Premier Investments Limited Annual Report 2018

← All annual reports

FY2018 Annual Report · Premier Investments Limited

Loading PDF…

Annual Report 2018

Annual Report 2018 A

Solomon Lew
Chairman

Mark McInnes
CEO Premier Retail

B Premier Investments Limited

Chairman’s Report

The Directors of Premier Investments Limited (“Premier”) are pleased
to submit to shareholders the Annual Report for the 52 weeks ended
28 July 2018 (“2018”) which has been another year of outstanding
operational and financial success by your company.

ROBUST FINANCIAL PERFORMANCE

Consistent with our key objective of delivering sustainable
shareholder value, the 2018 financial year has seen another
strong financial performance supporting record returns for
Premier shareholders. Premier delivered underlying net profit
before tax of $160.3 million, up 9.2% on the prior year. Net
cash generated by Premier (including dividends received)
increased 36% for the year to $146.9 million.

The pleasing full year financial result was underpinned by the
performance of our core operating business, Premier Retail,
which achieved a record $1.18 billion in sales and a record
underlying Earnings before Interest and Taxation (EBIT) of
$150.1 million1, up 10.3% on 2017 financial year (2017: 52
weeks ended 29 July 2017).

The trading result is reflective of the strong growth from the
Premier Retail online platforms, Smiggle globally, and Peter
Alexander together with the positive momentum of our
apparel brands. These outcomes have been achieved despite
significant external headwinds and the structural challenges in
the retail industry globally.

for major growth beyond through four major channels –
online, global concession partnerships, wholesale agreements
and new store openings.

Peter Alexander also delivered a record year. Sales for 2018 of
$218.7 million were up 14.5% on 2017 and up 31% over two
years. The brand’s objective of achieving $250 million in
annual sales by 2020 is progressing well ahead of
expectations.

I am particularly pleased to report that our online business
surpassed our original 2020 target of $100 million more than
two years ahead of plan, delivering sales for the year of $112.5
million – up 65% on 2017. We have made large investments in
our online channel including a very significant upgrade this
year to all our brands’ platforms across mobile, tablet and
desktop. We will continue to invest in this fast paced and
evolving space.

In April 2018, Premier Retail successfully moved its head office
into the new Premier owned building on St Kilda Road,
Melbourne. The building offers the facilities and space to
support the needs of our growth aspirations.

ACCELERATED GROWTH PLAN

STRONG CASH POSITION SUPPORTING RECORD RETURNS

The outstanding operational performance also reflects the
continued successful implementation of the Premier Retail
Strategy – a strategy we commenced in 2011 to drive growth
through Smiggle, Peter Alexander and our online offer while
rejuvenating our core brands and controlling efficiencies. The
Premier Board considers the Premier Retail management team
to be world class and the sustained successful execution of the
retail strategy has been exceptional.

Celebrating its 15th birthday, Smiggle achieved record global
sales of $293.0 million in 2018, up 22.7% on 2017 and up
58% over two years. The brand this year opened 52 new
stores globally and online sales exceeded 10% of sales in
countries with a transactional website. 67% of the 2018 sales
were delivered from outside of Australia.

We have announced a multi-channel accelerated growth
strategy for Smiggle – targeting both the $450 million in
global Smiggle retail sales by 2020 and establishing pathways

Net cash generated by Premier (including dividends received)
increased 36% for the year to $146.9 million. The strong
result has allowed Premier to continue to invest, distribute
dividends to shareholders and, at the same time, increase the
substantial cash holdings of the Group. At year-end, Premier’s
balance sheet reflected free cash on hand of $178.6 million.

Due to the continued strength of Premier’s balance sheet and
the strong performance of Premier Retail, the Board is
delighted to reward shareholders with an increased record
final ordinary dividend of 33 cents per share fully franked, up
22% or 6 cents per share on 2017 (2017: 27 cps). This will
bring the total full year dividends per share to 62 cents per
share fully franked, up 9 cents per share or 17%.

The 2018 dividends will return a total of approximately
$98 million to Premier shareholders bringing the total
dividends declared since 2011 to approximately $542 million
fully franked.

1 Refer to page 10 of the Directors’ Report for a definition and reconciliation of Premier Retail Underlying EBIT.

Annual Report 2018 1

Chairman’s Report continued

LEADERSHIP AND GOVERNANCE

These outcomes would not have been possible without the
continuing hard work and commitment of our employees. On
behalf of the Board and all shareholders, I would like to thank
Premier Retail CEO Mark McInnes, his senior leadership group
and our entire 9,000 plus strong team of employees across
the world for their outstanding contribution.

I would also like to acknowledge my fellow directors for their
valuable contribution and counsel throughout the year. There
were changes at Board level during the year with the
retirement of long–serving directors, Mr Lindsay Fox AC and
Dr Gary Weiss, both of whose contributions have been
exceptional and a key factor in our success.

We were delighted to welcome Sylvia Falzon as an
Independent Non-Executive Director who has already made a
substantial contribution since joining in March this year.

Finally, and with a great deal of sadness, we recognise our
former Chairman, Mr Frank Jones, who passed away in
August. Mr Jones was instrumental in all key events in
Premier’s history, including the original float of Premier in
1987. During his tenure as a Director of Premier he held
several positions including Chairman, Deputy Chairman and
Chairman of the Audit and Risk Committee. He was also the

Chairman and a Director of Breville Group Limited for many
years. Frank made a truly vital contribution to the substantial
growth in shareholder wealth for Premier shareholders during
his long association with the company.

As we look forward, the Board and I continue to see strong
growth prospects for our company. We believe that our track
record of sustained outstanding operational performance and
strong shareholder returns should give rise to the continuing
confidence of our shareholders.

I encourage all of our shareholders to attend the company’s
Annual General Meeting on 29 November 2018 for a further
overview on the performance of the Group and strategies for
the future. I look forward to seeing many of you there.

Solomon Lew
Chairman and Non-Executive Director

2 Premier Investments Limited

The Directors

Solomon Lew
Chairman and
Non-Executive Director

Lindsay E. Fox AC
Non-Executive Director

Mark McInnes
Executive Director

David M. Crean
Deputy Chairman
and Non-Executive Director

Sally Herman
Non-Executive Director

Michael R.I. McLeod
Non-Executive Director

Timothy Antonie
Non-Executive Director

Henry D. Lanzer AM
B. COM., LLB (Melb)
Non-Executive Director

Gary H. Weiss LLM, J.S.D.
Non-Executive Director

Sylvia Falzon
Non-Executive Director

Terrence McCartney
Non-Executive Director

Annual Report 2018 3

Strategic Review Premier Retail

Management continued the rigorous implementation of the six key initiatives outlined in the 2011 Strategic Review.

Focus Area

Status

Rejuvenate and
reinvigorate all five
apparel brands.

Organisation-wide cost
efficiency program.

Two phase gross
margin expansion
program.

Expand and grow the
internet business.

Grow Peter Alexander
significantly.

Grow Smiggle
significantly.

4 Premier Investments Limited

The apparel brands delivered sales growth of 5.5% for 2H18 with
strong momentum into Q4-18 (sales up 8.1% in the fourth quarter).
All five of the apparel brands enjoyed sales growth. Stand out growth
performances for the second half included Portmans sales up 17.4%
(Q4-18 up 17.6%), Jacqui E sales up 9.4% (Q4-18 up 11.8%) and Just
Jeans sales up 3.2% (Q4-18 up 7.2%). The Australian retail environment
remains difficult and very competitive. The apparel brands have delivered
the growth in the second half through the ongoing investment in
product, strong management and merchandising teams.

Costs of doing business decreased 90 bps as a percentage of sales to
49.9% in FY18, whilst strategic investment continues in growth initiatives,
including Online, Peter Alexander and Smiggle international expansion.
Over the past six years Premier Retail has opened 307 new profitable
Smiggle and Peter Alexander stores (192 of these outside of Australia)
but Premier Retail has also closed 103 unprofitable stores over that
time, including 17 during FY18. As consumers continue to increase their
online shopping, Premier Retail will continue to focus on store costs and
profitability to drive appropriate investment and shareholder returns.

Premier Retail’s gross margin of 62.5% for the year in a
highly competitive market was delivered through the effective
implementation of key gross margin strategies. Direct sourcing
initiatives continue to deliver benefits from new suppliers and
countries. Ongoing focus on markdown management is expected
to support margin going forward.

Online sales of $112.5 million were up 65.3% on FY17. 2020 Online
target of $100 million was delivered more than two years ahead of
plan. Significant investment continues in technology, people and new
marketing initiatives to deliver a world class platform and customer
experience. During 2H18, Premier Retail made a significant investment
in upgrading the online platforms for all seven brands across mobile,
tablet and desktop. Premier Retail will continue to invest heavily in
this fast-paced channel of growth. Online channel continues to deliver
significantly higher EBIT margin than the Group average.

Peter Alexander delivered record sales for the year of $218.7 million,
up 14.5% on FY17 and up 31% over two years. Both total sales and
like-for-like sales were strong for the year. The 2020 Growth plan
is progressing ahead of expectations, with annual sales expected to
exceed $250 million by FY20. Twenty-one new stores were opened
in FY18 – putting the brand ahead of the 2020 plan to open 40 new
stores between FY18 and FY20. The expanded range of P.A. Plus
size delivered exceptional 100% growth for the year. The full Peter
Alexander Bath & Body range was launched successfully in April 2018.

The brand achieved record global sales of $293.0 million in FY18, up
22.7% on FY17 and up 58% over two years. The brand opened 52
new stores globally and Online sales exceeded 10% of sales in countries
with a transactional website. 67% of the FY18 sales were delivered
from outside of Australia. Smiggle has announced an accelerated global
growth strategy to deliver $450 million in global Smiggle retail sales by
FY20 and establish future pathways for growth beyond FY20.

Brand Performance Premier Retail

Smiggle, achieved exceptional sales growth of 22.7% in FY18, with more than 67% of global revenue generated
outside Australia. John Cheston, Managing Director Smiggle, continues to lead a strong and focused management
team growing a truly unique global brand. Smiggle celebrated its 15th Birthday in FY18 and opened 52 new
stores globally, including the global flagship store on Oxford Street London and the brand’s first ever concession
store in the iconic Selfridges department store. Smiggle has announced a major strategic accelerated global
growth plan with the aim to both deliver the targeted $450 million in global Smiggle retail sales by FY20 and to
set up pathways for major growth beyond FY20.

Peter Alexander delivered outstanding growth of 14.5% in FY18. Twenty-one new stores were opened in
FY18 – putting the brand ahead of the 2020 plan to open 40 new stores between FY18 and FY20. The expanded
range of P.A. Plus size delivered exceptional 100% growth for the year, and the full Peter Alexander Bath &
Body range was launched successfully in April 2018. Under the leadership of Judy Coomber, Managing Director
Peter Alexander and Dotti, and Peter Alexander, Creative Director, the 2020 Growth plan is progressing ahead of
expectations, with annual sales expected to exceed $250 million by FY20.

Dotti, following the appointment of Judy Coomber to role of Managing Director Peter Alexander and Dotti,
together with the return of Deanna Moylan to the group as Dotti Group General Manager in March 2018
reporting to Judy, is already delivering a turnaround in performance with Q4-18 returning to positive LFL and
total sales growth. Customer research has been completed and a new product and marketing strategy is being
implemented together with capital investment largely funded from landlords in new store concepts. Dotti expects
Q4-18 improved momentum to result in further sales and margin growth in FY19.

Portmans, under the leadership of Linda Levy (appointed April 2017), delivered an exceptional turnaround in
performance with FY18 Sales up 11.3% and 2H18 Sales up 17.4% in a highly competitive apparel market. FY18
Online Sales delivered more than 100% growth on FY17 at a significantly higher EBIT margin than the store
portfolio. Portmans has an extremely strong and distinctive market position, and continued investment in social
media marketing and better merchants is expected to result in further growth in FY19.

Jacqui E under the new leadership of Nicole Naccarella (appointed June 2017) delivered an outstanding turnaround
in performance with FY18 Sales up 5.3% and 2H18 Sales up 9.4% in a highly competitive apparel market.
Jacqui E has an extremely strong and distinctive market position, and continued investment in better merchants is
expected to drive further growth in FY19.

Just Jeans, under Matthew McCormack’s leadership, delivered strong 2H18 sales growth including
Q4-18 LFL Growth up 8.5% in a highly competitive market in FY18. Like-for-like sales were
stronger than overall sales as 3 stores were closed in FY18 as part of the ongoing program to close
unprofitable stores across the group, including the Melbourne flagship Bourke Street Mall store.
Just Jeans has a strong, distinctive and competitive market position, and the brand is expected to
continue its growth.

Jay Jays, under Linda Whitehead’s leadership, delivered strong 2H18 sales growth including Q4-18
Sales Growth up 5.3% in a highly competitive market in FY18. Like-for-like sales were stronger than
overall sales as 3 stores were closed in FY18 as part of the ongoing program to close unprofitable
stores across the group. Jay Jays has a strong, distinctive and competitive market position. Ongoing
investment across existing 1.3 million digital touchpoints with customers across Email, Instagram,
Facebook, Twitter, Snapchat and YouTube together with investment in better merchants is expected to
drive further growth in FY19.

Annual Report 2018 5

Internet Performance Premier Retail

140

120

100

5.2%

47.2

4.3%

34.4

3.3%

24.6

2.6%

18.9

7.1%

68.1

11.0%

12%

112.5

10%

FY13

FY14

FY15

FY16

FY17

FY18

Online Sales ($'M)

Online sales as % of the sales in countries & brands with a transactional website

• Record Online sales of $112.5 million up 65.3% on FY17

• 2020 Online Sales target of $100 million delivered more than two years ahead of original plan

• Online sales growing to 11% of the respective markets’ sales in FY18

• 2013 investment in centralised and specifically customised Australian Distribution Centre servicing 100% order fulfilment

of 100% of Premier Retail products in Australia

• Online channel continues to deliver significantly higher EBIT margin than the Group average

• All global sites continuing to deliver strong growth with all brands outperforming the market

• Significant investment continues in technology, people and new marketing initiatives to deliver a world class platform

and customer experience, including full upgrade of mobile, tablet and desktop website platform for all 7 brands
completed in 2H18

• Announces the launch of New Zealand transactional websites for Just Jeans, Smiggle, Portmans and Jacqui E in 2H19.

These will be in addition to the already offered and rapidly growing New Zealand Peter Alexander and Dotti
transactional websites

Note: FY16 excludes non-comparable 53rd week of sales

6 Premier Investments Limited

Smiggle International Growth

Another record year for Smiggle, delivering global sales of $293.0 million
in FY18, up 22.7% on FY17 and up 58% over two years

Smiggle Flagship Oxford Street Store,

London – opened May 2018

• 67% of total global revenue was generated outside Australia in FY18

• 52 new stores opened globally in FY18

• Sales have grown from $19 million in FY08 to $293 million in FY18

• Through investment in technology, people and marketing, online sales continue to grow well above expectations.

In FY18 Smiggle Online sales exceeded 10% of sales in countries with a transactional website

SMIGGLE’S ACCELERATED GLOBAL GROWTH STRATEGY

Smiggle announced major strategic accelerated global growth plan with the aim to both deliver the targeted $450 million in
global Smiggle retail sales by FY20 and to set up pathways for major growth beyond FY20. The accelerated global expansion
will come from 4 major channels:

• Online

• Global concession partnerships

• Global wholesale arrangements

• New store growth

John Cheston (Managing Director: Smiggle) continues to lead a strong and focused management team and a truly unique
global brand

Smiggle’s world first concession in Harrods,

London – opened August 2018

Smiggle’s world first concession in Selfridges Oxford Street Store,

London – opened May 2018

Annual Report 2018 7

Peter Alexander Growth

Peter Alexander delivered record sales for the year of $218.7 million,
up 14.5% on FY17 and up 31% over two years.

• Both total sales and like-for-like sales were strong for the year

• The 2020 Growth plan is progressing ahead of expectations, with annual sales expected to exceed $250 million

by FY20

• Twenty-one new stores opened in FY18 – putting the brand ahead of the 2020 plan to open 40 new stores between

FY18 and FY20. Five new stores are confirmed for opening in 1H19

• The expanded range of P.A. Plus size delivered exceptional 100% growth for the year. The full Peter Alexander

Bath & Body range was launched successfully in April 2018

Peter Alexander Sydney Airport T3 - opened December 2017

8 Premier Investments Limited

Peter Alexander Melbourne Airport T4 - opened May 2018

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

• Peter Alexander and RSPCA/

• Packaging Stewardship

• Development

• Reward and recognition

• Workplace Safety

PAW JUSTICE

• Smiggle Community

Partnerships

• Waste and Recycling

• Energy efficiency

• Our sourcing models,
principles & policies

• Our Assurances

• Membership of the

Accord 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

9,000+

90%

ATTRACTION AND RETENTION

At the end of the financial year, Premier employed over 9,000
staff across six countries. By Christmas 2018, Premier will
employ over 10,400 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
FY18, 90% of our total team members are women, who held
80% of the positions at management level internationally.
We have continued our focus on the development and career
trajectory of our very strong team of female executives. Female
leaders spearheaded internet and marketing, human resources,
and five out of our seven brands, to deliver exceptional results.
We rely on the passion and commitment of our employees to
achieve the results we do.

DEVELOPMENT

Premier provides ongoing and regular training throughout
the year to support and develop all team members. Upon
commencement all new team members complete our
comprehensive Just Getting Started Induction Program.
Leadership and Management Development training is provided
for our leaders and this year 385 workshops were led by our
People & Culture and Senior Leadership Teams.

REWARD AND RECOGNITION

We recognise and reward outstanding contributions to our
Group results, both individually and for team performance.
Our annual Just Excellence Awards recognised our best
performing Retail Leaders and salespeople for their excellent
performance and contribution to achieving our FY18 goals.
The top performing Regional Managers, Store Managers and
Visual Merchandisers for each of our brands were rewarded
publicly amongst their peers for their great leadership and
delivery of the FY18 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’ is 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 fully 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 2018 9

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

PETER ALEXANDER AND PAW JUSTICE

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 12 years with
the RSPCA in Australia, and for the last four 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 $835,000
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.

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 four years have raised over $94,500.

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.

During the year Peter Alexander continued its commitment to
the prevention of cruelty to animals. The involvement with the
RSPCA in Australia and Paw Justice in New Zealand continues
to be the key charity supported by the brand. Each year, Peter
develops a special product to be made available in store in the
lead up to Christmas.
In 2017, a range of chocolate bars featuring Peter Alexander
prints were sold with 100% of all proceeds donated to these
charities. During the year we donated $173,000 to the RSPCA
and $17,500 to Paw Justice.

Since we’ve been working with
RSPCA shelters in Australia
and Paw Justice in New Zealand,
Peter has raised over
$929,000

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.
During the year we have donated over $85,000 in products.

Peter Alexander

10 Premier Investments Limited

Our Commitment To The Environment

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
hangers for reuse or 100% recycling. Additionally, 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, Distribution
Centre and Support Centre, upgrading 311 stores to LED
lighting, all of the DC high bay lighting to LED, and converting
over 80% of our head office lighting to LED. 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 implemented for all new store fit-outs.

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 tools to be more involved in reducing their
impact on the environment through sustainable packaging
design, recycling and product stewardship. Premier has
submitted its Action Plan outlining its objectives in relation to:

1. Optimising packaging to reduce environmental impact;

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, degradation and subsequent
biodegradation process.

WASTE AND RECYCLING

Premier has extensive recycling and sustainability practices
across our network of Stores, Distribution Centres and Support
Centre. Our Distribution Centres execute on-site recovery
systems for recycling used packaging, following Sustainable
Packaging Guidelines. All carton packaging uses recycled
content. Cartons are reused to facilitate the replenishment of
stock, and 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 waste in line with their recycling procedures. Orora’s
recycling waste business specialises in paper and cardboard,
among others, which is the major input for their recycled
paper mill that produces 100% recycled paper.

Our Support Centre recycles all paper and has a continuing 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 non-collection
of printouts. All weekly retail reporting, forms, reference and
administrative material is stored and accessible via mobile
technology, where possible.

Annual Report 2018 11

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:
China, Australia, Bangladesh, Hong Kong, India, Indonesia,
Mauritius, Taiwan, Thailand, Turkey, and Vietnam.

SOURCE COUNTRIES (THE JUST GROUP, UNITS)

Rest of the world 16%

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

China 84%

Background checks. We conduct thorough and ongoing
compliance activities of all suppliers directly and through
Li & Fung and qualified audit firms.

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. identity documents; for
recruitment fees etc.)

12 Premier Investments Limited

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, Dotti and Jay
Jays branded products in Bangladesh and we highlight our
program in this country in the interest of full transparency.

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 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.

MEMBERSHIP OF THE ACCORD ON FIRE AND BUILDING
SAFETY IN BANGLADESH

We are a member of the Accord on Fire and Building Safety in
Bangladesh (the Accord). Prior to joining the Accord, we were
(since 2013) a signatory to the Alliance for Bangladesh Worker
Safety (the Alliance). The Alliance program we joined was a
five-year commitment which ended in June 2018.

The Accord, and the Alliance before it, 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.

Together with our international peers in Bangladesh, we have
invested in worker safety, improved conditions and transparent
reporting in a results-oriented, measurable
and verifiable way.

All initiatives of the Accord are publicly available at
www.bangladeshaccord.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 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.

4. In addition, we will not conduct business with factories

that do not comply with the requirements of the Accord.
All factories have been disclosed to the Accord for
assessment under its operational processes.

Annual Report 2018 13

Our Business

CODE OF CONDUCT

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.
Premier continues to deliver low levels of shrinkage and we
will continue to maintain this focus into the future.

We believe that the ‘what’ and the ‘how’ are both important
when it comes to operating. We want great results, and how
we go about achieving them is also important.

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 a positive 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

All team members globally are issued with the Code of
Conduct upon commencement with the business and
are re-issued a copy and asked to acknowledge receipt as
amendments to the Code are made from time to time.
In addition, we have an advisory email and a confidential
telephone service for all issues and complaints related to
this Code.

14 Premier Investments Limited

Premier Investments Limited
A.C.N. 006 727 966

Financial Report
For the Period
30 July 2017 to 28 July 2018

Annual Report 2018 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

ASX Additional Information

Corporate Directory

100

101

1 Premier Investments Limited

DIRECTORS’ REPORT

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 28 July 2018.

The Directors present their report together with the consolidated financial report of Premier Investments Limited
(the “Company” or “Premier") and its controlled entities (the “Group”) for the 52 week period
30 July 2017 to 28 July 2018, 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. Mr. Lew is 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, wholesale and retailing of textiles, apparel and
general merchandise, as well as property development. His success in the retail industry has been largely due to
his ability to read fashion trends and interpret them for the Australasian market, in addition to his demonstrated
ability in the timing of strategic investments.

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.

Mr. Lew is a member of the World Retail Hall of Fame and is the first Australian to be formally inducted.

He is also a former Board Member of the Reserve Bank of Australia and former Member of the Prime Minister’s
Business Advisory Council.

Mr. Lew was the inaugural Chairman of the Mount Scopus Foundation (1987 – 2013) which supports the Mount
Scopus College, one of Australia’s leading private colleges with 2000 students. He has also been the Chairman
or a Director of a range of philanthropic organisations.

Dr. David M. Crean Deputy Chairman and Non-Executive Director

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 of Tasmania 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 to 1992 he
was the member for Denison in the House of Assembly. From 1993 to 1998 he held Shadow Portfolios of State
Development, Public Sector Management, Finance and Treasury.

Dr. Crean has been a Non-Executive Director and Deputy Chairman of Moonlake Investments, owner of VDL
dairy farms in Tasmania from August 2016 to April 2018. He 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.

Annual Report 2018 2

Directors’ Report continued

DIRECTORS’ REPORT
(CONTINUED)

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
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.

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
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 Advisor 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, Breville Group Limited and Netwealth
Group Limited and is a Principal of Stratford Advisory Group.

Sylvia Falzon Non-Executive Director (Appointed – 16 March 2018)

Ms. Falzon was appointed to the Board of Directors on 16 March 2018. She brings to Premier an executive
career that spanned over nearly 30 years in Financial Services where she held senior executive positions
responsible for institutional and retail funds management businesses, both here in Australia and offshore.

As a Non-Executive Director since 2010, Ms. Falzon has experience across a range of sectors including financial
services, health, aged care. During this time, she has been involved in several business transformations, IPOs,
merger and acquisitions and divestment activities. Ms. Falzon is currently an Independent Non-Executive Director
of ASX listed companies Regis Healthcare Limited, Perpetual Limited and joined Suncorp Group Limited on 1
September 2018. In addition, she serves on a range of board committees including chairing the People and
Remuneration committees at both Regis and Perpetual. She is also a member of the Governing Board of Cabrini
Health and Chairman of the Cabrini Foundation Board. Ms. Falzon previously served on the board of ASX listed
company SAI Global until December 2016.

Ms. Falzon holds a Masters Degree in Industrial Relations and Human Resource Management (Hons) from the
University of Sydney and a Bachelor of Business from the University of Western Sydney. She is a Senior Fellow
of the Financial Services Institute of Australasia and a Fellow of the Australian Institute of Company Directors.

Lindsay E. Fox AC Non-Executive Director (Retired – 28 July 2018)

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 12 countries. The Linfox Group employs over 24,000 people, operates 4.8
million square metres of warehouses and a fleet of more than 6,000 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.

3 Premier Investments Limited

DIRECTORS’ REPORT
(CONTINUED)

Lindsay E. Fox AC Non-Executive Director (Retired – 28 July 2018) (continued)

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 the
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. Mr. Fox retired
from the Premier Board on 28 July 2018.

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 sits on both listed and unlisted Boards, including Suncorp Group Limited, Breville Group Limited,
Evans Dixon Limited and Investec Property Limited. She is also on the Board of the Sydney Harbour Federation
Trust. Ms. Herman holds a BA from the University of New South Wales 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 35 years’ experience in providing legal, corporate finance and strategic advice to some of Australia’s
leading companies.

Mr. Lanzer is a Non-Executive Director of Just Group Limited, Thorney Opportunities Limited and previously the
TarraWarra Museum of Art and is also a Life Governor of the Mount Scopus College Council.

In June 2015, Henry was appointed as a Member of the Order of Australia.

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.

Annual Report 2018 4

Directors’ Report continued
DIRECTORS’ REPORT
(CONTINUED)

Terrence L. McCartney Non-Executive Director

Mr. McCartney has had a long and successful career in retail. Mr. McCartney started at Boans Department Stores
in Perth then moved to Grace Bros in Sydney. After the acquisition of Grace Bros by Myer, he relocated to the
merged Department Stores Group in Melbourne within the merchandise and marketing department. His
successful career within Coles Myer meant that Terry then moved to the Kmart discount department stores as
Head of Merchandise and Marketing and then Managing Director. Following several years as Managing Director
of Kmart Australia and New Zealand, Terry became Managing Director of Myer Grace Bros. For 5 years Terry
lead year on year growth in profitability of Australia’s largest department store.

Terry’s experience spans the full spectrum of retailing, ranging from luxury goods in department stores to large
mass merchandise discount operations. Terry has also been retained by large international accounting and legal
firms as an expert witness in relation to Australian retail.

In addition to his extensive list of retail experience, he has also been an advisor to large Australian and
international mining companies, prior to joining the Just Group Board in 2008. Terry lends his extensive retail and
commercial expertise to the Just Group as Non-Executive Director, and by serving on a number of committees,
including the Internet Steering Committee of the Group, and through various store and site visits, both locally and
overseas. He is also involved in seasonal and trading performance reviews for the Group.

Terry is a member of the Remuneration and Nomination Committee of Premier Investments Limited. In August
2017, he was appointed Chairman of the Remuneration and Nomination Committee.

Dr. Gary H. Weiss LL.M, J.S.D. Non-Executive Director (Retired – 28 July 2018)

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 Ardent Leisure Group Limited, Ridley Corporation Limited and Estia Health Limited,
Executive Director of Ariadne Australia Limited, and a Director of Thorney Opportunities Limited and The Straits
Trading Company Limited. He was Chairman of Clearview Wealth Limited from July 2013 until May 2016 and 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 Pro-Pac Packaging Limited (resigned 27 November
2017), Tag Pacific Limited (retired 31 August 2017), 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.

Dr. Weiss retired from the Premier Board on 28 July 2018.

COMPANY SECRETARY

Kim F. Davis

Mr. Davis has been the Company Secretary of Premier Investments Limited for 24 years. Prior to holding this
position, Mr Davis had 15 years’ experience within the accounting industry as a tax and financial advisor.

5 Premier Investments Limited

DIRECTORS’ REPORT
(CONTINUED)

PRINCIPAL ACTIVITIES

The Group operates a number of specialty retail fashion chains within the specialty retail fashion markets in Australia,
New Zealand, Asia and Europe. The Group also has significant investments in listed securities and money market
deposits.

