Appendix 4E
The Reject Shop Limited
(ABN 33 006 122 676)
Current reporting period:
52 week period ended 30 June 2024
Prior corresponding period:
52 week period ended 2 July 2023
Results for announcement to the market
Percentage
Change
%
Amount
$’000
Revenue from ordinary activities
up
+4.1% to
852,736
Profit from ordinary activities after tax attributable to
shareholders
down
-54.3% to
4,713
Net profit for the period attributable to shareholders
down
-54.3% to
4,713
Dividends
Amount per share
Franked amount
per share
Interim dividend (fully franked)
Final dividend1
10.0 cents
nil
10.0 cents
nil
Record date for determining entitlements to final
dividend
n/a
Final dividend payment date
n/a
For further commentary on the Group’s trading results refer to the accompanying 2024 Annual
Report and the FY24 Results announcement and presentation released in conjunction with this
report.
1 The Directors have determined not to declare a final dividend in respect of the financial period ended 30 June 2024 as the interim dividend
paid in respect of the half year ended 31 December 2023 represents approximately 80% of FY24 net profit after tax and satisfies the Company’s
dividend policy.
2024
About this Report
This Annual Report is a summary of The Reject Shop Limited’s operations,
activities and financial position as at 30 June 2024. In this Report,
references to ‘The Reject Shop’, ‘Company’, ‘we’, ‘us’ and ‘our’ refer to
The Reject Shop Limited unless otherwise stated. References in this
Report to a ‘financial year’, ‘financial period’ and ‘FY24’ refer to the
52-week period ended 30 June 2024 unless otherwise stated. All dollar
amounts are expressed in Australian dollars (AUD) unless otherwise
stated. This Report discloses The Reject Shop’s financial and non-financial
performance for FY24. More information can be found on the Company’s
website.
DISCLAIMER: This Report contains forward-looking statements, including statements, indications, and guidance regarding future performance. Such statements are not
guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of The Reject Shop, its
Directors and management, and involve elements of subjective judgement and assumptions as to future events which may or may not be correct. Actual performance may
differ materially from these forward-looking statements. A number of important factors could cause actual results or performance to differ materially from the forward-
looking statements. The forward-looking statements are based on information available to The Reject Shop as at the date of this Report (22 August 2024). Except as
required by law, including the ASX Listing Rules, The Reject Shop does not undertake to provide any additional or updated information, whether as a result of new
information, future events, results or otherwise.
About The Reject Shop
The Reject Shop has been delivering value and amazing prices to shoppers
for over 40 years. The Reject Shop helps all Australians save money every
day by offering our customers the lowest everyday prices on household
essentials as well as unique and exciting products at compelling value for
every event and occasion in approximately 385 convenient store locations
across Australia.
(1) 385 stores as at 30 June 2024
1
Contents
Chair’s Review
3
CEO’s Update
5
Board of Directors
6
Executive Leadership Team
8
Directors’ Report
11
Remuneration Report
19
Auditor’s Independence Declaration
29
Consolidated Statement of Comprehensive Income
30
Consolidated Balance Sheet
31
Consolidated Statement of Changes in Equity
32
Consolidated Statement of Cash Flows
33
Notes to the Consolidated Financial Statements
34
Consolidated Entity Disclosure Statement
57
Directors’ Declaration
58
Independent Auditor’s Report
59
Shareholder Information
65
Corporate Directory
67
The Reject Shop | Annual Report 2024
2
3
Chair’s Review
Dear Shareholders,
The Reject Shop is a merchandise-led business. The FY24 financial year was the first full year during which the new
merchandise strategy was meaningfully in place. At the beginning of the financial year, and consistent with the new
strategy, we committed to materially improving our merchandise offering.
I am pleased that our new product is resonating well with customers. During FY24, and in a challenging
macroeconomic and retail trading environment, the Company delivered record sales of $852.7 million, up 4.1% on the
prior corresponding period.
Like many Australian retailers, The Reject Shop continues to face near-term margin pressure from rising costs and
higher shrinkage, which adversely impacted profitability during FY24. In order to address these challenges,
management has been focused on gross profit margin improvement. Pleasingly, gross profit margin improved in the
second half of FY24 and has continued to improve into FY25.
The Company recorded earnings before interest and tax (EBIT) of $13.8 million and net profit after tax (NPAT)
of $4.7 million.
The Company’s balance sheet is strong with $49.9 million in cash and no drawn debt at 30 June 2024. During FY24,
approximately $15.0 million in cash was paid to shareholders via dividends and the on-market share buy-back.
My fellow Board members and I believe that the discount variety sector presents a significant opportunity for growth
over the medium to long term. As Australia’s largest discount variety retailer, and with our strong balance sheet, The
Reject Shop is well positioned to capture this opportunity. At 30 June 2024, the Company had 385 stores across
Australia, having opened 65 new stores and closed 34 mostly underperforming stores over the past four financial
years. In FY25, the Company is targeting to open approximately 15-20 new stores.
On behalf of the Board, I would like to take the opportunity to thank our committed and passionate team members
for their hard work in implementing the changes associated with the new merchandise strategy.
Finally, I would like to express my gratitude to my Board colleagues, our shareholders, customers, suppliers and
other stakeholders for your continued support and encouragement throughout the year.
Yours sincerely,
Steven Fisher
Non-executive Chair
Chair’s Review
The Reject Shop | Annual Report 2024
4
5
CEO’s Update
CEO’s Update
Dear Shareholders,
The FY24 financial year was the first full year of the new merchandise strategy and my team’s key focus was on
improving our product offering to drive customer growth and generate comparable store sales growth.
During the year, significant changes were made to the Company’s merchandise offering. We launched our
Homewares range, which offers our customers a rotation of new and exciting high quality products at amazing value.
We grew our seasonal events, including Christmas, Easter, Halloween, Mother’s Day and Father’s Day, with more
variety at lower prices points. We refreshed most of our core ranges and improved the way product is presented to
customers in our stores. We also improved the breadth and availability of our branded low-priced household
essentials range to help our customers save money every day.
