment AS AT 26 JULY 2014 Cost (gross carrying amount) Accumulated amortisation and impairment Net carrying amount CONSOLIDATED GOODWILL $’000 BRAND NAMES $’000 TRADEMARK $’000 LEASEHOLD PREMIUMS $’000 TOTAL $’000 477,085 - 376,179 - - - - - - - 1,282 - 42 - - 26 158 - (62) 1 854,572 158 42 (62) 1 477,085 376,179 1,324 123 854,711 the long-term growth expectation beyond the five year projection. 477,085 376,179 - - 477,085 376,179 477,085 - 376,179 - - - - - 1,324 - 1,324 1,176 106 - - 965 855,553 (842) (842) 123 854,711 89 - (65) 2 854,529 106 (65) 2 477,085 376,179 1,282 26 854,572 477,085 376,179 - - 477,085 376,179 1,282 - 1,282 797 855,343 (771) (771) 26 854,572 GOODWILL AND BRAND NAMES After initial recognition, goodwill and indefinite-life brand names acquired in a business combination are measured at cost less any accumulated impairment losses. Goodwill and brand names are not amortised but are subject to impairment testing on an annual basis or whenever there is an indication of impairment. Brand names with a carrying value of approximately $376,179,000 are assessed as having an indefinite useful life. The indefinite-useful life reflects management’s intention to continue to operate these brands to generate net cash inflows into the foreseeable future. 77 Premier Investments Limited 77 78 Impairment of goodwill acquired in a business combination is determined by assessing the recoverable amount of the cash-generating units (CGU) to which it relates. When the recoverable amount of the CGU is less than the carrying amount, an impairment loss is recognised. The key factors contributing to the goodwill relate to the synergies existing within the acquired business and also synergies expected to be achieved as a result of combining Just Group Limited with the rest of the Group. Accordingly, goodwill is assessed at a retail segment level. The recoverable amount of the CGU has been determined based upon a value in use calculation, using cash flow projections as at July 2015 for a period of five years plus a terminal value. The cash flow projections are based on financial estimates approved by the senior management and the Board for the 2015 financial year and are projected for a further four years based on estimated growth rates of 3.4% (2014: 3.4% to 3.5%). As part of the annual impairment test for goodwill, management assesses the reasonableness of growth rate assumptions by reviewing historical cash flow projections as well as future growth objectives. Cash flows beyond the five year period are extrapolated using a growth rate of 3% (2014: 3%) which reflects The post-tax discount rate applied to these cash flow projections is 10.7% (2014: 10.8%). The discount rate has been determined using the weighted average cost of capital which incorporates both the cost of debt and the cost of capital. Management has considered the possible change in expected sales growth, forecast Earnings Before Interest, Tax and Amortisation (EBITA) and discount rates applied within the CGU to which goodwill relate, each of which have been subject to sensitivities. A reasonably possible adverse change in these key assumptions on which the recoverable amount is based would not cause the carrying amount of the CGU to exceed its recoverable amount. IMPAIRMENT TESTING OF BRAND NAMES Brand names acquired through business combinations have been allocated to the following CGU groups ($’000) as no individual brand name is considered significant:  Casual wear - $188,975  Women’s wear - $137,744  Non Apparel - $49,460 The recoverable amounts of brand names acquired in a business combination are determined on an individual brand basis based upon a value in use calculation. The value in use calculation has been determined based upon the relief from royalty method using cash flow projections as at July 2015 for a period of five years plus a terminal value. The cash flow projections are based on financial estimates approved by senior management and the Board for the 2016 financial year and are projected for a further four years based on estimated growth rates. The extrapolated growth rates at which cash flows have been discounted for the individual brands within each of the CGU groups have been summarised in the table on the following page. Cash flows beyond the five year period are extrapolated using a growth rate of 3% (2014: 3%), which reflects the long-term growth expectation beyond the five year projection.     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 13 INTANGIBLES (CONTINUED) IMPAIRMENT TESTING OF GOODWILL Impairment of goodwill acquired in a business combination is determined by assessing the recoverable amount of the cash-generating units (CGU) to which it relates. When the recoverable amount of the CGU is less than the carrying amount, an impairment loss is recognised. The key factors contributing to the goodwill relate to the synergies existing within the acquired business and also synergies expected to be achieved as a result of combining Just Group Limited with the rest of the Group. Accordingly, goodwill is assessed at a retail segment level. The recoverable amount of the CGU has been determined based upon a value in use calculation, using cash flow projections as at July 2015 for a period of five years plus a terminal value. The cash flow projections are based on financial estimates approved by the senior management and the Board for the 2015 financial year and are projected for a further four years based on estimated growth rates of 3.4% (2014: 3.4% to 3.5%). As part of the annual impairment test for goodwill, management assesses the reasonableness of growth rate assumptions by reviewing historical cash flow projections as well as future growth objectives. Cash flows beyond the five year period are extrapolated using a growth rate of 3% (2014: 3%) which reflects the long-term growth expectation beyond the five year projection. The post-tax discount rate applied to these cash flow projections is 10.7% (2014: 10.8%). The discount rate has been determined using the weighted average cost of capital which incorporates both the cost of debt and the cost of capital. Management has considered the possible change in expected sales growth, forecast Earnings Before Interest, Tax and Amortisation (EBITA) and discount rates applied within the CGU to which goodwill relate, each of which have been subject to sensitivities. A reasonably possible adverse change in these key assumptions on which the recoverable amount is based would not cause the carrying amount of the CGU to exceed its recoverable amount. IMPAIRMENT TESTING OF BRAND NAMES Brand names acquired through business combinations have been allocated to the following CGU groups ($’000) as no individual brand name is considered significant:  Casual wear - $188,975  Women’s wear - $137,744  Non Apparel - $49,460 The recoverable amounts of brand names acquired in a business combination are determined on an individual brand basis based upon a value in use calculation. The value in use calculation has been determined based upon the relief from royalty method using cash flow projections as at July 2015 for a period of five years plus a terminal value. The cash flow projections are based on financial estimates approved by senior management and the Board for the 2016 financial year and are projected for a further four years based on estimated growth rates. The extrapolated growth rates at which cash flows have been discounted for the individual brands within each of the CGU groups have been summarised in the table on the following page. Cash flows beyond the five year period are extrapolated using a growth rate of 3% (2014: 3%), which reflects the long-term growth expectation beyond the five year projection. Annual Report 2015 78 78   NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 13 INTANGIBLES (CONTINUED) IMPAIRMENT TESTING OF BRAND NAMES (CONTINUED) The extrapolated growth rates at which cash flows have been discounted or the individual brands within each of the CGU groups have been summarised below: 14 INVESTMENTS IN ASSOCIATES CONSOLIDATED NOTE 2015 $’000 2014 $’000 CGU AVERAGE GROWTH RATES APPLIED TERMINAL VALUE GROWTH TO PROJECTED CASH FLOWS RATE Casual wear Women’s wear Non Apparel 3% to 4% 3% to 5% 4% to 8% 3% 3% 3% As part of the annual impairment test for brand names, management assesses the reasonableness of growth rate assumptions by reviewing historical cash flow projections as well as future growth objectives. Impairment loss on investment in associate Transferred to asset classified as held for sale 5 11 The post-tax discount rate applied to the cash flow projections for each of the three CGU groups is 9.7% (2014: 9.8%). The discount rate has been determined using the weighted average cost of capital which incorporates both the cost of debt and cost of capital. Royalty rates have been determined for each brand within the CGU groups by considering the brand’s history and future expected performance. Factors such as the profitability of the brand, market share, brand recognition and general conditions in the industry have also been considered in determining an appropriate royalty rate for each brand. Consideration is also given to the industry norms relating to royalty rates by analysing market derived data for comparable brands and by considering the notional royalty payments as a percentage of the divisional earnings before interest and taxation generated by the division in which the Brand names are used. Net royalty rates applied across the three CGU groups range between 3.5% and 8.5% (2014: 3.5% and 8.5%). Management has considered reasonably possible adverse changes in key assumptions applied to brands within the relevant CGU groups, each of which have been subjected to sensitivities. A brand within the Casual Wear CGU group with a carrying value of $112.2 million, which approximates its recoverable amount, indicated sensitivity to a reasonably possible adverse change in forecast sales growth, as well as indicating sensitivity to a reasonably possible adverse change to the post-tax discount rate applied to the cash flow projections. It is estimated that a 7% reduction in forecast sales growth could result in a decrease in the recoverable amount of the brand within the particular CGU group leading to a potential impairment of $9 million. Similarly, an estimated 50 basis point increase in the 9.7% post-tax discount rate applied to the cash flow projections could result in a decrease in the recoverable amount of the brand within the CGU group leading to a possible impairment of $8.9 million. The potential impairment losses as a result of the reasonably possible adverse changes to these key assumptions are not considered material to the overall recoverable amount of the CGU group to which the brand relates. One brand within the Women’s Wear CGU group with a carrying value of $31.6 million, which approximates its recoverable amount, indicated sensitivity to a reasonably possible adverse change to the post-tax discount rate applied to the cash flow projections. An estimated 50 basis point increase in the 9.7% post-tax discount rate applied to the cash flow projections could result in a decrease in the recoverable amount of the brand within the CGU group leading to a possible impairment of $2.8 million. The potential impairment loss as a result of the reasonably possible adverse changes to this key assumption is not considered material to the overall recoverable amount of the CGU group to which the brand relates. 79 Premier Investments Limited 79 Movements in carrying amounts Carrying amount at the beginning of the financial year Increase in investment in associate Share of profit after income tax Share of other comprehensive income Foreign currency translation of investment Dividends received 188,418 185,534 16,492 13,144 2,728 88 (9,628) (765) (1,000) 12,785 (896) (307) (8,698) - - - Investments in associates 209,477 188,418 Just Kor Fashion Group (Pty) Ltd Just Jeans Group Pty Ltd, a subsidiary of Premier Investments Limited, has a 50% interest in a joint venture entity, Just Kor Fashion Group (Pty) Ltd, which is involved in retailing of the Jay Jays concept in South Africa. Just Kor Fashion Group (Pty) Ltd is a small proprietary company incorporated in South Africa. Its functional currency is South African Rand. During the second half of the year, the Group resolved to dispose of its 50% interest in the joint venture entity. As a result of the disposal, the Group ceased equity accounting for its investment in the joint venture and classified the fair value of the investment as an asset held for sale. The commercial terms of the sale was agreed at the end of the financial year, with transfer of the fair value completed in August 2015. As a result of the reclassification from investment in associate to asset classified as held for sale and the subsequent revaluing to fair value, an impairment loss of $765,000 was recognised in the current financial year. Prior to classifying the investment as held for sale, the Group’s share of the profit in its investment in the associate for the first half of the year was $311,850 (2014 financial year: $247,215). The following table illustrates summarised financial information relating to the Group’s investment in Just Kor Fashion Group (Pty) Ltd, as at the end of the financial year: EXTRACT OF THE ASSOCIATE’S STATEMENT OF FINANCIAL POSITION Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities NET ASSETS Group’s share of associates net assets 2015 $’000 - - - - - - - 2014 $’000 8,422 2,718 11,140 (5,666) (2,762) (8,428) 1,356 80     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) CONSOLIDATED NOTE 2015 $’000 2014 $’000 14 INVESTMENTS IN ASSOCIATES Movements in carrying amounts Carrying amount at the beginning of the financial year Increase in investment in associate Share of profit after income tax Share of other comprehensive income Foreign currency translation of investment Dividends received Impairment loss on investment in associate Transferred to asset classified as held for sale 5 11 188,418 16,492 13,144 2,728 88 (9,628) (765) (1,000) 185,534 - 12,785 (896) (307) (8,698) - - Investments in associates 209,477 188,418 Just Kor Fashion Group (Pty) Ltd Just Jeans Group Pty Ltd, a subsidiary of Premier Investments Limited, has a 50% interest in a joint venture entity, Just Kor Fashion Group (Pty) Ltd, which is involved in retailing of the Jay Jays concept in South Africa. Just Kor Fashion Group (Pty) Ltd is a small proprietary company incorporated in South Africa. Its functional currency is South African Rand. During the second half of the year, the Group resolved to dispose of its 50% interest in the joint venture entity. As a result of the disposal, the Group ceased equity accounting for its investment in the joint venture and classified the fair value of the investment as an asset held for sale. The commercial terms of the sale was agreed at the end of the financial year, with transfer of the fair value completed in August 2015. As a result of the reclassification from investment in associate to asset classified as held for sale and the subsequent revaluing to fair value, an impairment loss of $765,000 was recognised in the current financial year. Prior to classifying the investment as held for sale, the Group’s share of the profit in its investment in the associate for the first half of the year was $311,850 (2014 financial year: $247,215). The following table illustrates summarised financial information relating to the Group’s investment in Just Kor Fashion Group (Pty) Ltd, as at the end of the financial year: EXTRACT OF THE ASSOCIATE’S STATEMENT OF FINANCIAL POSITION 2015 $’000 Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities NET ASSETS Group’s share of associates net assets - - - - - - - 2014 $’000 8,422 2,718 11,140 (5,666) (2,762) (8,428) 1,356 Annual Report 2015 80 80   NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 14 INVESTMENTS IN ASSOCIATES (CONTINUED) Just Kor Fashion Group (Pty) Ltd (continued) EXTRACT OF THE ASSOCIATE’S STATEMENT OF COMPREHENSIVE INCOME Revenue Profit after income tax Group’s share of profit after income tax Breville Group Limited 26 WEEKS ENDED 26 JANUARY 2015 $’000 18,212 624 312 2014 $’000 25,488 494 247 As at 25 July 2015, Premier Investments Limited holds 27.5% (2014: 25.7%) of Breville Group Limited, a company incorporated in Australia whose shares are quoted on the Australian Stock Exchange. The principal activities of Breville Group Limited involves the innovation, development, marketing and distribution of small electrical appliances. As at 25 July 2015, the fair value of the Group’s interest in Breville Group Limited as determined based on the quoted market price was $228,873,056 (2014: $264,947,047). There were no impairment losses relating to the investment in associate and no capital commitments or other commitments relating to the associate. The Group’s share of the profit after tax in its investment in associate for the year was $12,832,332 (2014: $12,537,482). The financial year end date of Breville Group Limited is 30 June. For the purpose of applying the equity method of accounting, the financial statements of Breville Group Limited for the year ended 30 June 2015 have been used. The following table illustrates summarised financial information relating to the Group’s investment in Breville Group Limited: EXTRACT OF THE ASSOCIATE’S STATEMENT OF FINANCIAL POSITION 30 JUNE 2015 $’000 30 JUNE 2014 $’000 Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities NET ASSETS 254,808 106,464 361,272 (102,626) (27,241) (129,867) 247,347 88,915 336,262 (97,909) (25,307) (123,216) Group’s share of associate’s net assets 63,613 54,775 EXTRACT OF THE ASSOCIATE’S STATEMENT OF COMPREHENSIVE INCOME 30 JUNE 2015 $’000 30 JUNE 2014 $’000 Revenue Profit after income tax Other comprehensive (loss) income 527,036 46,680 9,889 541,615 48,765 (3,448) Group’s share of profit after income tax 12,832 12,538 CONSOLIDATED 2015 $’000 2014 $’000 38,162 35,561 73,723 35,118 27,402 62,520 15 TRADE AND OTHER PAYABLES CURRENT Trade creditors Other creditors and accruals TOTAL CURRENT (a) Fair values Due to the short-term nature of these payables, their carrying value is equal to their fair value. (b) Interest rate, foreign exchange rate and liquidity risk Detail regarding interest rate, foreign exchange and liquidity risk is disclosed in Note 3. CONSOLIDATED NOTES 2015 $’000 2014 $’000 16 INTEREST-BEARING LIABILITIES CURRENT Lease liability Bank loans* unsecured Bank loans* unsecured (NZ$20.0 million) Net bank loans TOTAL CURRENT NON-CURRENT Lease liability Bank loans ** secured Bank loans* unsecured Bank loans* unsecured (NZ$20.0 million) TOTAL NON-CURRENT 23 23 14 14 - - - - 19,000 67,623 18,018 104,641 104,641 52 82,000 18,477 100,477 100,529 14 19,000 - - 19,000 19,014 * Bank loans are subject to a negative pledge and cross guarantee within the Just Group Ltd group. Premier Investments Limited is not a participant or guarantor of the Just Group Ltd financing facilities. During the current financial year the Group’s core debt facility relating to its unsecured bank loans were refinanced for a further three years. ** Premier Investments Limited obtained a bank borrowing amounting to $19 million. The borrowing is secured by a mortgage over the Land and Buildings, representing the National Distribution Centre in Truganina, Victoria. The borrowing is repayable in full at the end of 5 years, being January 2019. (a) Fair values The carrying value of the Group’s current and non-current borrowings approximates their fair value. (b) Interest rate, foreign exchange rate and liquidity risk Detail regarding interest rate, foreign exchange and liquidity risk is disclosed in Note 3. (c) Defaults and breaches During the current and prior years, there were no defaults or breaches on any of the loans. 81 Premier Investments Limited 81 82     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 15 TRADE AND OTHER PAYABLES CURRENT Trade creditors Other creditors and accruals TOTAL CURRENT (a) Fair values CONSOLIDATED 2015 $’000 2014 $’000 38,162 35,561 73,723 35,118 27,402 62,520 Due to the short-term nature of these payables, their carrying value is equal to their fair value. (b) Interest rate, foreign exchange rate and liquidity risk Detail regarding interest rate, foreign exchange and liquidity risk is disclosed in Note 3. CONSOLIDATED NOTES 2015 $’000 2014 $’000 16 INTEREST-BEARING LIABILITIES CURRENT Lease liability Bank loans* unsecured Bank loans* unsecured (NZ$20.0 million) Net bank loans TOTAL CURRENT NON-CURRENT Lease liability Bank loans ** secured Bank loans* unsecured Bank loans* unsecured (NZ$20.0 million) TOTAL NON-CURRENT 23 23 14 - - - 14 - 19,000 67,623 18,018 104,641 104,641 52 82,000 18,477 100,477 100,529 14 19,000 - - 19,000 19,014 * Bank loans are subject to a negative pledge and cross guarantee within the Just Group Ltd group. Premier Investments Limited is not a participant or guarantor of the Just Group Ltd financing facilities. During the current financial year the Group’s core debt facility relating to its unsecured bank loans were refinanced for a further three years. ** Premier Investments Limited obtained a bank borrowing amounting to $19 million. The borrowing is secured by a mortgage over the Land and Buildings, representing the National Distribution Centre in Truganina, Victoria. The borrowing is repayable in full at the end of 5 years, being January 2019. (a) Fair values The carrying value of the Group’s current and non-current borrowings approximates their fair value. (b) Interest rate, foreign exchange rate and liquidity risk Detail regarding interest rate, foreign exchange and liquidity risk is disclosed in Note 3. (c) Defaults and breaches During the current and prior years, there were no defaults or breaches on any of the loans. Annual Report 2015 82 82   NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 17 PROVISIONS CURRENT Employee entitlements – Annual Leave Employee entitlements – Long Service Leave Supply chain transformation Onerous leases TOTAL CURRENT NON-CURRENT CONSOLIDATED 2015 $’000 2014 $’000 10,209 5,189 497 202 16,097 10,011 4,906 1,100 541 16,558 Employee entitlements – Long Service Leave 1,782 1,462 MOVEMENTS IN PROVISIONS Supply chain transformation Opening balance Charged to Profit and Loss Utilised during the period Closing balance Onerous leases Opening balance Charged to Profit and Loss Utilised during the period Closing balance 1,100 - (603) 497 541 36 (375) 202 - 4,482 (3,382) 1,100 1,551 248 (1,258) 541 NATURE AND TIMING OF PROVISIONS Supply chain transformation, onerous lease and employee entitlements provisions Refer to note 2(u), 2(v), 2(w) and 2(x) for the relevant accounting policy and a discussion of significant estimations and assumptions applied in the measurement of these provisions. 18 OTHER LIABILITIES CURRENT Deferred income TOTAL CURRENT NON-CURRENT Deferred income TOTAL NON-CURRENT 83 Premier Investments Limited CONSOLIDATED 2015 $’000 2014 $’000 5,635 5,635 12,411 12,411 4,221 4,221 9,077 9,077 83 CONSOLIDATED 2015 $’000 2014 $’000 NO. (‘000) $‘000 155,714 666 156,380 155,260 454 155,714 608,615 608,615 608,615 - - 608,615 19 CONTRIBUTED EQUITY Ordinary shares 608,615 608,615 (a) MOVEMENTS IN SHARES ON ISSUE Shares on issue 27 July 2014 Shares issued during the year (i) Shares on issue at 25 July 2015 Shares on issue 28 July 2013 Shares issued during the year (i) Shares on issue at 26 July 2014 Fully paid ordinary shares carry one vote per share and carry the rights to dividends. (i) A total of 665,201 shares (2014: 454,396) were issued in relation to the performance rights plan. (b) CAPITAL MANAGEMENT The Group’s objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders. The Group also aims to maintain a capital structure that ensures the lowest cost of capital available to the entity. The capital structure of the Group consists of debt which includes borrowings as disclosed in Note 16, cash and cash equivalents as disclosed in Note 26 and equity attributable to the equity holders of the parent comprising of issued capital, reserves and retained profits as disclosed in Notes 19, 20 and 21 respectively. The Group operates primarily through its two business segments, investments and retail. The investments segment is managed and operated through the parent company. The retail segment operates through subsidiaries established in their respective markets and maintains a central borrowing facility through a subsidiary, to meet the retail segment’s funding requirements and to enable the Group to find the optimal debt and equity balance. The Group’s capital structure is reviewed on a periodic basis in the context of prevailing market conditions, and appropriate steps are taken to ensure the Group’s capital structure and capital management initiatives remain in line with the Board’s objectives. The Group maintains that the dividend paid will represent at least 65% of net profit after tax. (c) EXTERNALLY IMPOSED CAPITAL REQUIREMENTS Just Group Ltd, a subsidiary of Premier Investments Limited, is subject to a number of financial undertakings as part of its financing facility agreement. These undertakings have been satisfied during the period. authorities. The Group is not subject to any capital requirements imposed by regulators or other prudential 84     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 19 CONTRIBUTED EQUITY Ordinary shares 608,615 608,615 CONSOLIDATED 2015 $’000 2014 $’000 (a) MOVEMENTS IN SHARES ON ISSUE Shares on issue 27 July 2014 Shares issued during the year (i) Shares on issue at 25 July 2015 Shares on issue 28 July 2013 Shares issued during the year (i) Shares on issue at 26 July 2014 NO. (‘000) $‘000 155,714 666 156,380 155,260 454 155,714 608,615 - 608,615 608,615 - 608,615 Fully paid ordinary shares carry one vote per share and carry the rights to dividends. (i) A total of 665,201 shares (2014: 454,396) were issued in relation to the performance rights plan. (b) CAPITAL MANAGEMENT The Group’s objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders. The Group also aims to maintain a capital structure that ensures the lowest cost of capital available to the entity. The capital structure of the Group consists of debt which includes borrowings as disclosed in Note 16, cash and cash equivalents as disclosed in Note 26 and equity attributable to the equity holders of the parent comprising of issued capital, reserves and retained profits as disclosed in Notes 19, 20 and 21 respectively. The Group operates primarily through its two business segments, investments and retail. The investments segment is managed and operated through the parent company. The retail segment operates through subsidiaries established in their respective markets and maintains a central borrowing facility through a subsidiary, to meet the retail segment’s funding requirements and to enable the Group to find the optimal debt and equity balance. The Group’s capital structure is reviewed on a periodic basis in the context of prevailing market conditions, and appropriate steps are taken to ensure the Group’s capital structure and capital management initiatives remain in line with the Board’s objectives. The Group maintains that the dividend paid will represent at least 65% of net profit after tax. (c) EXTERNALLY IMPOSED CAPITAL REQUIREMENTS Just Group Ltd, a subsidiary of Premier Investments Limited, is subject to a number of financial undertakings as part of its financing facility agreement. These undertakings have been satisfied during the period. The Group is not subject to any capital requirements imposed by regulators or other prudential authorities. Annual Report 2015 84 84   NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 20 RESERVES (CONTINUED) (d) PERFORMANCE RIGHTS RESERVE (i) Nature and purpose of reserve This reserve is used to record the cumulative amortised value of performance rights issued to key senior employees net of the value of performance shares acquired under the performance rights plan. (ii) Movements in the reserve Opening balance Performance rights expense for the year CLOSING BALANCE 21 RETAINED EARNINGS Net profit for the period attributable to owners Opening balance Dividends paid CLOSING BALANCE CONSOLIDATED 2015 $’000 2014 $’000 3,281 801 4,082 687,400 88,102 (78,033) 697,469 2,383 898 3,281 674,962 73,000 (60,562) 687,400 20 RESERVES RESERVES COMPRISE: Capital profits reserve (a) Foreign currency translation reserve (b) Cash flow hedge reserve (c) Performance rights reserve (d) TOTAL RESERVES (a) CAPITAL PROFITS RESERVE (i) Nature and purpose of reserve The capital profits reserve is used to accumulate realised capital profits. There were no movements through the capital profits reserve.  (b) FOREIGN CURRENCY TRANSLATION RESERVE (i) Nature and purpose of reserve This reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries. (ii) Movements in the reserve Opening balance Foreign currency translation of overseas subsidiaries Net movement in associate entity’s reserves CLOSING BALANCE (c) CASH FLOW HEDGE RESERVE (i) Nature and purpose of reserve This reserve records the portion of the gain or loss on a hedging instrument in a cash flow hedge that is determined to be an effective hedge. (ii) Movements in the reserve Opening balance Net losses on cash flow hedges Transferred to (from) statement of financial position/comprehensive income Net deferred income tax movement on cash flow hedges CLOSING BALANCE CONSOLIDATED 2015 $’000 2014 $’000 464 6,480 21,197 4,082 32,223 464 2,334 (3,565) 3,281 2,514 2,334 1,418 2,728 6,480 2,502 728 (896) 2,334 (3,565) 19,251 11,440 (5,355) 16,123 (16,081) (10,612) 21,197 6,431 (3,565) 85 Premier Investments Limited 85 86     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 20 RESERVES (CONTINUED) (d) PERFORMANCE RIGHTS RESERVE (i) Nature and purpose of reserve This reserve is used to record the cumulative amortised value of performance rights issued to key senior employees net of the value of performance shares acquired under the performance rights plan. (ii) Opening balance Movements in the reserve Performance rights expense for the year CLOSING BALANCE 21 RETAINED EARNINGS Opening balance Net profit for the period attributable to owners Dividends paid CLOSING BALANCE CONSOLIDATED 2015 $’000 2014 $’000 3,281 801 4,082 687,400 88,102 (78,033) 697,469 2,383 898 3,281 674,962 73,000 (60,562) 687,400 Annual Report 2015 86 86   NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 22 OPERATING SEGMENTS Identification of reportable segments 22 (a) OPERATING SEGMENTS (CONTINUED) OPERATING SEGMENTS The Group has identified its operating segments based on the internal reports that are reviewed and used by the chief operating decision maker in assessing the performance of the company and in determining the allocation of resources. The operating segments are identified by management based on the nature of the business conducted. Discrete financial information about each of these operating businesses is reported to the chief operating decision maker on at least a monthly basis. The reportable segments are based on aggregate operating segments determined by the similarity of the business conducted, as these are the sources of the Group’s major risks and have the most effect on the rate of return. Types of products and services Retail The retail segment represents the financial performance of a number of speciality retail fashion chains. Investment Total Segment Income 952,191 895,387 57,678 55,705 (48,000) (45,000) 961,869 906,092 The investments segment represents investments in securities for both long and short term gains, dividend income and interest. Accounting policies The accounting policies used by the Group in reporting segments internally are the same as those contained in note 2 to the accounts and in the prior periods. Income tax expense Income tax expense is calculated based on the segment operating net profit using the Group’s effective income tax rate. It is the Group’s policy that if items of revenue and expense are not allocated to operating segments then any associated assets and liabilities are also not allocated to the segments. This is to avoid asymmetrical allocations within segments which management believe would be inconsistent. The following table presents revenue and profit information for reportable segments for the period ended 25 July 2015 and 26 July 2014. RETAIL INVESTMENT ELIMINATION TOTAL 2015 $’000 2014 $’000 2015 $’000 2014 $’000 2015 $’000 2014 $’000 2015 $’000 2014 $’000 REVENUE Interest revenue Other revenue Other income Sale of goods 947,662 892,570 - 947,662 892,570 390 388 449 470 9,438 10,690 9,828 11,139 48,014 45,015 (48,000) (45,000) 402 485 3,751 1,898 226 3,977 1,898 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 961,869 906,092 21,906 21,244 771 697 5,738 6,311 - 4,482 1,724 - (28,843) (25,365) 88,102 73,000 312 247 12,832 12,538 13,144 12,785 98,958 79,299 65,987 64,066 (48,000) (45,000) 116,945 98,365 Total income per the statement of comprehensive income RESULTS Depreciation and amortisation Impairment of property plant and equipment 21,906 21,244 771 697 Interest expense 5,738 6,311 Supply chain transformation expense - 4,482 1,724 - Disposal of asset held for sale Share of profit of associates Segment profit before income tax expense Income tax expense Net profit after tax per the statement of comprehensive income ASSETS AND LIABILITIES Segment assets 433,169 378,808 1,278,659 1,279,885 (72,756) (62,754) 1,639,072 1,595,939 Segment liabilities 251,239 247,203 76,268 68,298 (26,742) (18,091) 300,765 297,410 Capital expenditure 36,526 48,164 - - - - 36,526 48,164 87 Premier Investments Limited 87 88     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 22 (a) OPERATING SEGMENTS (CONTINUED) OPERATING SEGMENTS RETAIL INVESTMENT ELIMINATION TOTAL 2015 $’000 2014 $’000 2015 $’000 2014 $’000 2015 $’000 2014 $’000 2015 $’000 2014 $’000 REVENUE Sale of goods 947,662 892,570 - - Interest revenue Other revenue Other income 390 388 449 470 9,438 10,690 48,014 45,015 (48,000) (45,000) 402 485 - - - - 947,662 892,570 9,828 11,139 3,751 1,898 226 - - - 3,977 1,898 Total Segment Income 952,191 895,387 57,678 55,705 (48,000) (45,000) 961,869 906,092 - - - - - - - - - - 1,724 - 312 247 12,832 12,538 Total income per the statement of comprehensive income RESULTS Depreciation and amortisation Impairment of property plant and equipment 21,906 21,244 771 697 Interest expense 5,738 6,311 Supply chain transformation expense - 4,482 Disposal of asset held for sale Share of profit of associates Segment profit before income tax expense Income tax expense Net profit after tax per the statement of comprehensive income ASSETS AND LIABILITIES 961,869 906,092 - - - - - - 21,906 21,244 771 697 5,738 6,311 - 4,482 1,724 - 13,144 12,785 - - - - - - (28,843) (25,365) 88,102 73,000 98,958 79,299 65,987 64,066 (48,000) (45,000) 116,945 98,365 Segment assets 433,169 378,808 1,278,659 1,279,885 (72,756) (62,754) 1,639,072 1,595,939 Segment liabilities 251,239 247,203 76,268 68,298 (26,742) (18,091) 300,765 297,410 Capital expenditure 36,526 48,164 - - - - 36,526 48,164 Annual Report 2015 88 88   D E T A D I L O S N O C I S N O T A N M I L E I L A T O T I M O D G N K D E T N U I E R O P A G N S I D N A L A E Z W E N A I L A R T S U A S T N E M G E S C H P A R G O E G I ) I D E U N T N O C ( T N E M G E S G N T A R E P O I 2 2 ) b ( 9 8 FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS CONSOLIDATED NOTES 2015 $’000 2014 $’000 23 EXPENDITURE COMMITMENTS LEASE EXPENDITURE COMMITMENTS (i) OPERATING LEASES Payable within one year Payable within one to five years Payable in more than five years Total operating leases (ii) FINANCE LEASES Total lease liability – current Total lease liability – non-current Total finance leases FINANCE LEASE COMMITMENTS Payable within one year Payable within one to five years Minimum lease payments Less future finance charges TOTAL LEASE LIABILITY 16 16 108,283 179,102 44,396 331,781 14 - 14 14 14 - - 14 101,646 138,965 13,554 254,165 52 14 66 55 14 69 (3) 66 The Group has entered into commercial operating leases on certain land and buildings, motor vehicles and items of plant and equipment. These leases have an average life of five years. The Group has finance leases for various items of plant and equipment. These leases have an average term of four years with the option to purchase the asset at the completion of the lease term for the asset’s market value. 4 1 0 2 0 0 0 $ ’ 5 1 0 2 0 0 0 $ ’ 4 1 0 2 0 0 0 $ ’ 5 1 0 2 0 0 0 $ ’ 4 1 0 2 0 0 0 $ ’ 5 1 0 2 0 0 0 $ ’ 4 1 0 2 0 0 0 $ ’ 5 1 0 2 0 0 0 $ ’ 4 1 0 2 0 0 0 $ ’ 5 1 0 2 0 0 0 $ ’ 4 1 0 2 0 0 0 $ ’ 5 1 0 2 0 0 0 $ ’ 4 1 0 2 0 0 0 $ ’ 5 1 0 2 0 0 0 $ ’ 0 7 5 , 2 9 8 2 6 6 , 7 4 9 2 2 5 , 3 1 7 0 2 , 4 1 2 9 0 , 6 0 9 9 6 8 , 1 6 9 - - - - - - 0 7 5 , 2 9 8 2 6 6 , 7 4 9 1 1 1 , 2 7 9 7 9 1 , 3 9 3 8 1 , 3 9 8 0 2 , 1 6 5 9 1 1 , , 0 7 1 2 2 1 5 0 5 , 2 5 7 2 0 8 , 4 8 7 2 2 5 , 3 1 7 0 2 , 4 1 5 1 4 1 4 1 - 9 3 4 6 6 4 5 4 , 3 1 9 2 5 , 3 1 2 9 0 , 6 0 9 9 6 8 , 1 6 9 6 2 1 , 2 1 1 8 9 1 , 7 0 4 8 1 , 3 9 8 0 2 , 0 0 6 9 1 1 , , 4 3 8 2 2 1 9 5 9 , 5 6 7 1 3 3 , 8 9 7 d n a e u n e v e r r e h t O e m o c n i e m o c n i t n e m g e S s d o o g f o l e a S E U N E V E R t n e r r u c - n o n t n e m g e S 8 4 2 , 5 6 1 , 1 1 4 2 , 3 9 1 , 1 ) 5 9 4 , 4 5 ( ) 0 4 3 , 4 5 ( 3 4 7 , 9 1 2 , 1 1 8 5 , 7 4 2 , 1 5 6 4 , 4 8 6 3 3 1 , 4 6 1 , 8 4 6 2 5 , 6 3 - - 4 6 1 , 8 4 6 2 5 , 6 3 9 9 2 , 4 7 7 9 , 7 0 7 2 8 6 8 , 2 6 5 5 6 1 8 , 2 0 8 9 0 3 7 , 8 6 0 0 , 8 9 3 0 , 2 0 8 6 , 3 0 2 , 1 1 9 3 , 3 2 2 , 1 s t e s s a 5 1 6 , 2 4 4 5 9 , 5 2 e r u t i d n e p x e l a t i p a C ) I D E U N T N O C ( I S T N E M E T A T S L A C N A N F E H T O T S E T O N I 4 1 0 2 Y L U J 6 2 D N A 5 1 0 2 Y L U J 5 2 D E D N E S K E E W 2 5 E H T R O F 89 Premier Investments Limited 90     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) CONSOLIDATED NOTES 2015 $’000 2014 $’000 23 EXPENDITURE COMMITMENTS LEASE EXPENDITURE COMMITMENTS (i) OPERATING LEASES Payable within one year Payable within one to five years Payable in more than five years Total operating leases (ii) FINANCE LEASES Total lease liability – current Total lease liability – non-current Total finance leases FINANCE LEASE COMMITMENTS Payable within one year Payable within one to five years Minimum lease payments Less future finance charges TOTAL LEASE LIABILITY 16 16 108,283 179,102 44,396 331,781 14 - 14 14 - 14 - 14 101,646 138,965 13,554 254,165 52 14 66 55 14 69 (3) 66 The Group has entered into commercial operating leases on certain land and buildings, motor vehicles and items of plant and equipment. These leases have an average life of five years. The Group has finance leases for various items of plant and equipment. These leases have an average term of four years with the option to purchase the asset at the completion of the lease term for the asset’s market value. Annual Report 2015 90 90   NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 24 KEY MANAGEMENT PERSONNEL COMPENSATION FOR KEY MANAGEMENT PERSONNEL Short-term employee benefits Post-employment benefits Termination benefits Share-based payments TOTAL CONSOLIDATED 2015 $ 2014 $ 8,088,880 189,095 - 6,206,092 160,528 - 530,220 795,121 8,808,195 7,161,741 Information regarding individual key management personnel compensation, shareholdings of key management personnel, as well as other transactions and balances with key management personnel and their related parties, as required by Regulation 2M.3.03 of the Corporations Regulations 2001 is provided in the Remuneration Report section of the Directors’ Report. 25 AUDITOR’S REMUNERATION The auditor of Premier Investments Limited is Ernst & Young. Amounts received, or due and receivable, by Ernst & Young (Australia) for: - An audit or review of the financial report of the entity and any other entity in the consolidated group. Other services in relation to the entity and any other entity in the consolidated group: - Other Non-Audit Services Total – Other services TOTAL AUDITOR’S REMUNERATION CONSOLIDATED 2015 $ 2014 $ 526,757 431,210 76,600 76,600 603,357 46,218 46,218 477,428 91 Premier Investments Limited 91 26 (a) NOTES TO THE STATEMENT OF CASH FLOWS RECONCILIATION OF CASH AND CASH EQUIVALENTS Cash at bank and in hand Short-term deposits TOTAL CASH ASSETS AND CASH EQUIVALENTS (b) RECONCILIATION OF NET CASH FLOWS FROM OPERATIONS TO NET PROFIT AFTER INCOME TAX Net profit for the period Adjustments for: Amortisation Depreciation Impairment and write-off of non-current assets Foreign exchange losses Share of profit of associates Finance charges on capitalised leases Borrowing costs Net loss on disposal of property, plant and equipment Share-based payments expense Movement in cash flow hedge reserve Net exchange differences Changes in assets and liabilities net of the effects from acquisition and disposal of businesses: Decrease in provisions Increase (decrease) in deferred tax liabilities Increase in trade and other payables (Decrease) increase in other financial liabilities Decrease in deferred income Increase in trade and other receivables Increase in other current assets Increase in inventories (Increase) decrease in other financial assets Decrease (increase) in deferred tax assets Increase in income tax payable NET CASH FLOWS FROM OPERATING ACTIVITIES CONSOLIDATED 2015 $’000 2014 $’000 35,099 246,473 281,572 27,187 286,121 313,308 88,102 73,000 (13,144) (12,785) 109 21,797 1,536 73 28 153 758 801 24,762 (716) (141) 1,968 18,858 (6,674) (4,420) (898) (1,094) (13,318) (30,970) 8,402 7,139 103,111 112 21,132 947 345 25 387 426 898 (15,005) (276) (211) (5,709) 15,176 6,614 (1,692) (7,244) (539) (14,537) 15,446 (1,219) 11,179 86,470 92     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 26 (a) NOTES TO THE STATEMENT OF CASH FLOWS RECONCILIATION OF CASH AND CASH EQUIVALENTS Cash at bank and in hand Short-term deposits TOTAL CASH ASSETS AND CASH EQUIVALENTS (b) RECONCILIATION OF NET CASH FLOWS FROM OPERATIONS TO NET PROFIT AFTER INCOME TAX Net profit for the period Adjustments for: Amortisation Depreciation Impairment and write-off of non-current assets Foreign exchange losses Share of profit of associates Finance charges on capitalised leases Borrowing costs Net loss on disposal of property, plant and equipment Share-based payments expense Movement in cash flow hedge reserve Net exchange differences Changes in assets and liabilities net of the effects from acquisition and disposal of businesses: Decrease in provisions Increase (decrease) in deferred tax liabilities Increase in trade and other payables (Decrease) increase in other financial liabilities Decrease in deferred income Increase in trade and other receivables Increase in other current assets Increase in inventories (Increase) decrease in other financial assets Decrease (increase) in deferred tax assets Increase in income tax payable NET CASH FLOWS FROM OPERATING ACTIVITIES CONSOLIDATED 2015 $’000 2014 $’000 35,099 246,473 281,572 27,187 286,121 313,308 88,102 73,000 109 21,797 1,536 73 112 21,132 947 345 (13,144) (12,785) 28 153 758 801 24,762 (716) (141) 1,968 18,858 (6,674) (4,420) (898) (1,094) (13,318) (30,970) 8,402 7,139 103,111 25 387 426 898 (15,005) (276) (211) (5,709) 15,176 6,614 (1,692) (7,244) (539) (14,537) 15,446 (1,219) 11,179 86,470 Annual Report 2015 92 92   NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 26 NOTES TO THE STATEMENT OF CASH FLOWS (a) SUBSIDIARIES CONSOLIDATED 2015 $’000 2014 $’000 27 RELATED PARTY DISCLOSURES The consolidated financial statements include the financial statements of Premier Investments Limited and the subsidiaries listed in the following table: (CONTINUED) (c) FINANCE FACILITIES Working capital and bank overdraft facility Used Unused Finance facility Used Unused Bank guarantee facility Used Unused Interchangeable facility Used Unused Leasing facility Used Unused Total facilities Used Unused TOTAL - 11,800 11,800 105,018 53,982 159,000 188 12 200 3,899 4,101 8,000 14 - 14 - 12,000 12,000 119,477 39,523 159,000 607 1,393 2,000 2,134 5,866 8,000 66 - 66 109,119 69,895 179,014 122,284 58,782 181,066 93 Premier Investments Limited 93 Kimtara Investments Pty Ltd Premfin Pty Ltd Springdeep Investments Pty Ltd Prempref Pty Ltd Metalgrove Pty Ltd Just Group Limited Just Jeans Group Pty Limited Just Jeans Pty Limited Jay Jays Trademark Pty Limited Just-Shop Pty Limited Peter Alexander Sleepwear Pty Limited Old Blues Pty Limited Kimbyr Investments Limited Jacqui E Pty Limited Jacqueline-Eve Fashions Pty Limited Jacqueline-Eve (Hobart) Pty Limited Jacqueline-Eve (Retail) Pty Limited Jacqueline-Eve (Leases) Pty Limited Sydleigh Pty Limited Old Favourites Blues Pty Limited Urban Brands Pty Ltd Portmans Pty Limited Dotti Pty Ltd Smiggle Pty Limited Just Group International Pty Limited ** Smiggle Singapore Pte Ltd Just Group International HK Limited** Smiggle HK Limited** Just Group USA Inc.** Peter Alexander USA Inc.** Smiggle USA Inc.** Just UK International Limited** Smiggle UK Limited Peter Alexander UK Limited** ETI Holdings Limited** RSCA Pty Limited** RSCB Pty Limited** Just Group Singapore Private Ltd ** Peter Alexander Singapore Private Ltd ** Smiggle Stores Malaysia SDN BHD ** Smiggle Japan KK ** ** Not trading as at the date of this report. COUNTRY OF INCORPORATION INTEREST HELD INTEREST HELD New Zealand Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Singapore Hong Kong Hong Kong USA USA USA UK UK UK New Zealand Australia Australia Singapore Singapore Malaysia Japan 2015 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 2014 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 94     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 27 RELATED PARTY DISCLOSURES The consolidated financial statements include the financial statements of Premier Investments Limited and the subsidiaries listed in the following table: (a) SUBSIDIARIES COUNTRY OF INCORPORATION 2015 INTEREST HELD 2014 INTEREST HELD Kimtara Investments Pty Ltd Premfin Pty Ltd Springdeep Investments Pty Ltd Prempref Pty Ltd Metalgrove Pty Ltd Just Group Limited Just Jeans Group Pty Limited Just Jeans Pty Limited Jay Jays Trademark Pty Limited Just-Shop Pty Limited Peter Alexander Sleepwear Pty Limited Old Blues Pty Limited Kimbyr Investments Limited Jacqui E Pty Limited Jacqueline-Eve Fashions Pty Limited Jacqueline-Eve (Hobart) Pty Limited Jacqueline-Eve (Retail) Pty Limited Jacqueline-Eve (Leases) Pty Limited Sydleigh Pty Limited Old Favourites Blues Pty Limited Urban Brands Pty Ltd Portmans Pty Limited Dotti Pty Ltd Smiggle Pty Limited Just Group International Pty Limited ** Smiggle Singapore Pte Ltd Just Group International HK Limited** Smiggle HK Limited** Just Group USA Inc.** Peter Alexander USA Inc.** Smiggle USA Inc.** Just UK International Limited** Smiggle UK Limited Peter Alexander UK Limited** ETI Holdings Limited** RSCA Pty Limited** RSCB Pty Limited** Just Group Singapore Private Ltd ** Peter Alexander Singapore Private Ltd ** Smiggle Stores Malaysia SDN BHD ** Smiggle Japan KK ** ** Not trading as at the date of this report. Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia New Zealand Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Singapore Hong Kong Hong Kong USA USA USA UK UK UK New Zealand Australia Australia Singapore Singapore Malaysia Japan 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Annual Report 2015 94 94   NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 27 RELATED PARTY DISCLOSURES (CONTINUED) (b) GROUP TRANSACTIONS WITH ASSOCIATES The Group had a 50% interest in Just Kor Fashion Group (Pty) Ltd. (i) (ii) (iii) (iv) (v) (vi) Sale of inventory in the amount of $1,956,022 (2014: $4,143,973). Management fee charged for services provided in the amount of $83,501 (2014: $70,901). Royalty income of $nil (2014: $266,180) is due for the financial year. Information regarding outstanding balances with the associate at year end is disclosed in Note 8. The Group provided a loan to the associate. The loan is denominated in South African Rand. Interest is charged at a commercial rate and payable monthly. Interest earned on the loan is disclosed in Note 4. Refer to Note 11 for information regarding the subsequent to year-end disposal of the 50% interest in Just Kor Fashion Group (Pty) Ltd. (c) KEY MANAGEMENT PERSONNEL Details relating to remuneration paid to key management personnel are included in Note 24. (d) TERMS AND CONDITIONS 11 - 32. Outstanding balances at year-end are unsecured, interest free and settlement occurs in cash with the exception of the loan provided to the associate as disclosed above. (e) ULTIMATE PARENT Premier Investments Limited is the ultimate parent entity. 95 Premier Investments Limited 95 28 (a) SHARE-BASED PAYMENT PLANS RECOGNISED SHARE-BASED PAYMENT EXPENSES The expense recognised for employee services received during the year is shown in the table below: Total expense arising from equity-settled share-based payment transactions (b) TYPE OF SHARE-BASED PAYMENT PLAN CONSOLIDATED 2015 $’000 801 2014 $’000 898 Performance rights of shareholders. The company grants performance rights to executives, thus ensuring that the executives who are most directly able to influence the company performance are appropriately aligned with the interests A performance right is a right to acquire one fully paid ordinary share of the company after meeting a three or four year performance period, provided specific performance hurdles are met. The number of performance rights to vest is determined by a vesting schedule based on the performance of the company. These performance hurdles have been discussed in the Remuneration Report on pages The fair value of the performance rights has been calculated as at the respective grant dates using the Black Sholes European option pricing model. In determining the share-based payments expenses for the period, the number of instruments expected to vest has been adjusted to reflect the number of executives expected to remain with the group until the end of the performance period, as well as the probability of not meeting the TSR The following share-based payment arrangements were in existence during the current and prior performance hurdles. reporting periods: Granted on 22 November 2010 Granted on 10 May 2011 Granted on 25 May 2012 Granted on 12 April 2013 Granted on 18 April 2013 Granted on 11 December 2013 Granted on 22 June 2015 Granted on 22 June 2015 NUMBER GRANT DATE FAIR VALUE AT GRANT DATE 134,910 1,200,000 185,201 304,386 240,000 319,493 169,365 12,266 22/11/2010 10/05/2011 25/05/2012 12/04/2013 18/04/2013 11/12/2013 22/06/2015 22/06/2015 $3.60 $3.00 $2.62 $2.88 $4.20 $4.28 $10.34 $8.56 96     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 28 (a) SHARE-BASED PAYMENT PLANS RECOGNISED SHARE-BASED PAYMENT EXPENSES The expense recognised for employee services received during the year is shown in the table below: Total expense arising from equity-settled share-based payment transactions (b) TYPE OF SHARE-BASED PAYMENT PLAN Performance rights CONSOLIDATED 2015 $’000 801 2014 $’000 898 The company grants performance rights to executives, thus ensuring that the executives who are most directly able to influence the company performance are appropriately aligned with the interests of shareholders. A performance right is a right to acquire one fully paid ordinary share of the company after meeting a three or four year performance period, provided specific performance hurdles are met. The number of performance rights to vest is determined by a vesting schedule based on the performance of the company. These performance hurdles have been discussed in the Remuneration Report on pages 11 - 32. The fair value of the performance rights has been calculated as at the respective grant dates using the Black Sholes European option pricing model. In determining the share-based payments expenses for the period, the number of instruments expected to vest has been adjusted to reflect the number of executives expected to remain with the group until the end of the performance period, as well as the probability of not meeting the TSR performance hurdles. The following share-based payment arrangements were in existence during the current and prior reporting periods: Granted on 22 November 2010 Granted on 10 May 2011 Granted on 25 May 2012 Granted on 12 April 2013 Granted on 18 April 2013 Granted on 11 December 2013 Granted on 22 June 2015 Granted on 22 June 2015 NUMBER GRANT DATE FAIR VALUE AT GRANT DATE 134,910 1,200,000 185,201 304,386 240,000 319,493 169,365 12,266 22/11/2010 10/05/2011 25/05/2012 12/04/2013 18/04/2013 11/12/2013 22/06/2015 22/06/2015 $3.60 $3.00 $2.62 $2.88 $4.20 $4.28 $10.34 $8.56 Annual Report 2015 96 96   NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 28 (b) SHARE-BASED PAYMENT PLANS (CONTINUED) TYPE OF SHARE-BASED PAYMENT PLAN (CONTINUED) The following table shows the factors which were considered in determining the fair value of the performance rights in existence during the current and prior reporting period: GRANT DATE SHARE PRICE OPTION LIFE DIVIDEND YIELD VOLATILITY RISK-FREE RATE FAIR VALUE 22/11/2010 10/05/2011 25/05/2012 12/04/2013 18/04/2013 11/12/2013 22/06/2015 22/06/2015 $7.19 $6.00 $5.24 $5.77 $8.40 $8.56 $10.34 $8.56 3.8 years 4-5 years 3.4 years 3.5 years 4.2 years 3.8 years 2.3 years 2.3 years 5% 5% 5% 5% 5% 5% 5% 5% 40% 40% 40% 40% 40% 40% 40% 40% 5.23% 5.10% 2.39% 2.81% 2.71% 2.98% 1.95% 1.95% $3.60 $3.00 $2.62 $2.88 $4.20 $4.28 $10.34 $8.56 (c) SUMMARY OF RIGHTS GRANTED UNDER PERFORMANCE RIGHTS PLANS The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of, and movements in, performance rights issued during the year: 2015 No. 2015 WAEP Balance at beginning of the year 1,849,080 Granted during the year Forfeited during the year Exercised during the year Expired during the year 181,631 - (665,201) - Balance at the end of the year 1,365,510 - - - - - - 2014 No. 2,212,962 319,493 (148,465) (454,396) (80,514) 1,849,080 2014 WAEP - - - - - - Since the end of the financial year and up to the date of this report, no performance rights have been exercised, no performance rights have been issued, no performance rights have been forfeited and no performance rights have expired. (d) WEIGHTED AVERAGE FAIR VALUE The weighted average fair value of performance rights granted during the year was $10.22 (2014: $4.28). 