DIVIDENDS

Final Dividend recommended for 2018
Dividends paid in the year:

Interim for the half-year ended 27 January 2018

Final for 2017 shown as recommended in the 2017 report

CENTS

$’000

33.00
29.00

27.00

52,173
45,849

42,619

OPERATING AND FINANCIAL REVIEW

Group Overview:

Premier Investments Limited 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 specialty fashion retailer with operations in Australia, New
Zealand, Asia and Europe. 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 1,200 stores across seven countries, as well as online. Smiggle global expansion continued, with 48
new stores opened outside of Australia and New Zealand, including the opening of the first global concession store
in Selfridges Oxford Street in the United Kingdom. Peter Alexander opened 21 new stores during the year (including
5 new concession stores), with its growth plan currently progressing ahead of expectations. The Group’s online
sales exceeded $112 million for the 2018 financial year, delivering on the Group’s target of $100 million in online
sales by 2020 - 2 years ahead of schedule.

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 broad 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 28 July 2018 (2017: 52 week period ended 29 July 2017) are summarised below:

Revenue from sale of goods

Total interest income

Total other income and revenue

Total revenue and other income

CONSOLIDATED

2018
$’000

2017
$’000

% CHANGE

1,182,221

1,092,760

3,632

3,187

6,145

2,227

1,189,040

1,101,132

+8.19%

-40.90%

+43.11%

+7.98%

Reported profit before income tax

Non-cash impairment of intangible assets

Profit before income tax excluding non-cash impairment

123,965

30,000

153,965

139,145

-10.91%

139,145

+10.65%

Annual Report 2018 6

Directors’ Report continued
DIRECTORS’ REPORT
(CONTINUED)

DIRECTORS’ REPORT
OPERATING AND FINANCIAL REVIEW (CONTINUED)
(CONTINUED)
Group Operating Results (continued):

Retail Segment:
OPERATING AND FINANCIAL REVIEW (CONTINUED)
As Premier’s core business, Just Group was the key contributor to the Group’s operating results for the financial
Group Operating Results (continued):
year. Key financial indicators for the retail segment for the 52 week period ended 28 July 2018 (2017: 52 week
period ended 29 July 2017) are highlighted below:
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 for the 52 week period ended 28 July 2018 (2017: 52 week
period ended 29 July 2017) are highlighted below:

52 WEEKS
ENDED 28 JULY
2018

52 WEEKS
ENDED 29 JULY
2017

RETAIL SEGMENT

% CHANGE

Sale of goods

Total segment income
RETAIL SEGMENT

Segment net profit before income tax
Sale of goods

Total segment income
Capital expenditure

1,182,221
52 WEEKS
ENDED 28 JULY
1,183,715
2018

1,092,760
52 WEEKS
ENDED 29 JULY
1,095,062
2017

142,484
1,182,221

1,183,715
45,854

126,182
1,092,760

1,095,062
45,040

+8.19%

+8.10%
% CHANGE

+12.92%
+8.19%

+8.10%
+1.81%

Segment net profit before income tax

The Retail Segment contributed $142.5 million to the Group’s net profit before income tax for the 52 week period
ended 28 July 2018 (2017: $126.2 million net profit before income tax for the 52 week period ended 29 July 2017).

+12.92%

142,484

126,182

Capital expenditure

The Retail Segment Underlying Earnings before Interest and Taxation (“EBIT”) increased by 10.3% to $150.1 million
for the 52 weeks ended 28 July 2018, a new record for the Group. This strong result was achieved notwithstanding
The Retail Segment contributed $142.5 million to the Group’s net profit before income tax for the 52 week period
the structural pressures and challenges currently facing the Australian retail landscape.
ended 28 July 2018 (2017: $126.2 million net profit before income tax for the 52 week period ended 29 July 2017).

45,854

45,040

+1.81%

Premier Retail Underlying EBIT History
The Retail Segment Underlying Earnings before Interest and Taxation (“EBIT”) increased by 10.3% to $150.1 million
for the 52 weeks ended 28 July 2018, a new record for the Group. This strong result was achieved notwithstanding
the structural pressures and challenges currently facing the Australian retail landscape.

$150.1

$160.0

$136.0

Premier Retail Underlying EBIT History
$126.7

Premier Retail Underlying EBIT History

$150.1

$136.0

$80.4

$83.7

$80.4

$83.7

$80.4

$83.7

$92.8

$65.3

$105.7

$126.7

$105.7

$126.7

$105.7

FY11

FY12

FY13

FY14

FY15

FY16 *

FY17

FY18

FY11

FY12

FY13

$' millions

FY14

FY15

FY16 *

FY17

FY18

FY12
* FY16 Underlying EBIT represents a comparable 52 week period.

FY11

FY14

FY13

FY15
$' millions

FY16 *

FY17

FY18

Refer to page 10 for a reconciliation between underlying EBIT and statutory reported operating profit before taxation
for the Retail Segment.

$' millions

* FY16 Underlying EBIT represents a comparable 52 week period.

Refer to page 10 for a reconciliation between underlying EBIT and statutory reported operating profit before taxation
for the Retail Segment.

7 Premier Investments Limited

$140.0
$160.0

$120.0
$160.0
$140.0

$100.0
$140.0
$120.0

$80.0
$100.0
$120.0

$60.0
$80.0
$100.0

$40.0
$60.0
$80.0

$20.0
$40.0
$60.0

$‐
$20.0
$40.0

$-
$20.0

$‐

DIRECTORS’ REPORT
(CONTINUED)

OPERATING AND FINANCIAL REVIEW (CONTINUED)

Group Operating Results (continued):

Retail Segment (continued):

Growth in sales, combined with tight controls over the total cost of doing business led to the outstanding retail
segment underlying EBIT result. The solid result reflects the Group’s continued efforts to transform its apparel
brands, the implementation of its organisation-wide cost efficiency program, as well as the focus on its growth
initiatives, both locally and internationally.

PREMIER RETAIL TRANSFORMATION STRATEGY – OUR FOCUS ON GROWTH AND INVESTMENT

GROWTH

CORE

• Grow Smiggle significantly

• Gross margin expansion program

• Grow Peter Alexander significantly

• Rejuvenation of core apparel brands

• Expansion and growth of online businesses

• Organisation-wide cost efficiency program

The increase in sales is as a result of strong sales growth across the portfolio of brands, with successful growth in
both overseas and domestic markets.

Online sales were up 65.3% on the prior comparative 52 week period, reaching its original 2020 target of $100
million in annual online sales in the 2018 financial year, 2 years ahead of the original plan. During the 2018 financial
year, the Group invested further in this channel by upgrading its online platforms for all seven brands. Further
investment will also take place with the launch of New Zealand transactional websites in the 2019 financial year for
some of the Group’s apparel brands.

It has been an outstanding year for the growth-focussed brands, being Peter Alexander and Smiggle. Smiggle
reported global sales growth of 22.7% on the previous comparable 52 week period. Similarly, Peter Alexander
recorded sales growth of 14.5% on the previous comparable 52 week period.

The apparel brands delivered strong sales growth momentum, with sales for the second half of the 2018 financial
year up 5.5%. In particular, the Group is delighted by the stand out performances of Portmans, Jacqui E and Just
Jeans.

The Group continues to invest in new stores globally, and actively seeks to deliver sustainable sales growth through
store upgrades and refurbishments. During the 2018 financial year, the Group opened a further 84 stores across all
geographic segments, bringing the total global store network to over 1,200 stores.

During the 2018 financial year, the Group opened its first ever Smiggle concession store in the iconic Selfridges
Oxford Street in the United Kingdom. The success of this strategy has led to the announcement of a major strategic
plan to accelerate global growth for this brand. Further concession partnerships with iconic global retailers are being
explored in select countries to introduce Smiggle to new customers across the globe.

Annual Report 2018 8

DIRECTORS’ REPORT

(CONTINUED)

OPERATING AND FINANCIAL REVIEW (CONTINUED)

Group Operating Results (continued):

Reconciliation between underlying Premier Retail EBIT and Reported Retail Segment Result

The Group’s results are reported under International Financial Reporting Standards (“IFRS”) and represents 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. The Group provides

these Non-IFRS financial measures to better understand key aspects of the performance and drivers of the Group’s

Retail Segment.

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:

2018

$’000

2017

$’000

2016 *

$’000

2015

$’000

2014

$’000

2013

$’000

2012

$’000

2011

$’000

Reported Retail Segment

Operating Profit before Taxation

142,484

126,182

126,207

98,958

79,299

76,686

69,988

39,796

Add back: Interest expense

5,467

4,884

4,912

5,738

6,311

6,988

10,194

9,614

147,951

131,066

131,119

104,696

85,610

83,674

80,182

49,410

EBIT

Adjusted for:

Inter-segment adjustments

One-off costs related to strategic

review

expense

One-off Smiggle new market entry

One-off supply chain

transformation expense

One-off exit of South African Joint

Venture

Non-comparable EBIT contribution

for the 53rd week in 2016

One-off expenses relating to Head

office relocation and make-good

One-off litigation expense

(92)

(84)

(167)

(673)

(482)

192

747

218

1,460

1,786

3,045

(6,596)

2,345

1,724

3,193

4,482

15,771

Underlying Premier Retail EBIT

150,066

136,031

126,701

105,747

92,803

83,704

80,374

65,255

Underlying Premier Retail EBIT,

expressed in $’ millions

150.1

136.0

126.7

105.7

92.8

83.7

80.4

65.3

* Reported Premier Retail Profit before tax for the year ended 30 July 2016 represented a 53 week

financial year.

Directors’ Report continued
DIRECTORS’ REPORT
(CONTINUED)

DIRECTORS’ REPORT
OPERATING AND FINANCIAL REVIEW (CONTINUED)
(CONTINUED)

Group Operating Results (continued):

Retail Segment (continued):
OPERATING AND FINANCIAL REVIEW (CONTINUED)
Retail segment sales per geographic segment is presented in the graph below:
Group Operating Results (continued):

Retail Segment (continued):

SALE OF GOODS PER GEOGRAPHIC SEGMENT FOR THE
Retail segment sales per geographic segment is presented in the graph below:
YEAR ENDED 28 JULY 2018

Sale of Goods Per Geographic Segment for the Period Ended 28 July 2018

SALE OF GOODS PER GEOGRAPHIC SEGMENT FOR THE
YEAR ENDED 28 JULY 2018

New Zealand 10%

Europe 11%

Asia
5%

Europe
11%

Asia 5%

New Zealand
10%

Asia
5%

Europe
11%

New Zealand
10%

Australia 74%

Australia
74%

Investment Segment:

The Group’s balance sheet remains strong, primarily due to the significant asset holding of the investment segment.
As at 28 July 2018, the Group continued to reflect its 27.5% shareholding in Breville Group Limited as an investment
in associate, with an equity accounted value of $223.2 million. The fair value of the Group’s interest in Breville Group
Investment Segment:
Limited as determined based on the quoted market price for the shares as at 28 July 2018 was $407.4 million.
The Group’s balance sheet remains strong, primarily due to the significant asset holding of the investment segment.
During the 2017 financial year, the Group acquired a strategic investment of 10.77% in Myer Holdings Limited. At
As at 28 July 2018, the Group continued to reflect its 27.5% shareholding in Breville Group Limited as an investment
the end of the 2018 financial year the fair value of this listed equity investment is reflected as $40.7 million.
in associate, with an equity accounted value of $223.2 million. The fair value of the Group’s interest in Breville Group
Limited as determined based on the quoted market price for the shares as at 28 July 2018 was $407.4 million.
During the 2017 financial year, the Group acquired an office building in Melbourne, Victoria, with a cost price of
$58.5 million. During the 2018 financial year, the Premier Retail relocated its head office to the newly acquired,
During the 2017 financial year, the Group acquired a strategic investment of 10.77% in Myer Holdings Limited. At
Premier owned office building.
the end of the 2018 financial year the fair value of this listed equity investment is reflected as $40.7 million.

During the 2017 financial year, the Group acquired an office building in Melbourne, Victoria, with a cost price of
$58.5 million. During the 2018 financial year, the Premier Retail relocated its head office to the newly acquired,
Premier owned office building.

9 Premier Investments Limited

DIRECTORS’ REPORT
(CONTINUED)

OPERATING AND FINANCIAL REVIEW (CONTINUED)

Group Operating Results (continued):

Reconciliation between underlying Premier Retail EBIT and Reported Retail Segment Result

The Group’s results are reported under International Financial Reporting Standards (“IFRS”) and represents 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. The Group provides
these Non-IFRS financial measures to better understand key aspects of the performance and drivers of the Group’s
Retail Segment.

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:

2018
$’000

2017
$’000

2018
$’000

2016 *
$’000

2017
$’000

2015
$’000

2016 *
$’000

2014
$’000

2015
$’000

2013
$’000
2014
$’000

Reported Retail Segment
Operating Profit before Taxation
Reported Retail Segment
Operating Profit before Taxation

Add back: Interest expense

142,484

5,467

126,182

126,207

98,958

79,299

76,686

142,484

4,884

126,182

4,912

126,207

5,738

98,958

6,311

79,299

6,988

EBIT

Add back: Interest expense

147,951

5,467

131,066

4,884

131,119

4,912
104,696

5,738
85,610

6,311
83,674

Adjusted for:
EBIT

147,951

131,066

131,119

104,696

85,610

(92)

(84)

(167)

(673)

(482)

(92)

(84)

Adjusted for:
Inter-segment adjustments
One-off costs related to strategic
Inter-segment adjustments
review
One-off Smiggle new market entry
One-off costs related to strategic
expense
review
One-off supply chain
One-off Smiggle new market entry
transformation expense
expense
One-off exit of South African Joint
One-off supply chain
Venture
transformation expense
Non-comparable EBIT contribution
One-off exit of South African Joint
for the 53rd week in 2016
Venture
One-off expenses relating to Head
Non-comparable EBIT contribution
office relocation and make-good
for the 53rd week in 2016
One-off expenses relating to Head
office relocation and make-good

One-off litigation expense

747

218

1,460

747

1,786
-

3,045

1,460

(167)

1,724
-

(6,596)

(673)

(482)

3,193
-

4,482
-

-
-

3,193

1,724

4,482

218

(6,596)
-

2,345

1,786

126,701

3,045

Underlying Premier Retail EBIT
One-off litigation expense

150,066

136,031
-

105,747
2,345

92,803
-

83,704

80,374
-

Underlying Premier Retail EBIT,
expressed in $’ millions

Underlying Premier Retail EBIT

150.1

150,066

136.0

136,031

126.7

126,701

105.7

105,747

92.8

92,803

83.7

83,704
80.4

2012
$’000
2013
$’000

69,988

76,686
10,194

6,988
80,182

83,674

192

30
-

-
-

2011
$’000
2012
$’000

39,796

69,988
9,614

10,194
49,410

80,182

2011
$’000

39,796

9,614

49,410

192
15,771

-
-

65,255
-

80,374
65.3

15,771

65,255

Underlying Premier Retail EBIT,
expressed in $’ millions

* Reported Premier Retail Profit before tax for the year ended 30 July 2016 represented a 53 week
financial year.

150.1

126.7

105.7

136.0

92.8

83.7

80.4

65.3

* Reported Premier Retail Profit before tax for the year ended 30 July 2016 represented a 53 week
financial year.

Annual Report 2018 10

Directors’ Report continued

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 period 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.

2018

2017

2016

2015

2014

Closing share price at end of financial year

$17.35

$13.35

$16.22

$13.43

$9.34

Basic earnings per share (cents)

Dividend paid per share (cents)

Return on equity (%)

52.97

56.0

8.5%1

66.8

51.0

7.9%

66.3

44.0

7.8%

56.5

50.0

47.0

39.0

6.6%

5.6%

Net debt/equity ratio (%)

(0.2%)1

0.2%

(13.3%)

(13.2%)

(14.9%)

1 Excludes the impact of a non-cash impairment of intangible asset brand names of $30 million.

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
28 July 2018.

SIGNIFICANT EVENTS AFTER THE REPORTING DATE

On 20 September 2018, the Directors of Premier Investments Limited declared a final dividend in respect of the
2018 financial year. The total amount of the dividend is $52,173,000 (2017: $42,619,000) which represents a fully
franked dividend of 33 cents per share (2017: 27 cents per share). The dividend has not been provided for in the
28 July 2018 financial statements.

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 28 July 2018 are referred to in the preceding operating and financial review.
No additional information is included on the likely developments in the operations of the Group 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 Group 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.

SHARE OPTIONS AND SHARES ISSUED DURING THE FINANCIAL YEAR

Unissued Shares:

As at the date of this report, there were 862,271 unissued performance rights (862,271 at the reporting date). Refer
to the remuneration report for further details of the options outstanding.

Shares Issued as a Result of the Exercise of Options:

A total of 350,978 shares (2017: 584,305) were issued during the year pursuant to the Group’s Performance Rights
Plan. No other shares were issued during the year.

11 Premier Investments Limited

DIRECTORS’ REPORT
(CONTINUED)

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 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 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, 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, 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 such disclosure is
prohibited under the terms of the contracts.

INDEMNIFICATION OF AUDITORS

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 unspecified
amount). No payment has been made to indemnify Ernst & Young during or since the financial year.

AUDITOR INDEPENDENCE

The Directors received a copy of the Auditor’s Independence Declaration in relation to the audit for this financial year
and is presented on page 37.

NON-AUDIT SERVICES

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-audit
service provided means that independence was not compromised.

Details of non-audit services provided by the Group’s auditor, Ernst & Young, can be found in Note 30 of the
Financial Report.

ROUNDING

The company is a company of the kind specified in ASIC Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191, dated 24 March 2016. In accordance with that ASIC instrument amounts in the financial
statements and the Directors’ Report have been rounded to the nearest thousand dollars unless specifically stated to
be otherwise.

CORPORATE GOVERNANCE STATEMENT

To view Premier’s Corporate Governance Statement, please visit www.premierinvestments.com.au/about-us/board-
policies.

Annual Report 2018 12

Directors’ Report continued

DIRECTORS’ REPORT
(CONTINUED)

DIRECTOR INTERESTS IN SHARES AND RIGHTS OF THE COMPANY

At the date of this report, the interests of the Directors in the shares and performance rights of the company were:

Mr. S. Lew
Mr. L.E. Fox
Ms. S. Herman
Mr. H.D. Lanzer
Mr. M.R.I. McLeod
Dr. G. H. Weiss
Mr. M. McInnes

4,437,699 ordinary shares**
2,577,014 ordinary shares (retired: 28 July 2018)
8,000 ordinary shares
27,665 ordinary shares
28,186 ordinary shares
6,000 ordinary shares (retired: 28 July 2018)
486,800 ordinary shares and 500,000 performance rights

**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, Mr. Lew
does not have a relevant interest in the shares of the company held by the Associated Entities.

DIRECTORS’ 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:

DIRECTOR

Mr. S. Lew

Mr. M. McInnes

Mr. T. Antonie

Dr. D. Crean

Ms. S. Falzon

Mr. L. E. Fox

Ms. S. Herman

Mr. H. D. Lanzer

Mr. T. L. McCartney

Mr. M. R. I. McLeod

Dr. G. H. Weiss

BOARD MEETINGS

AUDIT AND RISK COMMITTEE

REMUNERATION AND

NOMINATION COMMITTEE

MEETINGS
HELD

NUMBER
ATTENDED

MEETINGS
HELD

NUMBER
ATTENDED

MEETINGS
HELD

NUMBER
ATTENDED

REMUNERATION REPORT

The Remuneration Report, which forms part of this Directors’ Report, is presented from page 14.

The Directors’ Report is signed in accordance with a resolution of the Board of Directors.

Solomon Lew
Chairman
27 September 2018

13 Premier Investments Limited

DIRECTORS’ REPORT
(CONTINUED)

REMUNERATION REPORT
DIRECTORS’ REPORT
(CONTINUED)

Dear Shareholders,
REMUNERATION REPORT
As Chairman of the Remuneration and Nomination Committee, I am pleased to present Premier Investments’
remuneration report for the 52 weeks ended 28 July 2018. This report outlines, in detail, the remuneration outcomes
and incentive arrangements, related to our performance.

Dear Shareholders,
Premier has again successfully delivered strong results for our shareholders, in financial year 2018, even with the
As Chairman of the Remuneration and Nomination Committee, I am pleased to present Premier Investments’
ongoing structural changes and challenges of retail, within Australia and Internationally. Premier Retail CEO, Mark
remuneration report for the 52 weeks ended 28 July 2018. This report outlines, in detail, the remuneration outcomes
McInnes has continued to successfully lead Premier Retail, with reported sales of $1.18 billion, statutory reported
and incentive arrangements, related to our performance.
retail segment operating profit before taxation of $142.5 million and underlying Earnings before Interest and Taxation
(“EBIT”)1 of $150.1 million, up 10.3% on the prior financial year.
Premier has again successfully delivered strong results for our shareholders, in financial year 2018, even with the
Premier shareholders continue to enjoy some of the best returns of any listed company in the ASX200. Premier
ongoing structural changes and challenges of retail, within Australia and Internationally. Premier Retail CEO, Mark
Retail has delivered seven consecutive years of underlying EBIT growth, resulting in increased ordinary fully franked
McInnes has continued to successfully lead Premier Retail, with reported sales of $1.18 billion, statutory reported
dividends being declared to our shareholders.
retail segment operating profit before taxation of $142.5 million and underlying Earnings before Interest and Taxation
(“EBIT”)1 of $150.1 million, up 10.3% on the prior financial year.

Underlying EBIT History1

Premier shareholders continue to enjoy some of the best returns of any listed company in the ASX200. Premier
Retail has delivered seven consecutive years of underlying EBIT growth, resulting in increased ordinary fully franked
dividends being declared to our shareholders.

Underlying EBIT History1
Underlying EBIT History1
$150.1

$160.0

$136.0

Full year ordinary dividends
per share (fully franked)

$160.0

$126.7

Underlying EBIT History1

$140.0

$105.7

$80.4 $83.7

$92.8

$120.0

$100.0

$80.0

$105.7

$150.1

$92.8

$80.4 $83.7

$126.7

$136.0

FY12
$80.4 $83.7

FY13

$60.0

$105.7

$92.8

FY14

FY15

$40.0
$' millions

FY16

FY17

FY18

$150.1

$136.0

$126.7

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY12

FY13

FY14

FY15

FY16

FY17

FY18

cents per share

$140.0

$120.0

$100.0

$160.0
$80.0

$140.0
$60.0

$120.0
$40.0

$100.0

$80.0

$60.0

$40.0

Full year ordinary dividends per share
(fully franked)

FY14

FY15

FY16

FY17

FY18

FY12

FY13

$' millions

$160.0

$140.0

$120.0

$100.0

$80.0

$60.0

$40.0

Underlying EBIT History1

Full year ordinary dividends per share
(fully franked)

Full year ordinary dividends
Full year ordinary dividends
per share (fully franked)
per share (fully franked)

$105.7

$92.8

$80.4 $83.7

50
70

$126.7
40
60

$150.1

$136.0
36

30
50

FY12

FY13

48
FY16

FY14

FY15
42
40
40
cents per share
36

FY17
38

FY18
40

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY12

FY13

FY14

FY15

FY16

FY17

FY18

$' millions

FY12

FY13

FY14

FY15

FY16

FY17

FY18

cents per share

1 Refer to page 10 of the Directors’ Report for a definition and reconciliation of underlying EBIT. FY16 Underlying

EBIT represents a comparable 52 week period.

1 Refer to page 10 of the Directors’ Report for a definition and reconciliation of underlying EBIT. FY16 Underlying

EBIT represents a comparable 52 week period.

Annual Report 2018 14

Directors’ Report continued
DIRECTORS’ REPORT
(CONTINUED)

REMUNERATION REPORT (CONTINUED)
DIRECTORS’ REPORT
(CONTINUED)
We have a very strong team of highly respected female executives that lead critical business functions and most of
our iconic retail brands. Some have had their careers developed from within the business whilst others have been
REMUNERATION REPORT (CONTINUED)
encouraged to join the business, to strengthen it. Female leaders are responsible for five out of our seven brands,
plus two of the critical support functions, being Internet and Marketing, and People and Culture.

Female leadership flows through all levels of the business. 90% of our approximately 9,000 strong work-force are
We have a very strong team of highly respected female executives that lead critical business functions and most of
female. Within management, 77% are female and of the senior management team, the representation is 63%2. It is a
our iconic retail brands. Some have had their careers developed from within the business whilst others have been
key priority for us to ensure that the executive and leadership structure reflects our leadership composition, and we
encouraged to join the business, to strengthen it. Female leaders are responsible for five out of our seven brands,
are continuing to encourage and support this.
plus two of the critical support functions, being Internet and Marketing, and People and Culture.
During the 2018 financial year, Premier has also increased the diversity of the Board. Ms. Sylvia Falzon joined the
Female leadership flows through all levels of the business. 90% of our approximately 9,000 strong work-force are
Board in March 2018. Sylvia has extensive executive and board experience here in Australia and offshore, adding to
female. Within management, 77% are female and of the senior management team, the representation is 63%2. It is a
the breath of skills required by Premier. Details of our Board’s background and expertise are set out in the Directors’
key priority for us to ensure that the executive and leadership structure reflects our leadership composition, and we
Report.
are continuing to encourage and support this.
With the addition of Sylvia to the Board, Premier considers eight of the eleven Board members as at 28 July 2018 as
During the 2018 financial year, Premier has also increased the diversity of the Board. Ms. Sylvia Falzon joined the
independent. Dr. Gary Weiss and Mr Lindsay Fox both announced their retirement from the Premier Board, effective
Board in March 2018. Sylvia has extensive executive and board experience here in Australia and offshore, adding to
28 July 2018. Subsequent to the retirement of Gary and Lindsay, the Board consists of 6 independent Directors.
the breath of skills required by Premier. Details of our Board’s background and expertise are set out in the Directors’
The past financial year was a continuation of our expansion of our retail footprint overseas, with free standing stores
Report.
and the addition of concession stores, commencing with a highly successful launch in Selfridges, London. At year-
With the addition of Sylvia to the Board, Premier considers eight of the eleven Board members as at 28 July 2018 as
end, Premier Retail successfully and profitably operated 192 stores across Asia and Europe.
independent. Dr. Gary Weiss and Mr Lindsay Fox both announced their retirement from the Premier Board, effective
There has been Australian retail businesses who have tried to expand internationally, that have failed. Premier has
28 July 2018. Subsequent to the retirement of Gary and Lindsay, the Board consists of 6 independent Directors.
been very successful, but the complexity of successfully developing and profitably managing these international
The past financial year was a continuation of our expansion of our retail footprint overseas, with free standing stores
opportunities, whilst continuing to develop the growth and profitability of the highly competitive and changing
and the addition of concession stores, commencing with a highly successful launch in Selfridges, London. At year-
domestic retail market, is reflected in Premier’s remuneration strategies. To do this, you now compete in an
end, Premier Retail successfully and profitably operated 192 stores across Asia and Europe.
international talent pool.

There has been Australian retail businesses who have tried to expand internationally, that have failed. Premier has
In order to compete at this level for the best talent, it is critical that Premier continues to entice, incentivise and
been very successful, but the complexity of successfully developing and profitably managing these international
develop executives who can bring innovative and forward-thinking strategies to the business, that build shareholder
opportunities, whilst continuing to develop the growth and profitability of the highly competitive and changing
wealth. The Board is committed to supporting its high calibre key management personnel, to ensure that the strong
domestic retail market, is reflected in Premier’s remuneration strategies. To do this, you now compete in an
financial returns enjoyed by shareholders continue.
international talent pool.
The report summarises our remuneration strategies, the way in which incentives are calculated and the connection
between those strategies and the achievement of positive returns for shareholders.
In order to compete at this level for the best talent, it is critical that Premier continues to entice, incentivise and
develop executives who can bring innovative and forward-thinking strategies to the business, that build shareholder
wealth. The Board is committed to supporting its high calibre key management personnel, to ensure that the strong
financial returns enjoyed by shareholders continue.

The report summarises our remuneration strategies, the way in which incentives are calculated and the connection
between those strategies and the achievement of positive returns for shareholders.
Terrence McCartney

Chairman, Remuneration and Nomination Committee

Terrence McCartney

Chairman, Remuneration and Nomination Committee

2 As per the Just Group Limited Australian Workplace Gender Equality Agency Report, lodged in May 2018.

15 Premier Investments Limited

DIRECTORS’ REPORT
(CONTINUED)

REMUNERATION REPORT (AUDITED)

This remuneration report for the 52 weeks ended 28 July 2018 outlines the remuneration arrangements of the Group
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.

The remuneration report is presented under the following headings:

Introduction

2. Remuneration Governance

3. Executive remuneration arrangements:-

A. Remuneration principles and strategy

B. Approach to setting remuneration

C. Fixed remuneration objectives

D. Detail of incentive plans

4. Executive remuneration outcomes (including link to performance)

5. Remuneration of CEO Premier Retail, Mr. McInnes

6. Executive service agreements

7. Non-Executive Director remuneration arrangements

8. Remuneration of Key Management Personnel

9. Additional disclosures relating to Rights and Shares

10. Additional disclosures relating to transactions and balances with Key Management Personnel

INTRODUCTION

The remuneration report details the remuneration arrangements for Key Management Personnel (“KMP”) who are
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 Group.

The table below outlines the Group’s KMP during the 52 weeks ended 28 July 2018. Unless otherwise indicated, the
individuals were KMP for the entire financial year.