Our customers are responding positively to these changes. I am pleased to share that, during FY24, the Company
generated approximately 2 million more customer transactions than it did in the prior corresponding period, reported
record full year sales and recorded positive comparable store sales growth in a challenging economic and trading
environment.
All of this would not have been possible without the hard work and dedication of each and every one of our
committed team members. I would like to thank all of our team members for their contribution and efforts during
the year.
While we are pleased with the progress being made in relation to the new merchandise strategy, we recognise that
there is an opportunity to improve the profitability of the business. Like many Australian retailers, The Reject Shop is
currently facing a number of macroeconomic and inflationary pressures, including higher wages, elevated domestic
supply chain costs and shrinkage. My team’s key focus in FY25 is to continue to improve gross profit margin while
also growing sales through the ongoing improvement of the merchandise offering and expanding our national store
network.
The macroeconomic and consumer environment remains uncertain so we are pleased that our strong balance sheet
positions us well to navigate through any potential volatility in trading. We are also very aware that The Reject Shop
plays a critical role in supporting Australians who are currently faced with significant cost of living pressures. We do
this by helping our customers save money on branded everyday essential items such as cleaning products, toiletries,
personal hygiene products, kids lunchbox snacks and pet products. In addition, our team continues to work hard to
offer our customers exciting, new general merchandise and seasonal ranges at incredible value. We are focused on
offering products that bring joy to our customers during challenging economic times while also making it more
affordable for Australians to celebrate seasonal events with their friends and families.
The Reject Shop is Australia’s largest discount variety retailer and has a track record of helping customers save
money for over 40 years. I would like to invite all Australians, including our shareholders and customers, to shop at
any one of our 385 stores across Australia, experience our new and improved product offering and save money on
each and every visit.
Yours sincerely,
Clinton Cahn
Chief Executive Officer
The Reject Shop | Annual Report 2024
6
Board of Directors
David Grant
Non-Executive Director
BCom, CA, GAICD
David Grant is a Chartered Accountant with extensive
experience in the accounting profession and the
commercial sector. David’s executive career included
roles with Goodman Fielder Limited and Iluka
Resources Limited.
David is currently a Non-executive Director of two
other publicly listed entities and is the Chair of the
Audit and Risk Committee of both of these entities.
David was previously a Non-executive Director of iiNet
Limited and Murray Goulburn Co-operative Co.
Limited.
David joined the Board of The Reject Shop in May
2020 and is Chair of the Audit & Risk Committee and a
member of the People & Culture Committee.
Current Listed Directorships
• EVT Limited (since 2013)
• Retail Food Group Limited (since 2018)
Former Listed Directorships (last three years)
• A2B Australia Limited (from June 2020 to
October 2022)
Steven Fisher
Non-Executive Chair
BAcc, CA
Steven Fisher has more than 30 years’ experience in
general management positions in the wholesale
consumer goods industry and was the former
Managing Director of the Voyager Group. Prior to
entering the consumer goods industry, Steven was a
practising chartered accountant having qualified with
a Bachelor of Accounting degree in South Africa.
Steven joined the Board of The Reject Shop in June
2019 and was appointed Chair in October 2019. Steven
is a member of the Audit & Risk Committee and the
People & Culture Committee.
Current Listed Directorships
• Nil
Former Listed Directorships (last three years)
• Breville Group Limited (from November 2004 to
November 2021)
• Laybuy Group Holdings Limited (from July 2020
to July 2023)
• BWX Limited (Chair from December 2022 to April
2023)
7
Board of Directors
Margaret Zabel
Non-Executive Director
BMath, MBA, GAICD
Margaret Zabel is a specialist in customer-centred
business transformation, brand strategy, innovation,
digital communications, customer experience and
change leadership. Margaret has more than 20 years
of senior executive experience working across major
companies and brands in fast moving consumer
goods, food, technology and communications
industries, including multinationals, ASX 100
companies and not-for-profits.
Margaret’s executive experience includes National
Marketing Director for Lion, Vice President of
Marketing for McDonald’s Australia and Chief
Executive Officer of Advertising Council Australia.
Margaret is currently a Non-executive Director of
three other publicly listed entities and is also a
Non-executive Director on the Boards of Collective
Wellness Group and Fairtrade AUNZ.
Margaret joined the Board of The Reject Shop in June
2021 and is Chair of the People & Culture Committee
and a member of the Audit & Risk Committee.
Current Listed Directorships
• G8 Education Limited (since 2017)
• Select Harvests Limited (since 2022)
• Australian Vintage Limited (since 2024)
Former Listed Directorships (last three years)
• Nil
Nicholas (Nick) Perkins
Non-Executive Director
BA, LLB, GAICD
Nick Perkins is the Managing Director and General
Counsel of Kin Group Pty Ltd, which is a substantial
shareholder of The Reject Shop. The Kin Group is a
diversified, global, long-term focused investor with
offices in Melbourne and New York.
Nick has held a variety of roles within the
Kin Group, and its subsidiary businesses, for over 19
years, including 10 years as the General Counsel of
Pact Group Limited.
Nick joined the Board of The Reject Shop in May 2020
and is a member of the Audit & Risk Committee and
the People & Culture Committee.
During the last three years, Nick has not served as a
director of any other listed company.
The Reject Shop | Annual Report 2024
8
Executive Leadership Team
Clinton Cahn
Chief Executive Officer
Clinton Cahn has experience across investment
banking at UBS, private equity at TPG Capital and
corporate strategy at Crown Resorts.
Clinton was the Chief Financial Officer from 1 May
2020 to 30 June 2024 and was appointed Chief
Executive Officer on 24 August 2023, having held the
role of Acting Chief Executive Officer from April 2022
to July 2022 and again from February 2023 to August
2023.
Clinton joined The Reject Shop in March 2020.
Amy Eshuys
Chief Operating Officer
Amy Eshuys is an experienced retail professional, with
extensive international merchandise experience and
deep knowledge of discount variety retail, having
worked in both Australia and the United States.