29 DEED OF CROSS GUARANTEE Pursuant to Class Order 98/1418, relief has been granted to the wholly-owned subsidiaries from the Corporations law requirements for preparation, audit and lodgement of financial reports. As a condition of the class order, Just Group Limited, a subsidiary of Premier Investments Limited, and each of the controlled entities of Just Group Limited entered into a Deed of Cross Guarantee as at 25 June 2009. Premier Investments Limited is not a party to the Deed of Cross Guarantee. 30 30 OTHER FINANCIAL INSTRUMENTS OTHER FINANCIAL INSTRUMENTS CURRENT ASSETS CURRENT ASSETS Derivatives designated as hedging instruments Derivatives designated as hedging instruments Forward currency contracts – cash flow hedges Forward currency contracts – cash flow hedges NON -CURRENT ASSETS NON -CURRENT ASSETS Derivatives designated as hedging instruments Derivatives designated as hedging instruments Forward currency contracts – cash flow hedges Forward currency contracts – cash flow hedges CURRENT LIABILITIES CURRENT LIABILITIES Derivatives designated as hedging instruments Derivatives designated as hedging instruments Forward currency contracts – cash flow hedges Forward currency contracts – cash flow hedges NON -CURRENT LIABILITIES  NON -CURRENT LIABILITIES  Derivatives designated as hedging instruments Derivatives designated as hedging instruments Forward currency contracts – cash flow hedges Forward currency contracts – cash flow hedges CONSOLIDATED CONSOLIDATED 2015 2015 $’000 $’000 2014 2014 $’000 $’000 30,795 30,795 30,795 30,795 1,517 1,517 1,517 1,517 1,771 1,771 1,771 1,771 79 79 79 79 117 117 117 117 10 10 10 10 6,798 6,798 6,798 6,798 3 3 3 3 (a) (a) INSTRUMENTS USED BY THE GROUP INSTRUMENTS USED BY THE GROUP Derivative financial instruments are used by the Group in the normal course of business in order to Derivative financial instruments are used by the Group in the normal course of business in order to hedge exposure to fluctuations in foreign exchange rates in accordance with the Group’s financial hedge exposure to fluctuations in foreign exchange rates in accordance with the Group’s financial risk management policies. risk management policies. (i) (i) Forward currency contracts – cash flow hedges Forward currency contracts – cash flow hedges The majority of the Group’s inventory purchases are denominated in US Dollars. In order to The majority of the Group’s inventory purchases are denominated in US Dollars. In order to protect against exchange rates movements, the Group has entered into forward exchange protect against exchange rates movements, the Group has entered into forward exchange contracts to purchase US Dollars. contracts to purchase US Dollars. These contracts are hedging highly probable forecasted purchases and they are timed to These contracts are hedging highly probable forecasted purchases and they are timed to mature when payments are scheduled to be made. mature when payments are scheduled to be made. The cash flows are expected to occur between one to twenty four months from 25 July 2015 The cash flows are expected to occur between one to twenty four months from 25 July 2015 and the profit and loss within cost of sales will be affected over the next couple of years as and the profit and loss within cost of sales will be affected over the next couple of years as the inventory is sold. the inventory is sold. 97 Premier Investments Limited 97 98 98       NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 30 30 OTHER FINANCIAL INSTRUMENTS OTHER FINANCIAL INSTRUMENTS CURRENT ASSETS CURRENT ASSETS Derivatives designated as hedging instruments Derivatives designated as hedging instruments Forward currency contracts – cash flow hedges Forward currency contracts – cash flow hedges NON -CURRENT ASSETS NON -CURRENT ASSETS Derivatives designated as hedging instruments Derivatives designated as hedging instruments Forward currency contracts – cash flow hedges Forward currency contracts – cash flow hedges CURRENT LIABILITIES CURRENT LIABILITIES Derivatives designated as hedging instruments Derivatives designated as hedging instruments Forward currency contracts – cash flow hedges Forward currency contracts – cash flow hedges NON -CURRENT LIABILITIES  NON -CURRENT LIABILITIES  Derivatives designated as hedging instruments Derivatives designated as hedging instruments Forward currency contracts – cash flow hedges Forward currency contracts – cash flow hedges CONSOLIDATED CONSOLIDATED 2015 $’000 2015 $’000 2014 $’000 2014 $’000 30,795 30,795 30,795 30,795 1,517 1,517 1,517 1,517 1,771 1,771 1,771 1,771 79 79 79 79 117 117 117 117 10 10 10 10 6,798 6,798 6,798 6,798 3 3 3 3 (a) (a) INSTRUMENTS USED BY THE GROUP INSTRUMENTS USED BY THE GROUP Derivative financial instruments are used by the Group in the normal course of business in order to Derivative financial instruments are used by the Group in the normal course of business in order to hedge exposure to fluctuations in foreign exchange rates in accordance with the Group’s financial hedge exposure to fluctuations in foreign exchange rates in accordance with the Group’s financial risk management policies. risk management policies. (i) (i) Forward currency contracts – cash flow hedges Forward currency contracts – cash flow hedges The majority of the Group’s inventory purchases are denominated in US Dollars. In order to The majority of the Group’s inventory purchases are denominated in US Dollars. In order to protect against exchange rates movements, the Group has entered into forward exchange protect against exchange rates movements, the Group has entered into forward exchange contracts to purchase US Dollars. contracts to purchase US Dollars. These contracts are hedging highly probable forecasted purchases and they are timed to mature when payments are scheduled to be made. These contracts are hedging highly probable forecasted purchases and they are timed to mature when payments are scheduled to be made. The cash flows are expected to occur between one to twenty four months from 25 July 2015 The cash flows are expected to occur between one to twenty four months from 25 July 2015 and the profit and loss within cost of sales will be affected over the next couple of years as and the profit and loss within cost of sales will be affected over the next couple of years as the inventory is sold. the inventory is sold. Annual Report 2015 98 98 98     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 30 30 OTHER FINANCIAL INSTRUMENTS (CONTINUED) OTHER FINANCIAL INSTRUMENTS (CONTINUED) (a) (a) INSTRUMENTS USED BY THE GROUP (CONTINUED) INSTRUMENTS USED BY THE GROUP (CONTINUED) (i) (i) Forward currency contracts – cash flow hedges (continued) Forward currency contracts – cash flow hedges (continued) At reporting date, the details of the outstanding contracts are: At reporting date, the details of the outstanding contracts are: CONSOLIDATED CONSOLIDATED 2015 $’000 2015 $’000 2014 $’000 2014 $’000 2015 2015 2014 2014 Buy USD / Sell AUD Buy USD / Sell AUD Maturity < 6 months Maturity < 6 months Maturity 6 – 12 months Maturity 6 – 12 months Maturity 12 – 24 months Maturity 12 – 24 months NOTIONAL AMOUNTS $AUD NOTIONAL AMOUNTS $AUD AVERAGE EXCHANGE RATE AVERAGE EXCHANGE RATE 77,145 77,145 93,879 93,879 10,146 10,146 80,467 80,467 98,823 98,823 14,085 14,085 0.8774 0.8774 0.8089 0.8089 0.7885 0.7885 0.9237 0.9237 0.9006 0.9006 0.9230 0.9230 Buy USD / Sell NZD Buy USD / Sell NZD Maturity < 6 months Maturity < 6 months Maturity 6 – 12 months Maturity 6 – 12 months Maturity 12 – 24 months Maturity 12 – 24 months Buy USD / Sell GBP Buy USD / Sell GBP Maturity < 6 months Maturity < 6 months Maturity 6 – 12 months Maturity 6 – 12 months Maturity 12 – 24 months Maturity 12 – 24 months Buy AUD / Sell NZD Buy AUD / Sell NZD Maturity < 6 months Maturity < 6 months Maturity 6 – 12 months Maturity 6 – 12 months Maturity 12 – 24 months Maturity 12 – 24 months Buy USD / Sell SGD Buy USD / Sell SGD Maturity < 6 months Maturity < 6 months Maturity 6 – 12 months Maturity 6 – 12 months Maturity 12 – 24 months Maturity 12 – 24 months NOTIONAL AMOUNTS $NZD NOTIONAL AMOUNTS $NZD AVERAGE EXCHANGE RATE AVERAGE EXCHANGE RATE 15,652 15,652 - - - - 16,685 16,685 15,844 15,844 15,839 15,839 0.8206 0.8206 - - - - 0.7943 0.7943 0.7822 0.7822 0.8208 0.8208 NOTIONAL AMOUNTS £GBP NOTIONAL AMOUNTS £GBP AVERAGE EXCHANGE RATE AVERAGE EXCHANGE RATE 1,737 1,737 1,134 1,134 167 167 992 992 - - - - 1.5313 1.5313 1.5059 1.5059 1.5067 1.5067 1.6968 1.6968 - - - - NOTIONAL AMOUNTS $NZD NOTIONAL AMOUNTS $NZD AVERAGE EXCHANGE RATE AVERAGE EXCHANGE RATE 4,114 4,114 3,178 3,178 - - 3,834 3,834 - - - - 1.0494 1.0494 1.0561 1.0561 - - NOTIONAL AMOUNTS $SGD NOTIONAL AMOUNTS $SGD AVERAGE EXCHANGE RATE AVERAGE EXCHANGE RATE 3,239 3,239 1,626 1,626 - - - - - - - - 0.7407 0.7407 0.7385 0.7385 - - The forward currency contracts are considered to be highly effective hedges as they are matched against forecast inventory purchases and any gain or loss on the contracts attributable to the hedge risk is taken directly to equity. The forward currency contracts are considered to be highly effective hedges as they are matched against forecast inventory purchases and any gain or loss on the contracts attributable to the hedge risk is taken directly to equity. When the cash flows occur, the Group adjusts the initial measurement of the component recognised in the statement of financial position by the related amount deferred in equity. When the cash flows occur, the Group adjusts the initial measurement of the component recognised in the statement of financial position by the related amount deferred in equity. 99 Premier Investments Limited - - - - - - - - - - 99 99 1.0954 1.0954 32 32 PARENT ENTITY INFORMATION PARENT ENTITY INFORMATION 30 30 OTHER FINANCIAL INSTRUMENTS (CONTINUED) OTHER FINANCIAL INSTRUMENTS (CONTINUED) (b) (b) INTEREST RATE RISK INTEREST RATE RISK (c) (c) CREDIT RISK CREDIT RISK Information regarding interest rate exposure is set out in Note 3. Information regarding interest rate exposure is set out in Note 3. Information regarding credit risk exposure is set out in Note 3. Information regarding credit risk exposure is set out in Note 3. 31 31 EARNINGS PER SHARE EARNINGS PER SHARE The following reflects the income and share data used The following reflects the income and share data used in the calculation of basic and diluted earnings per in the calculation of basic and diluted earnings per share: share: Net profit for the period Net profit for the period Weighted average number of ordinary shares used in Weighted average number of ordinary shares used in calculating: calculating: - basic earnings per share - basic earnings per share - diluted earnings per share - diluted earnings per share There have been no other conversions to, calls of, or subscriptions for ordinary shares or issues of There have been no other conversions to, calls of, or subscriptions for ordinary shares or issues of potential ordinary shares since the reporting date and before the completion of this financial report. potential ordinary shares since the reporting date and before the completion of this financial report. The accounting policies of the parent entity, which have been applied in determining the financial The accounting policies of the parent entity, which have been applied in determining the financial information shown below, are the same as those applied in the consolidated financial statements. information shown below, are the same as those applied in the consolidated financial statements. Refer to note 2 for a summary of the significant accounting policies of the Group. Refer to note 2 for a summary of the significant accounting policies of the Group. The individual financial statements for the parent entity show the following aggregate amounts: The individual financial statements for the parent entity show the following aggregate amounts: CONSOLIDATED CONSOLIDATED 2015 2015 $’000 $’000 2014 2014 $’000 $’000 88,102 88,102 73,000 73,000 NUMBER OF NUMBER OF SHARES SHARES ‘000 ‘000 NUMBER OF NUMBER OF SHARES SHARES ‘000 ‘000 155,967 155,967 157,564 157,564 155,384 155,384 157,455 157,455 2015 2015 $’000 $’000 2014 2014 $’000 $’000 289,109 289,109 312,461 312,461 1,360,484 1,360,484 1,360,447 1,360,447 29,920 29,920 95,420 95,420 23,189 23,189 86,759 86,759 100 100 (a) (a) Summary financial information Summary financial information Statement of financial position Statement of financial position Current assets Current assets Total assets Total assets Current liabilities Current liabilities Total liabilities Total liabilities                     NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) 30 30 OTHER FINANCIAL INSTRUMENTS (CONTINUED) OTHER FINANCIAL INSTRUMENTS (CONTINUED) (b) (b) INTEREST RATE RISK INTEREST RATE RISK Information regarding interest rate exposure is set out in Note 3. Information regarding interest rate exposure is set out in Note 3. (c) (c) CREDIT RISK CREDIT RISK Information regarding credit risk exposure is set out in Note 3. Information regarding credit risk exposure is set out in Note 3. CONSOLIDATED CONSOLIDATED 2015 $’000 2015 $’000 2014 $’000 2014 $’000 31 31 EARNINGS PER SHARE EARNINGS PER SHARE The following reflects the income and share data used The following reflects the income and share data used in the calculation of basic and diluted earnings per in the calculation of basic and diluted earnings per share: share: Net profit for the period Net profit for the period 88,102 88,102 73,000 73,000 Weighted average number of ordinary shares used in calculating: Weighted average number of ordinary shares used in calculating: - basic earnings per share - basic earnings per share - diluted earnings per share - diluted earnings per share NUMBER OF NUMBER OF SHARES SHARES ‘000 ‘000 NUMBER OF NUMBER OF SHARES SHARES ‘000 ‘000 155,967 155,967 157,564 157,564 155,384 155,384 157,455 157,455 There have been no other conversions to, calls of, or subscriptions for ordinary shares or issues of potential ordinary shares since the reporting date and before the completion of this financial report. There have been no other conversions to, calls of, or subscriptions for ordinary shares or issues of potential ordinary shares since the reporting date and before the completion of this financial report. 32 32 PARENT ENTITY INFORMATION PARENT ENTITY INFORMATION The accounting policies of the parent entity, which have been applied in determining the financial The accounting policies of the parent entity, which have been applied in determining the financial information shown below, are the same as those applied in the consolidated financial statements. information shown below, are the same as those applied in the consolidated financial statements. Refer to note 2 for a summary of the significant accounting policies of the Group. Refer to note 2 for a summary of the significant accounting policies of the Group. The individual financial statements for the parent entity show the following aggregate amounts: The individual financial statements for the parent entity show the following aggregate amounts: (a) (a) Summary financial information Summary financial information Statement of financial position Statement of financial position Current assets Current assets Total assets Total assets Current liabilities Current liabilities Total liabilities Total liabilities 2015 $’000 2015 $’000 2014 $’000 2014 $’000 289,109 289,109 312,461 312,461 1,360,484 1,360,484 1,360,447 1,360,447 29,920 29,920 95,420 95,420 23,189 23,189 86,759 86,759 Annual Report 2015 100 100 100     NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) NOTES TO THE FINANCIAL STATEMENTS FOR THE 52 WEEKS ENDED 25 JULY 2015 AND 26 JULY 2014 (CONTINUED) DIRECTORS’ DECLARATION In accordance with a resolution of the Directors of Premier Investments Limited, I state that: In the opinion of the Directors: (a) the financial statements and notes of Premier Investments Limited for the financial year ended 25 July 2015 are in accordance with the Corporations Act 2001, including: (i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements, and (ii) giving a true and fair view of the consolidated entity’s financial position as at 25 July 2015 and of its performance for the financial year ended on that date, and (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. (c) in the opinion of the directors, as at the date of this declaration, there are reasonable grounds to believe that the members of the 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 2(b) 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 declaration by the Chief Financial Officer required by section 295A of the Corporations Act 2001 for the financial year ended 25 July 2015. On behalf of the Board Solomon Lew Chairman 1 October 2015 32 32 PARENT ENTITY INFORMATION (CONTINUED) PARENT ENTITY INFORMATION (CONTINUED) (a) (a) Summary financial information (continued) Summary financial information (continued) Shareholders’ equity Shareholders’ equity Issued capital Issued capital Reserves Reserves - Foreign currency translation reserve - Foreign currency translation reserve - Performance rights reserve - Performance rights reserve Retained earnings Retained earnings Net profit for the year Net profit for the year Total comprehensive income (loss) Total comprehensive income (loss) 2015 $’000 2015 $’000 2014 $’000 2014 $’000 608,615 608,615 608,615 608,615 3,052 3,052 4,082 4,082 649,315 649,315 64,629 64,629 2,719 2,719 333 333 3,281 3,281 661,459 661,459 123,447 123,447 (886) (886) (b) (b) Guarantees entered into by the parent entity Guarantees entered into by the parent entity The parent entity has provided financial guarantees in respect of bank overdrafts and loans of subsidiaries amounting to $nil (2014: $nil). The parent entity has provided financial guarantees in respect of bank overdrafts and loans of subsidiaries amounting to $nil (2014: $nil). The parent entity has also given unsecured guarantees in respect of: The parent entity has also given unsecured guarantees in respect of: (i) (i) Finance leases of subsidiaries amounting to $nil (2014: $nil). Finance leases of subsidiaries amounting to $nil (2014: $nil). (ii) (ii) The bank overdraft of a subsidiary amounting to $nil (2014: $nil). The bank overdraft of a subsidiary amounting to $nil (2014: $nil). (c) (c) Contingent liabilities of the parent entity Contingent liabilities of the parent entity The parent entity did not have any contingent liabilities as at 25 July 2015 or 26 July 2014. The parent entity did not have any contingent liabilities as at 25 July 2015 or 26 July 2014. (d) (d) Contractual commitments for the acquisition of property, plant or equipment Contractual commitments for the acquisition of property, plant or equipment The parent entity did not have any contractual commitments to purchase property, plant and equipment as at 25 July 2015 or 26 July 2014. The parent entity did not have any contractual commitments to purchase property, plant and equipment as at 25 July 2015 or 26 July 2014. 33 33 EVENTS AFTER THE REPORTING DATE EVENTS AFTER THE REPORTING DATE On 17 September 2015, the Directors of Premier Investments Limited declared a final dividend in respect of the 2015 financial year. The total amount of the dividend is $32,840,000 (2014: $31,143,000) which represents a fully franked dividend of 21 cents per share (2014: 20 cents per share). On 17 September 2015, the Directors of Premier Investments Limited declared a final dividend in respect of the 2015 financial year. The total amount of the dividend is $32,840,000 (2014: $31,143,000) which represents a fully franked dividend of 21 cents per share (2014: 20 cents per share). During August 2015, Just Jeans Group Pty Ltd, a subsidiary of Premier Investments Limited, During August 2015, Just Jeans Group Pty Ltd, a subsidiary of Premier Investments Limited, completed the sale of a 50% interest in a joint venture entity, Just Kor Fashion Group (Pty) Ltd, a completed the sale of a 50% interest in a joint venture entity, Just Kor Fashion Group (Pty) Ltd, a company incorporated in South Africa. The full settlement, representing the fair value of the company incorporated in South Africa. The full settlement, representing the fair value of the investment in Just Kor Fashion Group (Pty) Ltd was received subsequent to year-end. Refer to investment in Just Kor Fashion Group (Pty) Ltd was received subsequent to year-end. Refer to note 11 for further details. note 11 for further details. 34 34 CONTINGENT LIABILITIES CONTINGENT LIABILITIES The Group has bank guarantees totalling $4,087,246 (2014: $2,740,170). The Group has bank guarantees totalling $4,087,246 (2014: $2,740,170). 101 Premier Investments Limited 101 101 102         DIRECTORS’ DECLARATION In accordance with a resolution of the Directors of Premier Investments Limited, I state that: In the opinion of the Directors: (a) the financial statements and notes of Premier Investments Limited for the financial year ended 25 July 2015 are in accordance with the Corporations Act 2001, including: (i) (ii) 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 25 July 2015 and of its performance for the financial year ended on that date, and there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. in the opinion of the directors, as at the date of this declaration, there are reasonable grounds to believe that the members of the 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. (b) (c) Note 2(b) 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 declaration by the Chief Financial Officer required by section 295A of the Corporations Act 2001 for the financial year ended 25 July 2015. On behalf of the Board Solomon Lew Chairman 1 October 2015 102 Annual Report 2015 102     8 Exhibition Street Melbourne VIC 3000 Australia GPO Box 67 Melbourne VIC 3001 8 Exhibition Street Melbourne VIC 3000 Australia GPO Box 67 Melbourne VIC 3001 Tel: +61 3 9288 8000 Fax: +61 3 8650 7777 ey.com/au Tel: +61 3 9288 8000 Fax: +61 3 8650 7777 ey.com/au Independent auditor's report to the members of Premier Investments Limited Independent auditor's report to the members of Premier Investments Report on the financial report Limited We have audited the accompanying financial report of Premier Investments Limited, which comprises the consolidated statement of financial position as at 25 July 2015, the consolidated statement of Report on the financial report comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the financial year then ended, notes comprising a summary of significant accounting We have audited the accompanying financial report of Premier Investments Limited, which comprises the policies and other explanatory information, and the directors' declaration of the consolidated entity consolidated statement of financial position as at 25 July 2015, the consolidated statement of comprising the company and the entities it controlled for the financial year ended or from time to time comprehensive income, the consolidated statement of changes in equity and the consolidated statement during the financial year. of cash flows for the financial year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration of the consolidated entity Directors' responsibility for the financial report comprising the company and the entities it controlled for the financial year ended or from time to time during the financial year. 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 Directors' responsibility for the financial report such internal controls as the directors determine are necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 2 (b), the directors The directors of the company are responsible for the preparation of the financial report that gives a true also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for the financial statements comply with International Financial Reporting Standards. such internal controls as the directors determine are necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 2 (b), the directors Auditor's responsibility also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards. Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with Auditor's responsibility relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain the financial report. The procedures selected depend on the auditor's judgment, including the reasonable assurance about whether the financial report is free from material misstatement. assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity's An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in preparation and fair presentation of the financial report in order to design audit procedures that are the financial report. The procedures selected depend on the auditor's judgment, including the appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness assessment of the risks of material misstatement of the financial report, whether due to fraud or error. of the entity's internal controls. An audit also includes evaluating the appropriateness of accounting In making those risk assessments, the auditor considers internal controls relevant to the entity's policies used and the reasonableness of accounting estimates made by the directors, as well as preparation and fair presentation of the financial report in order to design audit procedures that are evaluating the overall presentation of the financial report. appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal controls. An audit also includes evaluating the appropriateness of accounting We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for policies used and the reasonableness of accounting estimates made by the directors, as well as our audit opinion. evaluating the overall presentation of the financial report. Independence We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. In conducting our audit we have complied with the independence requirements of the Corporations Act 2001. We have given to the directors of the company a written Auditor’s Independence Declaration, a Independence copy of which is included in the directors’ report. In conducting our audit we have complied with the independence requirements of the Corporations Act 2001. We have given to the directors of the company a written Auditor’s Independence Declaration, a copy of which is included in the directors’ report. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 103 Premier Investments Limited A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Opinion In our opinion: Opinion In our opinion: a. the financial report of Premier Investments Limited is in accordance with the Corporations Act 2001, including: a. i the financial report of Premier Investments Limited is in accordance with the Corporations Act 2001, including: giving a true and fair view of the consolidated entity's financial position as at 25 July 2015 and of its performance for the financial year ended on that date; and ii i complying with Australian Accounting Standards and the Corporations Regulations 2001; giving a true and fair view of the consolidated entity's financial position as at 25 July 2015 and and of its performance for the financial year ended on that date; and b. the financial report also complies with International Financial Reporting Standards as disclosed complying with Australian Accounting Standards and the Corporations Regulations 2001; ii in Note 2 (b). and b. Report on the remuneration report the financial report also complies with International Financial Reporting Standards as disclosed in Note 2 (b). We have audited the Remuneration Report included in the directors' report for the financial year ended 25 July 2015. The directors of the company are responsible for the preparation and presentation of the Report on the remuneration report 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 We have audited the Remuneration Report included in the directors' report for the financial year ended Australian Auditing Standards. 25 July 2015. 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 Opinion is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. In our opinion, the Remuneration Report of Premier Investments Limited for the financial year ended 25 July 2015, complies with section 300A of the Corporations Act 2001. Opinion In our opinion, the Remuneration Report of Premier Investments Limited for the financial year ended 25 July 2015, complies with section 300A of the Corporations Act 2001. Ernst & Young Ernst & Young Rob Perry Partner Melbourne 1 October 2015 Rob Perry Partner Melbourne 1 October 2015 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Annual Report 2015 104 CORPORATE GOVERNANCE STATEMENT (CONTINUED) CORPORATE GOVERNANCE STATEMENT The committee consists of three members, who as at the date of this report are: The Board of Premier Investments Limited (“Premier”) is responsible for the corporate governance of the Group. The Board guides and monitors the business of Premier and its subsidiaries on behalf of its shareholders. Name David Crean Frank Jones Premier and its Board continue to be fully committed to achieving and demonstrating the highest standards of accountability and transparency in their reporting and see the continued development of a cohesive set of corporate governance policies and practices as fundamental to Premier’s successful growth. Position in Committee Chairperson Non‑Executive Director Non‑Executive Director Date Appointed 1 August 2010 7 September 1995 1 August 2010 Gary Weiss Details of the respective directors’ qualifications, skills, directorships and experience are set out in the Directors’ Report at page 2. The Board has included in its corporate governance policies those matters contained in the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (Third Edition) (“ASX Principles and Recommendations”) where applicable. However, the Board also recognises that full adoption of the ASX Principles and Recommendations may not be practical or provide the optimal result given the particular circumstances of Premier. The composition of the Audit and Risk Committee satisfies ASX Recommendation 4.2. The committee comprises a majority of independent directors and the chair of the committee is also independent. 4.2. Composition This corporate governance statement outlines Premier’s corporate governance policies and practices for the financial year ended 25 July 2015. The Audit and Risk Committee will meet as frequently as required to undertake its role effectively. During the 2010/11 financial year, the Audit and Risk Committee met three times. The CEO is invited to attend each scheduled meeting of the Audit and Risk Committee and a standing invitation is issued to the external auditors. In addition to the policies set out in this statement, Premier’s wholly‑owned subsidiary, Just Group Limited, has in place its own stringent corporate governance practices. Directors who are not members of the Audit and Risk Committee are notified of all meetings and may attend if they wish. Other senior managers and external advisers may also be invited to attend meetings of the Audit and Risk Committee. The Audit and Risk Committee may request management and/or others to provide such input and advice as required. A summary of the ASX Principles and Recommendations are provided in the table below, together with Premier’s compliance with these recommendations as at 25 July 2015. The Board has received a written statement from the CEO of Premier Retail and Company Secretary that Premier’s financial reports present a true and fair view in all material respects of Premier’s financial condition and operational results and in accordance with relevant accounting standards. ASX PRINCIPLES AND RECOMMENDATIONS COMPLY PRINCIPLE 1 – LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT 5 PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE 1.1 Disclose respective roles and responsibilities of its board and management Yes 1.2 Undertake appropriate checks and provide necessary information to elect or re-elect During the 2010/11 financial year, Premier maintained a policy to ensure that it complied with its continuous disclosure obligations under the ASX Listing Rules, the ASX Recommendations and the Corporations Act, and to ensure that all investors have equal and timely access to material and price sensitive information. This policy is contained in Premier’s Board Charter which is summarised on the Company’s website. 1.3 Written agreement with directors and senior executives setting out terms of engagement directors Yes Yes 1.4 Company secretary accountable to the board Yes 6 PRINCIPLE 6 – RESPECT THE RIGHTS OF SHAREHOLDERS 1.5 Diversity policy in place Yes 1.6 Periodically evaluate the performance of the board, its committees and directors PRINCIPLE 2 – STRUCTURE THE BOARD TO ADD VALUE 1.7 Periodically evaluate the performance of senior executives 2.1 Existence of a nomination committee, consisting of majority independent directors Premier endeavours to encourage and promote effective communication with its shareholders, as prescribed by ASX Recommendation 6.1. Premier’s Constitution sets out the procedures to be followed regarding: • the convening of meetings; • the form and requirements of the notice; • the chairperson and quorums; and • the voting procedures, proxies, representations and polls. Premier’s strategy is to ensure that shareholders, regulators and the wider investment community are informed of all major developments affecting Premier in a timely and effective manner. Information is communicated in a number of ways including: 2.5 Independent chairman of the board, and separation of duties between chairman and CEO 2.3 Board composition, including assessment of director independence 2.2 Board skills matrix and regular assessment of mix of skills 2.4 Majority of independent directors on the board In part In part Yes Yes Yes Yes Yes 2.6 Induction process for new directors and provide professional development opportunities • annual and half‑yearly reports; PRINCIPLE 3 – ACT ETHICALLY AND RESPONSIBLY 3.1 Existence and disclosure of a code of conduct • market disclosures in accordance with the continuous disclosure protocol; • updates on operations and developments; • announcements on Premier’s website; and • market briefings and presentations at general meetings. Yes Yes Shareholders are encouraged to attend and participate at general meetings. To facilitate this, meetings are held during normal business hours and at a place convenient for the greatest possible number of shareholders to attend. The full text of notices and accompanying materials are included on Premier’s website. Information is presented in a clear and concise manner designed to provide shareholders and the market with full and accurate information. 105 Premier Investments Limited CORPORATE GOVERNANCE STATEMENT CORPORATE GOVERNANCE STATEMENT (CONTINUED) CORPORATE GOVERNANCE STATEMENT (CONTINUED) ASX PRINCIPLES AND RECOMMENDATIONS COMPLY The Board of Premier Investments Limited (“Premier”) is responsible for the corporate governance of the Group. The Board guides and monitors the business of Premier and its subsidiaries on behalf of its shareholders. growth. Premier and its Board continue to be fully committed to achieving and demonstrating the highest standards of accountability and transparency in their reporting and see the continued development of a cohesive set of corporate governance policies and practices as fundamental to Premier’s successful The Board has included in its corporate governance policies those matters contained in the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (Third Edition) (“ASX Principles and Recommendations”) where applicable. However, the Board also recognises that full adoption of the ASX Principles and Recommendations may not be practical or provide the optimal result given the particular circumstances of Premier. This corporate governance statement outlines Premier’s corporate governance policies and practices for the financial year ended 25 July 2015. In addition to the policies set out in this statement, Premier’s wholly‑owned subsidiary, Just Group Limited, has in place its own stringent corporate governance practices. A summary of the ASX Principles and Recommendations are provided in the table below, together with Premier’s compliance with these recommendations as at 25 July 2015. ASX PRINCIPLES AND RECOMMENDATIONS COMPLY PRINCIPLE 1 – LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT 1.1 Disclose respective roles and responsibilities of its board and management 1.2 Undertake appropriate checks and provide necessary information to elect or re-elect directors 1.3 Written agreement with directors and senior executives setting out terms of engagement 1.4 Company secretary accountable to the board 1.5 Diversity policy in place 1.6 Periodically evaluate the performance of the board, its committees and directors 1.7 Periodically evaluate the performance of senior executives PRINCIPLE 2 – STRUCTURE THE BOARD TO ADD VALUE 2.1 Existence of a nomination committee, consisting of majority independent directors In part 2.2 Board skills matrix and regular assessment of mix of skills 2.3 Board composition, including assessment of director independence 2.4 Majority of independent directors on the board 2.5 Independent chairman of the board, and separation of duties between chairman and CEO In part 2.6 Induction process for new directors and provide professional development opportunities Yes PRINCIPLE 3 – ACT ETHICALLY AND RESPONSIBLY 3.1 Existence and disclosure of a code of conduct Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes PRINCIPLE 4 – SAFEGUARD INTEGRITY IN CORPORATE REPORTING The committee consists of three members, who as at the date of this report are: 4.1 Existence of an audit committee, consisting of majority independent directors 4.2 Obtain CEO and CFO certification regarding proper maintenance of financial records 4.3 Attendance of external auditor at annual general meeting Name David Crean Date Appointed PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE 1 August 2010 Frank Jones 5.1 Continuous disclosure policy in place 7 September 1995 Gary Weiss PRINCIPLE 6 – RESPECT THE RIGHTS OF SHAREHOLDERS 1 August 2010 Position in Committee Chairperson Non‑Executive Director Non‑Executive Director 6.1 Provide relevant information to investors via website Yes Yes Yes Yes Yes 6.2 Investor relations program that promotes two-way communication Details of the respective directors’ qualifications, skills, directorships and experience are set out in the Directors’ Report at page 2. 6.3 Encourage shareholder participation at annual general meetings Yes Yes 4.2. Composition 6.4 Shareholder option to send and receive communications electronically Yes The composition of the Audit and Risk Committee satisfies ASX Recommendation 4.2. The committee comprises a majority of independent directors and the chair of the committee is also independent. PRINCIPLE 7 – RECOGNISE AND MANAGE RISK 7.1 Existence of a committee overseeing risk, consisting of majority independent directors The Audit and Risk Committee will meet as frequently as required to undertake its role effectively. During the 2010/11 financial year, the Audit and Risk Committee met three times. 7.2 Regular reviews of the entity’s risk management framework Yes Yes 7.3 Existence of an internal audit function The CEO is invited to attend each scheduled meeting of the Audit and Risk Committee and a standing invitation is issued to the external auditors. 7.4 Management of environmental and social sustainability risks Yes Yes PRINCIPLE 8 – REMUNERATE FAIRLY AND RESPONSIBLY Directors who are not members of the Audit and Risk Committee are notified of all meetings and may attend if they wish. Other senior managers and external advisers may also be invited to attend meetings of the Audit and Risk Committee. The Audit and Risk Committee may request management and/or others to provide such input and advice as required. 8.1 Existence of a remuneration committee, consisting of majority independent directors In part 8.2 Remuneration policies of executive and non-executive directors and senior executives Yes 8.3 Equity-based remuneration scheme and hedging arrangements The Board has received a written statement from the CEO of Premier Retail and Company Secretary that Premier’s financial reports present a true and fair view in all material respects of Premier’s financial condition and operational results and in accordance with relevant accounting standards. Yes 5 PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE Role of the Board PRINCIPLE 1 – LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT 1 During the 2010/11 financial year, Premier maintained a policy to ensure that it complied with its continuous disclosure 1.1 obligations under the ASX Listing Rules, the ASX Recommendations and the Corporations Act, and to ensure that all investors have equal and timely access to material and price sensitive information. This policy is contained in Premier’s The Directors are responsible for protecting the rights and interests of Premier, its shareholders and Board Charter which is summarised on the Company’s website. other stakeholders, including creditors and employees. 6 PRINCIPLE 6 – RESPECT THE RIGHTS OF SHAREHOLDERS The Board’s key responsibilities are set out in its Board Charter, a summary of which is disclosed on Premier’s website, and include:   protecting and enhancing the value of the assets of Premier; setting strategies, directions and monitoring and reviewing against these strategic objectives; Premier endeavours to encourage and promote effective communication with its shareholders, as prescribed by ASX Recommendation 6.1. Premier’s Constitution sets out the procedures to be followed regarding: • the convening of meetings; • the form and requirements of the notice; overseeing the conduct of Premier’s business in order to evaluate whether Premier is • the chairperson and quorums; and adequately managed; • the voting procedures, proxies, representations and polls. Premier’s strategy is to ensure that shareholders, regulators and the wider investment community are informed of all major developments affecting Premier in a timely and effective manner. Information is communicated in a number of ways including: identifying, assessing, monitoring and managing risk and identifying material changes in Premier’s risk profile to ensure it can take advantage of potential opportunities while managing potential adverse effects;   • annual and half‑yearly reports;  reviewing and ratifying internal controls, codes of conduct and legal compliance;  monitoring Premier’s financial results; • market disclosures in accordance with the continuous disclosure protocol; • updates on operations and developments; • announcements on Premier’s website; and • market briefings and presentations at general meetings. Shareholders are encouraged to attend and participate at general meetings. To facilitate this, meetings are held during normal business hours and at a place convenient for the greatest possible number of shareholders to attend. The full text of notices and accompanying materials are included on Premier’s website. Information is presented in a clear and concise manner designed to provide shareholders and the market with full and accurate information. Annual Report 2015 106 CORPORATE GOVERNANCE STATEMENT (CONTINUED) CORPORATE GOVERNANCE STATEMENT (CONTINUED) 1.1 Role of the Board (continued)  ensuring the significant risks facing Premier have been identified and adequate control monitoring and reporting mechanisms are in place; The committee consists of three members, who as at the date of this report are:  Name  David Crean Frank Jones  Gary Weiss  approval of transactions relating to acquisitions, divestments and capital expenditure above delegated authority limits; determining Premier’s investment policy; Date Appointed 1 August 2010 7 September 1995 approval of financial statements and dividend policy; and ensuring responsible corporate governance. 1 August 2010 Position in Committee Chairperson Non‑Executive Director Non‑Executive Director Details of the respective directors’ qualifications, skills, directorships and experience are set out in the Directors’ Report at page 2. The Board is responsible for ensuring that management’s objectives and activities are aligned with the expectations and risks identified by the Board. The Board has a number of mechanisms in place to ensure this is achieved, including: 4.2. Composition  The composition of the Audit and Risk Committee satisfies ASX Recommendation 4.2. The committee comprises a majority of independent directors and the chair of the committee is also independent. Board approval of strategic plans designed to meet stakeholder’s needs and manage business risk; and  The Audit and Risk Committee will meet as frequently as required to undertake its role effectively. During the 2010/11 ongoing development of the strategic plans and approving initiatives and strategies designed financial year, the Audit and Risk Committee met three times. to ensure continued growth. The CEO is invited to attend each scheduled meeting of the Audit and Risk Committee and a standing invitation is issued to the external auditors. Directors who are not members of the Audit and Risk Committee are notified of all meetings and may attend if they wish. Other senior managers and external advisers may also be invited to attend meetings of the Audit and Risk Committee. The Audit and Risk Committee may request management and/or others to provide such input and advice as required. To assist in the execution of the above responsibilities, the Board had in place, throughout the financial year, an Audit and Risk Committee and a Remuneration and Nomination Committee. Both Committees have direct access to significant internal and external resources, including direct access to Premier’s advisers, both internal and external, and are authorised to seek independent professional or other advice if required. The roles and responsibilities of these committees are discussed throughout this corporate governance statement. The Board has received a written statement from the CEO of Premier Retail and Company Secretary that Premier’s financial reports present a true and fair view in all material respects of Premier’s financial condition and operational results and in accordance with relevant accounting standards. Until such time that a CEO is appointed, the Board will continue to delegate the responsibilities allocated to the CEO to other persons, such as: 5 PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE the Chief Executive Officer of Premier Retail, Mark McInnes;   During the 2010/11 financial year, Premier maintained a policy to ensure that it complied with its continuous disclosure obligations under the ASX Listing Rules, the ASX Recommendations and the Corporations Act, and to ensure that all investors have equal and timely access to material and price sensitive information. This policy is contained in Premier’s Board Charter which is summarised on the Company’s website. external service providers including, without limitation, Century Plaza Trading Pty Ltd; and the Chairman;   the existing management team at Just Group. 6 PRINCIPLE 6 – RESPECT THE RIGHTS OF SHAREHOLDERS Under the Premier Board Charter, the CEO’s responsibilities are:   the day‑to‑day leadership and management of Premier; assisting the Board with the strategy and long-term direction of Premier; Premier endeavours to encourage and promote effective communication with its shareholders, as prescribed by ASX Recommendation 6.1. Premier’s Constitution sets out the procedures to be followed regarding: • the convening of meetings; • the form and requirements of the notice; • the chairperson and quorums; and • the voting procedures, proxies, representations and polls. Premier’s strategy is to ensure that shareholders, regulators and the wider investment community are informed of all major developments affecting Premier in a timely and effective manner. Information is communicated in a number of ways including: managing and overseeing the interfaces between Premier and the public and to act as the principal representative for Premier; and As such, these responsibilities have been delegated to the above people by the Board of Premier. to report annually to the Board on succession planning and management development.   • annual and half‑yearly reports; The Board has delegated the responsibility for compliance with the ASX’s disclosure requirements and for shareholder communication to the Company Secretary. The Company Secretary uses information provided by the ASX and consults Premier’s professional legal advisers in ensuring compliance with Premier’s obligations with respect to the ASX Listing Rules and Corporate Governance Principles. Premier communicates with shareholders through announcements to the ASX (which are also posted on Premier’s website), general meetings of shareholders, the annual report, and through written and electronic correspondence from the Company Secretary from time to time. • market disclosures in accordance with the continuous disclosure protocol; • updates on operations and developments; • announcements on Premier’s website; and • market briefings and presentations at general meetings. Shareholders are encouraged to attend and participate at general meetings. To facilitate this, meetings are held during normal business hours and at a place convenient for the greatest possible number of shareholders to attend. The full text of notices and accompanying materials are included on Premier’s website. Information is presented in a clear and concise manner designed to provide shareholders and the market with full and accurate information. 107 Premier Investments Limited CORPORATE GOVERNANCE STATEMENT (CONTINUED) CORPORATE GOVERNANCE STATEMENT (CONTINUED) CORPORATE GOVERNANCE STATEMENT (CONTINUED) 1.1 Role of the Board (continued) ensuring the significant risks facing Premier have been identified and adequate control monitoring and reporting mechanisms are in place; approval of transactions relating to acquisitions, divestments and capital expenditure above 1.2 Appointment of New Directors and Re-Election of Directors The committee consists of three members, who as at the date of this report are: Premier had in place a Remuneration and Nomination Committee during the 2015 financial year. The Remuneration and Nomination Committee regularly reviews the structure, size and balance of the Board to ensure that the Board continues to have a mix of skills and experience necessary to conduct the business of Premier. Name David Crean The responsibilities of Premier’s Remuneration and Nomination Committee include advising the Board on: Date Appointed 1 August 2010 Frank Jones  Gary Weiss  criteria for appointment and identification of candidates for appointment as a Director; 7 September 1995 1 August 2010 the candidates it considers appropriate for appointment as a Director; Position in Committee Chairperson Non‑Executive Director Non‑Executive Director  Details of the respective directors’ qualifications, skills, directorships and experience are set out in the Directors’ Report at page 2. conducting of appropriate inquiries into the backgrounds and qualifications of Director nominees, including character, education, experience and financial history checks; and 4.2. Composition  the re-appointment of any Non-Executive Director at the conclusion of their term of office. The composition of the Audit and Risk Committee satisfies ASX Recommendation 4.2. The committee comprises a majority of independent directors and the chair of the committee is also independent. Premier’s Constitution specifies that all Directors must retire from the office at no later than the third Annual General Meeting following their last election. The Audit and Risk Committee will meet as frequently as required to undertake its role effectively. During the 2010/11 financial year, the Audit and Risk Committee met three times. All material information relevant to whether or not to appoint or re-elect a Director is provided to the Company’s shareholders as part of the Notice of Meeting and Explanatory Statement for the relevant meeting of shareholders addressing the appointment or re-election. The CEO is invited to attend each scheduled meeting of the Audit and Risk Committee and a standing invitation is issued to the external auditors. Terms of appointment of Directors and Senior Executives Directors who are not members of the Audit and Risk Committee are notified of all meetings and may attend if they wish. 1.3 Other senior managers and external advisers may also be invited to attend meetings of the Audit and Risk Committee. The Audit and Risk Committee may request management and/or others to provide such input and advice as required. The appointment of Directors and Senior Executives are made by, and in accordance with, a formal letter of appointment setting out the key terms and conditions relevant to the appointment. The Board has received a written statement from the CEO of Premier Retail and Company Secretary that Premier’s financial reports present a true and fair view in all material respects of Premier’s financial condition and operational results and in accordance with relevant accounting standards. The Group has an induction process for all Senior Executives and Directors. All new Directors are provided with the key policies and procedures affecting the Group, which include: 5 PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE a copy of the Company’s constitution;   a copy of the Company’s Code of Conduct; During the 2010/11 financial year, Premier maintained a policy to ensure that it complied with its continuous disclosure obligations under the ASX Listing Rules, the ASX Recommendations and the Corporations Act, and to ensure that all investors have equal and timely access to material and price sensitive information. This policy is contained in Premier’s Board Charter which is summarised on the Company’s website. the most recent Annual Report of the Company; and a copy of the Company’s Board Charter,   6 PRINCIPLE 6 – RESPECT THE RIGHTS OF SHAREHOLDERS where appropriate, a summary of the most recent strategic plan of the Company.  