KEY MANAGEMENT PERSONNEL

(i) Non-Executive Directors

Mr. S. Lew

Dr. D. Crean

Mr. T. Antonie

Ms. S. Falzon

Mr. L.E. Fox

Chairman and Non-Executive Director

Deputy Chairman and Non-Executive Director

Non-Executive Director and Lead Independent Director

Non-Executive Director (appointed 16 March 2018)

Non-Executive Director (retired 28 July 2018)

Ms. S. Herman

Non-Executive Director

Mr. H.D. Lanzer

Non-Executive Director

Mr. T.L. McCartney

Non-Executive Director

Mr. M.R.I. McLeod

Non-Executive Director

Dr. G.H. Weiss

Non-Executive Director (retired 28 July 2018)

Annual Report 2018 16

Directors’ Report continued
DIRECTORS’ REPORT
(CONTINUED)

REMUNERATION REPORT (AUDITED) (CONTINUED)

INTRODUCTION (CONTINUED)

KEY MANAGEMENT PERSONNEL (CONTINUED)

(ii) Executive Director

Mr. M. McInnes

Executive Director and Chief Executive Officer Premier Retail

(iii) Executives

Mr. K.F. Davis

Mr. J.S. Bryce

Company Secretary, Premier Investments Limited

Chief Financial Officer, Just Group Limited (appointed 13 December 2016)

Other than as noted above, there were no changes to the KMP after the reporting date and before the date the
financial report was authorised for issue.

Ms. Colette Garnsey ceased employment with the Group on 7 August 2017 and was therefore not considered to be a
KMP for the 2018 financial year.

2. REMUNERATION GOVERNANCE

Remuneration and Nomination Committee

The Remuneration and Nomination Committee (“Committee”) of the Board of Directors of the Group (“Board”) comprises
three Non-Executive Directors. Mr. McCartney assumed the role of Chairman of the Committee in August 2017. Mr.
McCartney is an independent director and brings to the Committee many years of retail and business experience, both
as an advisor and director. Further details in relation to Mr. McCartney’s background and expertise is set out in the
annual report.

The Committee is led by an independent Non-Executive Director and the majority of its members are independent Non-
Executive Directors. This demonstrates an ongoing commitment to the independence of the Committee. 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 may from time to time seek external remuneration advice to ensure it is fully informed when making
remuneration decisions. Remuneration advisors are engaged by, and report directly to, the Committee.

No such advice was sought during the 2018 financial year.

17 Premier Investments Limited

DIRECTORS’ REPORT
(CONTINUED)

REMUNERATION REPORT (AUDITED) (CONTINUED)

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 significant revenues earned in its traditional markets of Australia
and New Zealand. The retail industry in these markets has seen marked structural change over recent years, including
a prevalence in the use of new and existing technology, an increase in international competitors and significant
changes in general consumer sentiment.

Complementing its strong market position in Australia and New Zealand, the Group has significantly increased its
revenues from international markets in Asia and Europe. The Group is committed to growing its existing international
presence whilst also exploring expansion into new geographies. During the 2018 financial year, the Group opened its
first global concession store in Selfridges, London.

The market for skilled and experienced executives in the retail industry continues to be increasingly competitive and
international in nature. The Group’s strong domestic position, as well as global reach, provides exposure to an
international pool of talent and access to a diverse range of strategies to respond to industry changes.

Given these structural changes and the Group’s growing international business, the Board believes it is both critical to
the future success of the business, and in the best interest of shareholders, to attract, retain and develop the best
possible executive team through the provision of competitive remuneration packages, and incentive arrangements
which are aligned to growth and performance.

The Group’s strategic objective is to be recognised as a leader in the retail industry and build long term value for
shareholders. It seeks to do this in the following ways:

PREMIER RETAIL TRANSFORMATION STRATEGY – OUR FOCUS ON GROWTH AND
INVESTMENT

GROWTH

CORE

 Grow Smiggle significantly

 Gross margin expansion program

 Grow Peter Alexander significantly

 Rejuvenation of core apparel brands

 Expansion and growth of online businesses

 Organisation-wide cost efficiency program

The Group is committed to ensuring that executive remuneration outcomes are explicitly linked to the overall
performance and success of the Group. This section, and in particular the diagram on the following page, illustrates
this link between the Group’s strategic objective and its executive remuneration strategies.

Annual Report 2018 18

Directors’ Report continued
DIRECTORS’ REPORT
DIRECTORS’ REPORT
(CONTINUED)
(CONTINUED)

REMUNERATION REPORT (AUDITED) (CONTINUED)

3. EXECUTIVE REMUNERATION ARRANGEMENTS (CONTINUED)

3A. Remuneration principles and strategy (continued)

To be recognised as a leader in our industry and build long-term value for our shareholders

Group Objective

Remuneration strategy linkages to Group objective

Align the interests of executives with 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.

 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 generate
returns for shareholders.



Attract, motivate and retain high performing
individuals

 Remuneration is competitive as compared to
companies of a similar size and complexity.
Longer-term remuneration frameworks and
“at-risk” components encourage retention,
development and a multi-year performance
focus.



Component

Vehicle

Purpose

Link to performance

Fixed
remuneration

Component

Fixed
remuneration

STI

LTI

Discretionary
Bonus

Vehicle

Comprises
base salary,
superannuation
Comprises
contributions
base salary,
and other
superannuation
benefits
contributions
and other
benefits

Awarded in
cash

Awarded in
performance
rights

Awarded in
performance
rights
Awarded in
cash or
performance
rights

Awarded in
cash or
performance
rights

To provide competitive
Purpose
fixed remuneration with
reference to the applicable
role, market and relevant
executive’s experience.

To provide competitive
fixed remuneration with
reference to the applicable
role, market and relevant
executive’s experience.

Rewards executives for
their contribution to
achievement of Group and
business unit annual
outputs and performance
outcomes.

Rewards executives for
their contribution to
achievement of Group and
business unit annual
outputs and performance
Rewards executives for
outcomes.
their contribution to the
creation of shareholder
value over the long term.

Rewards executives for
their contribution to the
creation of shareholder
value over the long term.

Rewards executives in
exceptional circumstances
linked to long term
shareholder outcomes.

Both the executive’s performance,
and the performance of the Group,
are considered during regular
remuneration reviews.

Link to performance

Both the executive’s performance,
and the performance of the Group,
are considered during regular
remuneration reviews.

Key financial metrics based
primarily on Premier Retail’s
underlying earnings before interest
and taxation (“EBIT”) of each
business unit, as well as a suite of
other internal financial and non-
financial measures.

Vesting of performance rights is
dependent on both a positive total
shareholder return (“TSR”) for the
Group and testing against the
Comparison Peer Group (defined in
Section 3D of this report).

Granted at the discretion of the
Board upon recommendation of the
Committee in exceptional
circumstances, and when in the
best interests of the Group.

Rewards executives in
exceptional circumstances
linked to long term
shareholder outcomes.

No discretionary bonuses were
made during the 2018 or 2017
financial years.

Granted at the discretion of the
Board upon recommendation of the
Committee in exceptional
circumstances, and when in the
best interests of the Group.

No discretionary bonuses were
made during the 2018 or 2017
19
financial years.

19 Premier Investments Limited

DIRECTORS’ REPORT
(CONTINUED)

REMUNERATION REPORT (AUDITED) (CONTINUED)

3. EXECUTIVE REMUNERATION ARRANGEMENTS (CONTINUED)

3B. Approach to setting remuneration

For the 52 weeks ended 28 July 2018, the executive remuneration framework comprised of fixed remuneration, STI
and LTI, as outlined below. Details of Mr. McInnes’ remuneration are provided in section 5 of this report.

The Group aims to reward executives with a competitive level and mix of remuneration appropriate to their position and
responsibilities, 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, applicable business
unit and executive’s individual performance, relevant comparative remuneration (both externally and internally) and,
where appropriate, external advice. The Committee has access to external advice independent of management.

3D. Detail of incentive plans

Short term incentive (“STI”)

The Group operates an annual STI program which is awarded subject to the attainment of clearly defined financial and
non-financial Group and business unit measures.

Who participates?

Executives who have served a minimum of nine months.

How is STI delivered?

Cash.

What is the STI
opportunity?

Executives have an STI opportunity of between 0% and 100% of their fixed
remuneration.

What are the applicable
financial performance
measures?

STI payments awarded to each executive are explicitly aligned to the key
value drivers of Premier Retail, such that rewards will only be payable when
the following criteria have been met:



budgeted EBIT of Premier Retail has been achieved and an incentive pool
has been created;

the executive receives a performance appraisal on target or above;

the executive’s minimum performance outcomes have been achieved
(hurdle); and

the executive’s key performance indicators (“KPIs”) have been met
(qualifiers).

The financial performance measures are chosen with reference to the
strategic objective to promote both short term success and provide a
framework for delivering long term value.

The hurdle criteria are designed to ensure STI outcomes are aligned to the
creation of shareholder value. If the hurdles are not met, the STI is not
payable.

The qualifier criteria aligns the individual activities and focus of the executive
to shareholder value. Each executive is set multiple KPIs covering financial,
non-financial, Group and business unit measures of performance. The KPIs
are quantifiable and weighted according to their value.

The budgeted EBIT for each year is expected to incorporate growth on the
previous year. As such, in a year in which STI payments are made,
executives must exceed the actual result in the prior year to achieve an STI
in the following year. This mechanism ensures the STI scheme continues to
build shareholder returns over time.

Annual Report 2018 20

Directors’ Report continued
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 applicable
non-financial
performance
measures?

How is performance
assessed?

The award of an STI is also dependent on the executive achieving individual
aligned non-financial performance indicators, such as:







retention of existing customers through outstanding customer service;
implementation of key growth initiatives;
demonstrated focus on a continuous improvement in safety performance;
and
demonstrated focus on the growth and development of leadership
and team talent to encourage leadership succession.

After the end of the financial year, following consideration of the financial and
non-financial performance indicators, the Committee obtains input from the
CEO Premier Retail in relation to the amount of STI to be paid to eligible
executives.
The Committee then provides its recommendations to the Just Group Board
for approval. The provision of any STI payments is subject to the sole
discretion of the Chairman.

Long-term incentive (“LTI”)

The Group’s LTI plan seeks to create shareholder value over the long term by aligning executive remuneration with the
Group’s strategic objectives.

Generally, LTI performance rights are granted annually and are eligible to vest three years from the date of the grant,
with the exception of rights awarded to Mr. McInnes. Refer to section 5 for details surrounding Mr McInnes’ LTI
arrangements.

21 Premier Investments Limited

DIRECTORS’ REPORT
(CONTINUED)

REMUNERATION REPORT (AUDITED) (CONTINUED)

3. EXECUTIVE REMUNERATION ARRANGEMENTS (CONTINUED)

3D. Detail of incentive plans (continued)

Long-term incentive (“LTI”) (continued)

Who participates?

Executives.

How is LTI delivered?

Performance rights.

What were the
performance measures
for the 2018 and 2017
financial years?

How is performance
assessed?

LTI rights awarded to each executive are subject to a two stage performance
test - an absolute and relative test - based on the Group’s TSR. Broadly,
TSR is the percentage growth achieved from an investment in ordinary
shares over the relevant testing period (assuming all dividends are
reinvested).

The two stage performance measure approach ensures that the LTI plan
operates as a key driver for performance whilst also providing an incentive to
executives.

The absolute test requires the Group to achieve a positive TSR over the
testing period. If the TSR is negative over the testing period, then the
performance rights lapse.

If the TSR is positive over the testing period, the relative test is undertaken,
which compares the Group’s TSR with the S&P/ASX200 excluding overseas
and resource companies (“Comparison Peer Group”). The Comparison Peer
Group was chosen to reflect the Group’s competitors for both capital and
talent.

The Group’s performance against the Comparison Peer Group measure is
determined according to its ranking against the Comparison Peer Group
over the performance period. The vesting schedule is as follows:

Target

Conversion ratio of rights to
shares available to vest under the
TSR performance condition

Below 50th percentile
50th percentile

Between 50th and 62.5th percentile

62.5th percentile
Between 62.5th and 75th percentile

75th percentile and above

25%

Pro Rata

50%

Pro Rata

100%

The absolute test was introduced to ensure that shareholders and
executives are aligned in the goal of absolute wealth creation. The relative
test was introduced to provide alignment between comparative shareholder
return and reward for executives.

The Group considers the suitability of the above performance conditions on
an annual basis.

TSR performance is calculated by an independent external advisor at the
end of each performance period.
Section 9 of this report, titled “Additional disclosures relating to rights and
shares”, provides details of performance rights granted, vested, exercised
and lapsed during the year.

Annual Report 2018 22

Directors’ Report continued
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?

Generally, the performance rights will vest over a period of three years
subject to meeting performance measures.

Performance rights issued from the 2016 financial year onwards have no
opportunity to re-test.

How are grants treated
on termination?

Generally, all outstanding unvested rights are forfeited upon an executive
resigning from the Group.

May participants enter
into hedging
arrangements?

Executives are prohibited from entering into transactions to hedge or limit
the economic risk of the securities allocated to them under the LTI scheme,
either before vesting or after vesting while the securities are held subject to
restriction. Executives are only able to hedge securities that have vested but
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 the LTI plan.

Do participants receive
distributions or
dividends on unvested
LTI grants?

Participants do not receive distributions or dividends on unvested LTI
grants.

23 Premier Investments Limited

DIRECTORS’ REPORT
DIRECTORS’ REPORT
(CONTINUED)
(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
Group performance and its link to STI
STI payment outcomes are primarily driven by Premier Retail’s underlying EBIT growth. The following chart shows
Premier Retail’s underlying EBIT for the eight years since the appointment of Mr. McInnes as CEO Premier Retail.
STI payment outcomes are primarily driven by Premier Retail’s underlying EBIT growth. The following chart shows
Premier Retail’s underlying EBIT for the eight years since the appointment of Mr. McInnes as CEO Premier Retail.

Premier Retail Underlying EBIT
Premier Retail Underlying EBIT

Premier Retail Underlying EBIT

$140.0

$160.0

$120.0

$100.0

$160.0
$160.0
$140.0
$140.0
$120.0
$120.0
$100.0
$100.0
$80.0
$80.0
$60.0
$60.0
$40.0
$40.0
$20.0
$20.0
$20.0
$‐
$‐

$60.0

$40.0

$80.0

$150.1
$150.1

$150.1

$136.0
$136.0

$136.0

$126.7
$126.7

$126.7

$105.7
$105.7

$105.7

$92.8
$92.8

$92.8

$80.4
$80.4

$80.4

$83.7
$83.7

$83.7

$65.3
$65.3

$65.3

FY11
FY11

FY12
FY12

FY11

FY13
FY13

FY12

FY13

FY14
FY14

FY15
FY15

FY16 *
FY16 *

FY15

FY17
FY17

FY16 *

FY18
FY18

FY17

FY18

$'millions
FY14
$'millions

* FY16 Underlying EBIT represents a comparable 52 week period.

$'millions

* FY16 Underlying EBIT represents a comparable 52 week period.
Note: The term underlying EBIT is not an IFRS defined term. Please refer to page 10 for a reconciliation between underlying EBIT

and statutory reported operating profit before tax for the Retail Segment.
Note: The term underlying EBIT is not an IFRS defined term. Please refer to page 10 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 years ended 28 July 2018 and 29 July 2017
Performance compared to STI payments made during the financial years ended 28 July 2018 and 29 July 2017
STI payment to Mr. Bryce
STI payment to Mr. Bryce
During the 2017 financial year, an STI payment of $50,000 was paid to Mr. Bryce in line with the hurdles and qualifiers
relating to his 2016 financial year STI plan. This included the achievement of Premier Retail underlying EBIT. No STI
During the 2017 financial year, an STI payment of $50,000 was paid to Mr. Bryce in line with the hurdles and qualifiers
was paid during the 2018 financial year.
relating to his 2016 financial year STI plan. This included the achievement of Premier Retail underlying EBIT. No STI
was paid during the 2018 financial year.

STI payments to Ms. Garnsey
STI payments to Ms. Garnsey
Ms. Garnsey was provided with an STI payment of $300,000 in the 2017 financial year, in line with the hurdles and
qualifiers relating to her STI plan. This included the achievement of Premier Retail underlying EBIT and the
Ms. Garnsey was provided with an STI payment of $300,000 in the 2017 financial year, in line with the hurdles and
achievement of hurdles and qualifiers for specific brands for the 2016 financial year. Ms. Garnsey ceased effective 7
qualifiers relating to her STI plan. This included the achievement of Premier Retail underlying EBIT and the
August 2017, and as such was not considered a KMP for the 2018 financial year.
achievement of hurdles and qualifiers for specific brands for the 2016 financial year. Ms. Garnsey ceased effective 7
August 2017, and as such was not considered a KMP for the 2018 financial year.

24
24

Annual Report 2018 24

Directors’ Report continued
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 dependent on an absolute test, being a positive Group TSR
performance and a relative test, being a comparison against the Comparison Peer Group (as defined in section 3D of
this report).

The table below illustrates the outcomes of the TSR testing performed during the 2017 and 2018 financial years in
relation to KMP:

Testing Period

Share price
at start of
testing
period

Share price
at end of
testing
period

Dividends
paid

TSR
percentage

TSR
percentile

Number of
Performance
Rights
tested for
KMP

4 Apr 2014 to 4 Apr 2017

$9.95

$13.83

19 Jun 2012 to 19 Jun 2017

$4.49

$12.90

4 Apr 2014 to 4 Apr 2018

$9.95

$15.93

$1.39 fully
franked

$2.21 fully
franked

$1.92 fully
franked

62.80%

74th

250,000*

248.70%

90th

80,000

87.67%

83rd

250,000*

* Relates to Mr. McInnes, refer to section 5 of this report.

The below chart shows the Premier TSR against the S&P/ASX200 Index, from 4 April 2011 to 28 July 2018:

Premier Investments Limited TSR against the
ASX200 Index from 4 April 2011 to 28 July 2018

Premier Investments Limited TSR against the ASX200 Index
from 4 April 2011 to 28 July 2018

30.00

25.00

20.00

15.00

10.00

5.00

–
Apr‐11
–

+272%

+78%

Apr‐12

Apr‐13

Apr‐14

Apr‐15

Apr‐16

Apr‐17

Apr‐18

Apr-11

Apr-12

Apr-13

25 Premier Investments Limited

PMV

Apr-14

ASX 200

Apr-15

Apr-16

Apr-17

Apr-18

PMV

ASX 200

DIRECTORS’ REPORT
(CONTINUED)

REMUNERATION REPORT (AUDITED) (CONTINUED)

5. REMUNERATION OF CEO PREMIER RETAIL, MR. MCINNES

Mr. McInnes’ fixed remuneration

Mr. McInnes’ annual fixed remuneration increased from $2,000,000 to $2,500,000, effective from the beginning of the
2016 financial year. This was Mr. McInnes’ first increase in fixed remuneration since joining the Group in 2011.

Mr. McInnes’ notice period

Upon cessation of his employment, Mr. McInnes is entitled to 12 months’ notice (“Notice Period”) if he resigns or is
terminated by Premier for any reason other than for serious misconduct, or for conduct otherwise giving rise to an
entitlement at law to summarily dismiss (“Terminated Without Cause”).

During the Notice Period, Premier may direct Mr. McInnes to continue in his role, perform no duties, reduced duties or
alternative duties during the Notice Period, or elect to provide Mr. McInnes with payment in lieu of the Notice Period.
The maximum amount of any payment in lieu of the Notice Period based on Mr. McInnes’ current fixed remuneration is
$2,500,000 gross, less applicable tax.

If Mr. McInnes is terminated for serious misconduct or Premier is otherwise entitled at law to summarily dismiss Mr.
McInnes (“Terminated for Cause”), Premier may terminate Mr. McInnes’ employment without providing the Notice
Period (or payment in lieu of the Notice Period).

Mr. McInnes’ STI arrangements

Mr. McInnes is entitled to receive a STI if the applicable performance targets and conditions set out below are met.

Calculation of Mr. McInnes’ STI is based on growth of Premier Retail EBIT, as compared to the previous financial year
(“Base Year”). The relevant performance targets and corresponding STI payment amounts are as follows:

EBIT growth less than 5% of Base Year

No payment.

EBIT growth of 5% of Base Year

$1,250,000.

EBIT growth between 5% and 10% of Base Year

EBIT growth of above 10% of Base Year

$1,250,000 plus a pro rata payment based on the % of the
EBIT growth above 5%, up to a maximum of $2,500,000
for 10% EBIT growth.

If Mr. McInnes considers that any additional payment is
warranted based on EBIT growth of above 10%, he may
make a request for an additional payment to the Chairman
of Premier. The Chairman may determine whether or not
to make any such payment in his sole and absolute
discretion within 30 days of receiving any such request.

The maximum payment that Mr. McInnes may receive under the current STI scheme is $2,500,000, unless the
Chairman decides to make an additional payment in his absolute discretion to reward EBIT growth of above 10%. The
Chairman has not used such discretion during the 2017 or 2018 financial years.

The Chairman has absolute discretion to make an additional STI payment if Mr. McInnes would not otherwise be
entitled to such a payment under the above table.

The amount that Mr. McInnes may receive under the STI scheme in connection with him ceasing employment (for
reasons other than being Terminated for Cause) will depend on the financial year in which the Notice Period ends and
will be calculated in accordance with the above table (on a pro rata basis for part of a financial year if the Notice Period
ends part way through a financial year).

If Mr. McInnes resigns from his employment, or is Terminated Without Cause, he remains entitled to continue
participating in the STI scheme until the end of the Notice Period.

Annual Report 2018 26

Directors’ Report continued
DIRECTORS’ REPORT
(CONTINUED)

REMUNERATION REPORT (AUDITED) (CONTINUED)

5. REMUNERATION OF CEO PREMIER RETAIL, MR. MCINNES (CONTINUED)

Mr. McInnes’ STI arrangements (continued)

This entitlement will not be impacted by any election by Premier to direct Mr. McInnes to continue in his role, to perform
no duties, reduced duties or alternative duties during the Notice Period, or to provide Mr. McInnes with a payment in
lieu of the Notice Period.

If Mr. McInnes’ employment is Terminated for Cause, he is not entitled to participate in the STI scheme for the financial
year in which his employment ceases, or any following financial year.

Payment of an STI upon Mr. McInnes’ cessation of employment may be considered a termination benefit within the
meaning of Part 2D.2 of the Act.

Mr. McInnes’ STI payments during the financial years ended 28 July 2018 and 29 July 2017

During the 2018 financial year, an STI payment of $1,840,000 was made to Mr. McInnes which primarily reflected the
significant growth achieved in Premier Retail’s EBIT for the 2017 financial year.

During the 2017 financial year, an STI payment of $2,500,000 was made to Mr. McInnes which primarily reflected the
significant growth achieved in Premier Retail’s EBIT for the 2016 financial year.

The historical growth in Premier Retail’s underlying EBIT is detailed in the graph in section 4 of this report.

Mr. McInnes’ STI payment for the 2018 financial year will be finalised in December 2018.

Mr. McInnes’ LTI arrangements

Mr. McInnes is entitled to 1,000,000 performance rights split into four equal tranches. The performance rights were
granted at no cost to Mr. McInnes and, conditional on the performance hurdles being met, the performance rights will
be exercisable at no cost.

Shareholders approved the right of the Group to issue the 1,000,000 performance rights to Mr. McInnes at the 2015
Annual General Meeting of shareholders held on 27 November 2015. The rules pertaining to this grant were approved
by shareholders at the Extraordinary General Meeting of shareholders held on 15 June 2016.

The performance rights granted will vest in four equal tranches subject to the achievement of both an absolute and
relative TSR test. No value will be received by Mr. McInnes if the performance rights lapse prior to the vesting date.

Each tranche of performance rights will be tested against the TSR performance measure over different testing periods,
as follows:



Tranche A – 4 April 2014 to 4 April 2017 (Tested, see further details provided in Section 5)

Tranche B – 4 April 2014 to 4 April 2018 (Tested, see further details provided in Section 5)

Tranche C – 4 April 2014 to 4 April 2019

Tranche D – 4 April 2014 to 4 April 2020

(each date being a “Vesting Date”).

The share price baseline for each tranche is $9.88, which was the volume weighted average share price (“VWAP”) of
the ordinary shares on ASX for the five trading days prior to 4 April 2014. Premier’s TSR will be calculated based on
the percentage growth achieved from the share price baseline of $9.88 to the share price on the relevant Vesting Date
(calculated by the VWAP of the ordinary shares on ASX for the five trading days prior to the relevant Vesting Date).

The first stage absolute test requires that the TSR over the testing period is positive.

If the TSR is positive, the second stage relative test requires the TSR to be assessed against the relative performance
of the Comparison Peer Group.

27 Premier Investments Limited

DIRECTORS’ REPORT
(CONTINUED)

REMUNERATION REPORT (AUDITED) (CONTINUED)

5. REMUNERATION OF CEO PREMIER RETAIL, MR. MCINNES (CONTINUED)

Mr. McInnes’ LTI arrangements (continued)

The relative TSR performance targets and the corresponding vesting percentages are as follows:

Target

Below the 50th percentile

50th percentile

Conversion ratio of performance rights to shares
available to vest under the TSR performance condition:

25%

Between 50th and 62.5th percentile

Pro Rata

62.5th percentile

50%

Between 62.5th and 75th percentile

Pro Rata

75th percentile and above

100%

Premier’s TSR and ranking within the Comparison Peer Group for each testing period will be assessed by an external
independent advisor.

The performance rights under each tranche lapse if the applicable performance hurdles are not met (unless otherwise
determined by the Board in its absolute discretion).

If in any year Mr. McInnes has satisfied all performance conditions, other than the TSR being positive, and would
otherwise have been entitled to vesting of any performance rights, the Chairman may, in his sole and absolute
discretion, elect to enable some or all of the applicable performance rights to vest if circumstances justify such an
award.

If Mr. McInnes resigns, or is Terminated Without Cause, he will be entitled to continue to participate in the LTI plan until
the end of his Notice Period, regardless of any election by Premier to direct Mr. McInnes to continue in his role, to
perform no duties, reduced duties or alternative duties during the Notice Period, or to provide Mr. McInnes with a
payment in lieu of the Notice Period.

If Mr. McInnes’ employment is Terminated for Cause, he is not entitled to participate in the LTI plan for the financial
year in which his employment ceases, or any following financial year.

If Mr. McInnes resigns, or is Terminated Without Cause, and the final day of the Notice Period is within 14 days prior to
a Vesting Date, Mr. McInnes remains entitled to have the performance rights tested against the TSR performance
measure on the Vesting Date (“Special Vesting”).

The Special Vesting terms will be effective regardless of any election by Premier to direct Mr. McInnes to continue in
his role, to perform no duties, reduced duties or alternative duties during the Notice Period, or to provide Mr. McInnes
with a payment in lieu of the Notice Period.

Provision of a LTI upon Mr. McInnes’ cessation of employment may be considered a termination benefit within the
meaning of Part 2D.2 of the Act.

Annual Report 2018 28

Directors’ Report continued
DIRECTORS’ REPORT
(CONTINUED)

REMUNERATION REPORT (AUDITED) (CONTINUED)

5. REMUNERATION OF CEO PREMIER RETAIL, MR. MCINNES (CONTINUED)

Shares issued as a result of vesting of performance rights issued to Mr McInnes for the financial years ended 28 July
2018 and 29 July 2017

During the 2018 financial year, a tranche of 250,000 performance rights (being Tranche B) were tested for the period 4
April 2014 to 4 April 2018. The TSR over this period was 87.67%, placing Premier in the 83rd percentile of the Comparison
Peer Group. Details of this test have been presented in Section 4 of this report. The testing resulted in 100% of the
performance rights qualifying for vesting into 250,000 newly issued shares in April 2018.

During the 2017 financial year, a tranche of 250,000 performance rights (being Tranche A) were tested for the period 4
April 2014 to 4 April 2017. The TSR over this period was 62.80%, placing Premier in the 74th percentile of the Comparison
Peer Group. Details of this test have been presented in Section 4 of this report. The testing resulted in 94.7% of the
performance rights qualifying for vesting into 236,800 newly issued shares in April 2017.

Mr. McInnes’ post-employment restrictions

If Mr. McInnes resigns, is Terminated Without Cause or is Terminated for Cause, Premier may elect to restrict Mr.
McInnes from certain conduct in competition with Premier for a period of either 12 months or 24 months from the end
of the Notice Period (“Post-employment Restrictions”).

If Premier elects to enforce the Post-employment Restrictions, it is required to provide Mr. McInnes with his total fixed
remuneration during the relevant period (up to a maximum period of 24 months). If Premier elects to enforce the Post-
employment Restrictions for 24 months, Mr. McInnes would receive a total of $5,000,000 gross, less applicable tax
based on his current total fixed remuneration. If Premier elects to enforce the Post-employment Restrictions for 12
months, Mr. McInnes would receive a total of $2,500,000 gross, less applicable tax.

Premier’s ability to enforce the Post-employment Restrictions will not be impacted by any election by Premier to direct
Mr. McInnes to continue in his role, perform no duties, reduced duties or alternative duties during the Notice Period, or
to provide Mr. McInnes with a payment in lieu of the Notice Period.

If Mr. McInnes’ employment is Terminated for Cause, Premier may elect to enforce the Post-employment Restrictions
from the date on which his employment is terminated (as no Notice Period will be provided).