Prior to joining The Reject Shop, Amy held the
combined role of Vice President and General
Merchandise Manager for Buying, Merchandising &
Sourcing at CTS (formerly known as Christmas Tree
Shops) based in New Jersey. CTS is a specialty retailer
with 80 stores that combines low price every day and
seasonal merchandise. In her time with CTS, Amy was
responsible for developing and executing a compelling
merchandise offer to meet the needs and wants of
customers in a very competitive and challenging
marketplace.
Amy was appointed Chief Operating Officer of
The Reject Shop in April 2022.
Andrew Woolf
Chief Financial Officer
Prior to joining The Reject Shop, Andrew Woolf spent
15 years at PricewaterhouseCoopers (PwC) in the UK
and Australia, most recently as a Director in their
Financial Assurance practice primarily focused on
consumer and retail markets.
Andrew holds a Bachelor of Commerce and is a
Chartered Accountant. Andrew joined The Reject
Shop in 2020 as the Financial Controller and was
appointed Chief Financial Officer in July 2024.
Patrick Myers
Chief Commercial Officer
Patrick Myers is an experienced retail finance
professional with 15 years’ experience predominately
in commercial roles.
Prior to joining The Reject Shop, Patrick was at Swisse
Wellness for over three years and at Coles Group for
six years. Patrick holds a Bachelor of Economics and
Finance and is a Chartered Management Accountant.
Patrick joined The Reject Shop in 2021 as the Head of
Commercial and Strategy and was appointed Chief
Commercial Officer in July 2024.
Lauren Harris
General Counsel & Company Secretary
Lauren Harris is an experienced legal and governance
practitioner, having previously held roles at a top tier
law firm (Ashurst) and a number of ASX 100
companies across a range of industries. Lauren has
oversight of the Quality & Product Compliance, Legal
and Company Secretarial functions at The Reject
Shop.
Lauren holds a Bachelor of Laws (Hons) and a
Bachelor of Commerce.
Lauren joined The Reject Shop as General Counsel in
January 2024 and was appointed Company Secretary
in February 2024.
Hamish Briggs
General Manager, Operations
Hamish Briggs is a passionate operational leader and
retailer, with 15 years’ experience across Woolworths
and The Reject Shop.
Joining The Reject Shop in 2018 as an Area Manager,
Hamish progressed into the role of National
Operations Manager and Head of Central Operations
and served as the State Manager for Victoria and
Tasmania. Hamish has played a critical role in the
transformation journey at The Reject Shop over the
past 4 years, leveraging his expertise in retail
management to drive operational excellence,
simplification, cost optimisation and store
engagement.
Hamish was appointed General Manager, Operations
in July 2024 and oversees the Store Operations,
Central Operations and Loss Prevention functions.
9
Executive Leadership Team
Natasha (Tash) Reeve
General Manager, People & Culture
Tash Reeve is an accomplished Human Resources
professional who has worked in various industries and
sectors in Australia and the United States, including at
Hertz, 7-11 and Amazon. Tash specialises in
organisational development, talent management and
executive coaching. Tash oversees the Safety, Talent
Acquisition, People and Culture Business Partnering,
Employee Relations and Payroll functions at
The Reject Shop.
Tash holds a Bachelor of Business Management
specialising in Human Resources Management and
Marketing.
Tash joined The Reject Shop in April 2023 as Head of
Business Partnering and was appointed General
Manager, People & Culture in May 2024.
David (Dave) Newett
General Manager, Technology
Dave Newett has nearly 30 years of technology
experience, with over 20 years’ experience in retail
focused technology roles.
Prior to joining The Reject Shop, Dave held a number
of senior technology roles at Kmart. During his time at
Kmart, Dave helped define the technology strategy,
led major transformation initiatives from a technology
and business perspective and was instrumental in
enabling the enhanced use of data to drive business
outcomes.
Dave joined The Reject Shop as Head of Technology
in July 2021 and was appointed General Manager,
Technology in October 2023.
Paul Rose
General Manager, Property
Paul Rose is an experienced senior level professional
with over 20 years’ experience in retail property,
working with major retailers and major landlords
throughout Australia.
Paul held senior roles for 10 years with leading ASX
listed property trusts and commercial agencies in
centre management, leasing and development. Paul
then held senior property roles with Wesfarmers-
owned Kmart Australia from 2009 and incorporated
Target Australia from 2016. During this time, Paul was
part of the property leadership team that delivered
major store network growth to assist with re-
positioning Kmart Australia.
Paul joined The Reject Shop in February 2020.
Andrew Stein
Chief Customer Officer
Andrew Stein has more than 25 years of experience in
discount variety retail in the United States, New
Zealand and Australia.
In the US, Andrew was Chief Marketing Officer at
Kmart where he led the brand repositioning, the
development of the loyalty program, and creating
Cannes Lion award-winning advertising. At Big Lots,
Andrew was the Chief Customer Officer and led the
brand reinvention, the launch and building of
e-commerce, the redevelopment of the loyalty
program and several years of comparable store sales
growth.
Andrew then moved to the Warehouse Group in
New Zealand to lead Customer Strategy and Demand
Generation in the new agile structure for The
Warehouse, Warehouse Stationery and Noel
Leeming brands.
Andrew joined The Reject Shop in March 2022.
John Bacon
General Manager, Supply Chain
John Bacon has over 25 years of retail experience
having worked at Coles, Coles Liquor, Lovisa and, as a
supply chain consultant with a variety of other
retailers. As a consultant, John has worked on a
variety of supply chain transformation projects with
each of Woolworths, Bras N Things and Pillow Talk
while also assisting Forever New and Cotton On.
Since 2017, John has developed his skillset to include
managing supply chains in domestic and international
contexts where he provides proactive leadership to
build supply chain capacity, capability and resilience.
John is keen to contribute to the learning and
development of the next generation of retailers
through education and mentoring. John is a sessional
lecturer at the University of Melbourne in e-commerce
and supply chain.