Accountability of Company Secretary The Company Secretary is accountable directly to the Board, through the Chairman, and provides support to the Board and its committees on all matters to do with the proper functioning of the Board. The role of the Company Secretary includes: Premier endeavours to encourage and promote effective communication with its shareholders, as prescribed by ASX 1.4 Recommendation 6.1. Premier’s Constitution sets out the procedures to be followed regarding: • the convening of meetings; • the form and requirements of the notice; • the chairperson and quorums; and • the voting procedures, proxies, representations and polls. Premier’s strategy is to ensure that shareholders, regulators and the wider investment community are informed of all major developments affecting Premier in a timely and effective manner. Information is communicated in a number of ways including: coordinating the timely completion and dispatch of board and committee papers; monitoring that Board and committee policy and procedures are followed; advising the Board and its committees on governance matters;     • annual and half‑yearly reports; ensuring that the business at board and committee meetings are accurately captured in the minutes; and • market disclosures in accordance with the continuous disclosure protocol; • updates on operations and developments; • announcements on Premier’s website; and Each Director is able to communicate directly with the Company Secretary. The decision to appoint or • market briefings and presentations at general meetings. remove the Company Secretary is made by the Board. helping to organise and facilitate the induction of Directors.  Shareholders are encouraged to attend and participate at general meetings. To facilitate this, meetings are held during normal business hours and at a place convenient for the greatest possible number of shareholders to attend. The full text of notices and accompanying materials are included on Premier’s website. Information is presented in a clear and concise manner designed to provide shareholders and the market with full and accurate information. Annual Report 2015 108                delegated authority limits; determining Premier’s investment policy; approval of financial statements and dividend policy; and ensuring responsible corporate governance. The Board is responsible for ensuring that management’s objectives and activities are aligned with the expectations and risks identified by the Board. The Board has a number of mechanisms in place to ensure this is achieved, including: Board approval of strategic plans designed to meet stakeholder’s needs and manage business risk; and to ensure continued growth. ongoing development of the strategic plans and approving initiatives and strategies designed To assist in the execution of the above responsibilities, the Board had in place, throughout the financial year, an Audit and Risk Committee and a Remuneration and Nomination Committee. Both Committees have direct access to significant internal and external resources, including direct access to Premier’s advisers, both internal and external, and are authorised to seek independent professional or other advice if required. The roles and responsibilities of these committees are discussed throughout this corporate governance statement. Until such time that a CEO is appointed, the Board will continue to delegate the responsibilities allocated to the CEO to other persons, such as: the Chief Executive Officer of Premier Retail, Mark McInnes; the Chairman; external service providers including, without limitation, Century Plaza Trading Pty Ltd; and the existing management team at Just Group. Under the Premier Board Charter, the CEO’s responsibilities are: the day‑to‑day leadership and management of Premier; assisting the Board with the strategy and long-term direction of Premier; managing and overseeing the interfaces between Premier and the public and to act as the principal representative for Premier; and to report annually to the Board on succession planning and management development. As such, these responsibilities have been delegated to the above people by the Board of Premier. The Board has delegated the responsibility for compliance with the ASX’s disclosure requirements and for shareholder communication to the Company Secretary. The Company Secretary uses information provided by the ASX and consults Premier’s professional legal advisers in ensuring compliance with Premier’s obligations with respect to the ASX Listing Rules and Corporate Governance Principles. Premier communicates with shareholders through announcements to the ASX (which are also posted on Premier’s website), general meetings of shareholders, the annual report, and through written and electronic correspondence from the Company Secretary from time to time. CORPORATE GOVERNANCE STATEMENT (CONTINUED) CORPORATE GOVERNANCE STATEMENT (CONTINUED) 1.5 Diversity Policy The committee consists of three members, who as at the date of this report are: The Group is an equal opportunity employer, and recognises the value contributed to the organisation by employing people with varying skills, cultural backgrounds, gender, ethnicity and experience. Premier believes its diverse workforce is the key to its continued growth, improved productivity and performance. Name David Crean Frank Jones Date Appointed 1 August 2010 We actively value and embrace the diversity of our employees and are committed to creating an inclusive workplace where everyone is treated equally and fairly, and where discrimination, harassment and inequity are not tolerated. We aim to maintain appropriate standards of behaviour throughout the organisation, to create a safe workplace free from harassment and discrimination of any kind, to treat all team members fairly and equitably, and to evaluate employees based on their performance, skills and abilities. Position in Committee Chairperson Non‑Executive Director Non‑Executive Director 7 September 1995 1 August 2010 Gary Weiss Details of the respective directors’ qualifications, skills, directorships and experience are set out in the Directors’ Report at page 2. The following steps have been taken to achieve the Board’s diversity objectives: 4.2. Composition  The composition of the Audit and Risk Committee satisfies ASX Recommendation 4.2. The committee comprises a majority of independent directors and the chair of the committee is also independent. the appointment of Ms. Sally Herman in the 2012 financial year as an independent Non- Executive Director; and  The Audit and Risk Committee will meet as frequently as required to undertake its role effectively. During the 2010/11 financial year, the Audit and Risk Committee met three times. the appointment of Ms. Colette Garnsey in the 2013 financial year as the Core Brand Director, Premier Retail. The CEO is invited to attend each scheduled meeting of the Audit and Risk Committee and a standing invitation is issued to the external auditors. For the 2015 financial year, women represented 10% of Premier’s board, 39% of senior executives, 68% at senior management level and 90% of the Groups’ workforce. Directors who are not members of the Audit and Risk Committee are notified of all meetings and may attend if they wish. Other senior managers and external advisers may also be invited to attend meetings of the Audit and Risk Committee. The Audit and Risk Committee may request management and/or others to provide such input and advice as required. For this purpose, “senior executive” is defined as a key management executive who represents at least one of the major functions of the organisation, and participates in organisation-wide decisions with the CEO. The term “senior management level” refers to general managers and senior managers tasked with influencing organisation-wide decision making forums to provide expertise or project development, or likely to be involved in a balance of strategic and operational aspects of management. The Board has received a written statement from the CEO of Premier Retail and Company Secretary that Premier’s financial reports present a true and fair view in all material respects of Premier’s financial condition and operational results and in accordance with relevant accounting standards. 5 PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE In accordance with the requirements of the Workplace Gender Equality Act 2012, a subsidiary company of Premier Investments Limited, Just Group Limited lodged its annual compliance report with the Workplace Gender Equality Agency. During the 2010/11 financial year, Premier maintained a policy to ensure that it complied with its continuous disclosure obligations under the ASX Listing Rules, the ASX Recommendations and the Corporations Act, and to ensure that all investors have equal and timely access to material and price sensitive information. This policy is contained in Premier’s Board Charter which is summarised on the Company’s website. Given the high proportion of senior executives, senior managers and employees of the Group that are women, the Board has determined not to impose measurable objectives relating to diversity at this stage. 6 PRINCIPLE 6 – RESPECT THE RIGHTS OF SHAREHOLDERS Evaluating the Performance of the Board and its committees   The Board shall undertake regular performance evaluation of itself that: evaluates the effectiveness of the Board as a whole, and that of individual Directors; 1.6 Premier endeavours to encourage and promote effective communication with its shareholders, as prescribed by ASX Recommendation 6.1. Premier’s Constitution sets out the procedures to be followed regarding: • the convening of meetings; • the form and requirements of the notice; • the chairperson and quorums; and • the voting procedures, proxies, representations and polls. Premier’s strategy is to ensure that shareholders, regulators and the wider investment community are informed of all major developments affecting Premier in a timely and effective manner. Information is communicated in a number of ways including: effects any improvements to the Board Charter deemed necessary or desirable. compares the performance of the Board with the requirements of its Charter; sets the goals and objectives of the Board for the upcoming year; and The performance evaluation shall be conducted in such a manner as the Board deems appropriate and may involve the use of an external consultant. The Remuneration and Nomination Committee may assist in evaluating the performance and effectiveness of the Board and each Director before recommending to the Board his or her nomination for an additional term as a Director. • annual and half‑yearly reports;   • market disclosures in accordance with the continuous disclosure protocol; • updates on operations and developments; • announcements on Premier’s website; and • market briefings and presentations at general meetings. For the 2015 financial year no formal performance evaluations of the Board were undertaken. Shareholders are encouraged to attend and participate at general meetings. To facilitate this, meetings are held during normal business hours and at a place convenient for the greatest possible number of shareholders to attend. The full text of notices and accompanying materials are included on Premier’s website. Information is presented in a clear and concise manner designed to provide shareholders and the market with full and accurate information. 109 Premier Investments Limited The Group is an equal opportunity employer, and recognises the value contributed to the organisation by employing people with varying skills, cultural backgrounds, gender, ethnicity and experience. Premier believes its diverse workforce is the key to its continued growth, improved productivity and performance. We actively value and embrace the diversity of our employees and are committed to creating an inclusive workplace where everyone is treated equally and fairly, and where discrimination, harassment and inequity are not tolerated. We aim to maintain appropriate standards of behaviour throughout the organisation, to create a safe workplace free from harassment and discrimination of any kind, to treat all team members fairly and equitably, and to evaluate employees based on their performance, skills and abilities. The following steps have been taken to achieve the Board’s diversity objectives: the appointment of Ms. Sally Herman in the 2012 financial year as an independent Non- Executive Director; and Director, Premier Retail. the appointment of Ms. Colette Garnsey in the 2013 financial year as the Core Brand For the 2015 financial year, women represented 10% of Premier’s board, 39% of senior executives, 68% at senior management level and 90% of the Groups’ workforce. For this purpose, “senior executive” is defined as a key management executive who represents at least one of the major functions of the organisation, and participates in organisation-wide decisions with the CEO. The term “senior management level” refers to general managers and senior managers tasked with influencing organisation-wide decision making forums to provide expertise or project development, or likely to be involved in a balance of strategic and operational aspects of management. In accordance with the requirements of the Workplace Gender Equality Act 2012, a subsidiary company of Premier Investments Limited, Just Group Limited lodged its annual compliance report with the Workplace Gender Equality Agency. Given the high proportion of senior executives, senior managers and employees of the Group that are women, the Board has determined not to impose measurable objectives relating to diversity at this stage. 1.6 Evaluating the Performance of the Board and its committees The Board shall undertake regular performance evaluation of itself that: evaluates the effectiveness of the Board as a whole, and that of individual Directors; compares the performance of the Board with the requirements of its Charter; sets the goals and objectives of the Board for the upcoming year; and effects any improvements to the Board Charter deemed necessary or desirable. The performance evaluation shall be conducted in such a manner as the Board deems appropriate and may involve the use of an external consultant. The Remuneration and Nomination Committee may assist in evaluating the performance and effectiveness of the Board and each Director before recommending to the Board his or her nomination for an additional term as a Director. For the 2015 financial year no formal performance evaluations of the Board were undertaken.       CORPORATE GOVERNANCE STATEMENT (CONTINUED) CORPORATE GOVERNANCE STATEMENT (CONTINUED) CORPORATE GOVERNANCE STATEMENT (CONTINUED) 1.5 Diversity Policy 1.7 Evaluating the Performance of Senior Executives The performance of senior executives is reviewed against specific measurable and qualitative indicators, which include: The committee consists of three members, who as at the date of this report are:  financial measure of the Company’s performance;  Name David Crean  Frank Jones achievement of strategic objectives; and achievement of key operational targets. Date Appointed 1 August 2010 7 September 1995 Position in Committee Chairperson Non‑Executive Director Non‑Executive Director Gary Weiss 1 August 2010 The CEO of Premier Retail and the Board of the relevant subsidiary are responsible for the review of the performance of senior executives, in line with their respective key performance indicators. The evaluation is based on criteria that include the performance of the business, the accomplishment of long-term strategic objectives and other non-quantitative objectives established at the beginning of each year. A performance evaluation was undertaken on senior executives during the 2015 financial year in accordance with the process disclosed above. Details of the respective directors’ qualifications, skills, directorships and experience are set out in the Directors’ Report at page 2. 4.2. Composition PRINCIPLE 2 – STRUCTURE THE BOARD TO ADD VALUE The composition of the Audit and Risk Committee satisfies ASX Recommendation 4.2. The committee comprises a majority 2 of independent directors and the chair of the committee is also independent. 2.1 The Audit and Risk Committee will meet as frequently as required to undertake its role effectively. During the 2010/11 financial year, the Audit and Risk Committee met three times. During the 2015 financial year, Premier maintained a Nomination Committee. Nomination Committee The CEO is invited to attend each scheduled meeting of the Audit and Risk Committee and a standing invitation is issued to the external auditors. The Remuneration and Nomination Committee supports and advises the Board on the nomination policies and practices of Premier. The roles and responsibilities of the Remuneration and Nomination Committee are set out in Premier’s Board Charter, a summary of which is provided on Premier’s website. Directors who are not members of the Audit and Risk Committee are notified of all meetings and may attend if they wish. Other senior managers and external advisers may also be invited to attend meetings of the Audit and Risk Committee. The Audit and Risk Committee may request management and/or others to provide such input and advice as required. The Remuneration and Nomination Committee consists of the following three members: The Board has received a written statement from the CEO of Premier Retail and Company Secretary that Premier’s financial reports present a true and fair view in all material respects of Premier’s financial condition and operational results and in accordance with relevant accounting standards. Position in Committee Appointed Name Henry Lanzer September 2008 Chairperson 5 PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE September 2008 Non-Executive Director Solomon Lew Gary Weiss September 2008 During the 2010/11 financial year, Premier maintained a policy to ensure that it complied with its continuous disclosure obligations under the ASX Listing Rules, the ASX Recommendations and the Corporations Act, and to ensure that all investors have equal and timely access to material and price sensitive information. This policy is contained in Premier’s Board Charter which is summarised on the Company’s website. All of the members of the committee are Non-Executive Directors, one of whom is an independent Director. Non-Executive Director 6 PRINCIPLE 6 – RESPECT THE RIGHTS OF SHAREHOLDERS The nomination purposes of the committee include:   Premier endeavours to encourage and promote effective communication with its shareholders, as prescribed by ASX reviewing and providing recommendations of plans of succession for executives, Non‑ Recommendation 6.1. Premier’s Constitution sets out the procedures to be followed regarding: Executive Directors and Premier’s Chief Executive Officer (when appointed); • the convening of meetings; establishing and maintaining a formal procedure for the selection and appointment of • the form and requirements of the notice; Directors to the Board; • the chairperson and quorums; and • the voting procedures, proxies, representations and polls. undertaking regular reviews of the structure and size of the Board to ensure that the Board continues to have a mix of skills and experience necessary to conduct Premier’s business Premier’s strategy is to ensure that shareholders, regulators and the wider investment community are informed of all major developments affecting Premier in a timely and effective manner. Information is communicated in a number of ways and to make any consequential recommendations to the Board; and including:   • annual and half‑yearly reports; identifying, assessing the suitability of, and investigating the backgrounds of, individuals qualified to become Directors and making recommendations to the Board about potential nominees. • market disclosures in accordance with the continuous disclosure protocol; • updates on operations and developments; • announcements on Premier’s website; and • market briefings and presentations at general meetings. Shareholders are encouraged to attend and participate at general meetings. To facilitate this, meetings are held during normal business hours and at a place convenient for the greatest possible number of shareholders to attend. The full text of notices and accompanying materials are included on Premier’s website. Information is presented in a clear and concise manner designed to provide shareholders and the market with full and accurate information. Annual Report 2015 110 CORPORATE GOVERNANCE STATEMENT (CONTINUED) CORPORATE GOVERNANCE STATEMENT (CONTINUED) 2.1 Nomination Committee (continued) The committee consists of three members, who as at the date of this report are: The Remuneration and Nomination Committee intends to maintain the diversity of knowledge, skills and experience on the Premier Board across the areas of retailing and manufacturing, accounting, finance, transport, government and law. Name David Crean The Remuneration and Nomination Committee met on three occasions during the year. The meetings were attended by all three members. Further information on attendance at Board and committee meetings are set out in the Directors’ Report on page 10. Date Appointed 1 August 2010 Frank Jones 7 September 1995 Position in Committee Chairperson Non‑Executive Director Non‑Executive Director Gary Weiss 1 August 2010 Although ASX Recommendation 2.1 suggests that a nomination committee should consist of a majority of independent Directors and be chaired by an independent Director, Premier believes that the current members of its Nomination Committee are most appropriate to achieve its objectives given their skill set and experience. Details of the respective directors’ qualifications, skills, directorships and experience are set out in the Directors’ Report at page 2. 2.2 4.2. Composition Board skills assessment The composition of the Audit and Risk Committee satisfies ASX Recommendation 4.2. The committee comprises a majority of independent directors and the chair of the committee is also independent. The Board Charter provides that the Remuneration and Nomination Committee will undertake regular reviews of the structure and size of the Board to ensure that the Board continues to have a mix of skills and experience necessary to conduct Premier’s business. The Remuneration and Nomination Committee intends to maintain the diversity of knowledge, skills and experience on the Board across the areas of retailing and manufacturing, accounting, finance, transport, government and law. The Audit and Risk Committee will meet as frequently as required to undertake its role effectively. During the 2010/11 financial year, the Audit and Risk Committee met three times. The CEO is invited to attend each scheduled meeting of the Audit and Risk Committee and a standing invitation is issued to the external auditors. The skills, experience and expertise relevant to the position of Director held by each Director in office at the date of this report are included in the Directors’ Report. Directors who are not members of the Audit and Risk Committee are notified of all meetings and may attend if they wish. Other senior managers and external advisers may also be invited to attend meetings of the Audit and Risk Committee. The 2.3 Audit and Risk Committee may request management and/or others to provide such input and advice as required. Board composition As at 25 July 2015, the Board comprised nine Directors. The members of the Board and their positions in office during the 2015 financial year are: The Board has received a written statement from the CEO of Premier Retail and Company Secretary that Premier’s financial reports present a true and fair view in all material respects of Premier’s financial condition and operational results and in accordance with relevant accounting standards. Appointed Independent Director Non- Executive Yes 5 PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE Solomon Lew (Chairman) March 2008 During the 2010/11 financial year, Premier maintained a policy to ensure that it complied with its continuous disclosure obligations under the ASX Listing Rules, the ASX Recommendations and the Corporations Act, and to ensure that all investors have equal and timely access to material and price sensitive information. This policy is contained in Premier’s Board Charter which is summarised on the Company’s website. David Crean (Appointed as Deputy Chairman on 25 July 2015) Timothy Antonie (Lead Independent Director) December 2009 Lindsay Fox December 2009 Yes Yes Yes Yes April 1987 Yes Yes No 6 PRINCIPLE 6 – RESPECT THE RIGHTS OF SHAREHOLDERS Sally Herman December 2011 Yes Yes Yes Henry Lanzer Mark McInnes December 2012 Michael McLeod March 2008 Premier endeavours to encourage and promote effective communication with its shareholders, as prescribed by ASX Recommendation 6.1. Premier’s Constitution sets out the procedures to be followed regarding: • the convening of meetings; Gary Weiss • the form and requirements of the notice; • the chairperson and quorums; and • the voting procedures, proxies, representations and polls. Premier’s strategy is to ensure that shareholders, regulators and the wider investment community are informed of all major developments affecting Premier in a timely and effective manner. Information is communicated in a number of ways including: Details of the respective Directors’ qualifications, skills, directorships and experience are set out in the Directors’ Report on page 2. Frank Jones (Deputy Chairman) – resigned 25 July 2015 August 2002 March 1994 April 1987 Yes Yes Yes Yes No No No No No • annual and half‑yearly reports; • market disclosures in accordance with the continuous disclosure protocol; • updates on operations and developments; • announcements on Premier’s website; and • market briefings and presentations at general meetings. Shareholders are encouraged to attend and participate at general meetings. To facilitate this, meetings are held during normal business hours and at a place convenient for the greatest possible number of shareholders to attend. The full text of notices and accompanying materials are included on Premier’s website. Information is presented in a clear and concise manner designed to provide shareholders and the market with full and accurate information. 