The payments outlined above may be considered a termination benefit within the meaning of Part 2D.2 of the Act.

Termination benefits

The STI, LTI and Post-employment Restrictions payments and benefits outlined above may be considered termination
benefits within the meaning of Part 2D.2 of the Act.

At an Extraordinary General Meeting held on 15 June 2016, shareholders approved these potential termination
benefits for the purposes of Part 2D.2 of the Act.

29 Premier Investments Limited

DIRECTORS’ REPORT
(CONTINUED)

REMUNERATION REPORT (AUDITED) (CONTINUED)

6. EXECUTIVE SERVICE AGREEMENTS

Remuneration and other terms of employment for KMP and other executives are formalised in written service
agreements (with the exception of Mr. Davis, whose relevant terms of employment are set out below). Material
provisions of the service agreements are set out below:

Start
date

Term of
agreement

Review
period

Notice
period
required
from
Premier

Mr. McInnes

4 April
2011

Open

Annual

12 months

Open

Annual

12 months

Mr. Bryce
(appointed: 13
December 2016)

13 Dec
2016

Mr. Davis

17 Nov
1993

Termination benefits

Upon
diminution
of role

Nil

Notice
period
required
from
employee

12 months
fixed rem.
including
notice

Nil

12 months

Premier
initiated

12 months
fixed rem.
including
notice

Open

Annual

3 months

Nil

3 months

7. NON-EXECUTIVE DIRECTOR REMUNERATION 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 most recent determination of this kind
was at the 2016 Annual General Meeting held on 2 December 2016 when shareholders approved an aggregate
remuneration of an amount not exceeding $1,500,000 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 Director’s 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).

Annual Report 2018 30

d
e
t
a
e
r

2
1
.
1
6

2
4
.
2

2
1
.
1
6

2
4
.
2

1
3

0
0
0
,
0
2
1

0
0
0
,
0
6
1

4
3
6
,
7
3

0
0
0
,
0
2
1

0
0
0
,
0
8

0
0
0
,
0
6
1

4
3
6
,
7
3

0
0
0
,
0
0
1

0
0
0
,
0
8

0
0
0
,
0
4
3

0
0
0
,
0
0
1

0
0
0
,
0
8

0
0
0
,
0
2
1

0
0
0
,
0
8

0
0
0
,
0
4
3

4
3
6

0
0
0
,
0
2
1

7
1
1

0
0
0
,
0
8

7
5
0
,
5
5
4

4
3
6

7
1
1

1
8
4
,
6
2
8
,
6

0
0
6
,
9
2
5

1
8
4
,
6
2
8
,
6

8
3
1

7
5
0
,
5
5
4

1
1
8

a
t
o
T

e
c
n
a
m
r
o
f
r
e
P

m
r
e
t
-
g
n
o
L

-
t
s
o
P
r
e
h
t
O

d
e
t
a
e
r

a
t
o
T

e
c
n
a
m
r
o
f
r
e
P

s
e
v

d
e
s
a
b
e
r
a
h
S

i
t
n
e
c
n

m
r
e
t
-
g
n
o
L

s
e
v

i
t
n
e
c
n

-
t
s
o
P
r
e
h
t
O

t
n
e
m
y
o
p
m
e

t
n
e
m
y
o
p
m
e
-
t
s
o
P

t
n
e
m
y
o
p
m
e

n
o
i
t
a
u
n
n
a
r
e
p
u
S

y
r
a
t
e
n
o
M
-
n
o
N

s
t
i
f
e
n
e
B

y
r
a
t
e
n
o
M
-
n
o
N

m
r
e
t
-
t
r
o
h
S

h
s
a
C

:
s
w
o

l
l

o
f

s
a

e
r
a

r
a
e
y

d
e
s
a
b
e
r
a
h
S

a
c
n
a
n
i
f

e
h
t

t
n
e
m
y
o
p
m
e
-
t
s
o
P

d
a
p
p
u
o
r
G
e
h
t

f
o

e
n
n
o
s
r
e
p
t
n
e
m
e
g
a
n
a
m
y
e
k

r
o
f

s
e
c
v
r
e
s

r
o
f

m
r
e
t
-
t
r
o
h
S

n
o
i
t
a
s
n
e
p
m
o
c

1
8
8
,
3
1

5
6
2
,
3

6
7
6
,
8

5
6
2
,
3

1
4
9
,
6

1
8
8
,
3
1

1
4
9
,
6

6
7
6
,
8

0
0
0
,
5
2

1
4
9
,
6

4
0
7
,
4
6

0
0
0
,
5
2

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

0
0
0

0
2
1

9
1
1

6
4
1

9
6
3

0
0
0

9
5
0

9
1
1

4
2
3

9
6
3

0
0
0

9
5
0

0
0
0

4
2
3

0
0
0

9
5
0

0
0
0

4
3

0
2
1

3
7

6
4
1

1
9

4
3

0
8

3
7

5
9

0
8

1
9

0
4
3

3
7

0
4
3

n
e
m
e
e
h
c
a
e

n
u
o
m
a

d
n
a
e
r
u
t
a
n

e
h
t

f
o

l
i

a
t
e
D

e
e
F
/
y
r
a
l
a
S

s
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
-
n
o
N

w
e
L
.

.
r

8
1
0
2

s
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
-
n
o
N

e
n
o
t
n
A

.
r

1
r
e
z
n
a
L

x
o
F

y
e
n
t
r
a
C
c
M

d
o
1
e
r
L
e
c
z
M
n
a
L

.
I

y
e
n
t
r
a
C
c
M

s
s
e
W

.
L
.
T

.
r

n
a
m
r
e
H
S

.
s
M

.
L
.
r

.
r

.
L
.
T

.
r

n
o
z
a
F

e
n
o
t
n
A

n
a
e
r
C

w
e
L
.

n
o
z
a
F

n
a
m
r
e
H
S

x
o
F

n
a
e
r
C

.
L
.
r

.
r

.
s
M

.
r

.
s
M

2
7
7

0
0
6
,
9
2
5

8
2
9

3
0
1

3
4
3

8
3
1

1
1
8

2
7
7

8
2
9

3
0
1

3
4
3

3
0
1

3
4
3

9
4
0
,
0
2

2
4
8
,
9
2
1

8
3
1
,
5
6

2
4
8
,
9
2
1

0
1
4
,
4
5
1

0
0
0
,
0
4
8
,
1

1
5
5

7
1
4
,
1
6
4
,
4

9
0
5

s
v
a
D

8
1
0
2
L
A
T
O
M
T

F
K

.
r

7
8
4
,
8
0
4
,
3

7
1
4
,
1
6
4
,
4

s
e
v
i
t
u
c
e
x
e
l
a
t
o
T

8
1
0
2
L
A
T
O
T

.
s
e
n
n

I
c
M

.
r

r
o

n
e
m
y
a
p

T
S
e
h
t

o
t
g
n
i
t
a
e
r

n
o
i
t
a
m
r
o
f
n

r
e
h
t
r
u
f

r
o
f
7
2
e
g
a
p

o
t

r
e
f
e
R

.
r
e
b
e
L
h
c
o
B
d
o
n
r

A
o
t

d
a
p

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

.
s
e
n
n

I
c
M

.
r

r
o

n
e
m
y
a
p

T
S
e
h
t

o
t
g
n
i
t
a
e
r

n
o
i
t
a
m
r
o
f
n

r
e
h
t
r
u
f

r
o
f
7
2
e
g
a
p

o
t

r
e
f
e
R

.
r
e
b
e
L
h
c
o
B
d
o
n
r

A
o
t

d
a
p

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

2
3
0
,
1
1

1
7
0
,
2
3
3
,
2

3
0
1

2
3
0
,
1
1

3
4
3

1
4
9
,
6

0
0
0
,
5
2

4
0
7
,
4
6

9
8
0
,
0
2

9
4
0
,
0
2

0
0
0
,
5
2

8
3
1
,
5
6

9
8
0
,
0
2

0
1
4
,
4
5
1

2
0
0
0
,
0
4
8
,
1

2
-
0
0
0
,
0
4
8
,
1

0
0
0
,
0
4
8
,
1

9
5
0

3
7

6
3
9

3
2
4

0
0
0

0
3
9
,
2
5
0
,
1

5
7
4
2

6
3
9

3
2
4

1
5
5

0
0
0

9
0
5

5
7
4
2

7
8
4
,
8
0
4
,
3

s
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
-
n
o
N

s
s
e
s
W
e
v
i
t
u
c
e
x
E

.
r

s
e
n
n
I
c
M

l
a
t
o
T

.
r

s
v
a
D

s
e
n
n
I
c
M

F
K

.
r

e
c
y
r

s
e
v
i
t
u
c
e
x
E

S
.
J

.
r

e
c
y
r

s
e
v
i
t
u
c
e
x
e
l
a
t
o
T

S
.
J

.
r

0
0
0

5
9

0
3
9
,
2
5
0
,
1

s
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
-
n
o
N

d
o
e
L
c
M

.
I

l
a
t
o
T

.
r

:
s
w
o

l
l

o
f

s
a

e
r
a

r
a
e
y

a
c
n
a
n
i
f

e
h
t

d
a
p
p
u
o
r
G
e
h
t

f
o

e
n
n
o
s
r
e
p
t
n
e
m
e
g
a
n
a
m
y
e
k

r
o
f

s
e
c
v
r
e
s

r
o
f

n
o
i
t
a
s
n
e
p
m
o
c

n
e
m
e
e
h
c
a
e

n
u
o
m
a

d
n
a
e
r
u
t
a
n

e
h
t

f
o

l
i

a
t
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

.
8

)

(

)

D
E
U
N
T
N
O
C

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

D
E
T
D
U
A

(
T
R
O
P
E
R
N
O
T
A
R
E
N
U
M
E
R

.
8

d
e
u
n
i
t
n
o
c

t
r
o
p
T
R
e
O
R
P
E
’
R
s
r
S
o
R
O
t
D
E
c
T
U
C
e
N
E
T
r
N
R
i
O
D
I
C
D

’

(

)

D
E
U
N
T
N
O
C

(

)

D
E
T
D
U
A

T
R
O
P
E
R

’

S
R
O
T
C
E
R
D

(
T
R
O
P
E
R
N
O
T
A
D
R
E
U
E
N
N
U
T
N
M
O
E
C
R

(

)

31 Premier Investments Limited

d
e
t
a

e
r

-
3
6

3
7

4
1

9
8

0
2

3
6

3
7

3
6

4
1

9
8

0
2

2
3

e
c
n
a
m
r
o
f
r
e
P

d
e
t
a

e
r

a
t
o
T

e
c
n
a
m
r
o
f
r
e
P

0
0
0

0
2
1

0
0
0

0
8

0
0
0

0
0
1

0
0
0

0
6
1

a
t
o
T

0
0
0

0
8

0
4
3

0
2
1

0
6
1

0
0
0

0
8

0
0
0

0
8

0
0
0
0
0
0
,
0
0
0
8
1
0

0
1
0
4
0
7
0
0
4
9
3
0

7
0
5
0
7
0

1
0
4
2
3
1

0
0
0
0
0
0
0
0
0
8
5

0
1

-
1
4
5
9
2
9

3
2
2

0
0
0

2
3
6

0
8
0

6
3
0
1
4

1
2
7

4
6
5

2
1

7
7
5
0
7
9

1
1
2
4
7
7
,
0
4
9
4
0
6
,
3
0
1
1

7
1
4
7
5
5
,
0
9
2
7
9
9
,
4
4

7
5
7

1
4
3

0
0
0

0
0
5

3
2
2

2
3
6

6
3
0
1
4

1
2
7

4
6
5

2
1

7
7
5
0
7
9

1
2
7

4
4
6

3
1

7
7
5
0
7
9

d
e
s
a
b
e
r
a
h
S

m
r
e
t
-
g
n
o
L

s
e
v

i
t
n
e
c
n

d
e
s
a
b
e
r
a
h
S

m
r
e
t
-
g
n
o
L

s
e
v

i
t
n
e
c
n

t
n
e
m
y
o
p
m
e

n
o
i
t
a
u
n
n
a
r
e
p
u
S

s
t
i
f
e
n
e
B

-
t
s
o
P
r
e
h
t
O

y
r
a
t
e
n
o
M
-
n
o
N

)

h
s
a
C
D
E
U
N
T
N
e
O
e
C
F
/
y
r
a
D
l
E
a
S
T
D
U
A

)

(

(
T
R
O
P
E
R
N
O
T
A
R
E
N
U
7
M
1
0
E
2
R

t
n
e
m
y
o
p
m
e
-
t
s
o
P

m
r
e
t
-
t
r
o
h
S

)

D
E
U
N
T
N
O
C

(

)

D
E
U
N
T
N
O
C

(
L
E
N
N
O
S
R
E
P
T
N
E
M
E
G
A
N
A
M
T
Y
R
E
K
O
F
P
O
E
N
R
O
T
S
A
R
R
O
E
N
T
U
C
M
E
E
R
R
I
D
.
8

’

)

D
E
U
N
T
N
O
C

(

)

D
E
T
D
U
A

(
T
R
O
P
E
R
N
O
T
A
R
E
N
U
M
E
R

T
R
O
P
E
R

’

S
R
O
T
C
E
R
D

)

D
E
U
N
T
N
O
C

(

)

D
E
U
N
T
N
O
C

(
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

.
8

s
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
-
n
o
N

t
n
e
m
y
o
p
m
e
-
t
s
o
P

-
t
s
o
P
r
e
h
t
O

t
n
e
m
y
o
p
m
e

1
8
8
,
3
1

n
o
i
t
a
u
n
n
a
r
e
p
u
S

y
r
a
t
e
n
o
M
-
n
o
N

s
t
i
f
e
n
e
B

m
r
e
t
-
t
r
o
h
S

h
s
a
C

0
0
0
,
0
2
1

9
1
1
,
6
4
1

e
e
F
/
y
r
a
l
a
S

1
4
9
,
6

6
7
6
,
8

1
4
9
,
6

3
8
1
,
6
3

1
8
8
,
3
1

6
2
7
2
6
6
,
,
8
2
7

-
3
8
5
,
9
2

8
3
9
8
7
1
,
,
6
3
1
3

1
5
4
1
9
6
,
,
6
9
1

4
6
8
,
5
3

2
2
6
,
2
7

0
6
8
,
8
9

3
2
8
8
5
4
,
,
9
1
2
7
1

8
9
7
,
3
1

5
1
6
,
9
1

4
6
8
,
5
3

0
6
8
,
8
9

2
8
4
,
1
7
1

-
0
0
2
,
1
6
1

2
1
2
,
1
9
2

2
1
4
,
2
5
4

0
2
0
1
2
4
,
,
1
2
6
5
1
4

2
1
2
,
1
9
2

2
1
4
,
2
5
4

2
0
0
0
,
0
5

2
-
0
0
0
,
0
0
5
,
2

2
0
0
0
,
0
0
3

0
0
0
,
0
5
8
,
2

2
0
0
0
,
0
5

2
0
0
0
0
0
0
,
0
,
0
5
0
8
5
,
2
,
2

2
0
0
0
,
0
0
3

0
0
0
,
0
5
8
,
2

9
5
0
,
3
7

4
2
3
,
1
9

0
0
0
,
0
8

0
0
0
,
0
4
3

0
0
0
,
0
2
1

7
1
8
,
3
8

9
1
1
,
6
4
1

9
5
0
,
3
7

4
8
2
7
3
3
,
,
1
7
9
0
0
,
1

0
0
0
,
0
8

0
7
1
0
0
4
,
,
0
0
7
4
4
3
,
2

7
9
5
1
8
9
,
,
3
7
8
7
2

5
9
8
5
3
0
,
,
0
3
8
7
4

1
1
1
,
4
6
9

8
7
3
,
7
0
0
,
1

2
7
8
,
2
9
1
,
4

7
0
1
5
4
2
,
,
0
0
7
0
4
2
,
,
2
5

9
5
9
,
7
7
2

5
8
3
,
0
8
4

1
1
1
,
4
6
9

2
7
8
,
2
9
1
,
4

0
5
2
,
0
0
2
,
5

s
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
n
x
a
E
m
-
n
r
e
o
H
N
S
l
a
.
t
s
o
M
T

1
r
e
z
n
a
s
L
e
v
.
D
i
t
u
.
H
c
e
.
x
r
M
E

y
e
n
t
s
r
e
a
n
C
n
c
I
M
c
M
.
L
.
.
M
T

.
r

M
M

s
r
o
t
c
e
r
i
D
e
v
i
t
u
3
c
y
e
e
x
s
E
n
-
r
n
a
o
G
N

l
a
.
t
s
o
M
T

s
e
v

i
t
u
c
e
x
e

s
e
v
i
t
u
l
c
a
e
t
x
o
E
T

s
e
n
7
n
1
0
I
c
2
M
L
A
M
T
.
O
r
M
T

3
y
e
s
n
r
a
G

.
s
M

s
v
a
D

.
r

e
c
y
r

S
.
J

.
r

s
e
v

i
t
u
c
e
x
e

l
a
t
o
T

7
1
0
2
L
A
T
O
T

d
o
e
L
c
e
M
c
y
r

.
I

B
R
S
M
.
J

s
s
s
v
e
a
W
D

H
F

G
K

.
r

M
M

.
r

M
D

s
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
-
n
o
N

n
a
m
r
e
H
S

.
s
M

y
e
n
t
r
a
e
C
n
c
o
M
t
n
A

.
L
.
T

d
o
e
L
c
M
n
a
e
r
C
M
D

.
I

s
s
x
e
o
W
F

.
G
L

1
r
e
z
n
a
L
.

w
e
L
.

.
r

M
M

.
r

M
M

.
r

M
D

.
r

M
D

e
n
o
t
n
A

.
r

w
e
L
.

.
r

n
a
e
r
C

7
1
0
2

.
r

x
o
F

.
L

.
r

.
y
e
s
n
r
a
G

.
s
M
d
n
a

e
c
y
r

.
r

r
o
f

t
n
e
m
y
a
p

T
S
e
h

g
n

i
t

a
e
r
n
o

i
t

a
m
r
o

r
o

4
2

e
g
a
p
o

d
n
a

,
s
e
n
n

I
c
M

.
r

r
o

n
e
m
y
a
p

T
S
e
h
t

o
t
g
n
i
t
a
e
r

n
o
i
t
a
m
r
o
f
n

r
e
h
t
r
u
f

r
o
f
7
2
e
g
a
p

o
t

r
e
f
e
R

.
7
1
0
2
t
s
u
g
u
A
7
n
o

t
n
e
m
y
o
p
m
e

d
e
s
a
e
c

y
e
s
n
r
a
G

.
s
M

.
y
e
s
n
r
a
G

.
s
M
d
n
a

e
c
y
r

.
r

r
o
f

t
n
e
m
y
a
p

T
S
e
h

g
n

i
t

a
e
r
n
o

i
t

a
m
r
o

r
o

4
2

e
g
a
p
o

d
n
a

,
s
e
n
n

I
c
M

.
r

r
o

n
e
m
y
a
p

T
S
e
h
t

o
t
g
n
i
t
a
e
r

n
o
i
t
a
m
r
o
f
n

r
e
h
t
r
u
f

r
o

7
2
e
g
a
p

o
t

r
e
f
e
R

.
7
1
0
2
t
s
u
g
u
A
7
n
o

t
n
e
m
y
o
p
m
e

d
e
s
a
e
c

y
e
s
n
r
a
G

.
s
M

.
r
e
b
e
L
h
c
o
B
d
o
n
r

A
o
t

d
a
p

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

.
r
e
b
e
L
h
c
o
B
d
o
n
r

A
o
t

d
a
p

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

Annual Report 2018 32

s
a

l
l

e
w
s
a
,
8
1
0
2
y
u
J

8
2
d
e
d
n
e
r
a
e
y

d
e
s
p
a
l

d
n
a
d
e
t
s
e
v

s
t
h
g
R

r
a
e
y

e
h
t
g
n
i
r
u
d

d
e
s
p
a
l

s
t
h
g
R

d
e
t
s
e
v

s
t
h
g
R

e
h
t
g
n
i
r
u
d

r
a
e
y

o
N

r
a
e
y

o
N

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
)

P
M
K

(

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
i
r
e
c
n
a
m
r
o
f
r
e
p
f
o

r
e
b
m
u
n
e
h
t

s
e
s
o
c
s
d
w
o
e
b

e
b
a

e
h
T

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

.
9

:
r
a
e
y
e
h
t

g
n
i
r
u
d
d
e
s
p
a

d
n
a
d
e
t
s
e
v

,
d
e
d
r
a
w
a
s
t
h
g
R

)
a

e
s
i
c
r
e
x
e

t
s
a
L

e
s
i
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
l
a
v

r
i
a
F

t
a
t
h
g
i
r

r
e
p

e
t
a
d
t
n
a
r
g

d
e
d
r
a
w
a
s
t
h
g
R

r
a
e
y

e
h
t
g
n
i
r
u
d

r
a
e
Y

e
t
a
d

e
t
a
d
y
r
i
p
x
E

e
t
a
d
t
n
a
r
G

o
N

d
e
t
n
a
r
g

8
1
0
2

P
M
K

:
r
a
e
y

e
h
t

g
n
i
r
u
d
d
e
s
p
a

d
n
a

d
e
t
s
e
v

s
t
h
g
i
r

r
e
b
m
u
n
e
h

3
3

0
0
0
,
0
5
2

7
1
0
2
r
p
A
4

0
2
0
2

t
c
O
1

0
2
0
2

t
c
O
1

5
8
.
7

6
1
0
2

r
p
A
6
2

8
1
0
2

b
e
F
9
1

3
1
7
,

6
1
0
2

8
1
0
2

s
e
n
n

I
c
M

.
r

e
c
y
r

S
.
J

.
r

2
4
.
2

6
1
.
4
3

0
0
0
,
5
3
9
,
3

7
9
3
,
8
6

r
a
e
y

e
h
t

r
o
f

s
t
h
g
i
r

f
o

r
a
e
y
e
h
t
g
n
i
r
u
d

r
a
e
y

e
h
t
g
n
i
r
u
d

r
a
e
y
e
h
t
g
n
i
r
u
d

g
n
i
t
s
i
s
n
o
c
n
o
i
t
a
r
e
n
u
m
e
R

d
e
s
p
a
l

s
t
h
g
i
r

f
o
e
u
l
a
V

d
e
s
i
c
r
e
x
e

s
t
h
g
i
r

f
o
e
u
l
a
V

d
e
t
n
a
r
g
s
t
h
g
i
r

f
o
e
u
l
a
V

s
e
n
n

I
c
M

.
r

e
c
y
r

S
.
J

.
r

8
1
0
2

P
M
K

.
e
t
a
d
d
r
a
w
a

r
i
e
h
t

e
c
n
s

n
o
i
t
a
r
e
n
u
m
e
r

s
a
d
e
d
r
a
w
a

s
t
h
g
i
r

f
o

s
n
o
i
t
i
d
n
o
c
d
n
a

s
m
r
e
t
e
h
t

o
t

s
n
o
i
t
a
r
e
t
l
a

o
n

e
r
e
w
e
r
e
h
T

:
r
a
e
y
e
h
t

g
n
i
r
u
d

d
e
s
p
a

d
n
a
d
e
s
c
r
e
x
e
,
d
e
d
r
a
w
a

s
t

h
g
i
r

e
u
a
V

)
b

)

D
E
U
N
T
N
O
C

(

)

D
E
T
D
U
A

(
T
R
O
P
E
R
N
O
T
A
R
E
N
U
M
E
R

d
e
u
n
i
t
n
o
c

t
r
o
p
T
R
e
O
R
P
E
’
R
s
r
S
o
R
O
t
c
T
C
e
E
r
R
i
D
I
D

’

)

D
E
U
N
T
N
O
C

(

33 Premier Investments Limited

e
b
a
s
c
r
e
x
e

e
b
a
s

c
r
e
x
E

a
t
o
T

8
1
0
2

y
u
J

8
2

8
1
0
2
y
u
J
8
2

t
o
N

t
a

e
c
n
a

a
B

s
t
h
g
R

d
e
t
i
e
f
r
o
f

s
t
h
g
R

d
e
s
p
a
l

s
t
h
g
R

s
a
d
e
t
n
a
r

t
a
e
c
n
a
l
a
B

d
e
s
i
c
r
e
x
e

n
o
i
t
a
r
e
n
u
m
e
r

7
1
0
2
y
l
u
J

9
2

8
1
0
2

P
M
K

3
1
7
,
8

0
0
0
,
0
0
5

3
1
7
,
8

0
0
0
,
0
0
5

3
1
7
,
8

0
0
0
,
0
0
5

)
3
2
9
,
5
1
(

)
0
0
0
,
0
5
2
(

3
1
7
,
8

3
2
9
,
5
1

0
0
0
,
0
5
7

s
e
n
n
I
c
M

.
r

e
c
y
r

S
.
J

.
r

y
e
s
n
r
a
G
C

.
s
M

0
0
0
,
0
5
2

s
e
n
n
I
c
M

.
r

.
e
t
a
d
d
r
a
w
a

r
i
e
h
t

e
c
n
s

n
o
i
t
a
r
e
n
u
m
e
r

s
a
d
e
d
r
a
w
a

s
t
h
g
i
r

f
o

s
n
o
i
t
i
d
n
o
c
d
n
a

s
m
r
e
t
e
h
t

o
t

s
n
o
i
t
a
r
e
t
l
a

o
n

e
r
e
w
e
r
e
h
T

e
r
a
h
s
r
e
p
d
i
a
p
n
U

e
r
a
h
s
r
e
p
d
i
a
P

d
e
u
s
s
i

s
e
r
a
h
S

o
N

8
1
0
2

P
M
K

:
s
t
h
g
i
r

f
o

e
s
c
r
e
x
e

n
o

d
e
u
s
s

s
e
r
a
h
S

)
c

P
M
K

f
o
s
g
n
d
o
h

s
t
h
g
R

)
d

4
3

.
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
s
n
o
s
v
o
r
p
e
h
t
h
t
i

w
e
c
n
a
d
r
o
c
c
a

e
d
a
m
e
r
e
w

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

.
7
1
0
2

t
s
u
g
u
A
7

n
o

t
n
e
m
y
o
p
m
e
d
e
s
a
e
c

y
e
s
n
r
a
G

.
s
M

Annual Report 2018 34

)

D
E
U
N
T
N
O
C

(

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

.
9

)

D
E
U
N
T
N
O
C

(

)

D
E
T
D
U
A

(
T
R
O
P
E
R
N
O
T
A
R
E
N
U
M
E
R

T
R
O
P
E
R

’

S
R
O
T
C
E
R
D

)

D
E
U
N
T
N
O
C

(

Directors’ Report continued
DIRECTORS’ REPORT
(CONTINUED)

REMUNERATION REPORT (AUDITED) (CONTINUED)

9. ADDITIONAL DISCLOSURES RELATING TO RIGHTS AND SHARES (CONTINUED)

Number of Shares held in Premier Investments Limited:

BALANCE
29 JULY 2017
ORDINARY

SHARE
PURCHASE
ORDINARY

SHARES
ACQUIRED
UNDER
PERFORMANCE
RIGHTS PLAN
ORDINARY

NET CHANGE -
OTHER
ORDINARY

BALANCE
28 JULY 2018
ORDINARY

4,437,699

2,577,014

8,000

27,665

28,186

6,000

236,800

160,000

7,481,364

250,000

(160,000)

4,437,699

2,577,014

8,000

27,665

28,186

6,000

486,800

250,000

(160,000)

7,571,364

2018

NON-EXECUTIVE
DIRECTORS

Mr. S. Lew *
Mr. T. Antonie

Dr. D.M. Crean

Ms. S. Falzon

Mr. L.E. Fox **

Ms. S. Herman

Mr. H.D. Lanzer

Mr. T.L. McCartney
Mr. M.R.I. McLeod

Dr. G.H. Weiss **

EXECUTIVES

Mr. M. McInnes

Mr. K.F. Davis

Mr. J.S. Bryce

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 (2017: 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.

** Mr. Fox and Dr. Weiss retired on 28 July 2018.

*** Ms. Garnsey ceased employment on 7 August 2017.

10. ADDITIONAL DISCLOSURES RELATING TO TRANSACTIONS AND BALANCES WITH KEY

MANAGEMENT PERSONNEL

Details and terms and conditions of other transactions and balances with key management personnel and
their related parties

Mr. Lanzer is the managing partner of the legal firm Arnold Bloch Leibler. Group companies use the
services of Arnold Bloch Leibler from time to time. Legal services totalling $1,996,754 (2017: $3,242,483),
including Mr. Lanzer's Director fees, GST and disbursements were invoiced by Arnold Bloch Leibler to the
Group, with $58,580 (2017: $200,314) remaining outstanding at year-end. The fees paid for these services
were at arm's length and on normal commercial terms.