John joined The Reject Shop in December 2022.
The Reject Shop | Annual Report 2024
10
11
Directors’ Report
Directors’ Report
The Directors present their report on The Reject Shop
Limited and the entities it controls (collectively, the
Group) for the financial period ended 30 June 2024.
Directors
The Directors of The Reject Shop during the whole
of the financial period and up to the date of this
Directors’ Report were:
Steven Fisher
Non-Executive Chair
David Grant
Non-Executive Director
Nicholas (Nick) Perkins
Non-Executive Director
Margaret Zabel
Non-Executive Director
Details of the background and experience of the
Directors are outlined on pages 6 to 7.
Company Secretaries
The Company Secretaries of The Reject Shop during
the whole of the financial period and up to the date of
this Report, unless otherwise stated below, were:
Lauren Harris
(appointed 23 February 2024)
Michael Freier
(resigned 23 February 2024)
Details of the background and experience of the
current Company Secretary are outlined on page 8.
Board and Board Committee Meetings
The number of meetings of the Board and each Board
Committee held during the financial period and each
director’s attendance at those meetings are set out
below.
Director
meetings
Audit & Risk
Committee
meetings
People &
Culture
Committee
meetings
Director
Attended Held Attended Held Attended Held
S Fisher
13
13
4
4
5
5
D Grant
13
13
4
4
5
5
N Perkins
13
13
4
4
5
5
M Zabel
13
13
4
4
5
5
Directors’ Relevant Interest in Shares
The relevant interests that each Director has in the
Company’s ordinary shares or other securities as at
the date of this Directors’ Report are set out below.
Director
Ordinary Shares
Performance Rights
S Fisher
144,039
Nil
D Grant
23,500
Nil
N Perkins
55,866
Nil
M Zabel
15,000
Nil
Principal Activities
The principal activities of the Company during the
financial period were the retailing of discount variety
merchandise and no significant change in the nature
of these activities occurred during the period.
Operating and Financial Review
The Operating and Financial Review, which forms part
of this Directors’ Report, is presented on pages 13 to
18.
Significant Changes in the State of Affairs
There were no significant changes in the state of
affairs of the Group during the financial period.
Matters Subsequent to the End of the
Financial Period
The Company and Australia and New Zealand
Banking Group (ANZ) Limited agreed to extend the
Company’s existing banking facilities to August 2025
(previously August 2024). The limits for the banking
facilities are as follows:
• working capital facility: $10 million; and
• seasonal facility: $20 million (the seasonal facility
can only be used between October and
December each year).
Since the end of the financial period, the Directors
have determined not to declare a final dividend in
respect of the financial period ended 30 June 2024 as
the interim dividend paid in respect of the half year
ended 31 December 2023 represents approximately
80% of FY24 net profit after tax and satisfies the
Company’s dividend policy.
On 1 July 2024, Andrew Woolf was appointed Chief
Financial Officer of the Company and Patrick Myers
was appointed Chief Commercial Officer of the
Company.
Other than the above, no matters or circumstances
have arisen since the end of the financial period which
significantly affect or may significantly affect the
operations of the Group, the results of those
operations, or the state of affairs of the Group in future
financial periods.
The Reject Shop | Annual Report 2024
12
Directors’ Report CONTINUED
Likely Developments and Expected Results
of Operations
Likely developments in the operations of the Group
and the expected results of those operations in future
financial periods are contained in the Operating and
Financial Review on pages 13 to 18.
Environmental Regulation
The Group is not involved in any direct activities that
have a marked influence on the environment within its
area of operation. As such, the Directors do not
consider that the Group’s operations are subject to
any particular and significant environmental regulation
in Australia.
Indemnification and Insurance of Directors
and Officers
The Company’s Constitution provides that the
Company may indemnify any current or former
Director, Secretary or Officer of the Company against
every liability incurred by the person in that capacity
(except a liability for legal costs) and all legal costs
incurred in defending or resisting (or otherwise in
connection with) proceedings, whether civil or
criminal or of an administrative or investigatory nature,
in which the person becomes involved because of that
capacity. The indemnity does not apply to the extent
that the Company is forbidden by statute to indemnify
the person or the indemnity would, if given, be made
void by statute.
The Company maintains a Directors’ and Officers’
insurance policy which, subject to some exceptions,
provides insurance cover to past and present
Directors, Secretaries and Officers of the Company.
During the financial period, the Company paid
insurance premiums for the policy. The insurance
contract prohibits disclosure of the nature of the
insurance cover and the insurance premiums payable.
Indemnification of Auditor
Pursuant to the terms of the engagement letter with
PwC, the Company has agreed to reimburse PwC for
any liability (including reasonable legal costs) PwC
incurs in connection with any claim by a third party
arising from the Company’s breach of the terms of the
engagement letter. No payment has been made to
indemnify PwC during, or since the end of, the
financial period.
Options
The Company does not have any unissued securities
under option as at the date of this Directors’ Report,
nor has it granted, or issued securities under any
options during or since the end of the financial period.
Refer to Note 24 to the financial statements for the
number of Performance Rights at the end of the
financial period and to the Remuneration Report for
details of the Performance Rights held by the
Company’s Key Management Personnel.
Proceedings on Behalf of the Company
No application for leave has been made in respect of
the Company, and no proceedings have been brought
or intervened in on behalf of the Company with leave,
under section 237 of the Corporations Act 2001 (Cth)
(Corporations Act).
Non-audit Services
The Group may decide to employ its external auditor,
PwC, on assignments additional to statutory audit
duties where the auditor’s expertise and experience
with the Group will not compromise auditor
independence.
Details of the amounts paid or payable to PwC for
statutory audit, assurance and non-audit services
provided during the financial year are set out in Note
25 to the financial statements.