111 Premier Investments Limited CORPORATE GOVERNANCE STATEMENT (CONTINUED) CORPORATE GOVERNANCE STATEMENT (CONTINUED) CORPORATE GOVERNANCE STATEMENT (CONTINUED) 2.1 Nomination Committee (continued) 2.4 Director Independence The Remuneration and Nomination Committee intends to maintain the diversity of knowledge, skills and experience on the Premier Board across the areas of retailing and manufacturing, accounting, finance, transport, government and law. The Remuneration and Nomination Committee met on three occasions during the year. The meetings were attended by all three members. Further information on attendance at Board and committee meetings are set out in the Directors’ Report on page 10. Although ASX Recommendation 2.1 suggests that a nomination committee should consist of a majority of independent Directors and be chaired by an independent Director, Premier believes that the current members of its Nomination Committee are most appropriate to achieve its objectives given their skill set and experience. 2.2 Board skills assessment The Board Charter provides that the Remuneration and Nomination Committee will undertake regular reviews of the structure and size of the Board to ensure that the Board continues to have a mix of skills and experience necessary to conduct Premier’s business. The Remuneration and Nomination Committee intends to maintain the diversity of knowledge, skills and experience on the Board across the areas of retailing and manufacturing, accounting, finance, transport, government and law. The skills, experience and expertise relevant to the position of Director held by each Director in office at the date of this report are included in the Directors’ Report. 2.3 Board composition As at 25 July 2015, the Board comprised nine Directors. The members of the Board and their positions in office during the 2015 financial year are: Director Solomon Lew (Chairman) Appointed March 2008 David Crean (Appointed as Deputy Chairman December 2009 Timothy Antonie (Lead Independent Director) December 2009 Non- Executive Independent Yes Yes Yes Yes Yes Yes No Yes Yes Yes No Yes Yes Yes Yes No No No Yes No April 1987 December 2011 March 2008 December 2012 August 2002 March 1994 on 25 July 2015) Lindsay Fox Sally Herman Henry Lanzer Mark McInnes Michael McLeod Gary Weiss 25 July 2015 Frank Jones (Deputy Chairman) – resigned April 1987 Details of the respective Directors’ qualifications, skills, directorships and experience are set out in the Directors’ Report on page 2. The committee consists of three members, who as at the date of this report are: ASX Recommendation 2.4 recommends that the Board comprise a majority of independent directors. Premier has adopted the definition of independence set out in the commentary to ASX Recommendation 2.3 as disclosed in the Director Independence Policy on Premier’s website. Directors are assessed as independent where they are independent of management and free of any business or other relationship that could materially interfere, or be perceived to materially interfere, with the exercise of their unfettered and independent judgement. Date Appointed 1 August 2010 Name David Crean Frank Jones During the 2015 financial year, the Board considered that 5 of its 10 Directors were independent. As at 25 July 2015, the Board considered that 5 of its 9 Directors were independent. 1 August 2010 Gary Weiss 7 September 1995 Position in Committee Chairperson Non‑Executive Director Non‑Executive Director Details of the respective directors’ qualifications, skills, directorships and experience are set out in the Directors’ Report at page 2. The Board is aware of ASX Recommendation 2.4 and is confident that proper processes are in place, as outlined in its Board Charter, to address needs and expectations with respect to decision-making and the management of conflicts of interest. The Directors on the Board of Premier all add significant value and expertise in a variety of fields. Regardless of whether Directors are defined as independent, all Directors are expected to bring independent judgements and views to board deliberations. The composition of the Audit and Risk Committee satisfies ASX Recommendation 4.2. The committee comprises a majority of independent directors and the chair of the committee is also independent. 4.2. Composition The Audit and Risk Committee will meet as frequently as required to undertake its role effectively. During the 2010/11 financial year, the Audit and Risk Committee met three times. Premier permits individual Directors to engage separate independent counsel or advisors at the expense of the Group in appropriate circumstances, with the approval of the Chairman or by resolution of the Board. The CEO is invited to attend each scheduled meeting of the Audit and Risk Committee and a standing invitation is issued 2.5 to the external auditors. Chairman of the Board Directors who are not members of the Audit and Risk Committee are notified of all meetings and may attend if they wish. Other senior managers and external advisers may also be invited to attend meetings of the Audit and Risk Committee. The Audit and Risk Committee may request management and/or others to provide such input and advice as required. Premier does not comply with ASX Recommendation 2.5 as Mr. Lew, the Chairman of the Board, is not an independent Director. The Board believes that Mr. Lew’s position as a Director of Premier’s major shareholder, Century Plaza Investments Pty Ltd, does not prevent him from carrying out his responsibilities as Chairman of the Board. Given Mr. Lew’s industry experience, skills, expertise and reputation, and his relationship with Premier as its founder, the Board feels that Mr. Lew adds the most value to the Board as its Chairman and that he is the most appropriate person for the position. The Board has received a written statement from the CEO of Premier Retail and Company Secretary that Premier’s financial reports present a true and fair view in all material respects of Premier’s financial condition and operational results and in accordance with relevant accounting standards. 5 PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE In October 2014, the Board appointed Mr. Antonie as Lead Independent Director. The Board considers the appointment of a Lead Independent Director as an important step in providing support to the Chairman in facilitating effective contributions of all Directors, and to promote constructive relations between Directors, and between the Board and management. During the 2010/11 financial year, Premier maintained a policy to ensure that it complied with its continuous disclosure obligations under the ASX Listing Rules, the ASX Recommendations and the Corporations Act, and to ensure that all investors have equal and timely access to material and price sensitive information. This policy is contained in Premier’s Board Charter which is summarised on the Company’s website. 6 PRINCIPLE 6 – RESPECT THE RIGHTS OF SHAREHOLDERS Dr. Crean, an independent Non-Executive Director, was appointed as Deputy Chairman as of 25 July 2015. The Board considers the appointment of an independent Deputy Chairman as another important step in promoting a culture of openness and constructive challenge that would allow for diversity of views to be considered by the Board. The Board supports the separation of the role of the Chairman from that of the Chief Executive Officer (“CEO”) in accordance with ASX Recommendation 2.5. The Board Charter provides that the Chairman must be a Non-Executive Director, and defines the key roles of the Chairman as: Premier endeavours to encourage and promote effective communication with its shareholders, as prescribed by ASX Recommendation 6.1. Premier’s Constitution sets out the procedures to be followed regarding: • the convening of meetings; • the form and requirements of the notice; • the chairperson and quorums; and managing the Board effectively; • the voting procedures, proxies, representations and polls. Premier’s strategy is to ensure that shareholders, regulators and the wider investment community are informed of all major developments affecting Premier in a timely and effective manner. Information is communicated in a number of ways including: providing leadership to the Board; and interfacing with the CEO.    • annual and half‑yearly reports; • market disclosures in accordance with the continuous disclosure protocol; • updates on operations and developments; • announcements on Premier’s website; and • market briefings and presentations at general meetings. Shareholders are encouraged to attend and participate at general meetings. To facilitate this, meetings are held during normal business hours and at a place convenient for the greatest possible number of shareholders to attend. The full text of notices and accompanying materials are included on Premier’s website. Information is presented in a clear and concise manner designed to provide shareholders and the market with full and accurate information. Annual Report 2015 112 CORPORATE GOVERNANCE STATEMENT (CONTINUED) CORPORATE GOVERNANCE STATEMENT (CONTINUED) 2.6 New Director Induction and Professional Development The committee consists of three members, who as at the date of this report are: The Group has an induction process for all new Directors. All new Directors are provided with the key policies and procedures affecting the Group. The Board Charter provides for processes to ensure that new Directors are acquainted with knowledge of the industry within which the Group operates, and briefings with key executives where appropriate. Name David Crean Frank Jones Gary Weiss 3 In order for Directors to act in the best interest of the Group, Premier permits individual Directors to engage separate independent counsel or advisors at the expense of the Group in appropriate circumstances, with the approval of the Chairman or by resolution of the Board. 7 September 1995 Date Appointed 1 August 2010 Position in Committee Chairperson Non‑Executive Director Non‑Executive Director 1 August 2010 PRINCIPLE 3 – PROMOTE ETHICAL AND RESPONSIBLE DECISION MAKING Code of Conduct 4.2. Composition 3.1 Details of the respective directors’ qualifications, skills, directorships and experience are set out in the Directors’ Report at page 2. The composition of the Audit and Risk Committee satisfies ASX Recommendation 4.2. The committee comprises a majority of independent directors and the chair of the committee is also independent. The Board insists on the highest ethical standards from all officers and employees of Premier and is vigilant to ensure appropriate corporate professional conduct at all times. As such, the Board has adopted a Code of Conduct to provide a set of guiding principles which are to be observed by all Directors, senior executives and employees of Premier. The Code of Conduct is based on five principles that define the responsibility of Premier and all Directors and employees. These principles require that all directors and employees: The Audit and Risk Committee will meet as frequently as required to undertake its role effectively. During the 2010/11 financial year, the Audit and Risk Committee met three times.  The CEO is invited to attend each scheduled meeting of the Audit and Risk Committee and a standing invitation is issued to the external auditors. foster a culture in which all stakeholders are treated with respect; act to ensure there is no conflict of interest between work and private affairs; Directors who are not members of the Audit and Risk Committee are notified of all meetings and may attend if they wish. Other senior managers and external advisers may also be invited to attend meetings of the Audit and Risk Committee. The Audit and Risk Committee may request management and/or others to provide such input and advice as required. provide a safe workplace for employees and visitors;  are honest, legal, fair and trustworthy in dealings and relationships; and    The Board has received a written statement from the CEO of Premier Retail and Company Secretary that Premier’s develop a culture where professional integrity and ethical behaviour is valued in rewarded. financial reports present a true and fair view in all material respects of Premier’s financial condition and operational results and in accordance with relevant accounting standards. 5 PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE Premier is committed to the safe and ethical manufacture, sourcing and supply of goods and services. As such, Premier is committed to sourcing merchandise that is produced according to the Group’s strict principles of safe working conditions, where human rights are respected and people have free right of association. Premier will only deal with vendors who at least provide the working conditions and benefits stipulated by law and whose workers (employees and contractors) are treated and compensated fairly and not exposed to physical harm. Refer to pages 14 to 15 of the Annual Report for the group’s Ethical Sourcing Statement. During the 2010/11 financial year, Premier maintained a policy to ensure that it complied with its continuous disclosure obligations under the ASX Listing Rules, the ASX Recommendations and the Corporations Act, and to ensure that all investors have equal and timely access to material and price sensitive information. This policy is contained in Premier’s Board Charter which is summarised on the Company’s website. 6 PRINCIPLE 6 – RESPECT THE RIGHTS OF SHAREHOLDERS A copy of the Code of Conduct is provided to all new Directors and employees upon joining Premier. Premier endeavours to encourage and promote effective communication with its shareholders, as prescribed by ASX Additionally, standards by which all officers, employees and Directors are expected to act are Recommendation 6.1. Premier’s Constitution sets out the procedures to be followed regarding: contained in the Board Charter and in Premier’s share trading policy. These include standards and • the convening of meetings; expectations relating to: • the form and requirements of the notice; • the chairperson and quorums; and • the voting procedures, proxies, representations and polls. Premier’s strategy is to ensure that shareholders, regulators and the wider investment community are informed of all major developments affecting Premier in a timely and effective manner. Information is communicated in a number of ways including: insider trading and employee security trading; conflicts of interest; confidentiality; and    privacy.  • annual and half‑yearly reports; Under the Group’s share trading policy, an officer or executive must not trade in securities of Premier at any time while in possession of unpublished, price-sensitive information in relation to those securities. Before commencing to trade, an executive or officer must first obtain the approval of the Company Secretary or the Chairman. • market disclosures in accordance with the continuous disclosure protocol; • updates on operations and developments; • announcements on Premier’s website; and • market briefings and presentations at general meetings. Shareholders are encouraged to attend and participate at general meetings. To facilitate this, meetings are held during normal business hours and at a place convenient for the greatest possible number of shareholders to attend. The full text of notices and accompanying materials are included on Premier’s website. Information is presented in a clear and concise manner designed to provide shareholders and the market with full and accurate information. 113 Premier Investments Limited The Group has an induction process for all new Directors. All new Directors are provided with the key policies and procedures affecting the Group. The Board Charter provides for processes to ensure that new Directors are acquainted with knowledge of the industry within which the Group operates, and briefings with key executives where appropriate. In order for Directors to act in the best interest of the Group, Premier permits individual Directors to engage separate independent counsel or advisors at the expense of the Group in appropriate circumstances, with the approval of the Chairman or by resolution of the Board. 3 PRINCIPLE 3 – PROMOTE ETHICAL AND RESPONSIBLE DECISION MAKING 3.1 Code of Conduct The Board insists on the highest ethical standards from all officers and employees of Premier and is vigilant to ensure appropriate corporate professional conduct at all times. As such, the Board has adopted a Code of Conduct to provide a set of guiding principles which are to be observed by all Directors, senior executives and employees of Premier. The Code of Conduct is based on five principles that define the responsibility of Premier and all Directors and employees. These principles require that all directors and employees: foster a culture in which all stakeholders are treated with respect; act to ensure there is no conflict of interest between work and private affairs; provide a safe workplace for employees and visitors; are honest, legal, fair and trustworthy in dealings and relationships; and develop a culture where professional integrity and ethical behaviour is valued in rewarded. Premier is committed to the safe and ethical manufacture, sourcing and supply of goods and services. As such, Premier is committed to sourcing merchandise that is produced according to the Group’s strict principles of safe working conditions, where human rights are respected and people have free right of association. Premier will only deal with vendors who at least provide the working conditions and benefits stipulated by law and whose workers (employees and contractors) are treated and compensated fairly and not exposed to physical harm. Refer to pages 14 to 15 of the Annual Report for the group’s Ethical Sourcing Statement. A copy of the Code of Conduct is provided to all new Directors and employees upon joining Premier. Additionally, standards by which all officers, employees and Directors are expected to act are contained in the Board Charter and in Premier’s share trading policy. These include standards and expectations relating to: insider trading and employee security trading; conflicts of interest; confidentiality; and privacy. Under the Group’s share trading policy, an officer or executive must not trade in securities of Premier at any time while in possession of unpublished, price-sensitive information in relation to those securities. Before commencing to trade, an executive or officer must first obtain the approval of the Company Secretary or the Chairman.          CORPORATE GOVERNANCE STATEMENT (CONTINUED) CORPORATE GOVERNANCE STATEMENT (CONTINUED) CORPORATE GOVERNANCE STATEMENT (CONTINUED) 2.6 New Director Induction and Professional Development 3.1 Code of Conduct (continued) During the 2015 financial year, Premier’s share trading policy permits key management personnel and their associates to trade in the Company’s securities during the following window periods: The committee consists of three members, who as at the date of this report are:  within 6 weeks after the release of the Company’s half year results to the ASX;  Name David Crean  Frank Jones Date Appointed 1 August 2010 7 September 1995 within 6 weeks after the release of the Company’s preliminary final report to the ASX; and the rights trading period when the Company has issued a prospectus for those rights. Gary Weiss As required by the ASX listing rules, the Company notifies the ASX of any transaction conducted by 1 August 2010 Directors in the securities of the Company. Position in Committee Chairperson Non‑Executive Director Non‑Executive Director 4.2. Composition Details of the respective directors’ qualifications, skills, directorships and experience are set out in the Directors’ Report at page 2. Consistent with the Corporations Act, Premier’s conflict of interest policy requires that where an item of business is proposed to be discussed at any meeting of Directors, and discussion of that matter may give rise to a conflict of interest on the part of a Director, that Director must not be present while the matter is being considered and must not vote on that matter (unless the other directors pass a resolution permitting that director to be present or vote). The Board Charter permits Directors who may be in a position of conflict to request that the meeting be postponed or temporarily adjourned to enable The Audit and Risk Committee will meet as frequently as required to undertake its role effectively. During the 2010/11 him or her to seek legal advice on whether he or she can be present while the matter in question is financial year, the Audit and Risk Committee met three times. being considered and vote on the matter in question. The composition of the Audit and Risk Committee satisfies ASX Recommendation 4.2. The committee comprises a majority of independent directors and the chair of the committee is also independent. The CEO is invited to attend each scheduled meeting of the Audit and Risk Committee and a standing invitation is issued to the external auditors. ASX Recommendation 3.1 recommends that a company disclose its code of conduct or a summary of that code. Premier has implemented a formal code of conduct and this code, as well as Premier’s share trading policy, is available on Premier’s website. Directors who are not members of the Audit and Risk Committee are notified of all meetings and may attend if they wish. Other senior managers and external advisers may also be invited to attend meetings of the Audit and Risk Committee. The Audit and Risk Committee may request management and/or others to provide such input and advice as required. 4 PRINCIPLE 4 – SAFEGUARD INTEGRITY IN CORPORATE REPORTING Audit Committee The Board has received a written statement from the CEO of Premier Retail and Company Secretary that Premier’s 4.1 financial reports present a true and fair view in all material respects of Premier’s financial condition and operational results and in accordance with relevant accounting standards. 5 PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE In accordance with ASX Recommendation 4.1, the Board has established an Audit and Risk Committee. This committee’s role and responsibilities, as well as composition, structure and membership requirements, are set out in a formal charter approved by the Board, in accordance with ASX Recommendation 4.1. A summary of this Charter can be found on Premier’s website. During the 2010/11 financial year, Premier maintained a policy to ensure that it complied with its continuous disclosure obligations under the ASX Listing Rules, the ASX Recommendations and the Corporations Act, and to ensure that all investors have equal and timely access to material and price sensitive information. This policy is contained in Premier’s Board Charter which is summarised on the Company’s website. Premier’s Audit and Risk Committee supports and advises the Board in fulfilling its corporate governance and oversight responsibilities in relation to Premier’s financial reporting, internal control structures, ethical standards and risk management framework and systems. 6 PRINCIPLE 6 – RESPECT THE RIGHTS OF SHAREHOLDERS The Audit and Risk Committee’s prime responsibilities include:  Premier endeavours to encourage and promote effective communication with its shareholders, as prescribed by ASX reviewing the appropriateness of the accounting policies and principles, any changes to those Recommendation 6.1. Premier’s Constitution sets out the procedures to be followed regarding: policies and principles and the methods of applying them to ensure that they are in • the convening of meetings; accordance with Premier’s stated financial reporting framework; • the form and requirements of the notice; reviewing the nomination, performance, independence and competence of the external • the chairperson and quorums; and auditor; • the voting procedures, proxies, representations and polls. Premier’s strategy is to ensure that shareholders, regulators and the wider investment community are informed of all major developments affecting Premier in a timely and effective manner. Information is communicated in a number of ways including: meeting periodically with key management, external auditors and compliance staff to understand Premier’s control environment; and    • annual and half‑yearly reports; examining and evaluating the effectiveness of the internal control system with management and external auditors. • market disclosures in accordance with the continuous disclosure protocol; • updates on operations and developments; • announcements on Premier’s website; and • market briefings and presentations at general meetings. The composition of the Audit and Risk Committee satisfies ASX Recommendation 4.1. The committee comprises a majority of independent Directors, consists of only Non-Executive Directors and the Chair of the committee is also independent. Shareholders are encouraged to attend and participate at general meetings. To facilitate this, meetings are held during normal business hours and at a place convenient for the greatest possible number of shareholders to attend. The full text of notices and accompanying materials are included on Premier’s website. Information is presented in a clear and concise manner designed to provide shareholders and the market with full and accurate information. Annual Report 2015 114 CORPORATE GOVERNANCE STATEMENT (CONTINUED) CORPORATE GOVERNANCE STATEMENT (CONTINUED) 4.1 Audit Committee (continued) During the 2015 financial year, the committee consisted of three members at any one time: The committee consists of three members, who as at the date of this report are: Appointed Name Position in Committee David Crean August 2010 Chairperson Timothy Antonie Name David Crean Frank Jones Sally Herman Frank Jones Gary Weiss Gary Weiss October 2014 October 2014 Date Appointed 1 August 2010 September 1995 (retired from the committee October 2014) 7 September 1995 1 August 2010 August 2010 (retired from the committee October 2014) Non-Executive Director Position in Committee Chairperson Non‑Executive Director Non‑Executive Director Non-Executive Director Non-Executive Director Non-Executive Director The Audit and Risk Committee Charter requires the committee to be structured so that: Details of the respective directors’ qualifications, skills, directorships and experience are set out in the Directors’ Report at page 2.  