35 Premier Investments Limited

DIRECTORS’ REPORT
(CONTINUED)

REMUNERATION REPORT (AUDITED) (CONTINUED)

10. ADDITIONAL DISCLOSURES RELATING TO TRANSACTIONS AND BALANCES WITH KEY

MANAGEMENT PERSONNEL (CONTINUED)

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 $330,000
(2017: $299,750) 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 $16,404,781 (2017: $15,052,592) including GST have been made by Group companies
from Voyager Distributing Co. Pty Ltd, Playcorp Pty Ltd and Sky Chain Trading Limited, with $1,737,758
(2017: $788,091) 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 $476,379 (2017: $537,575) 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:

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

2018
$’000

1,796

2018
$’000

15,116

300

1,815

476

17,707

Annual Report 2018 36

Independent Auditor’s Declaration

Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au

8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67
Melbourne VIC 3001

Auditor’s Independence Declaration to the Directors of Premier
Investments Limited

Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au

8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67
Melbourne VIC 3001

As lead auditor for the audit of Premier Investments Limited for the year ended 28 July 2018, I declare to
the best of my knowledge and belief, there have been:
Auditor’s Independence Declaration to the Directors of Premier
Investments Limited

a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in

relation to the review; and

b) no contraventions of any applicable code of professional conduct in relation to the review.

As lead auditor for the audit of Premier Investments Limited for the year ended 28 July 2018, I declare to
This declaration is in respect of Premier Investments Limited and the entities it controlled during the
the best of my knowledge and belief, there have been:
financial period.

a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in

relation to the review; and

b) no contraventions of any applicable code of professional conduct in relation to the review.

This declaration is in respect of Premier Investments Limited and the entities it controlled during the
financial period.
Ernst & Young

Ernst & Young

Rob Perry
Partner
27 September 2018

A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation

37 Premier Investments Limited

A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation

Statement of Comprehensive Income
STATEMENT OF COMPREHENSIVE INCOME
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND JULY 2017

CONSOLIDATED

NOTES

2018
$’000

2017
$’000

Revenue from sale of goods

Other revenue

Total revenue

Other income

Total revenue and other income

Changes in inventories of finished goods

Employee expenses

Operating lease rental expense

Depreciation, impairment and amortisation of non-current assets

Advertising and direct marketing

Finance costs

Other expenses

Total expenses

Share of profit of associate

Profit from continuing operations before income tax

Income tax expense

Net profit for the period attributable to owners

Other comprehensive income

Items that may be reclassified subsequently to profit or loss
Net gain (loss) on 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 which may be reclassified to
profit or loss in subsequent periods, net of tax
Items not to be reclassified subsequently to profit or loss
Net fair value loss on listed equity investment

Income tax on items of other comprehensive income

Other comprehensive loss not to be reclassified to profit or
loss in subsequent periods, 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)

1,182,221

5,626

1,187,847

1,193

1,189,040

(443,907)

(282,813)

(222,978)

(58,904)

(15,234)

(7,551)

(49,775)

1,092,760

6,422

1,099,182

1,950

1,101,132

(403,336)

(272,896)

(211,779)

(26,071)

(13,737)

(6,242)

(42,725)

(1,081,162)

(976,786)

16,087

123,965

(40,327)

83,638

33,343

5,214

1,424

(10,003)

14,799

139,145

(34,009)

105,136

(7,129)

(4,008)

(700)

2,139

29,978

(9,698)

(26,978)

7,913

(34,700)

10,522

(19,065)

(24,178)

94,551

71,260

52.97

52.64

66.78

66.25

The accompanying notes form an integral part of this Statement of Comprehensive Income.

Annual Report 2018 38

Statement of Financial Position
STATEMENT OF FINANCIAL POSITION
AS AT 28 JULY 2018 AND 29 JULY 2017
AS AT 28 JULY 2018 AND 29 JULY 2017

NOTES

CONSOLIDATED

2018
$’000

ASSETS

Current assets

Cash and cash equivalents

Trade and other receivables

Inventories

Other financial instruments

Other current assets

Total current assets

Non-current assets

Property, plant and equipment

Intangible assets

Deferred tax assets

Listed equity investment at fair value

Investment in associate

Total non-current assets

TOTAL ASSETS

LIABILITIES

Current liabilities

Trade and other payables

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 non-current liabilities

Total non-current liabilities

TOTAL LIABILITIES

NET ASSETS

EQUITY

Contributed equity

Reserves

Retained earnings

TOTAL EQUITY

The accompanying notes form an integral part of this Statement of Financial Position.

39 Premier Investments Limited

2017
$’000

170,631

23,682

140,755

181

11,572

346,821

214,378

855,114

35,773

67,665

216,940

178,618

21,563

159,313

11,973

15,323

386,790

238,167

825,949

36,637

40,687

223,184

1,364,624

1,751,414

1,389,870

1,736,691

84,558

9,947

19,234

21,629

135,368

175,684

63,933

2,040

425

29,030

271,112

406,480

71,528

21,651

17,936

19,365

12,910

143,390

173,475

58,787

1,828

460

23,078

257,628

401,018

1,344,934

1,335,673

608,615

(16,009)

752,328

608,615

(30,100)

757,158

1,344,934

1,335,673

Statement of Cash Flows
STATEMENT OF CASH FLOWS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017

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

19(b)

CASH FLOWS FROM INVESTING ACTIVITIES

Dividends received from listed equity investment

Dividends received from investment in associate

Payment for trademarks

Purchase of investments

Proceeds from disposal of property, plant and equipment

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

NET CASH FLOWS USED IN FINANCING ACTIVITIES

NOTES

CONSOLIDATED

2018
$’000

2017
$’000

1,303,577

1,211,741

(1,120,075)

(1,063,463)

3,702

(7,232)

(46,121)

133,851

1,769

11,267

(859)

326

(53,172)

(40,669)

(88,468)

107,000

(105,000)

(86,468)

6,715

(5,722)

(51,434)

97,837

10,551

(325)

(102,365)

(105,634)

(197,768)

(80,352)

155,000

(87,074)

(12,426)

NET (DECREASE) INCREASE IN CASH HELD

6,714

(112,357)

Cash at the beginning of the financial year

Net foreign exchange difference

CASH AT THE END OF THE FINANCIAL YEAR

19(a)

170,631

1,273

178,618

283,233

(245)

170,631

The accompanying notes form an integral part of this Statement of Cash Flows.

Annual Report 2018 40

0
6
2
,
1
7

6
3
1
,
5
0
1

)
8
7
1
,
4
2
(

)
8
0
7
,
4
(

)
0
9
9
4
(

8
7
1
,
3

)
8
6
4
,
8
8
(

4
3
9
,
4
4
3
,
1

5
5
5
,
8
3
3
,
1

6
3
1
,
5
0
1

)
6
7
8
,
3
3
(

)
8
6
4
,
8
8
(

8
2
3
,
2
5
7

4
7
3
,
2
3
7

6
3
1
,
5
0
1

)
3
4
2
,
3
4
(

7
7
9
,
2

9
5
0

8
7
1
,
3

4
3
7

5
1

)
8
7
1
,
4
2
(

7
4
0
,
1

)
8
0
7
,
4
(

)
0
9
9
,
4
(

)
1
9
2
,
0
1
(

6
4
3
,
6

0
0
0
’
$

L
A
T
O
T

0
0
0
’
$

S
T
F
O
R
P

D
E
N
A
T
E
R

0
0
0
’
$

E
V
R
E
S
E
R

E
U
L
A
V
R
A
F

8
3
6
,
3
8

3
1
9
,
0
1

3
7
6
,
5
3
3
,
1

8
3
6
,
3
8

8
5
1
,
7
5
7

)
8
7
1
,
4
2
(

)
5
6
0
,
9
1
(

N
G
E
R
O
F

Y
C
N
E
R
R
U
C

8
3
6
,
6

)
1
6
6
,
3
(

0
0
0
’
$

E
V
R
E
S
E
R

0
0
0
’
$

E
G
D
E
H

0
4
3
,
3
2

1
5
5
,
4
9

8
3
6
,
3
8

)
5
6
0
,
9
1
(

8
3
6
,
6

0
4
3

3
2

N
O
T
A
L
S
N
A
R
T

E
V
R
E
S
E
R

W
O
L
F
H
S
A
C

E
C
N
A
M
R
O
F
R
E
P

0
0
0
’
$

S
T
H
G
R

E
V
R
E
S
E
R

0
0
0
’
$

L
A
T
P
A
C

S
T
F
O
R
P

E
V
R
E
S
E
R

0
0
0
’
$

Y
T
U
Q
E

D
E
T
U
B
R
T
N
O
C

)
1
8
2
,
5
1
(

6
5
5
,
2
1

4
6
4

5
1
6

8
0
6

4
6
4

e
m
o
c
n

e
v
i
s
n
e
h
e
r
p
m
o
c
l
a
t
o
T

e
m
o
c
n

e
v
s
n
e
h
e
r
p
m
o
c

r
e
h
t
O

d
o
i
r
e
p
e
h
t

r
o
f

i
s
r
e
n
w
o
h
t
i

w
s
n
o
i
t
c
a
s
n
a
r
T

:
s
r
e
n
w
o
s
a

y
t
i
c
a
p
a
c

r
i
e
h
t

d
e
u
s
s

s
t

h
g
i
r
e
c
n
a
m
r
o
f
r
e
P

d
o
i
r
e
p
e
h
t

r
o
f

t
i
f
o
r
p

t
e
N

7
1
0
2

y
u
J
0
3

d
a
p

s
d
n
e
d
v
D

5
1
6
,
8
0
6

8
1
0
2

y
u
J

8
2

t
a

s
a

e
c
n
a
l
a
B

5
1
6

8
0
6

e
m
o
c
n

e
v
i
s
n
e
h
e
r
p
m
o
c
l
a
t
o
T

d
o
i
r
e
p
e
h
t

r
o
f

i
s
r
e
n
w
o
h
t
i

w
s
n
o
i
t
c
a
s
n
a
r
T

:
s
r
e
n
w
o
s
a

y
t
i
c
a
p
a
c
r
i
e
h
t

d
e
u
s
s

s
t
h
g
i
r
e
c
n
a
m
r
o
f
r
e
P

s
s
o

e
v
s
n
e
h
e
r
p
m
o
c

r
e
h
t
O

d
o
i
r
e
p

e
h
t

r
o
f

t
i
f
o
r
p

t
e
N

6
1
0
2

y
u
J

1
3
t

d
a
p

s
d
n
e
d
v
D

1
4

0
1
2
,
6

)
2
5
3
,
0
8
(

3
7
6
,
5
3
3
,
1

)
2
5
3
,
0
8
(

8
5
1
,
7
5
7

0
1
2
,
6

)
8
7
1
,
4
2
(

)
1
6
6
,
3
(

)
1
8
2

5
1
(

6
5
5
2
1

4
6
4

5
1
6
,
8
0
6

7
1
0
2
y
u
J
9
2

t
a

s
a
e
c
n
a
l
a
B

y
t
i
u
q
E
n

s
e
g
n
a
h
C

f
o

t
n
e
m
e
t
a
t
S
s
h
t

f
o

t
r
a
p

a
r
g
e
t
n

n
a
m
r
o
f

s
e
t
o
n
g
n
y
n
a
p
m
o
c
c
a
e
h
T

D
E
T
A
D
L
O
S
N
O
C

7
1
0
2
Y
L
U
J

9
2
D
N
A
8
1
0
2
Y
L
U
J

8
2
D
E
D
N
E
S
K
E
E
W
2
5
E
H
T
R
O
F

y
t
i
u
q
E
n

s
e
g
n
a
h
C

f
o
t
n
e
m
e
t
a
t
S

7
1
0
2
Y
L
U

J
9
2
D
N
A
8
1
0
2
Y
L
U

Y
T
U
Q
E
N

S
E
G
N
A
H
C
F
O
T
N
E
M
E
T
A
T
S

J
8
2
D
E
D
N
E
S
K
E
E
W
2
5
E
H
T
R
O
F

41 Premier Investments Limited

Notes to the Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017

1
1

2
2

GENERAL INFORMATION
GENERAL INFORMATION
The financial report contains the consolidated financial statements of the consolidated entity, comprising
The financial report contains the consolidated financial statements of the consolidated entity, comprising
Premier Investments Limited (the ‘parent entity’) and its wholly owned subsidiaries (‘the Group’) for the
Premier Investments Limited (the ‘parent entity’) and its wholly owned subsidiaries (‘the Group’) for the
52 weeks ended 28 July 2018. The financial report was authorised for issue in accordance with a
52 weeks ended 28 July 2018. The financial report was authorised for issue in accordance with a
resolution of the Directors on 27 September 2018.
resolution of the Directors on 27 September 2018.
Premier Investments Limited is a for profit company limited by shares incorporated in Australia whose
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
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.
principal activities of the Group are described in the Directors’ Report.
The Group has presented the content and structure of its financial report in a matter to improve and
The Group has presented the content and structure of its financial report in a matter to improve and
clarify the presentation of financial information. The financial report is presented in such a way as to
clarify the presentation of financial information. The financial report is presented in such a way as to
provide users with more clear, understandable and structured financial information, which better
provide users with more clear, understandable and structured financial information, which better
explains the financial performance and position of the Group.
explains the financial performance and position of the Group.
The notes to the financial statements have been organised into the following sections:
The notes to the financial statements have been organised into the following sections:
(i) Other significant group accounting policies: Summarises the basis of financial statement
(i) Other significant group accounting policies: Summarises the basis of financial statement

preparation and other accounting policies adopted in the preparation of these consolidated financial
preparation and other accounting policies adopted in the preparation of these consolidated financial
statements. Specific accounting policies are disclosed in the note to which they relate.
statements. Specific accounting policies are disclosed in the note to which they relate.

(ii) Group performance: Contains the notes that focus on the results and performance of the Group.
(ii) Group performance: Contains the notes that focus on the results and performance of the Group.
(iii) Operating assets and liabilities: Provides information on the Group’s assets and liabilities used to
(iii) Operating assets and liabilities: Provides information on the Group’s assets and liabilities used to

generate the Group’s performance.
generate the Group’s performance.

(iv) Capital invested: Provides information on the capital invested which allows the Group to generate
(iv) Capital invested: Provides information on the capital invested which allows the Group to generate

its performance.
its performance.

(v) Capital structure and risk management: Provides information on the Group’s capital structure,
(v) Capital structure and risk management: Provides information on the Group’s capital structure,

and summarises the Group’s Risk Management policies.
and summarises the Group’s Risk Management policies.

(vi) Group structure: Contains information in relation to the Group’s structure and related parties.
(vi) Group structure: Contains information in relation to the Group’s structure and related parties.
(vii) Other disclosures: Summarises other disclosures which are required in order to comply with
(vii) Other disclosures: Summarises other disclosures which are required in order to comply with

Australian Accounting Standards and other authoritative pronouncements.
Australian Accounting Standards and other authoritative pronouncements.

OTHER SIGNIFICANT GROUP ACCOUNTING POLICIES
OTHER SIGNIFICANT GROUP ACCOUNTING POLICIES
The consolidated financial report is prepared for the 52 weeks from 30 July 2017 to 28 July 2018.
The consolidated financial report is prepared for the 52 weeks from 30 July 2017 to 28 July 2018.
Below is a summary of significant group accounting policies applicable to the Group which have not
Below is a summary of significant group accounting policies applicable to the Group which have not
been disclosed elsewhere. The notes to the financial statements, which contain detailed accounting
been disclosed elsewhere. The notes to the financial statements, which contain detailed accounting
policy notes, should be read in conjunction with the below Group accounting policies.
policy notes, should be read in conjunction with the below Group accounting policies.
(a) BASIS OF FINANCIAL REPORT PREPARATION
(a) BASIS OF FINANCIAL REPORT PREPARATION

The financial report is a general-purpose financial report, which has been prepared in accordance
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
with the requirements of the Corporations Act 2001, Australian Accounting Standards and other
authoritative pronouncements of the Australian Accounting Standards Board. The financial report
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 listed equity
has been prepared on a historical cost basis, except for other financial instruments and listed equity
investments at fair value, which have been measured at fair value as explained in the relevant
investments at fair value, which have been measured at fair value as explained in the relevant
accounting policies throughout the notes.
accounting policies throughout the notes.
The financial report is presented in Australian dollars and all values are rounded to the nearest
The financial report is presented in Australian dollars and all values are rounded to the nearest
thousand dollars ($’000), unless otherwise stated, as the Company is a kind referred to in ASIC
thousand dollars ($’000), unless otherwise stated, as the Company is a kind referred to in ASIC
Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, dated 24 March
Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, dated 24 March
2016.
2016.

42
42

Annual Report 2018 42

Notes to the Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

OTHER SIGNIFICANT GROUP ACCOUNTING POLICIES (CONTINUED)

(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).

The consolidated financial statements are those of the consolidated entity, comprising Premier
Investments Limited and its wholly owned subsidiaries as at the end of each financial year. A list
of the Group’s subsidiaries is included in note 26.

Subsidiaries are entities that are controlled by the Group. Control is achieved when the Group has:

-
-
-

Power over 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.

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 revenue in the separate statement of
comprehensive income of the parent entity, and do not impact the recorded cost of the
investment.

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.

(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
judgements and estimates on historical experience and on other various factors it believes to be
reasonable under the circumstances, the results of which form the basis of the carrying values of
assets and liabilities that are not readily apparent from other sources.

Management has identified certain critical accounting policies for which significant judgements,
estimates and assumptions are required. These key judgements, estimates and assumptions
have been disclosed as part of the relevant note to the financial statements. 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.

(e) CURRENT VERSUS NON-CURRENT CLASSIFICATION

The Group presents assets and liabilities in the statement of financial position based on current
versus 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.

43 Premier Investments Limited

NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

OTHER SIGNIFICANT GROUP ACCOUNTING POLICIES (CONTINUED)

(e) CURRENT VERSUS NON-CURRENT CLASSIFICATION (CONTINUED)

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.

(f) 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, or to realise the assets
and settle the liabilities simultaneously.

(g) FOREIGN CURRENCY TRANSLATION

Items included in the financial statements of each of the Group’s entities are measured using the
currency of the primary economic environment in which the entity operates (‘the functional
currency’). Both the functional and presentation currency of Premier Investments Limited and its
Australian subsidiaries is 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 are taken to profit or loss in the statement of comprehensive income. Non-
monetary items that are measured in terms of historical cost in a foreign currency are translated
using the exchange rates at the dates of the initial transactions.

As at the reporting date the assets and liabilities of the overseas subsidiaries 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 income are translated at the weighted
average exchange rates for the period.

Exchange variations resulting from the translations are recognised in the foreign currency
translation reserve in equity.

(h) GOODS AND SERVICES TAX (GST), INCLUDING OTHER VALUE-ADDED TAXES

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.

Annual Report 2018 44

Notes to the Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

OTHER SIGNIFICANT GROUP ACCOUNTING POLICIES (CONTINUED)

(i) COMPARATIVE AMOUNTS

The current reporting period, 30 July 2017 to 28 July 2018, represents 52 weeks and the
comparative reporting period is from 31 July 2016 to 29 July 2017 which also represents 52 weeks.
From time to time, management may change prior year comparatives to reflect classifications
applied in the current year.

(j) 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
for new and amended Australian Accounting Standards and AASB Interpretations relevant to the
Group and its operations that are effective for the current annual reporting period, as well as
accounting policies early adopted during the current annual reporting period.

The new and amended Australian Accounting Standards relevant to the Group for the current
annual reporting period, as well as Australian Accounting Standards which have been early
adopted, are as follows:

(i)

(ii)

AASB 2016-2 Amendments to Australian Accounting Standards – Disclosure Initiative:
Amendments to AASB 107 Statement of Cash Flows became effective as of 30 July 2017
and resulted in updated disclosures in the financial statements (refer to note 20).

AASB 9 Financial Instruments: The Group has elected to early adopt AASB 9 as of the
beginning of the financial year, being 30 July 2017. AASB 9 replaces AASB 139 Financial
Instruments: Recognition and Measurement. AASB 9 provides a simpler approach to
classification and measurement of financial assets compared to the requirements of AASB
139 and introduces a new expected credit-loss impairment model that 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. The Group has also
elected to early adopt the hedge accounting requirements of AASB 9 as of 28 January
2018. The nature and effects of the key changes to the Group’s accounting policies
resulting from the early adoption of AASB 9 are summarised below:

Classification of financial assets and liabilities

Under AASB 9, the classification of financial assets has been simplified with the effect that
certain classification categories that existed under AASB 139 have been removed. Under
AASB 9, the method of classification is based on both the entity’s business model for
managing the financial asset as well as the characteristics of the financial asset’s
contractual cash flows.

Under AASB 139, loans and receivables were measured at amortised cost, less any
provision for actual impairment losses. Under AASB 9, amortised cost applies to
instruments for which an entity has a business model to hold the financial asset to collect
the contractual cash flows, and the characteristics of the contractual cash flows are that of
solely payments of the principal amount and interest.

Under AASB 139, available-for-sale financial assets represented non-derivative financial
assets and consisted of an investment in listed securities. Available-for-sale financial
assets were measured at fair value at reporting date, with unrealised gains or losses
presented in other comprehensive income and accumulated in equity in the fair value
reserve, until the investment was derecognised or until the investment was deemed to be
impaired, at which time the cumulative gains or losses previously reported in equity were
recognised in profit and loss.

45 Premier Investments Limited

NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

OTHER SIGNIFICANT GROUP ACCOUNTING POLICIES (CONTINUED)

(j) NEW ACCOUNTING STANDARDS AND INTERPRETATIONS (CONTINUED)

Under AASB 9, entities have an irrevocable option on an instrument-by-instrument basis
to present changes in the fair value of non-derivative equity instruments not held for
trading in other comprehensive income without subsequent reclassification to profit and
loss. The Group has elected to classify its listed investment that it holds in this category.
This change in accounting policy has been applied retrospectively, with no material impact
on the Group’s retained earnings of previous years.

The adoption of AASB 9 has not had a significant effect on the Group’s classification of
financial liabilities.

Changes in the accounting policies of financial assets and liabilities because of the early
adoption of AASB 9 have been applied retrospectively. The table summarises the impact
on classification and measurement of the Group’s financial assets and financial liabilities
on 31 July 2016 resulting from the adoption of AASB 9.

CLASSIFICATION
UNDER AASB 139

CLASSIFICATION
UNDER AASB 9

CARRYING
AMOUNT
UNDER AASB
139

CARRYING
AMOUNT UNDER
AASB 9

IMPACT ON
RETAINED
EARNINGS AS AT
31 JULY 2016

FINANCIAL
ASSETS
Listed equity
investment (a)

Trade and other
receivables
Cash and cash
equivalents

FINANCIAL
LIABILITIES
Interest-bearing
liabilities

Trade and other
payables

Available-
for-sale

Loans and
receivables
Loans and
receivables

Fair value
through other
comprehensive
income
Amortised cost

16,461

Amortised cost

283,233

Other
financial
liabilities
Other
financial
liabilities

Other financial
liabilities

105,805

72,965

(a) The listed equity investment was acquired in the 2017 financial year. As at 29 July

2017, the listed equity investment’s carrying amount under AASB 139 was
$67,665,000, which is also reflective of the carrying amount under AASB 9.

Impairment of financial assets

AASB 9 replaces the ‘incurred loss’ model in AASB 139 with a more forward-looking
‘expected credit loss’ model. Under AASB 9, expected credit losses are used as the basis
for calculating the impairment allowance. After initial recognition, the impairment
allowance is adjusted up or down through profit and loss at each reporting date as the
probabilities of recovery deteriorate or improve. Due to the nature of the Group’s trade and
other receivables, the re-measurement of impairment allowances using the expected
credit loss model under AASB 9 has not had a material impact on current or prior period
impairment allowances.

Annual Report 2018 46

Notes to the Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

OTHER SIGNIFICANT GROUP ACCOUNTING POLICIES (CONTINUED)

(j) NEW ACCOUNTING STANDARDS AND INTERPRETATIONS (CONTINUED)

Hedge accounting

AASB 9 amends hedge accounting to more closely align hedge accounting with risk
management, establish a more principle-based approach to hedge accounting and address
inconsistencies in the hedge accounting model in AASB 139. AASB 9 replaces some of the
arbitrary rules with more principle-based requirements, allowing more hedging instruments
and hedged items to qualify for hedge accounting. The principle-based approach of AASB 9
requires that there is an economic relationship between the hedged item and the hedging
instrument, that the effect of credit risk does not dominate value changes and that the hedge
ratio of the hedging relationship is the same as that used for risk management purposes.

The transition provisions within AASB 9 states that hedging relationships under AASB 139
which also qualify for hedge accounting under AASB 9 are treated as continuing hedges.
Hedge accounting under AASB 139 ceases at the moment hedge accounting under AASB 9
commences, therefore resulting in no changes on transition.

Hedge accounting requirements of AASB 9 shall be applied prospectively. The Group has
early adopted the hedge accounting requirements of AASB 9 as of 28 January 2018. As a
result, the early adoption of AASB 9 relating to hedge accounting has not had a material
impact on retained earnings of the Group, or the classification and measurement of the
Group’s hedge accounting.

Resulting from the adoption of AASB 9, additional disclosures are presented in note 25 of
the financial statements.

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 29 July 2017,
are outlined below:

(i)

AASB 15 Revenue from Contracts with Customers: AASB 15 establishes principles for
reporting the nature, amount, timing and uncertainty of revenue and cash flows arising from
an entity’s contracts with customers. Since issuing AASB 15 in December 2014, the AASB
have also issued AASB 2014-5 Amendments to Australian Accounting Standards Arising
from AASB 15; AASB 2015-8 Amendments to Australian Accounting Standards – effective
date of AASB 15, and AASB 2016-3 Amendments to Australian Accounting Standards –
Clarifications to AASB 15. The first application date for the Group will be for the financial
year ending 27 July 2019. The Group has performed a detailed assessment to determine
the impact of adopting AASB 15 on its consolidated financial statements. The assessment
performed to date has identified certain key areas that may have a potential risk of impact,
and which may require a greater level of scrutiny to quantify the financial impact of AASB
15. These key areas relate to the use of loyalty programs, and revenue associated with gift
cards. Although the Group’s assessment performed to date has not identified a material
financial impact, the Group’s continuing assessment will focus on identifying and responding
to changes in business processes and associated internal controls as a result of the new
accounting standard. The new standard also requires extensive disclosures including
disaggregation of total revenue and key judgements and estimates. The Group will adopt
AASB 15 on 29 July 2018 and anticipates using the modified retrospective transition method
on initial adoption.

47 Premier Investments Limited

NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

OTHER SIGNIFICANT GROUP ACCOUNTING POLICIES (CONTINUED)

(j) NEW ACCOUNTING STANDARDS AND INTERPRETATIONS (CONTINUED)

(ii)

AASB 16 Leases: This Standard will replace AASB 117 Leases, Interpretation 4 Determining
whether an Arrangement contains a Lease, Interpretation 115 Operating Leases –
Incentives and Interpretation 127 Evaluating the Substance of Transactions Involving the
Legal Form of a Lease. The Standard provides a comprehensive model for the identification
of lease arrangements and their treatment in the financial statements. The standard
introduces a new lease accounting model for lessees that require lessees to recognise all
leases on balance sheet, except short-term leases and leases of low value assets. Under
AASB 16, the present value of operating lease commitments would be shown as a liability
on the balance sheet together with an asset representing the right-of-use. In addition, the
current operating lease expense recognised in profit or loss in the statement of
comprehensive income will be replaced with amortisation and interest expense. The Group
has completed an initial assessment of the potential impact on its consolidated financial
statements and is in the process of completing its detailed assessment.

The actual impact of applying AASB 16 on the financial statements in the period of initial
application will depend on:

a) Future economic conditions, including the Group’s incremental borrowing rate at

initial application date;

b) The composition of the Group’s lease portfolio at that date, including the value of
retail property in holdover negotiations or subject to variable pricing terms;

c) The Group’s latest assessment of whether it will exercise any lease renewal

options; and

d) The extent to which the Group chooses to use practical expedients and

recognition exemptions.

The most significant impact identified to date is that the Group will recognise new assets and
liabilities for leases currently classified as operating leases. In addition, the nature of
expenses related to those leases will now change as AASB 16 replaces the straight-line
operating lease expense with a depreciation charge for right of use assets and interest
expense on lease liabilities. The first application date for the Group will be for the financial
year ending 25 July 2020.

(iii)

AASB Interpretation 23 Uncertainty over Income Tax Treatments: The Interpretation clarifies
the application of the recognition and measurement criteria in AASB 112 Income Taxes
when there is uncertainty over income tax treatments. The first application date for the
Group will be for the financial year ending 25 July 2020. The Group does not anticipate that
the Interpretation will have a material impact on the Group.

Annual Report 2018 48

Notes to the Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

GROUP PERFORMANCE

3 OPERATING SEGMENTS

Identification of 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 Group 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. The operating segments are identified by management based on the
nature of the business conducted, and for which discrete financial information is available and reported to
the chief operating decision maker on at least a monthly basis.

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.

Reportable Segments

Retail

The retail segment represents the financial performance of a number of speciality retail fashion chains.

Investment

The investment segment represents investments in securities for both long and short term gains, dividend
income and interest.

Accounting policies

The key accounting policies used by the Group in reporting segments internally are the same as those
contained in these financial statements.

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.

Segment capital expenditure

Segment capital expenditure is the total cost incurred during the period to acquire property, plant and
equipment, and intangible assets other than goodwill.

The table on the following page presents revenue and profit information for operating segments for the
periods ended 28 July 2018 and 29 July 2017.