Based on advice received from the Audit & Risk
Committee, the Board is satisfied that the provision of
non-audit services provided by PwC to the Company
during the financial period is compatible with, and did
not compromise, the general standard of
independence for auditors imposed by the
Corporations Act for the following reasons:
• the non-audit services and the ratio of non-audit
to audit services provided by PwC have been
reviewed by the Audit & Risk Committee to
ensure they do not impact the impartiality and
objectivity of the auditor; and
• none of the services undermine the general
principles relating to auditor independence as
set out in APES 110 Code of Ethics for
Professional Accountants (including
Independence Standards) as they did not involve
reviewing or auditing the auditor’s own work,
acting in a management or decision-making
capacity for the Company, acting as an advocate
for the Company or jointly sharing economic
risks and rewards.
13
Directors’ Report
Overview of Operations
The Company operates in the discount variety retail sector in Australia.
The ongoing development of a differentiated merchandise offer that strongly appeals to customers continues to be a
key focus.
Our store locations continue to be one of the key strengths of the Company, providing our customers with
convenient access to our offer. The Company expects to continue to open new stores in locations that reach new
customers and close mostly underperforming stores. The Company generally seeks to close stores that are loss-
making or where landlords seek material rent increases that impact the financial viability of a store.
During the year, the Company opened 17 new stores and closed 12 stores, finishing the year with a national store
network of 385 stores.
Overview of Financial Performance
FY24
FY23
$ Amounts are $m / %s are to Sales
Statutory
Statutory
Sales
852.7
819.3
Gross Profit(i)(ii)
40.7%
40.9%
Cost of doing business(i)(ii)
26.3%
25.3%
EBITDA(i)(ii)
123.0
127.8
Depreciation and Amortisation
(109.2)
(107.0)
EBIT(i)(ii)
13.8
20.8
Net Interest Expense
(6.5)
(6.2)
Profit Before Tax
7.3
14.6
Income Tax Expense
2.6
(4.3)
Net Profit After Tax
4.7
10.3
(i) Non IFRS measure and unaudited.
(ii) FY23 includes approximately $4.2 million of non-recurring income from insurance claims relating to stores that were flood damaged
during FY22 and FY23.
FY24 Performance
Sales in FY24 were $852.7 million, up 4.1% on the prior period. During FY24, significant changes were made to the
Company’s merchandise strategy, including:
• launching our Homewares range, which offers our customers a rotation of new and exciting high quality
product at amazing value;
• growing our seasonal events (Christmas, Easter, Halloween) with more variety at compelling price points;
• refreshing most of our core ranges and improving the way product is presented to customers in our stores;
and
• improving the breadth and availability of our branded low-priced household essentials range to help our
customers save money every day.
FY24 was the first full year during which the new merchandise strategy was meaningfully in place and it has shown
positive signs, with store sales growth during the year driven by an increase in customer transactions and units per
basket.
Gross Profit was $347.4 million, which was up 3.6% on the prior period. Gross Profit margin was 40.7% of sales,
which was up approximately 33 basis points on the prior period (excluding approximately $4.2 million of non-
recurring income in the prior period from insurance claims relating to stores that were flood damaged during FY22
and FY23).
The Gross Profit margin result was adversely impacted by higher than anticipated shrinkage and product mix shift
towards lower margin consumables. Supply chain costs had a mixed impact on gross margin with the benefit from a
reduction in international shipping costs, partially offset by increased domestic supply chain costs.
Consistent with many Australian retailers, the Company is facing a number of macroeconomic and inflationary
pressures. The Cost of Doing Business (CODB), which consists of store and administrative expenses but excludes
The Reject Shop | Annual Report 2024
14
Directors’ Report CONTINUED
depreciation and amortisation, was $224.4 million. The
CODB as a percentage of sales in FY24 was higher than
the prior period.
The Company generated EBITDA of $123.0 million, EBIT
of $13.8 million and NPAT of $4.7 million.
Outlook
The Reject Shop continues to face near-term margin
pressure from rising costs and higher shrinkage, which
adversely impacted profitability in FY24. In order to
address these challenges, management will continue to
evolve its merchandise strategy with a key focus on
Gross Profit margin improvement. Management will
also continue to focus on managing the cost of doing
business in a high inflation environment and expanding
its store network.
Dividends
On 24 August 2023, the Company reinstated its
previous dividend policy to maintain a minimum
dividend payout ratio of 60% of net profit after tax,
subject to the underlying profitability and financial
requirements of the Company which will be assessed
periodically. The Company retains flexibility in deciding
how much of the annual dividend is declared as an
interim or a final dividend.
The following dividends were paid to shareholders
during the financial period:
Dividend
Total
($m)
Cents
per
share
Final dividend in respect of the
financial year ended 2 July 2023
2.5
6.5
Special dividend in respect of the
financial year ended 2 July 2023
3.6
9.5
Interim dividend in respect of the half
year ended 31 December 2023
3.8
10.0
Since the end of the financial period, the Directors have
determined not to declare a final dividend in respect of
the financial period ended 30 June 2024 as the interim
dividend paid in respect of the half year ended 31
December 2023 represents approximately 80% of FY24
net profit after tax and satisfies the Company’s dividend
policy.
On-market Share Buy-back
On 24 August 2023, the Company announced an
on-market share buy-back of up to $10 million. Under
the buy-back, the Company bought-back and cancelled
approximately 1.2 million shares at a cost of
approximately $5 million. The buy-back will end on 10
September 2024.
The Company may, at its discretion and at any time,
vary the size of the share buy-back by up to 10% of its
issued capital or suspend or terminate the share
buy-back.
The Board will continue to review the Company’s
capital management strategy.
Balance Sheet
The Company’s balance sheet remains strong with a
net cash position at 30 June 2024 of $49.9 million.
This compares to a net cash position of $77.3 million
at 2 July 2023. During FY24, approximately $15.0 million
in cash was paid to shareholders via dividends and the
on-market share buy-back.
As at the balance date, and consistent with the position
at 2 July 2023, the Company did not have any drawn
debt.
Store Network Plans
The Company continues to make good progress in
expanding its store network.
During the financial period, the Company opened 17
new stores. The Company continues to look for new
locations where it can conveniently serve more
Australians and is targeting to open approximately
15-20 new stores in FY25, including approximately 10
stores during the first half of FY25 (mostly in the second
quarter).