all members are financially literate, that is, are able to read and understand financial statements; 4.2. Composition The composition of the Audit and Risk Committee satisfies ASX Recommendation 4.2. The committee comprises a majority of independent directors and the chair of the committee is also independent. at least one member has financial expertise, that is, is an accountant or financial professional with experience of financial and accounting matters; and The Audit and Risk Committee will meet as frequently as required to undertake its role effectively. During the 2010/11 financial year, the Audit and Risk Committee met three times. some members have an understanding of the industry in which the Group operates.   The CEO is invited to attend each scheduled meeting of the Audit and Risk Committee and a standing invitation is issued to the external auditors. The Audit and Risk Committee met on four occasions during the year. Each of the meetings was attended by all three members of the Committee. Further information on attendance at Board and committee meetings are set out in the Directors’ Report on page 10. Directors who are not members of the Audit and Risk Committee are notified of all meetings and may attend if they wish. Other senior managers and external advisers may also be invited to attend meetings of the Audit and Risk Committee. The Audit and Risk Committee may request management and/or others to provide such input and advice as required. Details of the respective Directors’ qualifications, skills, directorships and experience are set out in the Directors’ Report at page 2. The Board has received a written statement from the CEO of Premier Retail and Company Secretary that Premier’s financial reports present a true and fair view in all material respects of Premier’s financial condition and operational results and in accordance with relevant accounting standards. The Audit and Risk Committee will meet as frequently as required to undertake its role effectively. The CEO (when appointed) will have a standing invitation to attend each scheduled meeting of the Audit and Risk Committee and a standing invitation has also been extended to Premier’s external auditors. 5 PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE During the 2010/11 financial year, Premier maintained a policy to ensure that it complied with its continuous disclosure obligations under the ASX Listing Rules, the ASX Recommendations and the Corporations Act, and to ensure that all investors have equal and timely access to material and price sensitive information. This policy is contained in Premier’s Board Charter which is summarised on the Company’s website. Directors who are not members of the Audit and Risk Committee are notified of all meetings and may attend if they wish. Other senior managers and external advisers may also be invited to attend meetings of the Audit and Risk Committee. The Audit and Risk Committee may request management and/or others to provide such input and advice as required.   6 PRINCIPLE 6 – RESPECT THE RIGHTS OF SHAREHOLDERS Under the Audit and Risk Committee Charter, the committee is responsible for establishing procedures and making Board recommendations regarding external auditors, monitoring the effectiveness and Premier endeavours to encourage and promote effective communication with its shareholders, as prescribed by ASX independence of the external auditor, reviewing the scope of the external audit, discussing with the Recommendation 6.1. Premier’s Constitution sets out the procedures to be followed regarding: external auditor any significant disagreements with management, and meeting with the external • the convening of meetings; auditor without management present at least twice a year. • the form and requirements of the notice; • the chairperson and quorums; and • the voting procedures, proxies, representations and polls. Premier’s strategy is to ensure that shareholders, regulators and the wider investment community are informed of all major developments affecting Premier in a timely and effective manner. Information is communicated in a number of ways including: In accordance with the Corporations Act, the external audit engagement partner is required to rotate at least once every five financial years. Ernst & Young was appointed as Premier’s external auditor in May 2002. • annual and half‑yearly reports; • market disclosures in accordance with the continuous disclosure protocol; • updates on operations and developments; • announcements on Premier’s website; and • market briefings and presentations at general meetings. Shareholders are encouraged to attend and participate at general meetings. To facilitate this, meetings are held during normal business hours and at a place convenient for the greatest possible number of shareholders to attend. The full text of notices and accompanying materials are included on Premier’s website. Information is presented in a clear and concise manner designed to provide shareholders and the market with full and accurate information. 115 Premier Investments Limited During the 2015 financial year, the committee consisted of three members at any one time: Position in Committee Chairperson Non-Executive Director Non-Executive Director Name Appointed David Crean August 2010 Timothy Antonie October 2014 Sally Herman October 2014 October 2014) October 2014) Frank Jones September 1995 (retired from the committee Non-Executive Director Gary Weiss August 2010 (retired from the committee Non-Executive Director The Audit and Risk Committee Charter requires the committee to be structured so that:    all members are financially literate, that is, are able to read and understand financial statements; at least one member has financial expertise, that is, is an accountant or financial professional with experience of financial and accounting matters; and some members have an understanding of the industry in which the Group operates. The Audit and Risk Committee met on four occasions during the year. Each of the meetings was attended by all three members of the Committee. Further information on attendance at Board and committee meetings are set out in the Directors’ Report on page 10. Details of the respective Directors’ qualifications, skills, directorships and experience are set out in the Directors’ Report at page 2. The Audit and Risk Committee will meet as frequently as required to undertake its role effectively. The CEO (when appointed) will have a standing invitation to attend each scheduled meeting of the Audit and Risk Committee and a standing invitation has also been extended to Premier’s external auditors. Directors who are not members of the Audit and Risk Committee are notified of all meetings and may attend if they wish. Other senior managers and external advisers may also be invited to attend meetings of the Audit and Risk Committee. The Audit and Risk Committee may request management and/or others to provide such input and advice as required.   Under the Audit and Risk Committee Charter, the committee is responsible for establishing procedures and making Board recommendations regarding external auditors, monitoring the effectiveness and independence of the external auditor, reviewing the scope of the external audit, discussing with the external auditor any significant disagreements with management, and meeting with the external auditor without management present at least twice a year. In accordance with the Corporations Act, the external audit engagement partner is required to rotate at least once every five financial years. Ernst & Young was appointed as Premier’s external auditor in May 2002. CORPORATE GOVERNANCE STATEMENT (CONTINUED) CORPORATE GOVERNANCE STATEMENT (CONTINUED) CORPORATE GOVERNANCE STATEMENT (CONTINUED) 4.1 Audit Committee (continued) 4.2 CEO and CFO certification In accordance with section 295A of the Corporations Act, the Company Secretary, who performs the CFO functions, has provided a written statement to the Board that, in the Company Secretary’s opinion: The committee consists of three members, who as at the date of this report are:  Name David Crean  Frank Jones Gary Weiss  Premier’s financial records for the 2015 financial year have been maintained in accordance with section 286 of the Corporations Act; Premier’s financial statements, and the notes referred to in the financial statements, for the 2015 financial year comply with the accounting standards; and 7 September 1995 Date Appointed 1 August 2010 1 August 2010 Position in Committee Chairperson Non‑Executive Director Non‑Executive Director Premier’s financial statements and notes for the 2015 financial year give a true and fair view of Premier’s financial position and performance. Details of the respective directors’ qualifications, skills, directorships and experience are set out in the Directors’ Report at page 2. In addition, the Company Secretary has provided a written statement to the Board that: 4.2. Composition  The composition of the Audit and Risk Committee satisfies ASX Recommendation 4.2. The committee comprises a majority of independent directors and the chair of the committee is also independent. the view provided on the Group’s financial report is founded on a sound system of risk management and internal compliance and control which implements the financial policies adopted by the Board; and  The Audit and Risk Committee will meet as frequently as required to undertake its role effectively. During the 2010/11 the Group’s risk management and internal compliance and control system is operating financial year, the Audit and Risk Committee met three times. effectively in all material aspects. The CEO is invited to attend each scheduled meeting of the Audit and Risk Committee and a standing invitation is issued to the external auditors. Directors who are not members of the Audit and Risk Committee are notified of all meetings and may attend if they wish. Other senior managers and external advisers may also be invited to attend meetings of the Audit and Risk Committee. The Audit and Risk Committee may request management and/or others to provide such input and advice as required. The Board notes that due to its nature, internal control assurance from the Company Secretary can only be reasonable rather than absolute. This is due to such factors as the need for judgement, the use of testing on a sample basis, the inherent limitations in internal control and because much of the evidence available is persuasive rather than conclusive and therefore is not and cannot be designed to detect all weaknesses in control procedures. The Board has received a written statement from the CEO of Premier Retail and Company Secretary that Premier’s financial reports present a true and fair view in all material respects of Premier’s financial condition and operational results and in accordance with relevant accounting standards. In response to this, internal control questions are required to be completed by key management personnel of all significant business units in support of these written statements. 5 PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE External auditor attendance at annual general meetings 4.3 During the 2010/11 financial year, Premier maintained a policy to ensure that it complied with its continuous disclosure obligations under the ASX Listing Rules, the ASX Recommendations and the Corporations Act, and to ensure that all investors have equal and timely access to material and price sensitive information. This policy is contained in Premier’s Board Charter which is summarised on the Company’s website. The external auditor, Ernst & Young, attends Premier’s annual general meetings and is available to respond to questions from Premier’s members about its independence as auditor, the preparation and content of the Auditor’s Report and Premier’s accounting policies adopted in relation to the financial statements. 6 PRINCIPLE 6 – RESPECT THE RIGHTS OF SHAREHOLDERS PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE 5 Premier endeavours to encourage and promote effective communication with its shareholders, as prescribed by ASX 5.1 Continuous disclosure obligations Recommendation 6.1. Premier’s Constitution sets out the procedures to be followed regarding: • the convening of meetings; • the form and requirements of the notice; • the chairperson and quorums; and • the voting procedures, proxies, representations and polls. Premier’s strategy is to ensure that shareholders, regulators and the wider investment community are informed of all major developments affecting Premier in a timely and effective manner. Information is communicated in a number of ways including: During the 2015 financial year, Premier maintained a policy to ensure that it complied with its continuous disclosure obligations under the ASX Listing Rules, the ASX Recommendations and the Corporations Act, and to ensure that all investors have equal and timely access to material and price sensitive information. A copy of Premier’s Continuous Disclosure Policy has been disclosed on Premier’s website. Under this policy, the Board will, as soon as it becomes aware of information concerning Premier that would be likely to have a material effect on the price or value of Premier’s securities, ensure that information is notified to the ASX. • annual and half‑yearly reports; • market disclosures in accordance with the continuous disclosure protocol; • updates on operations and developments; • announcements on Premier’s website; and • market briefings and presentations at general meetings. Premier has appointed a Compliance Officer to accept reports from personnel relating to price sensitive information. The Compliance Officer is primarily responsible for ensuring that Premier complies with its disclosure obligations under the Corporations Act and the ASX Listing Rules, and for deciding what information will be disclosed. Additionally, all managers are required to keep up to date with all matters within their responsibility which may be or become material to Premier in this respect. Shareholders are encouraged to attend and participate at general meetings. To facilitate this, meetings are held during normal business hours and at a place convenient for the greatest possible number of shareholders to attend. The full text of notices and accompanying materials are included on Premier’s website. Information is presented in a clear and concise manner designed to provide shareholders and the market with full and accurate information. Annual Report 2015 116 CORPORATE GOVERNANCE STATEMENT (CONTINUED) CORPORATE GOVERNANCE STATEMENT (CONTINUED) 6 PRINCIPLE 6 – RESPECT THE RIGHTS OF SHAREHOLDERS 6.1 Provide information about itself and its governance via website The committee consists of three members, who as at the date of this report are: Premier provides information about itself and its governance via its website. Shareholders, regulators and the wider investment community are able to view Premier’s corporate governance policies and materials through its website. Premier also provides convenient access to all ASX announcements, market disclosures, annual and half yearly reports and full text of notices and accompanying materials via the Premier website. Date Appointed 1 August 2010 Name David Crean Position in Committee Chairperson Non‑Executive Director Non‑Executive Director Frank Jones 6.2 Gary Weiss Promoting two-way communication with investors 7 September 1995 1 August 2010 Premier endeavours to encourage and promote effective communication with its shareholders. Premier’s Constitution sets out the procedures to be followed regarding: Details of the respective directors’ qualifications, skills, directorships and experience are set out in the Directors’ Report at page 2.  the convening of meetings; 4.2. Composition  the form and requirements of the notice; The composition of the Audit and Risk Committee satisfies ASX Recommendation 4.2. The committee comprises a majority of independent directors and the chair of the committee is also independent. the chairperson and quorums; and   The Audit and Risk Committee will meet as frequently as required to undertake its role effectively. During the 2010/11 financial year, the Audit and Risk Committee met three times. the voting procedures, proxies, representations and polls. The CEO is invited to attend each scheduled meeting of the Audit and Risk Committee and a standing invitation is issued to the external auditors. Premier’s strategy is to ensure that shareholders, regulators and the wider investment community are informed of all major developments affecting Premier in a timely and effective manner. Information is communicated in a number of ways including: Directors who are not members of the Audit and Risk Committee are notified of all meetings and may attend if they wish. Other senior managers and external advisers may also be invited to attend meetings of the Audit and Risk Committee. The Audit and Risk Committee may request management and/or others to provide such input and advice as required. annual and half yearly reports;  market disclosures in accordance with the continuous disclosure protocol;   The Board has received a written statement from the CEO of Premier Retail and Company Secretary that Premier’s financial reports present a true and fair view in all material respects of Premier’s financial condition and operational results and in accordance with relevant accounting standards. announcements on Premier’s website; and updates on operations and developments;  5 PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE market briefings and presentations at general meetings.  6 PRINCIPLE 6 – RESPECT THE RIGHTS OF SHAREHOLDERS Send and receive communication electronically Encourage participation at annual general meetings During the 2010/11 financial year, Premier maintained a policy to ensure that it complied with its continuous disclosure 6.3 obligations under the ASX Listing Rules, the ASX Recommendations and the Corporations Act, and to ensure that all investors have equal and timely access to material and price sensitive information. This policy is contained in Premier’s Board Charter which is summarised on the Company’s website. Shareholders are encouraged to attend and participate at general meetings. To facilitate this, meetings are held during normal business hours and at a place convenient for the greatest possible number of shareholders to attend. The full text of notices and accompanying materials are included on Premier’s website. Information is presented in a clear and concise manner designed to provide shareholders and the market with full and accurate information. Premier’s share registry provides shareholders with the option to receive communications electronically. Premier endeavours to encourage and promote effective communication with its shareholders, as prescribed by ASX Recommendation 6.1. Premier’s Constitution sets out the procedures to be followed regarding: 6.4 • the convening of meetings; • the form and requirements of the notice; • the chairperson and quorums; and • the voting procedures, proxies, representations and polls. 7 Premier’s strategy is to ensure that shareholders, regulators and the wider investment community are informed of all major developments affecting Premier in a timely and effective manner. Information is communicated in a number of ways including: The Board has overall responsibility to ensure that there is a sound system of risk management and internal controls across the business. One of the primary responsibilities of the Board is to identify, assess, monitor and manage risk. Additionally, the Board is responsible for identifying material changes in Premier’s risk profile to ensure that Premier can take advantage of potential opportunities while managing potential adverse effects. PRINCIPLE 7 – RECOGNISE AND MANAGE RISK • annual and half‑yearly reports; • market disclosures in accordance with the continuous disclosure protocol; • updates on operations and developments; • announcements on Premier’s website; and • market briefings and presentations at general meetings. Shareholders are encouraged to attend and participate at general meetings. To facilitate this, meetings are held during normal business hours and at a place convenient for the greatest possible number of shareholders to attend. The full text of notices and accompanying materials are included on Premier’s website. Information is presented in a clear and concise manner designed to provide shareholders and the market with full and accurate information. 117 Premier Investments Limited          6 PRINCIPLE 6 – RESPECT THE RIGHTS OF SHAREHOLDERS 6.1 Provide information about itself and its governance via website Premier provides information about itself and its governance via its website. Shareholders, regulators and the wider investment community are able to view Premier’s corporate governance policies and materials through its website. Premier also provides convenient access to all ASX announcements, market disclosures, annual and half yearly reports and full text of notices and accompanying materials via the Premier website. 6.2 Promoting two-way communication with investors Premier endeavours to encourage and promote effective communication with its shareholders. Premier’s Constitution sets out the procedures to be followed regarding: the convening of meetings; the form and requirements of the notice; the chairperson and quorums; and the voting procedures, proxies, representations and polls. Premier’s strategy is to ensure that shareholders, regulators and the wider investment community are informed of all major developments affecting Premier in a timely and effective manner. Information is communicated in a number of ways including: annual and half yearly reports; market disclosures in accordance with the continuous disclosure protocol; updates on operations and developments; announcements on Premier’s website; and market briefings and presentations at general meetings. 6.3 Encourage participation at annual general meetings Shareholders are encouraged to attend and participate at general meetings. To facilitate this, meetings are held during normal business hours and at a place convenient for the greatest possible number of shareholders to attend. The full text of notices and accompanying materials are included on Premier’s website. Information is presented in a clear and concise manner designed to provide shareholders and the market with full and accurate information. 6.4 Send and receive communication electronically Premier’s share registry provides shareholders with the option to receive communications electronically. 7 PRINCIPLE 7 – RECOGNISE AND MANAGE RISK The Board has overall responsibility to ensure that there is a sound system of risk management and internal controls across the business. One of the primary responsibilities of the Board is to identify, assess, monitor and manage risk. Additionally, the Board is responsible for identifying material changes in Premier’s risk profile to ensure that Premier can take advantage of potential opportunities while managing potential adverse effects. CORPORATE GOVERNANCE STATEMENT (CONTINUED) CORPORATE GOVERNANCE STATEMENT (CONTINUED) CORPORATE GOVERNANCE STATEMENT (CONTINUED) 7.1 Audit and Risk Committee The Board has delegated responsibility for the identification, assessment and management of risks relating to both Premier’s internal and external controls to Premier’s Audit and Risk Committee. The The committee consists of three members, who as at the date of this report are: risk management functions of the Audit and Risk Committee include:  Name David Crean  Frank Jones Gary Weiss  examining and evaluating the effectiveness of the internal control system with management and external auditors; assessing existing controls that management has in place for unusual transactions or transactions that may carry more than an accepted level of risk; 7 September 1995 Date Appointed 1 August 2010 1 August 2010 Position in Committee Chairperson Non‑Executive Director Non‑Executive Director meeting periodically with key management, external auditors and compliance staff to understand Premier’s control environment; Details of the respective directors’ qualifications, skills, directorships and experience are set out in the Directors’ Report at page 2.  receiving reports concerning all suspected and actual frauds, thefts, breaches of the law and key risk areas; and 4.2. Composition  The composition of the Audit and Risk Committee satisfies ASX Recommendation 4.2. The committee comprises a majority of independent directors and the chair of the committee is also independent. assessing and ensuring that there are internal processes for determining and managing key areas, such as important judgments and accounting estimates. The Audit and Risk Committee will meet as frequently as required to undertake its role effectively. During the 2010/11 The Audit and Risk Committee has the authority to: financial year, the Audit and Risk Committee met three times.  The CEO is invited to attend each scheduled meeting of the Audit and Risk Committee and a standing invitation is issued to the external auditors. request management or others to attend meetings and to provide any information or advice that the Committee requires;   access the Company’s documents and records; Directors who are not members of the Audit and Risk Committee are notified of all meetings and may attend if they wish. Other senior managers and external advisers may also be invited to attend meetings of the Audit and Risk Committee. The obtain the advice of special or independent counsel, accountants or other experts, without Audit and Risk Committee may request management and/or others to provide such input and advice as required. seeking approval of the Board or management; and The Board has received a written statement from the CEO of Premier Retail and Company Secretary that Premier’s financial reports present a true and fair view in all material respects of Premier’s financial condition and operational results and in accordance with relevant accounting standards. approach management and external auditors for information.  5 PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE As outlined in section 4.1 of this corporate governance statement, a summary of Premier’s Audit and Risk Committee charter can be found on Premier’s website. This summary addresses Premier’s policies for the oversight and management of material business risks. 