49 Premier Investments Limited

NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

GROUP PERFORMANCE (CONTINUED)

3 OPERATING SEGMENTS (CONTINUED)

(A) OPERATING SEGMENTS

RETAIL

INVESTMENT

ELIMINATION

CONSOLIDATED

2018
$’000

2017
$’000

2018
$’000

2017
$’000

2018
$’000

2017
$’000

2018
$’000

2017
$’000

REVENUE AND OTHER INCOME

Sale of goods

1,182,221 1,092,760

Interest revenue

Other revenue

Other income

Total revenue and other

income

106

195

117

250

3,526

6,028

82,799

72,027

(81,000)

(72,000)

1,994

277

- 1,182,221 1,092,760

3,632

6,145

1,193

1,935

1,193

1,950

1,183,715 1,095,062

86,325

78,070

(81,000)

(72,000) 1,189,040 1,101,132

Total income per the statement of

comprehensive income

RESULTS

Depreciation and

amortisation

Impairment of property

plant and equipment

Impairment of intangible

asset brand names

27,910

24,951

994

580

540

30,000

Interest expense

5,467

4,884

2,084

1,358

16,087

14,799

Share of profit of

associate

Profit before income

tax expense

Income tax expense

Net profit after tax per the statement of

comprehensive income

ASSETS AND LIABILITIES

1,189,040 1,101,132

28,904

25,531

540

30,000

7,551

6,242

16,087

14,799

(40,327)

(34,009)

83,638

105,136

142,484

126,182

62,481

84,963

(81,000)

(72,000)

123,965

139,145

Segment assets

552,218

499,031

1,260,913 1,301,128

(61,717)

(63,468) 1,751,414 1,736,691

Segment liabilities

308,458

305,959

106,637

112,513

(8,906)

(17,454)

406,189

401,018

Capital expenditure

45,854

45,040

4,927

58,485

50,781

103,525

Annual Report 2018 50

7
1
0
2

0
0
0

’

8
1
0
2

0
0
0

’

7
1
0
2

0
0
0

’

8
1
0
2

0
0
0

’

7
1
0
2

0
0
0

’

8
1
0
2

0
0
0

’

7
1
0
2

0
0
0
’
$

8
1
0
2

0
0
0
’
$

7
1
0
2

0
0
0
’
$

8
1
0
2

0
0
0
’
$

7
1
0
2

0
0
0
’
$

8
1
0
2

0
0
0
’
$

7
1
0
2

0
0
0
’
$

8
1
0
2

0
0
0
’
$

D
E
T
A
D
L
O
S
N
O
C

S
N
O
T
A
N
M
L
E

L
A
T
O
T

E
P
O
R
U
E

A
S
A

D
N
A
L
A
E
Z
W
E
N

A
L
A
R
T
S
U
A

N
O
T
A
R
E
P
O
F
O
S
A
E
R
A
C
H
P
A
R
G
O
E
G

)

(

s
t
n
e
m
e
t
a
t
S

a
i
c
n
a
n
i
F
e
h
t
o
t

s
e
t
o
N

)

D
E
U
N
T
N
O
C

(

7
1
S
0
T
2
N
Y
L
E
U
M
J
9
E
2
T
D
A
N
A
T
8
S
1
0
L
2
A
Y
I
L
C
U
N
J
8
A
2
N
D
E
I
F
D
N
E
E
H
S
K
T
E
E
O
W
T
2
5
S
E
E
H
T
T
O
R
O
N
F

)

D
E
U
N
T
N
O
C

(

7
1
0
2
Y
L
U
J

9
2
D
N
A
8
1
0
2
Y
L
U
J

8
2
D
E
D
N
E
S
K
E
E
W
2
5
E
H
T
R
O
F

)

D
E
U
N
T
N
O
C

(

E
C
N
A
M
R
O
F
R
E
P
P
U
O
R
G

51 Premier Investments Limited

)

D
E
U
N
T
N
O
C

(

S
T
N
E
M
G
E
S
G
N
T
A
R
E
P
O

1
5

5
2
5
3
0
1

1
8
7
0
5

5
2
5
3
0
1

1
8
7
0
5

9
4
1
,
3
1

3
3
0
,
5
1

4
2
6
4
6
3
1

)
4
2
7
1
5
(

7
4
9
7
3

4
9
5
1
4
4

7
7
6
6
2
3
,
1

8
8
3
,
4
3

2
9
2
,
6
4

2
7
3

9
1
8

0
6
7
2
9
0

1
2
2
2
8
1
1

2
3
1
1
0
1

0
7
8
9
8
3

0
4
0
9
8
1
1

0
6
7
2
9
0

1
2
2
2
8
1
,
1

2
2
3
,
4
9

2
8
5
,
6
2
1

8
4
6
,
7
3

0
2
8
,
7
5

3
6
1
,
8
2
1

5
0
0
,
4
2
1

7
2
6
,
2
3
8

4
1
8
,
3
7
8

2
7
3

9
1
8

8
6
2

5
3
1

0
0
1
,
8

2
8
6
,
6

2
3
1
1
0
1

0
4
0
9
8
1
,
1

4
2
3
,
4
9

4
8
5
,
6
2
1

0
5
6
,
7
3

0
2
8
,
7
5

1
3
4
,
8
2
1

0
4
1
,
4
2
1

7
2
7
,
0
4
8

6
9
4
,
0
8
8

E
M
O
C
N

R
E
H
T
O

D
N
A
E
U
N
E
V
E
R

s
d
o
o
g
f
o
e
a
S

d
n
a

e
u
n
e
v
e
r

r
e
h
t
O

e
m
o
c
n

d
n
a

e
u
n
e
v
e
r

t
n
e
m
g
e
S

e
m
o
c
n

r
e
h
t
o

t
n
e
r
r
u
c
-
n
o
n
t
n
e
m
g
e
S

9
4
9
,
6

2
1
2
,
4

3
6
3
,
8

2
2
5
,
2

8
4
8

5
6
6
,
8

3
0
1

3
3
2
,
8

2
9
5
,
1
9
3
,
1

9
8
7
,
3
6
2
,
1

s
t
e
s
s
a

6
1
3
,
5
8

3
2
1
,
3
3

e
r
u
t
i
d
n
e
p
x
e

a
t
i
p
a
C

NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

GROUP PERFORMANCE (CONTINUED)

4 REVENUE AND OTHER INCOME

REVENUE

Revenue from sale of goods

OTHER REVENUE

Membership program fees

Sundry revenue

Interest received

Dividends received from listed equity investment

TOTAL OTHER REVENUE

TOTAL REVENUE

OTHER INCOME

Royalty and licence fees

Other persons

Foreign exchange gains

Other

TOTAL OTHER INCOME

CONSOLIDATED

2018
$’000

2017
$’000

1,182,221

1,092,760

190

3,632

1,769

5,626

247

6,145

6,422

1,187,847

1,099,182

127

1,066

1,193

669

1,238

1,950

TOTAL REVENUE AND OTHER INCOME

1,189,040

1,101,132

REVENUE RECOGNITION ACCOUNTING POLICY

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.

Specifically, 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.

The Group has elected to recognise revenue on lay-by sales upon receipt of a deposit, as the Group has a
history of most lay-by sales in retail stores being completed following receipt of the initial deposit.

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.

Interest 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.

Dividend revenue is recognised when the Group’s right to receive the payment is established.

Annual Report 2018 52

Notes to the Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

GROUP PERFORMANCE (CONTINUED)

4 REVENUE AND OTHER INCOME (CONTINUED)

KEY ACCOUNTING ESTIMATES

Estimated gift card redemption rates

Expected gift card redemption rates are reviewed annually, and adjustments are made to the expected
redemption rates when considered necessary.

CONSOLIDATED

NOTES

2018
$’000

2017
$’000

5 EXPENSES

OPERATING LEASE EXPENSES

Minimum lease payments – operating leases

Contingent rentals

TOTAL OPERATING LEASE EXPENSES

DEPRECIATION, AMORTISATION AND IMPAIRMENT
OF NON-CURRENT ASSETS

Depreciation of property, plant and equipment

Impairment of property, plant and equipment

Amortisation of leasehold premiums

Impairment of intangible asset brand names

TOTAL DEPRECIATION, AMORTISATION AND
IMPAIRMENT OF NON-CURRENT ASSETS

FINANCE COSTS

Interest on bank loans and overdraft

TOTAL FINANCE COSTS

OTHER EXPENSES INCLUDE:

Foreign exchange losses

Loss on ineffective cash flow hedges

Net loss on disposal of property, plant and equipment

53 Premier Investments Limited

180,089

42,889

222,978

173,959

37,820

211,779

28,880

25,504

30,000

540

58,904

26,071

7,551

989

176

6,242

246

321

NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

GROUP PERFORMANCE (CONTINUED)

INCOME TAX

The major components of income tax expense are:

(a)

INCOME TAX RECOGNISED IN PROFIT OR 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

Difference in exchange rates

INCOME TAX EXPENSE REPORTED IN THE STATEMENT
OF COMPREHENSIVE INCOME

(b) STATEMENT OF CHANGES IN EQUITY

Deferred income tax related to items credited directly to equity:

Net deferred income tax on movements on cash-flow hedges

Net deferred income tax on unrealised loss on listed equity
investment at fair value

INCOME TAX EXPENSE (BENEFIT) REPORTED IN EQUITY

ACCOUNTING PROFIT BEFORE TAX MULTIPLIED BY THE
GROUP’S APPLICABLE AUSTRALIAN INCOME TAX RATE

CONSOLIDATED

2018
$’000

2017
$’000

40,680

(77)

2,371

(2,647)

39,943

(3,772)

(1,492)

(687)

40,327

34,009

10,003

(7,913)

2,090

(2,139)

(10,522)

(12,661)

Accounting profit before income tax

123,965

139,145

At the Parent Entity’s statutory income tax rate of
30% (2017: 30%)
Adjustment in respect of current income tax of previous years

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

37,190

(2,814)

10,965

(3,368)

(1,037)

(609)

40,327

41,743

(1,148)

2,046

(2,877)

(3,324)

(2,431)

34,009

Annual Report 2018 54

Notes to the Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

GROUP PERFORMANCE (CONTINUED)

INCOME TAX (CONTINUED)

(d) RECOGNISED DEFERRED TAX ASSETS AND

LIABILITIES

DEFERRED TAX RELATES TO THE FOLLOWING:

Foreign currency balances

Potential capital gains tax on financial investments

Deferred gains and losses on foreign exchange contracts

Inventory provisions

Deferred income

Employee provisions

Other receivables and prepayments

Property, plant and equipment

Other

NET DEFERRED TAX LIABILITIES

REFLECTED IN THE STATEMENT OF FINANCIAL
POSITION AS FOLLOWS:

Deferred tax assets

Deferred tax liabilities

NET DEFERRED TAX LIABILITIES

INCOME TAX ACCOUNTING POLICY

CONSOLIDATED

2018
$’000

2017
$’000

630

(32,794)

(3,464)

290

12,572

6,302

(1,902)

(6,346)

(2,584)

(27,296)

36,637

(63,933)

(27,296)

(610)

(38,269)

6,579

515

9,131

5,806

(823)

(6,620)

1,277

(23,014)

35,773

(58,787)

(23,014)

Income tax expense comprises current tax (amounts payable or receivable within 12 months) and deferred
tax (amounts payable or receivable after 12 months). Tax expense is recognised in profit or loss, unless it
relates to items that have been recognised in equity as part of other comprehensive income or directly in
equity. In this instance, the related tax expense is also recognised in other comprehensive income or directly
in equity.

Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount
expected to be recovered from or paid to the tax authorities based on the current and prior period taxable
income. The tax rates and tax laws used to calculate tax amounts are those that are enacted or substantially
enacted by the reporting date.

Deferred income tax

Deferred income tax is recognised on taxable temporary differences at the reporting date between the tax
base of the assets and liabilities and their carrying amounts for financial reporting purposes based on the
expected manner of recovery of the carrying value of an asset or liability. Deferred 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 substantially enacted at the reporting
date.

55 Premier Investments Limited

NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

GROUP PERFORMANCE (CONTINUED)

INCOME TAX (CONTINUED)

INCOME TAX ACCOUNTING POLICY (CONTINUED)

Deferred income tax liabilities are recognised for all 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 the taxable profit or loss: and

 When the taxable temporary difference is associated with investments in subsidiaries, associates and
interest 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 taxable temporary differences, except for the following:

 When the deferred tax asset 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;

 When the deductible temporary difference is associated with investments in subsidiaries, associates and
interest in joint ventures, in which case the 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 to utilise the deferred tax asset.

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.

Tax assets and tax liabilities are offset only if a legally enforceable right exists to set off and the tax assets
and tax liabilities relate to the same taxable entity and the same taxation authority.

Tax consolidation

Premier Investments Limited and its wholly owned Australian controlled entities have 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.

KEY ACCOUNTING ESTIMATES AND JUDGEMENTS

Deferred tax assets are recognised for taxable 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.

Annual Report 2018 56

Notes to the Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

GROUP PERFORMANCE (CONTINUED)

INCOME TAX (CONTINUED)

INCOME TAX ACCOUNTING POLICY (CONTINUED)

KEY ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)

Assumptions about the generation of future taxable profits depend on management's estimates of future
cash flows. These depend on estimates of future sales volumes, operating 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 in 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 profit or loss in the statement of comprehensive income.

CONSOLIDATED

2018
$’000

2017
$’000

7 EARNINGS PER SHARE

The following reflects the income and share data used in the
calculation of basic and diluted earnings per share:

Net profit for the period

83,638

105,136

Weighted average number of ordinary shares used in
calculating:

- basic earnings per share

- diluted earnings per share

NUMBER OF
SHARES
‘000

157,890

158,897

157,436

158,693

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.

EARNINGS PER SHARE ACCOUNTING POLICY

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.

57 Premier Investments Limited

NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

GROUP PERFORMANCE (CONTINUED)

8 A) DIVIDENDS PAID AND PROPOSED

DIVIDENDS PAID

Declared and paid during the year:

Interim franked dividends for 2018:

29 cents per share (2017: 26 cents)

Final franked dividends for 2017:

27 cents per share (2016: 25 cents)

TOTAL DECLARED AND PAID DURING THE YEAR

DIVIDENDS PROPOSED

Final franked dividend proposed for 2018:

33 cents per share (2017: 27 cents)

CONSOLIDATED

2018
$’000

2017
$’000

45,849

40,994

42,619

88,468

39,358

80,352

52,173

42,619

On 20 September 2018, the Directors of Premier Investments Limited declared a final dividend in respect
of the 2018 financial year. The total amount of the dividend is $52,173,000 (2017: $42,619,000) which
represents a fully franked dividend of 33 cents per share (2017: 27 cents per share).

8 B) FRANKING CREDIT BALANCE

The below table provides information about franking credits
available for use in subsequent reporting periods:

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% (2017: 30%)

- franking credits that will arise from the payment of
income tax payable 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

2018
$’000

2017
$’000

215,483

212,295

4,848

12,322

(22,360)

197,971

(18,254)

206,363

The tax rate at which paid dividends have been franked is 30% (2017: 30%). Dividends proposed will be
franked at the rate of 30% (2017: 30%).

Annual Report 2018 58

Notes to the Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

OPERATING ASSETS AND LIABILITIES

CONSOLIDATED

2018
$’000

2017
$’000

TRADE AND OTHER RECEIVABLES (CURRENT)

Sundry debtors

TOTAL CURRENT TRADE AND OTHER RECEIVABLES

21,563

23,682

(a) Impairment losses

Receivables are non-interest-bearing and are generally on 30 to 60 day terms. An allowance for credit losses is
recognised based on the expected credit loss from the time the financial asset is initially recognised. Bad debts
are written off when identified. No allowance for credit losses has been recognised by the Group during the
financial year ended 28 July 2018 (2017: $nil). During the year, no bad debt expense (2017: $nil) was
recognised. It is expected that sundry debtor balances will be received when due.

(b) Fair value

Due to the short-term nature of these receivables, their carrying value is considered to approximate their fair
value.

TRADE AND OTHER RECEIVABLES ACCOUNTING POLICY

Trade and other receivables are classified as non-derivative financial assets and are recognised initially at fair
value. After initial measurement, these assets are measured at amortised cost, less any allowance for any
expected credit losses.

INVENTORIES

Finished goods

TOTAL INVENTORIES AT COST

INVENTORIES ACCOUNTING POLICY

CONSOLIDATED

2018
$’000

2017
$’000

159,313

140,755

Inventories are valued at the lower of cost and net realisable value.

Costs incurred in bringing each product to its present location and conditions are accounted for as follows:

- 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.

59 Premier Investments Limited

NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

OPERATING ASSETS AND LIABILITIES (CONTINUED)

11 OTHER ASSETS (CURRENT)

Deposits and prepayments

TOTAL OTHER CURRENT ASSETS

12 TRADE AND OTHER PAYABLES (CURRENT)

Trade creditors

Other creditors and accruals

TOTAL CURRENT TRADE AND OTHER PAYABLES

(a) Fair values

CONSOLIDATED

2018
$’000

2017
$’000

15,323

43,282

41,276

84,558

11,572

39,318

32,210

71,528

Due to the short-term nature of these payables, their carrying values approximate their fair values.

TRADE AND OTHER PAYABLES ACCOUNTING POLICY

Trade and other payables 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 Group.

Trade liabilities are normally settled on terms of between 7 and 90 days.

13 PROVISIONS

CURRENT

Employee entitlements – Annual Leave

Employee entitlements – Long Service Leave

Other provisions

TOTAL CURRENT PROVISIONS

NON-CURRENT

Employee entitlements – Long Service Leave

TOTAL NON-CURRENT PROVISIONS

PROVISIONS ACCOUNTING POLICIES

CONSOLIDATED

2018
$’000

2017
$’000

12,020

7,214

19,234

2,040

11,348

6,462

1,555

19,365

1,828

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 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 discount rate that reflects the risks specific to the liability and the time value of money.
Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance
cost.

Annual Report 2018 60

Notes to the Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

OPERATING ASSETS AND LIABILITIES (CONTINUED)

13 PROVISIONS (CONTINUED)

PROVISIONS ACCOUNTING POLICIES (CONTINUED)

EMPLOYEE ENTITLEMENTS ACCOUNTING POLICIES

Current annual leave

The provisions for employee entitlements to wages, salaries and annual leave (which are expected to be settled
wholly within 12 months of the reporting date) 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.

Long service leave and non-current annual leave

The liability for long service leave and non-current annual leave (which are not expected to be settled wholly
within 12 months of the reporting date) 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.

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.

14 OTHER LIABILITIES

CURRENT

Deferred income

TOTAL CURRENT

NON-CURRENT

Deferred income

TOTAL NON-CURRENT

CONSOLIDATED

2018
$’000

2017
$’000

21,629

29,030

12,910

23,078

DEFERRED INCOME ACCOUNTING POLICY

Deferred 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.

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.

61 Premier Investments Limited

NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

CAPITAL INVESTED

15 PROPERTY, PLANT AND EQUIPMENT

CONSOLIDATED

LAND
$’000

BUILDINGS
$’000

PLANT AND
EQUIPMENT
$’000

LEASED
PLANT AND
EQUIPMENT
$’000

CAPITAL
WORKS IN
PROGRESS
$’000

TOTAL
$’000

21,953

54,720

455,266

343

12,070

544,352

(3,129)

(302,713)

(343)

(306,185)

21,953

51,591

152,553

21,953

52,959

134,667

40,225

3,285

(1,368)

(27,512)

(502)

2,390

21,953

51,591

152,553

12,070

238,167

4,799

214,378

10,556

(3,285)

50,781

(28,880)

(502)

2,390

12,070

238,167

21,953

54,720

409,868

343

4,799

491,683

(1,761)

(275,201)

(343)

(277,305)

AT 28 JULY 2018
Cost

Accumulated depreciation and
impairment

NET CARRYING AMOUNT

RECONCILIATIONS:

Carrying amount at beginning
of the financial year

Additions

Transfers between classes

Depreciation

Disposals

Exchange differences

Carrying amount at end of
the financial year

AT 29 JULY 2017

Cost

Accumulated depreciation and
impairment

NET CARRYING AMOUNT

21,953

52,959

134,667

RECONCILIATIONS:

Carrying amount at beginning
of the financial year

Additions

Transfers between classes

Depreciation

Impairment

Disposals

Exchange differences

Carrying amount at end of
the financial year

3,203

14,178

120,037

18,750

39,735

40,458

1,602

(954)

(24,550)

(540)

(1,081)

(1,259)

21,953

52,959

134,667

4,799

214,378

1,819

139,237

4,582

(1,602)

103,525

(25,504)

(540)

(1,081)

(1,259)

4,799

214,378

Annual Report 2018 62

Notes to the Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

CAPITAL INVESTED (CONTINUED)

15 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

LAND AND BUILDINGS

The land and buildings with a combined carrying amount of $73,544,000 have been pledged to secure certain
interest-bearing borrowings of the Group (refer to note 20).

PROPERTY, PLANT AND EQUIPMENT ACCOUNTING POLICY

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.

KEY ACCOUNTING ESTIMATES AND ASSUMPTIONS

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 on a prospective basis when considered
necessary.

IMPAIRMENT TESTING OF PROPERTY, PLANT AND EQUIPMENT AND SIGNIFICANT ACCOUNTING
ESTIMATES AND ASSUMPTIONS

The carrying values of property, plant and equipment are reviewed for impairment annually. If an indication of
impairment exists, and where the carrying value of the asset exceeds the estimated recoverable amount, the
assets or cash-generating units (CGU) are written down to their recoverable amount. The recoverable amount
is the greater of fair value less costs of disposal and value-in-use. Value-in-use refers to an asset’s value
based on the expected future cash flows arising from its continued use, discounted to present value using a
post-tax discount rate that reflect current market assessments of the risks specific to the asset.

If an asset does not generate largely independent cash inflows, the recoverable amount is determined for the
CGU to which the asset belongs. The recoverable amount was estimated for certain items of plant and
equipment on an individual store basis, as this has been identified as the CGU of the Group’s retail segment.

These value-in-use calculations use cash flow projections based on financial budgets approved by
management, covering a five year period. Cash flows within the five year period are extrapolated using a
growth rate of 4% (2017: 4%).

The post-tax discount rate applied to the cash flow projections is 10.5% (2017: 10.5%). The discount rate
used reflects management’s estimate of the risks specific to the CGU that is 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.

No impairment loss was recognised during the current financial year (2017: $539,600).

63 Premier Investments Limited

NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

CAPITAL INVESTED (CONTINUED)

INTANGIBLES

RECONCILIATION OF CARRYING AMOUNTS AT THE BEGINNING AND END OF
THE PERIOD

YEAR ENDED 28 JULY 2018

As at 30 July 2017 net of accumulated
amortisation and impairment

Trademark registrations

Amortisation

Impairment of brand names

Exchange differences

As at 28 July 2018 net of accumulated
amortisation and impairment

AS AT 28 JULY 2018

Cost (gross carrying amount)

Accumulated amortisation and
impairment
NET CARRYING AMOUNT

YEAR ENDED 29 JULY 2017

As at 31 July 2016 net of accumulated
amortisation and impairment

Trademark registrations

Amortisation

As at 29 July 2017 net of accumulated
amortisation and impairment

AS AT 29 JULY 2017

Cost (gross carrying amount)

Accumulated amortisation and
impairment
NET CARRYING AMOUNT

GOODWILL ACCOUNTING POLICY

CONSOLIDATED

GOODWILL
$’000

BRAND
NAMES
$’000

TRADEMARKS
$’000

LEASEHOLD
PREMIUMS
$’000

TOTAL
$’000

477,085
-

376,179
-

1,777
861

(30,000)

73
-

(24)

(2)

855,114
861

(24)

(30,000)

(2)

477,085

346,179

2,638

825,949

477,085

376,179

-
477,085

(30,000)
346,179

477,085

376,179

2,638

-
2,638

1,452

325

977

856,879

(930)
47

(30,930)
825,949

100

(27)

854,816

325

(27)

477,085

376,179

1,777

855,114

477,085

376,179

-
477,085

-
376,179

1,777

-
1,777

979

856,020

(906)
73

(906)
855,114

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 not amortised but is subject to impairment testing.

Annual Report 2018 64

Notes to the Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

CAPITAL INVESTED (CONTINUED)

INTANGIBLES (CONTINUED)

GOODWILL ACCOUNTING POLICY (CONTINUED)

Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances
indicate that the carrying value may be impaired. Goodwill acquired in a business combination is, from the
date of acquisition, allocated to each of the Group’s cash-generating units (CGUs) that are expected to benefit
from the synergies of the combination. Impairment is determined by assessing the recoverable amount of the
CGU to which the goodwill relates.

Where the recoverable amount of the CGU is less than the carrying amount, an impairment loss is
recognised. Impairment losses recognised for goodwill are not subsequently reversed.

OTHER INTANGIBLE ASSETS (excluding goodwill) ACCOUNTING POLICY

Intangible assets acquired separately are initially measured at cost. Intangible assets acquired in a business
combination are initially recognised at fair value. 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.

A summary of the key accounting policies applied to the Group’s intangible assets are as follows:

Brands

Leasehold Premiums

Trademarks & Licences

Useful life
assessment?

Indefinite

Finite

Indefinite

Method used?

Not amortised or revalued

Amortised over the term
of the lease

Not amortised or revalued

Internally
generated or
acquired?

Impairment
test/recoverable
amount testing

Acquired

Annually; for indicators of
impairment

Amortisation method
reviewed at each financial
year end; reviewed
annually for indicators of
impairment

Annually; for indicators of
impairment

Brand names, trademarks and licences are assessed as having an indefinite useful life, as this reflects
management’s intention to continue to operate these to generate net cash inflows into the foreseeable future.
These assets are not amortised but are subject to impairment testing.

Intangible assets are tested for impairment where an indicator of impairment exists, or in the case of indefinite
life intangibles, impairment is tested annually or where an indicator of impairment exists.

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 higher of the asset’s
value-in-use and fair value less costs of disposal. Value-in use refers to an asset’s value based on the
expected future cash flows arising from its continued use, discounted to present value using a post-tax
discount rate that reflect current market assessments of the risks specific to the asset.

If an asset does not generate largely independent cash inflows, the recoverable amount is determined for the
CGU to which the asset belongs.

65 Premier Investments Limited

NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

CAPITAL INVESTED (CONTINUED)

INTANGIBLES (CONTINUED)

SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS

The recoverable amounts of CGUs are determined based on the higher of value-in-use calculations or fair value
less costs of disposal. These calculations depend on management estimates and assumptions. In particular,
significant estimates and judgements are made in relation to the key assumptions used in forecasting future
cash flows and the expected growth rates used in these cash flow projections, as well as the discount rates
applied to these cash flows. Management assesses these assumptions each reporting period and considers the
potential impact of changes to these assumptions.

IMPAIRMENT TESTING OF GOODWILL

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, which is also an operating segment for the Group.

The recoverable amount of the CGU has been determined based upon a value-in-use calculation, using cash
flow projections as at July 2018 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 2019 financial year and
are projected for a further four years based on estimated growth rates of 2.4% (2017: 3.3%). 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% (2017: 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 10.0% (2017: 10.0%). 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 specific to the asset and adjusted for risks specific to the CGU.

Management has considered the reasonably possible changes in expected sales growth, forecast Earnings
Before Interest, Tax and Amortisation (EBITA) and discount rates applied to the CGU to which goodwill relates,
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 have been 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 2018 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 2019 financial year and are projected for a further four years based on
estimated growth rates.

Annual Report 2018 66

Notes to the Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

CAPITAL INVESTED (CONTINUED)

INTANGIBLES (CONTINUED)

IMPAIRMENT TESTING OF BRAND NAMES (CONTINUED)

The extrapolated growth rates at which cash flows have been projected for the individual brands within each of
the CGU groups have been summarised below. Cash flows beyond the five year period are extrapolated using
a growth rate of 3% (2017: 3%), which reflects the long-term growth expectation beyond the five year projection.

CGU

AVERAGE GROWTH RATES

TERMINAL VALUE

APPLIED TO PROJECTED

GROWTH RATE

CASH FLOWS

Casual wear

2% to 2.5%

Women’s wear

1.5% to 3.5%

Non Apparel

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.

The post-tax discount rate applied to the cash flow projections for each of the three CGU groups is 8.7%
(2017: 8.7%). The discount rate has been determined using the weighted average cost of capital which
incorporates both the cost of debt and cost of capital specific to the asset and adjusted for risks specific to the
CGU.

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% (2017: 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. Key assumptions relate to
expected sales growth, net royalty rates and discount rates applied.

As a result of the annual impairment test performed for the 2018 financial year, an impairment expense of $30
million was recognised in relation to brand names within the Casual Wear CGU group with an original carrying
value of $112.2 million. The impairment expense decreases the carrying value to $82.2 million. The decrease in
the recoverable amount of brand names within the Casual Wear CGU group reflects the increasingly
competitive retail landscape and structural changes impacting the apparel industry in Australia and New
Zealand.

The carrying value now approximates its recoverable value. Any adverse movements in key assumptions may
lead to a further impairment. Reasonably possible changes in key assumptions relating to a 5% reduction in
estimated sales growth rates or a discount rate increase of 50 basis points may lead to a further impairment
loss of up to $5 million, which is not considered material to the overall recoverable amount of the CGU.