The Company closed 12 stores during the financial
period, which included six underperforming stores,
three relocations and three regrettable closures (which
were the result of a tenancy remix by the landlord). The
Company expects to close approximately five stores
during FY25 (mostly in the second half).
At the end of the financial period, The Reject Shop’s
national store network included 385 stores, up from
380 at the end of FY23. This compares to 354 stores at
the end of FY20, after which the Company began more
meaningfully expanding its store network.
15
Directors’ Report
Class action
The Company is named as the respondent in a class
action commenced by a former store manager (the
applicant) in the Federal Court of Australia on behalf
of store managers and assistant store managers
employed by the Company between 24 April 2017 to
18 April 2023. The applicant is represented by
Adero Law.
The premise of the initial proceeding is that the
General Retail Industry Award 2010 applied to the
relevant store manager’s employment and that there
were alleged underpayments under that award
together with alleged associated contraventions of
the Fair Work Act 2009 (Cth) however, the applicant is
seeking leave to file an amended statement of claim.
The application for leave is currently listed to be heard
on 11 October 2024.
The Company is continuing to defend the proceeding.
Business Risks
There are a number of factors, both specific to the
Company and of a general nature, which may
adversely impact the reputation or future operating
and financial performance of the Company and the
ability for the Company to achieve its strategic
objectives. These factors may impact the outcome of
an investment in the Company.
The Company has a risk management framework and
internal control systems in place to manage material
business risks.
The business risks that may have a material adverse
impact on the Company’s reputation and operational
and financial performance are set out below together
with some mitigating strategies. The business risks
presented below are not intended as an exhaustive
list of all the risks and uncertainties associated with
the Company.
Economic Conditions and Consumer Confidence
Economic conditions and the general retail
environment may have an adverse impact on
consumer confidence and the Company’s operational
and financial performance.
A deterioration in consumer confidence due to
macroeconomic conditions, including cost of living
pressures, rising interest rates and inflation, may
reduce consumer spending, particularly in
discretionary categories. This could adversely impact
profitability and sales, and the Company’s operational
and financial performance. The deterioration in
economic conditions during FY24 has also resulted in
an increase in the cost of doing business and retail
crime (including theft), which can adversely impact
profit margins and the Company’s financial
performance.
The Company plays a critical role in supporting
Australians who are currently faced with significant
cost of living pressures, by helping customers save
money on branded everyday essential items. The
Company’s strategy is focused on continuously
improving its merchandise offering. The Company
also continues to invest in shrink mitigation initiatives.
Competition
The Company operates in a highly competitive retail
environment where price and value are critical to the
customers it serves and is subject to changing
customer demand and preferences. Increased
competition and competitive offerings from new and
existing retailers, including online retailers and
marketplaces, may lead to price deflation and a
decline in sales and profitability which could
adversely impact the Company’s operational and
financial performance.
The Company closely monitors price and quality to
ensure it maintains its competitive stance. The
Company’s strategy is focused on improving its
merchandise offering and expanding its store network
in new locations where it can conveniently serve more
Australians.
Business Interruption
Unanticipated events such as natural disasters,
weather events, wars, terrorism, strikes and epidemics
may impact the Company’s supply chain and
operations as well as consumer behaviour, which
could have a material adverse impact on the
Company’s operational and financial performance.
The Company continues to review its plans and
insurance coverage to manage risks associated with
extreme weather events, however, in some instances,
insurance coverage is limited or not available. An
increase in the frequency and intensity of extreme
weather events may impact the cost and availability of
insurance. For context, the Company’s Queensland
distribution centre was subject to flooding in January
2011 and four stores were subject to flooding in
calendar year 2022 which has limited the Company’s
current flood insurance coverage.
The Company also continues to monitor for other
events which may present a key risk to the business
and develops appropriate control measures.
The Reject Shop | Annual Report 2024
16
Directors’ Report CONTINUED
Supply Chain
The Company’s supply chain is important to ensuring
the availability of products in store for customers.
Domestic and international supply chain disruptions
and poor supply chain management could adversely
impact the Company’s operational and financial
performance.
The Company has a dedicated Supply Chain team and
continues to monitor and respond to risks relating to
its domestic and international supply chain. The
Company also continues to invest in logistics and
technology systems to support its supply chain
operations and create efficiency. The Company has
implemented a new warehouse booking system and
is currently in the process of implementing a new
warehouse management system at each of its
distribution centres.
The Company also sources a mix of local and
imported products and is exposed to various risks in
relation to raw material costs and supply chain delays.
Additionally, a deterioration in the Company’s
relationships with key suppliers could adversely
impact the Company’s ability to source products at
competitive prices.
The Company also has a dedicated Merchandise team
and continues to focus on managing relationships
with suppliers.
Cyber Security and Information Technology
The Company relies on information technology
systems, communication carriers and data providers
to operate in a rapidly changing digital environment.
Failure of these systems or network disruptions could
have a material adverse impact on the Company’s
operational and financial performance, including
through the inability to process customer transactions
in stores and limiting the Company’s ability to receive
or distribute inventory.
In addition, the inability to adequately protect the
Company’s systems from cyber-attack, theft or other
malicious or accidental act (from internal or external
sources) could result in a data breach or prevent the
operation of information technology systems which
could have a material adverse impact on the
Company’s reputation and operational and financial
performance.
The Company has a dedicated Technology team,
supported by external advisers, and continues to
focus on enhancing its cyber governance framework
and investing in cyber security and information
technology systems, including through data centre
migration, network modernisation and penetration
testing. Team members are also required to complete
regular cyber security awareness training.
The Company continues to invest in new technology
systems. During FY25, the Company is undertaking
two key technology projects: network modernisation
(WAN/LAN) and implementation of a new warehouse
management system at each of its distribution
centres.
Failure to implement technology changes effectively
or to manage and complete projects as planned could
disrupt operations and result in unforeseen costs and
a failure to achieve anticipated benefits. This could
adversely impact the Company’s operational and
financial performance.