6 PRINCIPLE 6 – RESPECT THE RIGHTS OF SHAREHOLDERS During the 2010/11 financial year, Premier maintained a policy to ensure that it complied with its continuous disclosure obligations under the ASX Listing Rules, the ASX Recommendations and the Corporations Act, and to ensure that all 7.2 Risk management framework investors have equal and timely access to material and price sensitive information. This policy is contained in Premier’s Board Charter which is summarised on the Company’s website. The responsibility for managing risk on a day-to-day basis lies with the management of each business operation. Additionally, independent risk management audits of site operations are carried out regularly and a quarterly report is prepared for the Board which reviews the risk management and Premier endeavours to encourage and promote effective communication with its shareholders, as prescribed by ASX insurances of the Group. The Board received four of these reports during the 2015 financial year. The Recommendation 6.1. Premier’s Constitution sets out the procedures to be followed regarding: evaluation of the Group’s risk management framework is an on-going process, rather than a formal annual review. • the convening of meetings; • the form and requirements of the notice; 7.3 • the chairperson and quorums; and • the voting procedures, proxies, representations and polls. Premier’s strategy is to ensure that shareholders, regulators and the wider investment community are informed of all major developments affecting Premier in a timely and effective manner. Information is communicated in a number of ways including: During the 2015 year, the Audit and Risk Committee met with an external consultant to independently evaluate the risk management and internal control processes throughout the Group. The external consultant reports directly to the Audit and Risk Committee and provides the committee with quarterly reports on the risk management and internal control processes of the Group. Internal audit function • annual and half‑yearly reports; • market disclosures in accordance with the continuous disclosure protocol; • updates on operations and developments; • announcements on Premier’s website; and • market briefings and presentations at general meetings. Shareholders are encouraged to attend and participate at general meetings. To facilitate this, meetings are held during normal business hours and at a place convenient for the greatest possible number of shareholders to attend. The full text of notices and accompanying materials are included on Premier’s website. Information is presented in a clear and concise manner designed to provide shareholders and the market with full and accurate information. Annual Report 2015 118 CORPORATE GOVERNANCE STATEMENT (CONTINUED) CORPORATE GOVERNANCE STATEMENT (CONTINUED) 7.4 Economic, environmental and social sustainability risks The committee consists of three members, who as at the date of this report are: As evidenced from its Code of Conduct, the Premier Board is committed to conducting business in an environmentally responsible and ethical manner. The Board recognises the importance of respecting its stakeholders, including employees, shareholders, customers and suppliers. To this extent, a subsidiary company of Premier Investments Limited, Just Group Limited is a signatory to the Australian Packaging Covenant, a voluntary, industry-regulated formal agreement between government and industry which provides companies with the tools to be more involved in reducing the impact on the environment through sustainable packaging design, recycling and product stewardship. Refer to pages 11 to 13 of the Annual Report for the Group’s Commitment to Business Sustainability. Position in Committee Chairperson Non‑Executive Director Non‑Executive Director Date Appointed 1 August 2010 7 September 1995 1 August 2010 Name David Crean Frank Jones Gary Weiss Details of the respective directors’ qualifications, skills, directorships and experience are set out in the Directors’ Report at page 2. The Premier Board also recognises its commitment to the safe and ethical manufacture and supply of goods and services. During October 2013, Just Group Limited became a signatory to the Alliance for Bangladesh Worker Safety, a binding five year commitment to work with some of the world’s largest apparel retailers to invest in worker safety, improved conditions and transparent reporting in a measurable and verifiable way. Refer to pages 14 to 15 of the Annual Report for the Group’s Ethical Sourcing Statement. The composition of the Audit and Risk Committee satisfies ASX Recommendation 4.2. The committee comprises a majority of independent directors and the chair of the committee is also independent. 4.2. Composition Remuneration Committee PRINCIPLE 8 – REMUNERATE FAIRLY AND RESPONSIBLY 8 The Audit and Risk Committee will meet as frequently as required to undertake its role effectively. During the 2010/11 financial year, the Audit and Risk Committee met three times. 8.1 The CEO is invited to attend each scheduled meeting of the Audit and Risk Committee and a standing invitation is issued to the external auditors. During the 2015 financial year, Premier maintained a formal remuneration committee in accordance with ASX Recommendation 8.1. The Remuneration and Nomination Committee supports and advises the Board on the remuneration policies and practices of Premier. The remuneration purposes of the committee include: Directors who are not members of the Audit and Risk Committee are notified of all meetings and may attend if they wish. Other senior managers and external advisers may also be invited to attend meetings of the Audit and Risk Committee. The Audit and Risk Committee may request management and/or others to provide such input and advice as required.   review and make recommendations to the Board on remuneration packages and policies The Board has received a written statement from the CEO of Premier Retail and Company Secretary that Premier’s financial reports present a true and fair view in all material respects of Premier’s financial condition and operational results applicable to senior executives and Directors; and in accordance with relevant accounting standards. 5 PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE define levels at which the Chief Executive Officer must make recommendations to the committee on proposed changes to remuneration and employee benefit policies;  ensure that remuneration packages and policies attract, retain and motivate high calibre executives; and During the 2010/11 financial year, Premier maintained a policy to ensure that it complied with its continuous disclosure obligations under the ASX Listing Rules, the ASX Recommendations and the Corporations Act, and to ensure that all investors have equal and timely access to material and price sensitive information. This policy is contained in Premier’s Board Charter which is summarised on the Company’s website. ensure that remuneration policies demonstrate a clear relationship between key executive performance and remuneration.  6 PRINCIPLE 6 – RESPECT THE RIGHTS OF SHAREHOLDERS The roles and responsibilities of the Remuneration and Nomination Committee are set out in Premier’s Board Charter, a summary of which is provided on Premier’s website. Premier endeavours to encourage and promote effective communication with its shareholders, as prescribed by ASX Recommendation 6.1. Premier’s Constitution sets out the procedures to be followed regarding: The Remuneration and Nomination Committee consists of three members, all of whom are Non- • the convening of meetings; Executive Directors. The composition and number of meetings held and attended by members of the • the form and requirements of the notice; Remuneration and Nomination Committee are outlined in section 2.1 of this corporate governance • the chairperson and quorums; and statement. • the voting procedures, proxies, representations and polls. Premier’s strategy is to ensure that shareholders, regulators and the wider investment community are informed of all major developments affecting Premier in a timely and effective manner. Information is communicated in a number of ways including: • annual and half‑yearly reports; • market disclosures in accordance with the continuous disclosure protocol; • updates on operations and developments; • announcements on Premier’s website; and • market briefings and presentations at general meetings. Shareholders are encouraged to attend and participate at general meetings. To facilitate this, meetings are held during normal business hours and at a place convenient for the greatest possible number of shareholders to attend. The full text of notices and accompanying materials are included on Premier’s website. Information is presented in a clear and concise manner designed to provide shareholders and the market with full and accurate information. 119 Premier Investments Limited As evidenced from its Code of Conduct, the Premier Board is committed to conducting business in an environmentally responsible and ethical manner. The Board recognises the importance of respecting its stakeholders, including employees, shareholders, customers and suppliers. To this extent, a subsidiary company of Premier Investments Limited, Just Group Limited is a signatory to the Australian Packaging Covenant, a voluntary, industry-regulated formal agreement between government and industry which provides companies with the tools to be more involved in reducing the impact on the environment through sustainable packaging design, recycling and product stewardship. Refer to pages 11 to 13 of the Annual Report for the Group’s Commitment to Business Sustainability. The Premier Board also recognises its commitment to the safe and ethical manufacture and supply of goods and services. During October 2013, Just Group Limited became a signatory to the Alliance for Bangladesh Worker Safety, a binding five year commitment to work with some of the world’s largest apparel retailers to invest in worker safety, improved conditions and transparent reporting in a measurable and verifiable way. Refer to pages 14 to 15 of the Annual Report for the Group’s Ethical Sourcing Statement. 8 PRINCIPLE 8 – REMUNERATE FAIRLY AND RESPONSIBLY 8.1 Remuneration Committee During the 2015 financial year, Premier maintained a formal remuneration committee in accordance with ASX Recommendation 8.1. The Remuneration and Nomination Committee supports and advises the Board on the remuneration policies and practices of Premier. The remuneration purposes of the committee include:     review and make recommendations to the Board on remuneration packages and policies applicable to senior executives and Directors; define levels at which the Chief Executive Officer must make recommendations to the committee on proposed changes to remuneration and employee benefit policies; ensure that remuneration packages and policies attract, retain and motivate high calibre executives; and ensure that remuneration policies demonstrate a clear relationship between key executive performance and remuneration. The roles and responsibilities of the Remuneration and Nomination Committee are set out in Premier’s Board Charter, a summary of which is provided on Premier’s website. The Remuneration and Nomination Committee consists of three members, all of whom are Non- Executive Directors. The composition and number of meetings held and attended by members of the Remuneration and Nomination Committee are outlined in section 2.1 of this corporate governance statement. CORPORATE GOVERNANCE STATEMENT (CONTINUED) CORPORATE GOVERNANCE STATEMENT (CONTINUED) CORPORATE GOVERNANCE STATEMENT (CONTINUED) 7.4 Economic, environmental and social sustainability risks 8.2 Remuneration policy Premier’s remuneration policies are both reasonable and responsible, and they establish a link between remuneration and performance. Further details regarding Premier’s remuneration practices are set out in the Remuneration Report on pages 11 to 32 of the Financial Report. The committee consists of three members, who as at the date of this report are: Name David Crean Frank Jones Premier clearly distinguishes the structure of Non-Executive Directors’ remuneration from that of Executive Directors and senior executives. Non-Executive Directors’ remuneration is capped at a maximum of $1,000,000 per annum. During the 2015 financial year a total of $805,000 was paid by way of remuneration to Premier’s Non-Executive Directors. Date Appointed 1 August 2010 7 September 1995 Position in Committee Chairperson Non‑Executive Director Non‑Executive Director Premier has not established any schemes for retirement benefits for Non-Executive Directors (other than superannuation). 1 August 2010 Gary Weiss Details of the respective directors’ qualifications, skills, directorships and experience are set out in the Directors’ Report at 8.3 page 2. Equity-based Remuneration Schemes 4.2. Composition The Group’s equity based remuneration scheme is governed by the Performance Rights Plan (approved by shareholders during the 2014 annual general meeting). A summary of the Performance Rights Plan is available on the Premier website. The composition of the Audit and Risk Committee satisfies ASX Recommendation 4.2. The committee comprises a majority of independent directors and the chair of the committee is also independent. The Audit and Risk Committee will meet as frequently as required to undertake its role effectively. During the 2010/11 financial year, the Audit and Risk Committee met three times. Executives are prohibited from entering into transactions to hedge or limit the economic risk of the securities allocated to them under the Performance Rights Plan, either before vesting or after vesting while the securities are held subject to restriction. Executives are only able to hedge securities that have vested and continue to be subject to a trading restriction and a seven-year lock, with the prior consent of the Board. The CEO is invited to attend each scheduled meeting of the Audit and Risk Committee and a standing invitation is issued to the external auditors. Directors who are not members of the Audit and Risk Committee are notified of all meetings and may attend if they wish. Other senior managers and external advisers may also be invited to attend meetings of the Audit and Risk Committee. The Audit and Risk Committee may request management and/or others to provide such input and advice as required. No employees have any hedging arrangements in place. The Board has received a written statement from the CEO of Premier Retail and Company Secretary that Premier’s financial reports present a true and fair view in all material respects of Premier’s financial condition and operational results and in accordance with relevant accounting standards. 5 PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE During the 2010/11 financial year, Premier maintained a policy to ensure that it complied with its continuous disclosure obligations under the ASX Listing Rules, the ASX Recommendations and the Corporations Act, and to ensure that all investors have equal and timely access to material and price sensitive information. This policy is contained in Premier’s Board Charter which is summarised on the Company’s website. 6 PRINCIPLE 6 – RESPECT THE RIGHTS OF SHAREHOLDERS Premier endeavours to encourage and promote effective communication with its shareholders, as prescribed by ASX Recommendation 6.1. Premier’s Constitution sets out the procedures to be followed regarding: • the convening of meetings; • the form and requirements of the notice; • the chairperson and quorums; and • the voting procedures, proxies, representations and polls. Premier’s strategy is to ensure that shareholders, regulators and the wider investment community are informed of all major developments affecting Premier in a timely and effective manner. Information is communicated in a number of ways including: • annual and half‑yearly reports; • market disclosures in accordance with the continuous disclosure protocol; • updates on operations and developments; • announcements on Premier’s website; and • market briefings and presentations at general meetings. Shareholders are encouraged to attend and participate at general meetings. To facilitate this, meetings are held during normal business hours and at a place convenient for the greatest possible number of shareholders to attend. The full text of notices and accompanying materials are included on Premier’s website. Information is presented in a clear and concise manner designed to provide shareholders and the market with full and accurate information. Annual Report 2015 120 ASX ADDITIONAL INFORMATION AS AT 30 SEPTEMBER 2015 TWENTY LARGEST SHAREHOLDERS NAME CENTURY PLAZA INVESTMENTS PTY LTD J P MORGAN NOMINEES AUSTRALIA LIMITED HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED CITICORP NOMINEES PTY LIMITED METREPARK PTY LTD NATIONAL NOMINEES LIMITED RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LTD ) BNP PARIBAS NOMS PTY LTD UBS NOMINEES PTY LTD DANCETOWN PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED LINFOX SHARE INVESTMENT PTY LTD SPRINGSAND INVESTMENTS PTY LTD ARGO INVESTMENTS LIMITED BNP PARIBAS NOMINEES PTY LTD BNP PARIBAS NOMINEES PTY LTD RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED AMP LIFE LIMITED RBC INVESTOR SERVICES AUSTRALIA PTY LIMITED MILTON CORPORATION LIMITED TOTAL FOR TOP 20: SUBSTANTIAL SHAREHOLDERS NAME CENTURY PLAZA INVESTMENTS PTY LTD AND ASSOCIATES PERPETUAL LIMITED AND ITS SUBSIDARIES AUSTRALIANSUPER PTY LTD AIRLIE FUNDS MANAGEMENT PTY LTD DISTRIBUTION OF EQUITY SHAREHOLDERS TOTAL % IC RANK 51,569,400 20,717,144 13,128,775 8,665,601 8,235,331 6,252,850 5,581,904 3,603,721 3,082,070 3,000,000 2,827,846 2,577,014 1,437,699 1,250,000 1,125,954 820,590 773,042 750,025 713,946 590,250 32.98% 13.25% 8.40% 5.54% 5.27% 4.00% 3.57% 2.30% 1.97% 1.92% 1.81% 1.65% 0.92% 0.80% 0.72% 0.52% 0.49% 0.48% 0.46% 0.38% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 136,703,162 87.42% TOTAL UNITS 58,552,420 18,644,969 8,871,777 8,322,930 % IC 42.43% 11.92% 5.70% 5.36% Holders 1 TO 1,000 4,842 1,001 TO 5,000 2,246 5,001 TO 10,000 362 10,001 TO 100,000 179 100,001 TO (MAX) 41 TOTAL 7,670 Ordinary Fully Paid Shares 1,864,522 5,211,412 2,672,680 4,383,498 142,247,963 156,380,075 The number of investors holding less than a marketable parcel of 39 securities ($12.85 on 30 September 2015) is 212 and they hold 1,953 securities. VOTING RIGHTS All ordinary shares carry one vote per share without restriction. 121 Premier Investments Limited TOTAL % IC RANK ASX ADDITIONAL INFORMATION AS AT 30 SEPTEMBER 2015 RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LTD TWENTY LARGEST SHAREHOLDERS NAME CENTURY PLAZA INVESTMENTS PTY LTD J P MORGAN NOMINEES AUSTRALIA LIMITED HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED CITICORP NOMINEES PTY LIMITED METREPARK PTY LTD NATIONAL NOMINEES LIMITED ) BNP PARIBAS NOMS PTY LTD UBS NOMINEES PTY LTD DANCETOWN PTY LTD CORP A/C> LINFOX SHARE INVESTMENT PTY LTD SPRINGSAND INVESTMENTS PTY LTD ARGO INVESTMENTS LIMITED HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED BNP PARIBAS NOMINEES PTY LTD RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED 51,569,400 20,717,144 13,128,775 8,665,601 8,235,331 6,252,850 5,581,904 3,603,721 3,082,070 3,000,000 2,827,846 2,577,014 1,437,699 1,250,000 1,125,954 820,590 773,042 AMP LIFE LIMITED ASX ADDITIONAL INFORMATION AS AT 30 SEPTEMBER 2015 RBC INVESTOR SERVICES AUSTRALIA PTY LIMITED 750,025 713,946 32.98% 13.25% 8.40% 5.54% 5.27% 4.00% 3.57% 2.30% 1.97% 1.92% 1.81% 1.65% 0.92% 0.80% 0.72% 0.52% 0.49% 0.48% 0.46% 0.38% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 MILTON CORPORATION LIMITED TOTAL FOR TOP 20: TWENTY LARGEST SHAREHOLDERS SUBSTANTIAL SHAREHOLDERS CENTURY PLAZA INVESTMENTS PTY LTD CENTURY PLAZA INVESTMENTS PTY LTD AND ASSOCIATES J P MORGAN NOMINEES AUSTRALIA LIMITED PERPETUAL LIMITED AND ITS SUBSIDARIES HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED AUSTRALIANSUPER PTY LTD CITICORP NOMINEES PTY LIMITED AIRLIE FUNDS MANAGEMENT PTY LTD METREPARK PTY LTD DISTRIBUTION OF EQUITY SHAREHOLDERS NATIONAL NOMINEES LIMITED RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LTD 1,001 ) TO 5,000 1 TO 1,000 BNP PARIBAS NOMS PTY LTD Holders UBS NOMINEES PTY LTD Ordinary Fully Paid Shares DANCETOWN PTY LTD 4,842 2,246 590,250 136,703,162 87.42% 51,569,400 58,552,420 20,717,144 18,644,969 13,128,775 8,871,777 8,665,601 8,322,930 8,235,331 6,252,850 10,001 5,581,904 TO 100,000 3,603,721 179 3,082,070 5,001 TO 10,000 362 32.98% 42.43% 13.25% 11.92% 8.40% 5.70% 5.54% 5.36% 5.27% 4.00% 100,001 TO (MAX) 3.57% 2.30% 41 1.97% 1 2 3 4 5 6 7 TOTAL 8 7,670 9 1,864,522 5,211,412 2,672,680 4,383,498 3,000,000 142,247,963 156,380,075 1.92% 10 TOTAL % IC RANK NAME NAME TOTAL TOTAL UNITS % IC % IC RANK HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED is 212 and they hold 1,953 securities. LINFOX SHARE INVESTMENT PTY LTD 2,577,014 2,827,846 1.81% 1.65% SPRINGSAND INVESTMENTS PTY LTD VOTING RIGHTS ARGO INVESTMENTS LIMITED All ordinary shares carry one vote per share without restriction. BNP PARIBAS NOMINEES PTY LTD BNP PARIBAS NOMINEES PTY LTD RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED AMP LIFE LIMITED RBC INVESTOR SERVICES AUSTRALIA PTY LIMITED RBC INVESTOR SERVICES AUSTRALIA PTY LIMITED CENTURY PLAZA INVESTMENTS PTY LTD AND ASSOCIATES CENTURY PLAZA INVESTMENTS PTY LTD AND ASSOCIATES PERPETUAL LIMITED AND ITS SUBSIDARIES AUSTRALIANSUPER PTY LTD AIRLIE FUNDS MANAGEMENT PTY LTD MILTON CORPORATION LIMITED TOTAL FOR TOP 20: SUBSTANTIAL SHAREHOLDERS NAME 1,437,699 1,250,000 1,125,954 820,590 773,042 750,025 713,946 590,250 0.92% 0.80% 0.72% 0.52% 0.49% 0.48% 0.46% 0.38% 136,703,162 87.42% TOTAL UNITS 58,552,420 18,644,969 8,871,777 8,322,930 % IC 42.43% 11.92% 5.70% 5.36% 11 12 13 14 15 16 17 18 19 20 DISTRIBUTION OF EQUITY SHAREHOLDERS DISTRIBUTION OF EQUITY SHAREHOLDERS Holders Holders 1 TO 1,000 4,842 1,001 TO 5,000 2,246 5,001 TO 10,000 362 10,001 TO 100,000 179 100,001 TO (MAX) 41 TOTAL 7,670 1 TO 1,000 4,842 1,001 TO 5,000 2,246 5,001 TO 10,000 362 10,001 TO 100,000 179 100,001 TO (MAX) 41 TOTAL 7,670 Ordinary Fully Paid Shares 1,864,522 5,211,412 2,672,680 4,383,498 142,247,963 156,380,075 Ordinary Fully Paid Shares 1,864,522 5,211,412 2,672,680 4,383,498 142,247,963 156,380,075 The number of investors holding less than a marketable parcel of 39 securities ($12.85 on 30 September 2015) The number of investors holding less than a marketable parcel of 39 securities ($12.85 on 30 September 2015) is 212 and they hold 1,953 securities. VOTING RIGHTS All ordinary shares carry one vote per share without restriction. is 212 and they hold 1,953 securities. VOTING RIGHTS All ordinary shares carry one vote per share without restriction. Annual Report 2015 122 ASX ADDITIONAL INFORMATION AS AT 30 SEPTEMBER 2015 RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LTD TWENTY LARGEST SHAREHOLDERS NAME CENTURY PLAZA INVESTMENTS PTY LTD J P MORGAN NOMINEES AUSTRALIA LIMITED HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED CITICORP NOMINEES PTY LIMITED METREPARK PTY LTD NATIONAL NOMINEES LIMITED ) BNP PARIBAS NOMS PTY LTD UBS NOMINEES PTY LTD DANCETOWN PTY LTD CORP A/C> LINFOX SHARE INVESTMENT PTY LTD SPRINGSAND INVESTMENTS PTY LTD ARGO INVESTMENTS LIMITED HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED BNP PARIBAS NOMINEES PTY LTD RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED AMP LIFE LIMITED MILTON CORPORATION LIMITED TOTAL FOR TOP 20: SUBSTANTIAL SHAREHOLDERS NAME PERPETUAL LIMITED AND ITS SUBSIDARIES AUSTRALIANSUPER PTY LTD AIRLIE FUNDS MANAGEMENT PTY LTD 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 51,569,400 20,717,144 13,128,775 8,665,601 8,235,331 6,252,850 5,581,904 3,603,721 3,082,070 3,000,000 2,827,846 2,577,014 1,437,699 1,250,000 1,125,954 820,590 773,042 750,025 713,946 590,250 TOTAL UNITS 58,552,420 18,644,969 8,871,777 8,322,930 32.98% 13.25% 8.40% 5.54% 5.27% 4.00% 3.57% 2.30% 1.97% 1.92% 1.81% 1.65% 0.92% 0.80% 0.72% 0.52% 0.49% 0.48% 0.46% 0.38% % IC 42.43% 11.92% 5.70% 5.36% 136,703,162 87.42% AUDITOR Ernst & Young AUDITOR 8 Exhibition Street Ernst & Young Melbourne Victoria 3000 8 Exhibition Street Melbourne Victoria 3000 SHARE REGISTER Computershare Investor Services Pty Limited SHARE REGISTER Yarra Falls Computershare Investor Services Pty Limited 452 Johnston Street Yarra Falls Abbotsford Victoria 3067 452 Johnston Street Telephone (03) 9415 5000 Abbotsford Victoria 3067 Telephone (03) 9415 5000 LAWYERS Arnold Bloch Leibler LAWYERS Level 21 Arnold Bloch Leibler 333 Collins Street Level 21 Melbourne Victoria 3000 333 Collins Street Telephone (03) 9229 9999 Melbourne Victoria 3000 Telephone (03) 9229 9999 CORPORATE DIRECTORY CORPORATE DIRECTORY A.C.N. 006 727 966 A.C.N. 006 727 966 DIRECTORS Solomon Lew (Chairman) DIRECTORS Frank W. Jones (Deputy Chairman – resigned 25 July 2015) Solomon Lew (Chairman) Dr. David M. Crean (Appointed Deputy Chairman – 25 July 2015) Frank W. Jones (Deputy Chairman – resigned 25 July 2015) Timothy Antonie (Lead Independent Director) Dr. David M. Crean (Appointed Deputy Chairman – 25 July 2015) Lindsay E. Fox Timothy Antonie (Lead Independent Director) Sally Herman Lindsay E. Fox Henry D. Lanzer Sally Herman Mark McInnes Henry D. Lanzer Michael R.I. McLeod Mark McInnes Dr. Gary H. Weiss Michael R.I. McLeod Dr. Gary H. Weiss COMPANY SECRETARY Kim Davis COMPANY SECRETARY Kim Davis REGISTERED OFFICE Level 53 REGISTERED OFFICE 101 Collins Street Level 53 Melbourne Victoria 3000 101 Collins Street Telephone (03) 9650 6500 Melbourne Victoria 3000 Facsimile (03) 9654 6665 Telephone (03) 9650 6500 Facsimile (03) 9654 6665 WEBSITE www.premierinvestments.com.au WEBSITE www.premierinvestments.com.au EMAIL info@premierinvestments.com.au EMAIL info@premierinvestments.com.au 123 Premier Investments Limited About this report This report has been printed on Sovereign Silk and Sun Art Matt and are both elemental chlorine free. Sovereign Silk is FSC certified derived from well-managed forests and controlled sources. Both stocks are manufactured by an ISO 14001 certified mill. The printer is also ISO 9001 and ISO 14001 accredited. These certifications specify the requirements for a quality and environmental management system. Designed and produced by walterwakefield.com.au Peter Alexander celebrated Mother’s Day this year with world-famous supermodel Christie Brinkley and her 16 year old daughter Sailor Brinkley-Cook. The campaign dubbed Super Mum, celebrated mothers of all ages and from all walks of life. Peter’s mum also featured in the heart-warming Mother’s Day campaign. Pictured: Peter Alexander and his Mum, Julette Alexander. Annual Report 2015 18 

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