The brand names were acquired through the acquisition of the Just Group in 2008, and the historical carrying
values assigned to the brands were reflective of trading performance and the retail environment over 10 years
ago. The accounting standards do not allow for a re-allocation of the carrying values of indefinite-life intangible
assets, therefore the significant value created within the collective portfolio of brands subsequent to 2008 is not
reflected in the historical carrying values of these intangible assets.

67 Premier Investments Limited

NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

CAPITAL INVESTED (CONTINUED)

17 LISTED EQUITY INVESTMENT AT FAIR VALUE

INVESTMENT

Investment in listed securities at fair value

TOTAL INVESTMENTS

CONSOLIDATED

2018
$’000

2017
$’000

40,687

67,665

FAIR VALUE LISTED EQUITY INVESTMENT ACCOUNTING POLICY

The listed equity investment comprises a non-derivative equity instrument not held for trading. On the adoption of
AASB 9, the Group has made the irrevocable election to designate the listed equity investment as ‘fair value
through other comprehensive income’, as it is not held for trading, with only dividends recognised in profit or loss.
Accordingly, the investment is accounted for at fair value through other comprehensive income, without
subsequent reclassification of gains or losses nor impairment to profit or loss.

In the 2017 financial year, the listed equity investment was classified as an available-for-sale financial asset
under AASB 139. Under AASB 139, the financial asset was measured at fair value as at the reporting date, with
unrealised gains or losses recognised directly in other comprehensive income, until the investment was
derecognised or until the investment was deemed to be impaired, at which time the cumulative gain or loss
previously reported in equity was recognised in profit or loss.

The change in accounting policy resulting from the adoption of AASB 9 has been applied retrospectively, with no
impact on the prior period financial position or performance of the Group. Dividends received from this investment
for the 52 weeks ended 28 July 2018 have been recognised in profit or loss.

The fair value of equity investments in listed securities is determined by reference to quoted market bid prices at
the close of business on the reporting date.

INVESTMENT IN ASSOCIATE

Movements in carrying amounts

Carrying amount at the beginning of the financial year

Share of profit after income tax

Share of other comprehensive income

Dividends received

TOTAL INVESTMENT IN ASSOCIATE

Breville Group Limited

CONSOLIDATED

2018
$’000

2017
$’000

216,940

16,087

1,424

(11,267)

223,184

213,392

14,799

(700)

(10,551)

216,940

As at 28 July 2018, Premier Investments Limited holds 27.5% (2017: 27.5%) of Breville Group Limited, a
company incorporated in Australia whose shares are quoted on the Australian Securities Exchange. The
principal activities of Breville Group Limited involves the innovation, development, marketing and distribution of
small electrical appliances.

As at 28 July 2018, the fair value of the Group’s interest in Breville Group Limited as determined based on the
quoted market price was $407,380,401 (2017: $362,314,615).

Annual Report 2018 68

Notes to the Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

CAPITAL INVESTED (CONTINUED)

INVESTMENT IN ASSOCIATE (CONTINUED)

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 $16,086,873 (2017: $14,798,967).

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 2018
have been used. The accounting policies applied by Breville Group Limited in their financial statements
materially conform to those used by the Group for like transactions and events in similar circumstances.

The following table illustrates summarised financial information relating to the Group’s investment in Breville
Group Limited:

EXTRACT OF BREVILLE GROUP LIMITED’S STATEMENT OF
FINANCIAL POSITION

30 JUNE 2018
$’000

30 JUNE 2017
$’000

Current assets

Non-current assets

Total assets

Current liabilities

Non-current liabilities

Total liabilities

NET ASSETS

315,705

129,644

445,349

(108,801)

(53,313)

(162,114)

283,235

300,934

117,498

418,432

(116,946)

(41,877)

(158,823)

259,609

Group’s share of Breville Group Limited net assets

77,861

71,367

EXTRACT OF BREVILLE GROUP LIMITED’S STATEMENT OF
COMPREHENSIVE INCOME

30 JUNE 2018
$’000

30 JUNE 2017
$’000

Revenue

Profit after income tax

Other comprehensive (loss) income

Group’s share of Breville Group Limited profit after
income tax

652,348

58,519

5,181

605,733

53,834

(2,548)

16,087

14,799

INVESTMENT IN ASSOCIATE ACCOUNTING POLICY

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 accounts for its investments in associate using the equity method of accounting in the consolidated
financial statements. Under the equity method, the investment in the associate is initially recognised at cost.
Thereafter, the carrying amount of the investment is adjusted to recognise the Group’s share of profit after tax
of the associate, which is recognised in profit or loss, and the Group’s share of other comprehensive income,
which is recognised in other comprehensive income in the statement of comprehensive income. Dividends
received from the associate generally reduces the carrying amount of the investment.

69 Premier Investments Limited

NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

CAPITAL INVESTED (CONTINUED)

INVESTMENT IN ASSOCIATE (CONTINUED)

After application of the equity method, the Group determines whether it is necessary to recognise an
impairment loss on its investment in an associate. At each reporting period, the Group determines whether
there is objective evidence that the investment in the 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 impairment loss in profit or loss in the statement of
comprehensive income.

CAPITAL STRUCTURE AND RISK MANAGEMENT

19 NOTES TO THE STATEMENT OF CASH FLOWS

(a) RECONCILIATION OF CASH AND CASH EQUIVALENTS

Cash at bank and in hand
Short-term deposits

TOTAL CASH AND CASH EQUIVALENTS

(b) RECONCILIATION OF NET PROFIT AFTER INCOME
TAX TO NET CASH FLOWS FROM OPERATIONS

Net profit for the period

Adjustments for:

Amortisation
Depreciation
Impairment and write-off of non-current assets
Foreign exchange losses (gains)
Share of profit of associate
Dividends received from listed equity investment
Borrowing costs
Net loss on disposal of property, plant and equipment
Share-based payments expense
Gross movement in cash flow hedge reserve
Net exchange differences

Changes in assets and liabilities net of the effects from
acquisition and disposal of businesses:

Increase in provisions
Increase in deferred tax liabilities
Increase (decrease) in trade and other payables
(Decrease) increase in other financial liabilities
Increase in deferred income
Decrease (increase) in trade and other receivables
(Increase) decrease in other current assets
Increase in inventories
(Increase) decrease in other financial assets
Decrease (increase) in deferred tax assets
Decrease in income tax payable

NET CASH FLOWS FROM OPERATING ACTIVITIES

CONSOLIDATED

2018
$’000

2017
$’000

47,020
131,598

178,618

33,623
137,008

170,631

83,638

105,136

24
28,880
30,000
989
(16,087)
(1,769)
209
176
3,178
23,340
2,954

81
5,146
13,030
(21,686)
14,671
2,119
(3,751)
(18,558)
(11,792)
7,048
(7,989)

133,851

27
25,504
540
(669)
(14,799)
-
300
492
6,210
(4,990)
302

2,865
1,476
(1,437)
5,921
14,212
(7,221)
122
(17,199)
1,455
(6,393)
(14,017)

97,837

Annual Report 2018 70

Notes to the Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

CAPITAL STRUCTURE AND RISK MANAGEMENT (CONTINUED)

19 NOTES TO THE STATEMENT OF CASH FLOWS

(CONTINUED)

Working capital and bank overdraft facility
Used
Unused

Finance facility
Used
Unused

Bank guarantee facility
Used
Unused

Interchangeable facility
Used
Unused

Total facilities
Used
Unused
TOTAL

CONSOLIDATED

2018
$’000

2017
$’000

11,800

176,000
53,000

229,000

51
149
200

7,790
5,210

13,000

183,841
70,159

254,000

11,800

174,000
55,000

229,000

51
149
200

6,759
1,241

8,000

180,810
68,190

249,000

CASH AND CASH EQUIVALENTS ACCOUNTING POLICY

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.

71 Premier Investments Limited

NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

CAPITAL STRUCTURE AND RISK MANAGEMENT (CONTINUED)

INTEREST-BEARING LIABILITIES

NON-CURRENT

Bank loans* unsecured

Bank loans ** secured

TOTAL INTEREST-BEARING LIABILITIES

CONSOLIDATED

2018
$’000

2017
$’000

106,684

69,000

175,684

104,475

69,000

173,475

* 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.

** Premier Investments Limited obtained bank borrowings amounting to $69 million. A $19 million borrowing is secured by a
mortgage over Land and Buildings, representing the National Distribution Centre in Truganina, Victoria. During the 2017
financial year, this borrowing was refinanced and is repayable in full at the end of 5 years, being January 2022. During the 2017
financial year, Premier Investments Limited obtained a further $50 million borrowing which is secured by a mortgage over Land
and Buildings, representing an office building in Melbourne, Victoria. The borrowing is repayable in full at the end of 5 years,
being December 2021.

(a) Fair values

The carrying values of the Group’s current and non-current interest-bearing liabilities approximate their fair
values.

(b) Defaults and breaches

During the current and prior years, there were no defaults or breaches on any of the loans.

CONSOLIDATED

30 JULY 2017
$’000

CASH
FLOWS
$’000

OTHER
$’000

28 JULY 2018
$’000

Non-current interest-bearing liabilities

TOTAL INTEREST-BEARING LIABILITIES

173,475

2,000

209

175,684

‘Other’ includes the effect of the amortisation of the capitalised borrowing costs, which are amortised
over the life of the facility.

INTEREST-BEARING LIABILITIES ACCOUNTING POLICY

Interest-bearing liabilities 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 while on-going
borrowing costs are expensed as incurred.

Annual Report 2018 72

Notes to the Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

CAPITAL STRUCTURE AND RISK MANAGEMENT (CONTINUED)

21 CONTRIBUTED EQUITY

Ordinary share capital

608,615

CONSOLIDATED

2018
$’000

2017
$’000

(a) MOVEMENTS IN SHARES ON ISSUE

Ordinary shares on issue 30 July 2017

Ordinary shares issued during the year (i)

Ordinary shares on issue at 28 July 2018

Ordinary shares on issue 31 July 2016

Ordinary shares issued during the year (i)

Ordinary shares on issue at 29 July 2017

NO. (‘000)

$‘000

157,748

351

158,099

157,164

584

157,748

608,615

Fully paid ordinary shares carry one vote per share and carry the rights to dividends.

(i)

A total of 350,978 ordinary shares (2017: 584,305) 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 interest-bearing borrowings, cash and cash
equivalents and equity attributable to the equity holders of Premier Investments Limited, comprising of
contributed equity, reserves and retained earnings.

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.

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.

73 Premier Investments Limited

NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

CAPITAL STRUCTURE AND RISK MANAGEMENT (CONTINUED)

CONSOLIDATED

2018
$’000

2017
$’000

22 RESERVES

RESERVES COMPRISE:

Capital profits reserve

Foreign currency translation reserve (a)

Cash flow hedge reserve (b)

Performance rights reserve (c)

Fair value reserve (d)

TOTAL RESERVES

(a) FOREIGN CURRENCY TRANSLATION RESERVE

Nature and purpose of reserve

Reserve is used to record exchange differences arising
from the translation of the financial statements of foreign
subsidiaries.
 Movements in the reserve

Opening balance

Foreign currency translation of overseas subsidiaries

Net movement in associate entity’s reserves

CLOSING BALANCE

(b) CASH FLOW HEDGE RESERVE

Nature and purpose of reserve

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.

 Movements in the reserve

Opening balance

Net gain (loss) on cash flow hedges

Transferred to statement of financial position/
profit or loss

Deferred income tax movement on cash flow hedges

CLOSING BALANCE

Nature and purpose of reserve

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.
 Movements in the reserve

Opening balance

Performance rights expense for the year

CLOSING BALANCE

464

2,977

8,059

15,734

(43,243)

(16,009)

(3,661)

5,214

1,424

2,977

(15,281)

21,370

11,973

(10,003)

8,059

12,556

3,178

15,734

464

(3,661)

(15,281)

12,556

(24,178)

(30,100)

1,047

(4,008)

(700)

(3,661)

(10,291)

7,066

(14,195)

2,139

(15,281)

6,346

6,210

12,556

Annual Report 2018 74

Notes to the Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

CAPITAL STRUCTURE AND RISK MANAGEMENT (CONTINUED)

22 RESERVES (CONTINUED)

(d) FAIR VALUE RESERVE

Nature and purpose of reserve

Reserve is used to record unrealised gains and losses on
fair value revaluation of listed equity investment at fair
value.
 Movements in the reserve

Opening balance

Unrealised loss on revaluation of listed investment at
fair value

Net deferred income tax movement on listed equity
investment at fair value

CLOSING BALANCE

23 EXPENDITURE COMMITMENTS

OPERATING LEASE EXPENDITURE COMMITMENTS

Payable within one year

Payable within one to five years

Payable in more than five years

TOTAL OPERATING LEASES

CONSOLIDATED

2018
$’000

2017
$’000

(24,178)

(26,978)

(34,700)

7,913

(43,243)

10,522

(24,178)

CONSOLIDATED

2018
$’000

2017
$’000

114,149

228,593

61,091

403,833

100,385

195,426

59,288

355,099

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.

LEASES ACCOUNTING POLICY

Operating lease payments are recognised as an expense in profit or loss in the statement of comprehensive
income 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.

75 Premier Investments Limited

NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

CAPITAL STRUCTURE AND RISK MANAGEMENT (CONTINUED)

24 OTHER FINANCIAL INSTRUMENTS

CURRENT ASSETS

Derivatives designated as hedging instruments

Forward currency contracts – cash flow hedges

TOTAL CURRENT FINANCIAL INSTRUMENTS

CURRENT LIABILITIES

Derivatives designated as hedging instruments

Forward currency contracts – cash flow hedges

TOTAL CURRENT FINANCIAL INSTRUMENTS

NON –CURRENT LIABILITIES

Derivatives designated as hedging instruments

Interest rate swaps – cash flow hedges

TOTAL NON-CURRENT FINANCIAL INSTRUMENTS

(a) DERIVATIVE INSTRUMENTS USED BY THE GROUP

(i) Forward currency contracts – cash flow hedges

CONSOLIDATED

2018
$’000

2017
$’000

11,973

181

425

21,651

460

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 contracts to
predominantly purchase US Dollars.

The forward currency contracts are considered to be highly effective hedges as they are matched against
forecast inventory purchases and are timed to mature when payments are scheduled to be made. Any gain
or loss on the contracts attributable to the hedge risk are recognised in other comprehensive income and
accumulated in the hedge reserve in equity.

The cash flows are expected to occur between one to twelve months from 28 July 2018 and the profit or
loss within cost of sales will be affected over the next couple of years as the inventory is sold.

Annual Report 2018 76

Notes to the Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

CAPITAL STRUCTURE AND RISK MANAGEMENT (CONTINUED)

24 OTHER FINANCIAL INSTRUMENTS (CONTINUED)

(a) DERIVATIVE INSTRUMENTS USED BY THE GROUP (CONTINUED)

(ii) Interest rate swaps – cash flow hedges

The Group has entered into interest rate swap contracts exchanging floating rate interest amounts for
fixed rate interest amounts on certain of its interest-bearing liabilities. These interest rate swap
contracts are designated as cash flow hedges in order to reduce the Group’s cash flow exposure
resulting from variable interest rates on borrowings. The interest rate swaps and the interest rate
payments on the loans occur simultaneously. The amount accumulated in the hedge reserve in equity
is reclassified to profit or loss over the period that the floating rate interest payments on debt affect
profit or loss.

At reporting date, the details of outstanding forward currency contracts are:

CONSOLIDATED

2018
$’000

2017
$’000

2018

2017

NOTIONAL AMOUNTS $AUD

AVERAGE EXCHANGE RATE

90,902

93,367

140,230

74,833

0.7892

0.7637

0.7217

0.7510

NOTIONAL AMOUNTS $NZD

AVERAGE EXCHANGE RATE

15,284

17,742

29,844

12,252

0.7299

0.6916

0.6562

0.7146

NOTIONAL AMOUNTS £GBP

AVERAGE EXCHANGE RATE

7,697

3,485

4,854

1.4033

1.4414

1.2877

NOTIONAL AMOUNTS $NZD

AVERAGE EXCHANGE RATE

3,863

5,911

1.098

1.0440

NOTIONAL AMOUNTS $SGD

AVERAGE EXCHANGE RATE

4,179

4,150

4,288

0.7650

0.7504

0.7129

Buy USD / Sell AUD

Maturity < 6 months

Maturity 6 – 12 months

Buy USD / Sell NZD

Maturity < 6 months

Maturity 6 – 12 months

Buy USD / Sell GBP

Maturity < 6 months

Maturity 6 – 12 months

Buy AUD / Sell NZD

Maturity < 6 months

Buy USD / Sell SGD

Maturity < 6 months

Maturity 6 – 12 months

77 Premier Investments Limited

NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

CAPITAL STRUCTURE AND RISK MANAGEMENT (CONTINUED)

24 OTHER FINANCIAL INSTRUMENTS (CONTINUED)

OTHER FINANCIAL INSTRUMENTS AND HEDGING ACCOUNTING POLICY

The Group uses derivative financial instruments such as forward currency contracts and interest rate swaps
to hedge its foreign currency risks and interest rate risks. These 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 at subsequent reporting dates.

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 and are considered to be effective, 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 highly
probable future purchases as well as cash flows 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 other
comprehensive income and accumulated in the cash flow hedge reserve in equity, while the ineffective
portion is recognised in profit or loss. Amounts taken to equity are reclassified out of equity and included in
the measurement of the hedge transaction (finance costs or inventory purchases) when the forecast
transaction occurs.

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.

25 FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES

The Group’s principal financial instruments comprise cash and cash equivalents, derivative financial
instruments, listed equity investments at fair value, receivables, payables, bank overdrafts and interest-
bearing liabilities.

Annual Report 2018 78

Notes to the Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

CAPITAL STRUCTURE AND RISK MANAGEMENT (CONTINUED)

25 FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES (CONTINUED)

RISK EXPOSURES AND RESPONSES

The Group manages its exposure to key financial risks in accordance with Board-approved policies which
are reviewed annually and includes 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. Liquidity risk is monitored through
development of future cash flow forecast projections.

CREDIT RISK

The overwhelming majority of the Group’s sales are on cash terms with settlement within 24 hours. As
such, the Group’s exposure to credit risk is minimal. 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 mainly from 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 28 July 2018, the maximum exposure to credit risk of the Group is the amount guaranteed
as disclosed in note 33.

INTEREST RATE RISK

The Group’s exposure to market interest rates relates primarily to its cash and cash equivalents that it
holds and interest-bearing liabilities.

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 and cash equivalents

Financial Liabilities

Bank loans AUD

NET FINANCIAL ASSETS (LIABILITIES)

NOTES

79 Premier Investments Limited

CONSOLIDATED

2018
$’000

178,618

175,684

2,934

2017
$’000

170,631

173,475

(2,844)

NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

CAPITAL STRUCTURE AND RISK MANAGEMENT (CONTINUED)

25 FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES (CONTINUED)

INTEREST RATE RISK (CONTINUED)

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates. The Group’s objective of managing interest rate risk is to
minimise the Group’s exposure to fluctuations in interest rates that might impact its interest revenue,
interest expense and cash flow. The Group manages this by locking in a portion of its cash and cash
equivalents into term deposits. The maturity of term deposits is determined based on the Group’s cash flow
forecast.

The Group manages its interest rate risk relating to interest-bearing liabilities by having access to both
fixed and variable rate debt which can be drawn down. The Group also entered into interest rate swaps, in
which it agreed to exchange, at specific intervals, the difference between fixed and variable interest
amounts, calculated on an agreed-upon notional principal amount.

Interest rate sensitivity

i)
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on the
portion of cash and cash equivalents and interest-bearing liabilities affected. A 100 (2017:100) basis point
increase and decrease in Australian interest rates represents management's assessment of the reasonably
possible change in interest rates. The table indicates an increase or decrease in the Group’s profit before
tax.

Impacts of reasonably possible movements:

CONSOLIDATED

+1.0% (100 basis points)

-1.0% (100 basis points)

POST-TAX PROFIT TO

INCREASE (DECREASE) BY:

2018
$000

356

(21)

2017
$000

138

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.

The sensitivity analysis assumes all other variables are held constant, and the change in
interest rates take place at the beginning of the financial year and are held constant
throughout the reporting period.

Annual Report 2018 80

Notes to the Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

CAPITAL STRUCTURE AND RISK MANAGEMENT (CONTINUED)

25 FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES (CONTINUED)

FOREIGN OPERATIONS

The Group has operations in Australia, New Zealand, Singapore, Hong Kong, Malaysia, The Republic of
Ireland and the United Kingdom. As a result, movements in the Australian Dollar and the currencies
applicable to these foreign operations affect the Group’s statement of financial position and results from
operations. From time to time the Group obtains New Zealand Dollar denominated financing facilities from
a financial institution to provide a natural hedge of the Group’s exposure to movements in the Australian
Dollar and New Zealand Dollar (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 also on occasion, hedges its cash flow exposure in movements in the AUD/SGD
and AUD/GBP.

FOREIGN CURRENCY TRANSACTIONS

The Group has exposures to foreign currencies principally arising from purchases by operating entities in
currencies other than their functional currency. Approximately 70% of the Group’s purchases are
denominated in United States Dollar (USD), which is not the functional currency of any Australian entities
or any of the foreign operating entities.

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. These forward exchange contracts are designated as cash
flow hedges that are subject to movements through equity and profit or loss respectively as foreign
exchange rates move.

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 base currency 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.

81 Premier Investments Limited

NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

CAPITAL STRUCTURE AND RISK MANAGEMENT (CONTINUED)

25 FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES (CONTINUED)

FOREIGN CURRENCY TRANSACTIONS (CONTINUED)

At reporting date, the Group had the following exposures to movements in the United States Dollar (USD),
New Zealand Dollar (NZD), Singapore Dollar (SGD), Pound Sterling (GBP), Hong Kong Dollar (HKD),
Malaysian Ringgit (MYR), and Euro (EUR):

2018

CONSOLIDATED

FINANCIAL ASSETS

USD

NZD

SGD

GBP

HKD

$’000

MYR

$’000

EUR

$’000

Cash and cash equivalents

157

4,482

908

5,707

581

10,540

Derivative financial assets

11,973

12,130

4,482

908

5,707

581

10,540

FINANCIAL LIABILITIES

Trade and other payables

23,240

3,341

Derivative financial liabilities

23,240

3,341

553

NET EXPOSURE

(11,110)

1,141

837

5,703

532

10,540

553

2017

CONSOLIDATED

FINANCIAL ASSETS

Cash and cash equivalents

Derivative financial assets

FINANCIAL LIABILITIES

USD

NZD

SGD

GBP

HKD

$’000

MYR

$’000

EUR

$’000

181

279

2,477

1,330

6,194

171

5,001

2,477

1,330

6,194

171

5,001

Trade and other payables

17,697

2,531

Derivative financial liabilities

21,651

39,348

2,531

317

722

NET EXPOSURE

(39,069)

(54)

1,013

5,472

227

5,001

227

Annual Report 2018 82

Notes to the Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

CAPITAL STRUCTURE AND RISK MANAGEMENT (CONTINUED)

25 FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES (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)

CONSOLIDATED

Impacts of reasonably

possible movements:

CONSOLIDATED

AUD/USD + 2.5%

AUD/USD – 10.0%

AUD/NZD + 2.5%

AUD/NZD – 10.0%

AUD/SGD + 2.5%

AUD/SGD –10.0%

AUD/GBP + 2.5%

AUD/GBP –10.0%

AUD/HKD + 2.5%

AUD/HKD –10.0%

AUD/MYR + 2.5%

AUD/MYR –10.0%

AUD/EUR + 2.5%

AUD/EUR –10.0%

2018
$000

(46)

189

(28)

127

(20)

(139)

634

(43)

194

(257)

1,171

(53)

2017
$000

189

(6)

(25)

113

(133)

608

(2)

(122)

556

(6)

2018
$000

(4,161)

16,959

2017
$000

646

17,665

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 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 from reporting date.

The effect on other comprehensive income is the effect on the cash flow hedge reserve.

The sensitivity does not include financial instruments that are non-monetary items as these are not
considered to give rise to currency risk.

83 Premier Investments Limited

NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

CAPITAL STRUCTURE AND RISK MANAGEMENT (CONTINUED)

25 FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES (CONTINUED)

LIQUIDITY RISK

Liquidity risk refers to the risk of encountering difficulties in meeting obligations associated with financial
liabilities and other cash flow commitments. Liquidity risk management is 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.

The Group has, at reporting date, $47 million (2017: $34 million) cash held in deposit with 11am at call and
the remaining $131.6 million (2017: $137 million) cash held in deposit with maturity terms ranging from 30
to 180 days (2017: 30 to 120 days). Hence management believe there is no significant exposure to
liquidity risk at 28 July 2018 and 29 July 2017.

The Group aims to maintain a balance between continuity of funding and flexibility through the use of bank
overdrafts and bank loans with a variety of counterparties.

At reporting date, the remaining undiscounted contractual maturities of the Group’s financial
liabilities are:

2018

CONSOLIDATED

FINANCIAL LIABILITIES

Trade and other payables

Bank loans

Forward currency contracts

2017

CONSOLIDATED

FINANCIAL LIABILITIES

Trade and other payables

Bank loans

Forward currency contracts

MATURITY

< 6 MONTHS

MATURITY
6 – 12 MONTHS

MATURITY
12 – 24 MONTHS

MATURITY
> 24 MONTHS

$’000

84,558

134,779

219,337

123,784

106,684

69,000

447

107,131

69,000

MATURITY

< 6 MONTHS

MATURITY
6 – 12 MONTHS

MATURITY
12 – 24 MONTHS

MATURITY
> 24 MONTHS

$’000

71,528

166,543

238,071

83,616

104,475

69,000

104,475

69,000

Annual Report 2018 84

Notes to the Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

CAPITAL STRUCTURE AND RISK MANAGEMENT (CONTINUED)

25 FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES (CONTINUED)

FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

The Group measures financial instruments, such as derivatives and listed equity investments at fair value,
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.

In determining the fair value of an asset or liability, the Group uses market observable data, to the extent
possible. 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.

Fair value hierarchy
All assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorised within the following 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 for identical assets or liabilities.

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.

The following table provides the fair value measurement hierarchy of the Group’s financial assets and
liabilities:

FINANCIAL YEAR ENDED 28 JULY 2018

FINANCIAL YEAR ENDED 29 JULY 2017

CONSOLIDATED

LEVEL 1

LEVEL 2

LEVEL 3

LEVEL 1

LEVEL 2

LEVEL 3

$’000

FINANCIAL ASSETS

Listed equity investment at fair value

40,687

Foreign Exchange Contracts

11,973

40,687

11,973

FINANCIAL LIABILITIES

Foreign Exchange Contracts

Interest Rate Swaps

425

67,665

181

21,651

460

22,111

There have been no transfers between Level 1, Level 2 and Level 3 during the financial year.

85 Premier Investments Limited

NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

CAPITAL STRUCTURE AND RISK MANAGEMENT (CONTINUED)

25 FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES (CONTINUED)

FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (CONTINUED)

At 28 July 2018 and 29 July 2017, the fair values of cash and cash equivalents, short-term receivables and
payables approximate their carrying values. The carrying value of interest bearing liabilities is considered 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 and interest rate swaps 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 and interest rate swaps
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.

Interest rate swaps are measured based on forward interest rates from observable yield curves at the end
of the respective reporting period, and contract interest rates, which have been discounted at a rate that
incorporates the credit risk of the counterparties.