The Company has appropriate project management
and resourcing to oversee and manage these projects.
Property
The Company continues to focus on expanding its
store network in new locations where it can
conveniently serve more Australians. This is
dependent on the availability of suitable sites and the
ability of the Company to negotiate acceptable lease
terms. In addition, as Company stores are leased,
retaining a store is subject to successful negotiation
with the landlord at the end of a lease term. Failure to
secure new sites and store closures, including
regrettable closures (e.g. the result of a tenancy remix
by a landlord) or closure of underperforming stores,
could impact the Company’s ability to achieve its
growth strategy and have a material adverse impact
on its reputation and operational and financial
performance. Increasing store fit-out costs may also
impact the Company’s profitability.
The Company actively manages its store portfolio
against established financial and operational criteria
which must be met for both new and existing stores.
The Company’s property strategy is centred around:
renegotiating expired leases to better reflect the
current sales opportunity at each location, closing
unprofitable stores, opening new stores to replace
closures, and building a pipeline of new stores to drive
growth in the medium-term. The Company employs
experienced Property and Store Development teams
to support the execution of this strategy.
The Company’s distribution centres are leased and
subject to negotiation at the end of each lease term.
There is no guarantee a distribution centre lease will
be renewed at the end of each lease term on terms
acceptable to the Company. Each of the Company’s
distribution centres are operated either by the
Company or a third party. In either case, there is a risk
that, due to circumstances outside the control of the
Company, inventory located at the distribution centre
could be damaged, or that access to the distribution
centre could be restricted, meaning that such
17
Directors’ Report
inventory is unable to be retrieved. This could have a
material adverse impact on the Company’s financial
and operational performance.
During the year, the Company extended the lease at
its Queensland Distribution Centre from February
2025 to February 2030 (with an option to surrender
the lease from August 2027). The Company’s leases at
its Melbourne and Perth Distribution Centres expire in
November 2026 and August 2029 respectively. The
Company continues to review its long-term plan for its
distribution centre network having regard to its
growth strategy and its distribution centre lease expiry
profile.
Safety, Health & Wellbeing
The Company is committed to providing a safe
working environment for its team members and
contractors and a safe shopping environment for its
customers.
The Company has over 4,000 team members across
its stores and distribution centre network, as well as
thousands of customers who visit its stores
nationwide. Team member or customer safety
incidents or injuries, or failure to manage safety, health
and wellbeing risks could have an adverse impact on
the Company’s financial performance and reputation.
The Company has a dedicated Safety team, supported
by representatives in appropriate geographic
locations to oversee the application of relevant
policies and work safe procedures across the
business. Team members are required to complete
workplace health and safety training and are educated
on existing and emerging safety risks.
People
The Company has over 4,000 team members across
its stores, store support centre and distribution centre
network. The Company’s performance may depend on
key team members, and its ability to attract and retain
experienced and high performing team members.
Failure to retain the requisite team members could
adversely impact the Company’s operational and
financial performance and the ability for the Company
to achieve its strategic objectives.
The Company continues to focus on the attraction and
retention of key team members.
Legal, Regulatory and Compliance
The Company is subject to laws and regulations,
including competition and consumer, taxation,
employment, and workplace health and safety laws as
well as ethical sourcing and governance requirements.
The Company sells many products which must comply
with the Australian Consumer Law, mandatory
product safety standards and general product safety
requirements under applicable law, as well as meet
the expectations of customers. Notwithstanding the
product compliance protocols established by the
Company and insurance arrangements, products may
not meet relevant legal and regulatory requirements
which could result in, among other things, product
recalls, material inventory write-offs and significant
penalties or fines.
Failure to comply with laws and regulations could
result in significant legal costs, penalties, regulatory
enforcement action, class actions, litigation and other
claims which could have a material adverse impact on
the Group’s reputation, and operational and financial
performance.
As noted on page 15, the Company is named as a
defendant in a class action filed in the Federal Court
of Australia on behalf of store managers and assistant
store managers employed by the Company between
24 April 2017 to 18 April 2023. The Company intends to
continue to defend the proceeding.
Changes in legislation or regulations could also
adversely impact the Company’s operational and
financial performance and restrict the Company’s
business.
The Company monitors for legislative and regulatory
changes and is a member of various industry bodies
that actively engage with government on policy areas
and reform. The Company also provides relevant team
members with training on legislative and regulatory
changes where applicable.
Financing
As noted on page 11, the Company has working capital
and seasonal facilities with ANZ each with an annual
renewal requirement. An inability of the Company to
comply with the financial covenants, renew these
facilities or obtain alternative or additional financing if
required could have a material adverse impact on the
Company’s operational and financial performance.
As at 30 June 2024, the Company’s balance sheet
remained strong with a net cash position of
$49.9 million and no drawn debt. The Company also
closely monitors compliance with financial covenants
and has strong oversight of balance sheet
management and capital management initiatives.
The Company imports a high proportion of products,
the costs of which are denominated in foreign
currencies. Material adverse fluctuations in foreign
exchange rates could impact the Company’s
profitability. The Company closely manages and
The Reject Shop | Annual Report 2024
18
monitors its hedging position against foreign
exchange rate exposures.
Environmental and Social Responsibility
The sustainability of the Company’s business may be
impacted by a number of environmental and social
matters and the Company’s stakeholders, including
customers, shareholders, suppliers and team
members, may have expectations for the Company on
a range of environmental and social matters.
Failure to address these expectations over time could
have an adverse impact on the Group’s reputation,
and operational and financial performance.
The Company monitors for environmental and social
responsibility developments and develops plans
accordingly. The Company also publishes a Modern
Slavery Statement annually and has established an
Ethical Sourcing Policy which sets out the minimum
ethical requirements that the Company expects of its
suppliers, wholesalers and agents when producing
and supplying products to the Company.