Annual Report 2018 86

Notes to the Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

GROUP STRUCTURE
GROUP STRUCTURE
26 SUBSIDIARIES
26 SUBSIDIARIES

The consolidated financial statements include that of Premier Investments Limited (ultimate parent entity) and the
subsidiaries listed in the following table. (* Indicates not trading as at the date of this report)
The consolidated financial statements include that of Premier Investments Limited (ultimate parent entity) and the
subsidiaries listed in the following table. (* Indicates not trading as at the date of this report)

COUNTRY OF
INCORPORATION

2017
INTEREST

Kimtara Investments Pty Ltd
Premfin Pty Ltd
Kimtara Investments Pty Ltd
Springdeep Investments Pty Ltd
Premfin Pty Ltd
Prempref Pty Ltd
Springdeep Investments Pty Ltd
Metalgrove Pty Ltd
Prempref Pty Ltd
Just Group Limited
Metalgrove Pty Ltd
Just Jeans Group Pty Limited
Just Group Limited
Just Jeans Pty Limited
Just Jeans Group Pty Limited
Jay Jays Trademark Pty Limited
Just Jeans Pty Limited
Just-Shop Pty Limited
Jay Jays Trademark Pty Limited
Peter Alexander Sleepwear Pty Limited
Just-Shop Pty Limited
Old Blues Pty Limited
Kimbyr Investments Limited
Peter Alexander Sleepwear Pty Limited
Jacqui E Pty Limited
Old Blues Pty Limited
Jacqueline-Eve Fashions Pty Limited *
Kimbyr Investments Limited
Jacqueline-Eve (Hobart) Pty Limited *
Jacqui E Pty Limited
Jacqueline-Eve (Retail) Pty Limited *
Jacqueline-Eve Fashions Pty Limited *
Jacqueline-Eve (Leases) Pty Limited *
Jacqueline-Eve (Hobart) Pty Limited *
Sydleigh Pty Limited *
Jacqueline-Eve (Retail) Pty Limited *
Old Favourites Blues Pty Limited *
Jacqueline-Eve (Leases) Pty Limited *
Urban Brands Retail Pty Ltd *
Sydleigh Pty Limited *
Portmans Pty Limited
Old Favourites Blues Pty Limited *
Dotti Pty Ltd
Urban Brands Retail Pty Ltd *
Smiggle Pty Limited
Portmans Pty Limited
Just Group International Pty Limited *
Dotti Pty Ltd
Smiggle Group Holdings Pty Limited *
Smiggle Pty Limited
Smiggle International Pty Limited *
Just Group International Pty Limited *
Smiggle Singapore Pte Ltd
Smiggle Group Holdings Pty Limited *
Just Group International HK Limited*
Smiggle International Pty Limited *
Smiggle HK Limited
Just Group USA Inc.*
Smiggle Singapore Pte Ltd
Peter Alexander USA Inc.*
Just Group International HK Limited*
Smiggle USA Inc.*
Smiggle HK Limited
Just UK International Limited*
Just Group USA Inc.*
Smiggle UK Limited
Peter Alexander USA Inc.*
Peter Alexander UK Limited*
Smiggle USA Inc.*
Smiggle Ireland Limited
Just UK International Limited*
Smiggle Netherlands B.V.*
Smiggle UK Limited
ETI Holdings Limited*
Peter Alexander UK Limited*
Roskill Hill Limited*
Smiggle Ireland Limited
RSCA Pty Limited*
Smiggle Netherlands B.V.*
RSCB Pty Limited*
ETI Holdings Limited*
Just Group Singapore Private Ltd *
Roskill Hill Limited*
Peter Alexander Singapore Private Ltd *
RSCA Pty Limited*
Smiggle Stores Malaysia SDN BHD
RSCB Pty Limited*
Just Group Singapore Private Ltd *
Peter Alexander Singapore Private Ltd *
Smiggle Stores Malaysia SDN BHD

COUNTRY OF
INCORPORATION

Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia

Australia
Australia

2018

INTEREST

2018

INTEREST

100%
100%
100%
100%
100%
100%
100%
100%
100%
100%

100%
100%

100%
100%
100%
100%
100%
100%
100%
100%
100%
100%

2017
INTEREST

100%
100%
100%
100%
100%
100%
100%
100%
100%
100%

100%
100%

100%
100%
100%
100%
100%
100%
100%
100%
100%
100%

New Zealand
Australia

Australia
Australia

100%
100%

Australia
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
Singapore

Australia
Australia

Hong Kong
Australia
Hong Kong
USA
Singapore
USA
Hong Kong
USA
Hong Kong
UK
USA
UK
USA
UK
USA
Ireland
UK
Netherlands
UK
UK
Ireland
Australia
Netherlands
Australia
New Zealand
Singapore
New Zealand
Singapore
Malaysia

New Zealand
New Zealand

Australia
Australia
Singapore
Singapore
Malaysia

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%
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%
87
100%
100%

87 Premier Investments Limited

NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

GROUP STRUCTURE (CONTINUED)

27 PARENT ENTITY INFORMATION

The accounting policies of Premier Investments Limited, being 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.

(a) Summary financial information

Statement of financial position

Current assets

Total assets

Current liabilities

Total liabilities

Shareholders’ equity

Issued capital

Reserves:

- Foreign currency translation reserve

- Performance rights reserve

- Cash flow hedge reserve

Retained earnings

Net profit for the period

Total comprehensive income (loss) for the period, net of tax

(b) Guarantees entered into by the parent entity

2018
$’000

2017
$’000

163,694

1,367,975

4,837

70,301

175,062

1,367,532

13,016

80,948

608,615

3,705

15,734

(86)

664,869

90,118

1,427

2,281

12,556

(88)

663,220

87,590

(789)

The parent entity has provided no financial guarantees in respect of bank overdrafts and loans of subsidiaries
(2017: $nil).

The parent entity has also given no unsecured guarantees in respect of finance leases of subsidiaries or
bank overdrafts of subsidiaries (2017: $nil).

The parent entity did not have any contingent liabilities as at 28 July 2018 (2017: $nil).

(d) 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 28 July 2018 or 29 July 2017.

Annual Report 2018 88

Notes to the Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

GROUP STRUCTURE (CONTINUED)

28 DEED OF CROSS GUARANTEE

Pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785, dated 17 December 2016,
relief has been granted to certain wholly-owned subsidiaries in the Australian Group from the Corporations
law requirements for preparation, audit and lodgement of financial reports.

As a condition of this instrument, 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.

29 RELATED PARTY TRANSACTIONS

(a) PARENT ENTITY AND SUBSIDIARIES

The ultimate parent entity is Premier Investments Limited. Details of subsidiaries are provided in note 26.

(b) KEY MANAGEMENT PERSONNEL

COMPENSATION FOR KEY MANAGEMENT PERSONNEL

Short-term employee benefits

Post-employment benefits

Share-based payments

TOTAL

CONSOLIDATED

2018
$

2017
$

6,455,827

8,502,662

129,842

171,482

2,343,103

4,970,577

8,928,772

13,644,721

Mr. Lanzer is the managing partner of the legal firm Arnold Bloch Leibler. Group companies use the services of
Arnold Bloch Leibler from time to time. Legal services totalling $1,996,754 (2017: $3,242,483), including Mr.
Lanzer's Director fees, GST and disbursements were invoiced by Arnold Bloch Leibler to the Group, with
$58,580 (2017: $200,314) remaining outstanding at year-end. The fees paid for these services 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 $16,404,781 (2017: $15,052,592) including GST have been made by Group companies from Voyager
Distributing Co. Pty Ltd, Playcorp Pty Ltd and Sky Chain Trading Limited, with $1,737,758 (2017: $788,091)
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 $476,379 (2017: $537,575) costs including GST incurred by Century Plaza
Trading Pty Ltd.

89 Premier Investments Limited

NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

OTHER DISCLOSURES

30 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 AUDITOR’S REMUNERATION

31 SHARE-BASED PAYMENT PLANS

(a) RECOGNISED SHARE-BASED PAYMENT EXPENSE

TOTAL EXPENSE ARISING FROM EQUITY-SETTLED
SHARE-BASED PAYMENT TRANSACTIONS

(b) TYPE OF SHARE-BASED PAYMENT PLANS

Performance rights

CONSOLIDATED

2018
$

2017
$

577,732

529,065

82,438

660,170

143,028

672,093

CONSOLIDATED

2018
$’000

3,178

2017
$’000

6,210

The Group grants performance rights to executives, thus ensuring that the executives who are most directly
able to influence the Group’s performance are appropriately aligned with the interests of shareholders.

A performance right is a right to acquire one fully paid ordinary share of the Group 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 section of the Directors’ Report.

The fair value of the performance rights has been calculated as at the respective grant dates using an
appropriate valuation technique. The valuation model applied, being either the Black Sholes European option
pricing model (for performance rights granted prior to the end of the 2015 financial year) or the Monte-Carlo
simulation pricing model (for performance rights granted in the 2016 financial year and onwards) is dependent
on the assumptions underlying the performance rights granted to ensure these are appropriately factored into
the determination of fair value.

In determining the share-based payments expense 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 Total Shareholder Return (“TSR”) performance
hurdles.

Annual Report 2018 90

Notes to the Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

OTHER DISCLOSURES (CONTINUED)

31 SHARE-BASED PAYMENT PLANS (CONTINUED)

(b) TYPE OF SHARE-BASED PAYMENT PLANS (CONTINUED)

The following table shows the share-based payment arrangements in existence during the current and prior
reporting periods, as well as the factors considered in determining the fair values of the performance rights in
existence:

GRANT DATE
(DD/MM/YYYY)

NUMBER OF
RIGHTS GRANTED

SHARE ISSUE
PRICE

OPTION LIFE

DIVIDEND
YIELD

VOLATILITY

RISK-FREE
RATE

FAIR
VALUE

18/04/2013

11/12/2013

22/06/2015

24/02/2016

26/04/2016

10/04/2017

19/02/2018

240,000

319,493

169,365

12,266

123,647

1,000,000

120,124

148,237

$8.40

$8.56

$10.34

$8.56

$12.89

$9.88

$15.70

$12.91

4.2 years

3.8 years

2.3 years

2.6 years

3-6 years

2.5 years

5.5%

3.4%

40%

30%

16%

2.71%

2.98%

1.95%

1.75%

2.06%

1.79%

2.14%

$4.20

$4.28

$10.34

$8.56

$12.89

$9.96

$6.89

$7.85

The following table illustrates the number (No.) and weighted average exercise prices (“WAEP”) of, and
movements in, performance rights issued during the year:

Balance at beginning of the year

Granted during the year

Forfeited during the year

Exercised during the year (i)

Expired during the year

Balance at the end of the year

2018
No.

1,149,837

148,237

(42,805)

(350,978)

(42,020)

862,271

2018
WAEP

2017
No.

2017
WAEP

1,627,218

120,124

(584,305)

(13,200)

1,149,837

(i) The weighted average share price at the date of exercise of rights exercised during the year was $15.01

(2017: $14.12).

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 $7.85 (2017: $6.89).

91 Premier Investments Limited

NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 28 JULY 2018 AND 29 JULY 2017 (CONTINUED)

OTHER DISCLOSURES (CONTINUED)

31 SHARE-BASED PAYMENT PLANS (CONTINUED)

SHARE-BASED PAYMENT ACCOUNTING POLICIES

The Group provides benefits to its employees in the form of share-based payments, whereby employees render
services in exchange for rights over shares (equity-settled transactions). The plan in place to provide these
benefits is 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 in profit or loss, 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).

At each subsequent reporting date until vesting, the cumulative charge to profit or loss in 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 or 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.

KEY ACCOUNTING ESTIMATES AND ASSUMPTIONS

The fair value of share-based payment transactions is determined at the grant date using an appropriate
valuation model, which takes into account the terms and conditions upon which the instruments were granted
to key executives. The terms and conditions require estimates to be made of the number of equity instruments
expected to vest, as well as the probabilities of meeting the relevant TSR performance hurdles. These
accounting estimates and assumptions would have no impact on the carrying amounts of assets or liabilities
within the next annual reporting period, but may impact the share-based payment expense and performance
rights reserve within equity.

32 EVENTS AFTER THE REPORTING DATE

On 20 September 2018, the Directors of Premier Investments Limited declared a final dividend in respect of the
2018 financial year. The total amount of the dividend is $52,173,000 (2017: $42,619,000) which represents a
fully franked dividend of 33 cents per share (2017: 27 cents per share).

33 CONTINGENT LIABILITIES

The Group has bank guarantees totalling $7,790,046 (2017: $6,497,749).

Annual Report 2018 92

Directors’ Declaration
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
28 July 2018 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 28 July 2018
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 28 July 2018.

On behalf of the Board

Solomon Lew
Chairman

27 September 2018

93 Premier Investments Limited

Independent Auditor’s Report

Ernst & Young
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

Ernst & Young
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

Independent Auditor's Report to the Members of Premier
Investments Limited

Report on the Audit of the Financial Report
Independent Auditor's Report to the Members of Premier
Opinion
Investments Limited

We have audited the financial report of Premier Investments Limited (the Company) and its
Report on the Audit of the Financial Report
subsidiaries (collectively the Group), which comprises the consolidated statement of financial
position as at 28 July 2018, the consolidated statement of comprehensive income, consolidated
Opinion
statement of changes in equity and consolidated statement of cash flows for the year then ended,
notes to the financial statements, including a summary of significant accounting policies, and the
We have audited the financial report of Premier Investments Limited (the Company) and its
directors' declaration.
subsidiaries (collectively the Group), which comprises the consolidated statement of financial
position as at 28 July 2018, the consolidated statement of comprehensive income, consolidated
In our opinion:
statement of changes in equity and consolidated statement of cash flows for the year then ended,
notes to the financial statements, including a summary of significant accounting policies, and the
the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
directors' declaration.
including:

In our opinion:
a)

giving a true and fair view of the consolidated financial position of the Group as at 28 July
2018 and of its consolidated financial performance for the year ended on that date; and

the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
complying with Australian Accounting Standards and the Corporations Regulations 2001.
b)

a)
Basis for Opinion

giving a true and fair view of the consolidated financial position of the Group as at 28 July
2018 and of its consolidated financial performance for the year ended on that date; and

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
complying with Australian Accounting Standards and the Corporations Regulations 2001.
b)
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
Basis for Opinion
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of
the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
Professional Accountants (the Code) that are relevant to our audit of the financial report in
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
Financial Report section of our report. We are independent of the Group in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
for our opinion.
Professional Accountants (the Code) that are relevant to our audit of the financial report in
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
Key Audit Matters

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
Key audit matters are those matters that, in our professional judgment, were of most significance in
for our opinion.
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not
Key Audit Matters
provide a separate opinion on these matters. For each matter below, our description of how our
audit addressed the matter is provided in that context.
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not
provide a separate opinion on these matters. For each matter below, our description of how our
audit addressed the matter is provided in that context.

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 2018 94

Independent Auditor’s Report continued

Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au

Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001

We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
Independent Auditor's Report to the Members of Premier
Investments Limited

1. Carrying value of intangible assets

Why significant

Report on the Audit of the Financial Report

How our audit addressed the key audit matter

Opinion

As at 28 July 2018 the Group held $823.3
million (or 47.1% of total assets) in goodwill and
indefinite-life brand names recognised from
historical business combinations.

Our audit procedures included the following:

► Assessed the application of valuation

methodologies applied.

We have audited the financial report of Premier Investments Limited (the Company) and its
► Assessed the key inputs and assumptions within
subsidiaries (collectively the Group), which comprises the consolidated statement of financial
the board approved forecast cashflows, discount
position as at 28 July 2018, the consolidated statement of comprehensive income, consolidated
rates, relief from royalty rates and sales growth
statement of changes in equity and consolidated statement of cash flows for the year then ended,
rates adopted in the value in use model.
notes to the financial statements, including a summary of significant accounting policies, and the
directors' declaration.

As outlined in Note 16 of the financial report, the
goodwill and brand names are tested by the
Group for impairment annually.

► Considered the historical reliability of the Group’s

In our opinion:

The recoverable amount of these assets has
been determined based on a value in use model
referencing discounted cash flows of the retail
segment for goodwill, and the casual wear,
women’s wear and non-apparel cash generating
units (CGUs) for brand names. The model
contains estimates and significant judgments
regarding future cash flow projections which are
critical to the assessment of impairment,
particularly planned sales growth in the casual
wear and women’s wear CGUs and discount rates
applied.

the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:

in accordance with Australian Accounting
Standards.

giving a true and fair view of the consolidated financial position of the Group as at 28 July
2018 and of its consolidated financial performance for the year ended on that date; and

► Compared the data used in the value in use model
to the actual current year and forecast financial
performance of the underlying CGUs.

cash flow forecasting process.

► Evaluated whether the determination of CGUs was

complying with Australian Accounting Standards and the Corporations Regulations 2001.

► Performed sensitivity analysis on key inputs and
assumptions included in the board approved
forecast cashflows and impairment models
including the discount rates

Basis for Opinion

In the current year, the Group recognised $30.0
million of impairment related to a brand within
the casual wear CGU.

Accordingly, we considered this a key audit
matter.

► Compared earnings multiples derived from the
Group’s value in use model to those observable
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
from external market data of comparable listed
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
entities.
Financial Report section of our report. We are independent of the Group in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of
the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the financial report in
► Assessed the adequacy of the disclosures
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

► Benchmarked key assumptions used by the Group

included in the financial report.

to our independent views.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.

Our valuation specialists were involved in the
conduct of these procedures where considered
relevant.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not
provide a separate opinion on these matters. For each matter below, our description of how our
audit addressed the matter is provided in that context.

A member firm of Ernst & Young Global Limited
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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

95 Premier Investments Limited

Ernst & Young
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

2. Existence and valuation of inventories

Why significant

How our audit addressed the key audit matter

Independent Auditor's Report to the Members of Premier
Investments Limited

As at 28 July 2018 the Group held $159.3
million in inventories.

► Assessed the application of valuation

Our audit procedures included the following:

Inventories are held at several distribution
centres, as well as at over 1,200 retail stores.

Report on the Audit of the Financial Report

methodologies applied

As detailed in Note 10 of the financial report,
inventories are valued at the lower of cost and
net realisable value.

Opinion

► Assessed and tested the effectiveness of relevant
controls over the determination of standard costs.

► Selected a sample of inventory lines and

recalculated standard costs.

The cost of finished goods inventories includes a
proportion of purchasing department costs, as
well as freight, handling, and warehouse costs
incurred to deliver the goods to the point of sale.

► Attended store and distribution centre inventory
counts on a sample basis and assessed the stock
counting process which addressed inventory
quantity, condition and inventory quality.

We have audited the financial report of Premier Investments Limited (the Company) and its
subsidiaries (collectively the Group), which comprises the consolidated statement of financial
position as at 28 July 2018, the consolidated statement of comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash flows for the year then ended,
notes to the financial statements, including a summary of significant accounting policies, and the
directors' declaration.

► Assessed the basis for inventory provisions,
including the rationale for recording specific
provisions. In doing so we examined the ageing
profile of inventory, considered how the Group
identified specific slow-moving inventories,
the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
assessed future selling prices and historical loss
including:
rates.

Provisions are recorded for matters such as aged
and slow moving inventory to ensure inventory is
recorded at the lower of cost and net realisable
value. This requires a level of judgment with
regard to changing consumer demands and
fashion trends. Such judgments include the
Group’s expectations for future sales and
inventory mark downs.

In our opinion:

► Tested the slow-moving inventory reports for
giving a true and fair view of the consolidated financial position of the Group as at 28 July
2018 and of its consolidated financial performance for the year ended on that date; and

accuracy and completeness.

Accordingly, the existence and valuation of
inventory was considered to be a key audit
matter.

provisions by identifying mark down sales at or
complying with Australian Accounting Standards and the Corporations Regulations 2001.
subsequent to year end, completing gross margin
analysis to assess movements impacting net
realisable value, and comparing sale prices
against the value of inventories at balance date.

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of
the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the financial report in
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

► Considered the completeness of inventory

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.

Key Audit Matters

A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation

Annual Report 2018 96

Independent Auditor’s Report continued

Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au

Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001

3. Accounting for the Group’s interest in Breville Group Limited

Why significant

How our audit addressed the key audit matter

At 28 July 2018 the Group held a 27.5% stake in
the ASX-listed entity Breville Group Limited
(“Breville”).

Independent Auditor's Report to the Members of Premier
Investments Limited

► Enquired with Breville’s auditors to discuss the
audit procedures they completed including
significant areas of audit focus, and subsequent
Report on the Audit of the Financial Report
events.

Our audit procedures included the following:

Opinion

As detailed in Note 18 of the financial report,
this investment was equity-accounted in
accordance with Australian Accounting
Standards. At balance date the Group held an
equity accounted investment of $223.2 million
and recorded an equity accounted profit of
$16.1 million in the overall profit after tax of the
Group.

► Examined the audit work completed by Breville’s
auditors for the 30 June 2018 audit prepared in
forming their audit opinion over the Breville
financial report.

We have audited the financial report of Premier Investments Limited (the Company) and its
subsidiaries (collectively the Group), which comprises the consolidated statement of financial
► Considered whether the accounting policies of
position as at 28 July 2018, the consolidated statement of comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash flows for the year then ended,
notes to the financial statements, including a summary of significant accounting policies, and the
dividends for the year to be equity accounted.
directors' declaration.

The Group’s accounting for the investment in
Breville was considered to be a key audit matter
due to the quantum of the contribution to the
Group’s result.

► Agreed Premier’s shareholding to supporting

► Recalculated the Group’s share of profit and

Breville were consistent with those of the Group.

In our opinion:

evidence.

complying with Australian Accounting Standards and the Corporations Regulations 2001.

giving a true and fair view of the consolidated financial position of the Group as at 28 July
2018 and of its consolidated financial performance for the year ended on that date; and

the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
Information Other than the Financial Report and Auditor’s Report Thereon
a)
The directors are responsible for the other information. The other information comprises the
information included in the Group’s 2018 Annual Report, but does not include the financial report
and our auditor’s report thereon. We obtained the Directors’ Report that is to be included in the
b)
Annual Report, prior to the date of this auditor’s report, and we expect to obtain the remaining
sections of the Annual Report after the date of this auditor’s report.
Basis for Opinion
Our opinion on the financial report does not cover the other information and accordingly we do not
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
In connection with our audit of the financial report, our responsibility is to read the other
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of
information and, in doing so, consider whether the other information is materially inconsistent with
the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
the financial report or our knowledge obtained in the audit or otherwise appears to be materially
Professional Accountants (the Code) that are relevant to our audit of the financial report in
misstated.
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

If, based on the work we have performed on the other information obtained prior to the date of this
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
auditor’s report, we conclude that there is a material misstatement of this other information, we are
for our opinion.
required to report that fact. We have nothing to report in this regard.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in
Responsibilities of the Directors for the Financial Report
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not
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
provide a separate opinion on these matters. For each matter below, our description of how our
2001 and for such internal control as the directors determine is necessary to enable the preparation
audit addressed the matter is provided in that context.
of the financial report that gives a true and fair view and is free from material misstatement,
whether due to fraud or error.

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

97 Premier Investments Limited

Ernst & Young
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

In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using
the going concern basis of accounting unless the directors either intend to liquidate the Group or to
cease operations, or have no realistic alternative but to do so.
Independent Auditor's Report to the Members of Premier
Auditor's Responsibilities for the Audit of the Financial Report
Investments Limited
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
Report on the Audit of the Financial Report
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with the Australian Auditing Standards will always detect a
Opinion
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
We have audited the financial report of Premier Investments Limited (the Company) and its
influence the economic decisions of users taken on the basis of this financial report.
subsidiaries (collectively the Group), which comprises the consolidated statement of financial
position as at 28 July 2018, the consolidated statement of comprehensive income, consolidated
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
statement of changes in equity and consolidated statement of cash flows for the year then ended,
judgment and maintain professional scepticism throughout the audit. We also:
notes to the financial statements, including a summary of significant accounting policies, and the
directors' declaration.
·

Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting
the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
from error, as fraud may involve collusion, forgery, intentional omissions,
including:
misrepresentations, or the override of internal control.

In our opinion:

a)
·

giving a true and fair view of the consolidated financial position of the Group as at 28 July
Obtain an understanding of internal control relevant to the audit in order to design audit
2018 and of its consolidated financial performance for the year ended on that date; and
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.
complying with Australian Accounting Standards and the Corporations Regulations 2001.

·
Basis for Opinion

Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
·
Conclude on the appropriateness of the directors’ use of the going concern basis of
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
Financial Report section of our report. We are independent of the Group in accordance with the
related to events or conditions that may cast significant doubt on the Group’s ability to
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of
continue as a going concern. If we conclude that a material uncertainty exists, we are
the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
required to draw attention in our auditor’s report to the related disclosures in the financial
Professional Accountants (the Code) that are relevant to our audit of the financial report in
report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
·

Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves fair presentation.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in
We communicate with the directors regarding, among other matters, the planned scope and timing
our audit of the financial report of the current year. These matters were addressed in the context of
of the audit and significant audit findings, including any significant deficiencies in internal control
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not
that we identify during our audit.
provide a separate opinion on these matters. For each matter below, our description of how our
audit addressed the matter is provided in that context.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.

A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation

Annual Report 2018 98

Independent Auditor’s Report continued

Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au

Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001

From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
Independent Auditor's Report to the Members of Premier
reasonably be expected to outweigh the public interest benefits of such communication.
Investments Limited

Report on the Audit of the Remuneration Report
Report on the Audit of the Financial Report

Opinion on the Remuneration Report
Opinion

We have audited the Remuneration Report included in the directors' report for the year ended 28
We have audited the financial report of Premier Investments Limited (the Company) and its
July 2018.
subsidiaries (collectively the Group), which comprises the consolidated statement of financial
position as at 28 July 2018, the consolidated statement of comprehensive income, consolidated
In our opinion, the Remuneration Report of Premier Investments Limited for the year ended 28 July
statement of changes in equity and consolidated statement of cash flows for the year then ended,
2018, complies with section 300A of the Corporations Act 2001.
notes to the financial statements, including a summary of significant accounting policies, and the
directors' declaration.
Responsibilities
In our opinion:
The directors of the Company are responsible for the preparation and presentation of the
the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
including:
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
a)

giving a true and fair view of the consolidated financial position of the Group as at 28 July
2018 and of its consolidated financial performance for the year ended on that date; and

complying with Australian Accounting Standards and the Corporations Regulations 2001.

Basis for Opinion
Ernst & Young

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of
the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the financial report in
Rob Perry
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
Partner
Melbourne
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
27 September 2018
for our opinion.

Key Audit Matters

A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation

99 Premier Investments Limited
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation

ASX ADDITIONAL SHAREHOLDER INFORMATION
ASX Additional Shareholder Information
AS AT 24 SEPTEMBER 2018

AS AT 24 SEPTEMBER 2018

TWENTY LARGEST SHAREHOLDERS

NAME

TOTAL

% IC

RANK

CENTURY PLAZA INVESTMENTS PTY LTD

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED

J P MORGAN NOMINEES AUSTRALIA LIMITED

CITICORP NOMINEES PTY LIMITED

METREPARK PTY LTD

NATIONAL NOMINEES LIMITED

SL SUPERANNUATION NO 1 PTY LTD

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED

LINFOX SHARE INVESTMENT PTY LTD

BNP PARIBAS NOMS PTY LTD

UBS NOMINEES PTY LTD

BNP PARIBAS NOMINEES PTY LTD

ARGO INVESTMENTS LIMITED

MILTON CORPORATION LIMITED

MARK MCINNES

MR CON ZEMPILAS

DAVID ALAN BULL

AMP LIFE LIMITED

CITICORP NOMINEES PTY LIMITED

GEOMAR SUPERANNUATION PTY LTD

51,569,400

26,135,211

20,775,401

10,103,975

8,235,331

5,119,614

4,437,699

2,729,489

2,577,014

2,347,120

1,749,957

1,724,864

1,250,000

590,321

486,800

470,000

363,472

308,444

268,900

250,000

32.62%

16.53%

13.14%

6.39%

5.21%

3.24%

2.81%

1.73%

1.63%

1.48%

1.11%

1.09%

0.79%

0.37%

0.31%

0.30%

0.23%

0.20%

0.17%

0.16%

TOTAL FOR TOP 20:

141,493,012

89.51%

SUBSTANTIAL SHAREHOLDERS

NAME

CENTURY PLAZA INVESTMENTS PTY LTD AND

ASSOCIATES PERPETUAL LIMITED AND ITS SUBSIDIARIES

DISTRIBUTION OF EQUITY SHAREHOLDERS

TOTAL UNITS

% IC

58,552,420

42.43%

18,796,813

11.89%

Holders

1
TO
1,000

5,373

1,001
TO
5,000

2,549

5,001
TO
10,000

342

10,001
TO
100,000

201

100,001
TO
(MAX)

TOTAL

8,495

Ordinary Fully Paid Shares

2,071,082

5,769,715

2,482,024

4,580,731

143,196,192

158,099,744

The number of investors holding less than a marketable parcel of 28 securities ($18.11 on 24 September 2018)
is 193 and they hold 960 securities.

VOTING RIGHTS
All ordinary shares carry one vote per share without restriction.

Annual Report 2018 100

CORPORATE DIRECTORY
Corporate Directory

A.C.N. 006 727 966

DIRECTORS
Mr. Solomon Lew (Chairman)
Dr. David M. Crean (Deputy Chairman)
Mr. Timothy Antonie (Lead Independent Director)
Ms. Sylvia Falzon (appointed: 16 March 2018)
Mr. Lindsay E. Fox AC (retired: 28 July 2018)
Ms. Sally Herman
Mr. Henry D. Lanzer AM
Mr. Terrence L. McCartney
Mr. Mark McInnes
Mr. Michael R.I. McLeod
Dr. Gary H. Weiss (retired: 28 July 2018)

COMPANY SECRETARY
Mr. Kim Davis

REGISTERED OFFICE
Level 53
101 Collins Street
Melbourne Victoria 3000
Telephone (03) 9650 6500
Facsimile (03) 9654 6665

WEBSITE

www.premierinvestments.com.au

info@premierinvestments.com.au

101 Premier Investments Limited

AUDITOR
Ernst & Young
8 Exhibition Street
Melbourne Victoria 3000

SHARE REGISTER AND SHAREHOLDER
ENQUIRIES
Computershare Investor Services Pty
Limited
Yarra Falls
452 Johnston Street
Abbotsford Victoria 3067
Telephone (03) 9415 5000

LAWYERS
Arnold Bloch Leibler
Level 21
333 Collins Street
Melbourne Victoria 3000
Telephone (03) 9229 9999

About this report

This report has been printed on Sovereign Silk and Alpha 3000
Matt and are both elemental chlorine free.

Both stocks are FSC certified derived from well-managed forests
and 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

Annual Report 2018 102

103 Premier Investments Limited