Rounding of Amounts
The Company is of a kind referred to in ASIC
Corporations (Rounding in Financial/Directors’
Reports) Instrument 2016/191, relating to the “rounding
off” of amounts in the directors’ report and financial
report. In accordance with that Instrument, amounts
in these reports are rounded to the nearest thousand
dollars unless otherwise stated.
Corporate Governance
During FY24, our corporate governance framework
was consistent with the 4th edition of th ASX
Corporate Governance Council’s Corporate
Governance Principles and Recommendations.
The 2024 Corporate Governance Statement can
be found at:
https://www.rejectshop.com.au/about/
corporate-governance
Remuneration Report
The Remuneration Report, which forms part of this
Directors’ Report, is presented separately on pages 19
to 27.
This Directors’ Report is signed in accordance with a
resolution of the Directors.
Steven Fisher
Non-executive Chair
22 August 2024
19
Remuneration Report
This Remuneration Report outlines the remuneration
arrangements for the Company’s Key Management
Personnel (KMP) identified in Section A of this report
for the year ended 30 June 2024 in accordance with
the requirements of the Corporations Act and the
Corporations Regulations 2001 (Cth).
This Remuneration Report is presented under the
following sections:
A – KMP covered in this Remuneration Report
B – Remuneration governance
C – Executive remuneration framework
D – Company performance
E – Executive KMP remuneration
F – Executive KMP employment contracts
G – Non-executive Director remuneration
H – Minimum shareholding policy
I – KMP equity interests
J – KMP loans and other transactions
The information in this Remuneration Report has been
audited as required by section 308(3C) of the
Corporations Act.
A – KMP covered in this Remuneration
Report
This Remuneration Report covers the Company’s
KMP, including Non-executive Directors and those
executives deemed to have authority and
responsibility for planning, directing and controlling
the activities of the Company. The KMP for FY24 are
set out below.
All KMP held their positions for the duration of FY24
unless otherwise stated.
Non-Executive Directors Role as at 30 June 2024
Steven Fisher
Chair
David Grant
Non-executive Director
Nicholas (Nick) Perkins
Non-executive Director
Margaret Zabel
Non-executive Director
Executive KMP
Role as at 30 June 2024
Clinton Cahn
Chief Executive Officer
(CEO) and Chief Financial
Officer1
Amy Eshuys
Chief Operating Officer
(COO)
1. Clinton Cahn was appointed CEO of the Company on 24
August 2023 and served as Acting CEO from 1 February 2023
to 23 August 2023. Clinton ceased in his role as Chief Financial
Officer with effect from 1 July 2024 following the appointment
of Andrew Woolf as Chief Financial Officer.
Other than as indicated above, there have been no
changes to the Company’s KMP since 30 June 2024.
B – Remuneration governance
The Board is responsible for satisfying itself that the
Company’s remuneration policies are aligned with the
Company’s purpose, values, strategic objectives and
risk appetite. To assist the Board with this
responsibility, the Board has established the People &
Culture Committee (P&C Committee). The P&C
Committee’s role is to review and make
recommendations to the Board on people and
remuneration related policies, frameworks and
practices, including ensuring Directors and executives
are remunerated fairly and within accepted market
rates.
The responsibilities of the P&C Committee are
outlined in its Charter which is available at:
https://www.rejectshop.com.au/about/
corporate-governance
Details of the composition of the P&C Committee and
the number of meetings held during FY24 are set out
on page 11.
C – Executive remuneration framework
The Company’s executive remuneration policies are
designed to attract, motivate and retain qualified,
experienced and high performing executives with
complementary skills.
For FY24, the target remuneration mix opportunity for
the CEO2 is represented below.
Fixed
Remuneration
40%
Long-term
Incentive3
40%
Short-term
Incentive
20%
For FY24, the target remuneration mix opportunity for
the COO is represented below.
Fixed
Remuneration
44.5%
Long-term
Incentive3
33.3%
Short-term
Incentive
22.2%
2. Based on the CEO’s remuneration package effective on
24 August 2023.
3. Based on the fair value of the performance rights awarded
under the Performance Rights Plan. This does not include
one-off allocations of service-based performance rights.
Remuneration Report
The Reject Shop | Annual Report 2024
20
Remuneration Report CONTINUED
The executive remuneration and reward framework includes the following four components:
Element
Purpose
Performance metrics Potential value
Changes for FY24
Base (or fixed)
remuneration
Provide
competitive
market salary
including
non-monetary
benefits
Nil
Positioned at median
market rate
Reviewed in line with
market positioning,
scope of role and
performance
Other
remuneration (such
as superannuation
payments)
Provide
consistent with
statutory
obligations
Nil
Not applicable
The superannuation
guarantee rate
increased to 11% on
1 July 2023 and 11.5%
on 1 July 2024
Short-term
incentive (STI)
Cash reward for
in-year
performance
Achieving target EBIT,
individual
performance and
safety related
measures
CEO: 50% of base at
target performance
COO: 50% of base at
target performance
There were no
changes to the nature
of the FY24 STI
performance metrics
Long-term
incentive (LTI)
Alignment to
long-term
shareholder value
through
participation in
the Company’s
Performance
Rights Plan
3 year Earnings Per
Share (EPS)
performance
CEO: 100% of base
COO: 75%1 of base
There were no
changes to the
nature of the LTI
performance metrics
1. The COO’s LTI opportunity increased from 50% in FY23 to 75% in FY24.
The framework seeks to align executive reward with achievement of the Company’s strategic objectives and the
creation of value for shareholders.
The objective of the Company’s executive reward framework is to ensure every payment, either monetary or in the
form of equity, is on the basis of reward for performance and appropriate for the results delivered.
Base pay and benefits
Executive KMP salaries are structured as a total employment cost (TEC) package.
Executives are offered a competitive base pay that comprises the fixed component of pay and rewards. Base pay for
executives is reviewed to ensure competitiveness with the market. There are no guaranteed base pay increases in
the employment contracts of any of the executives. The Company’s process for reviewing the performance of
executives is outlined in the Company’s 2024 Corporate Governance Statement. An executive’s pay is also reviewed
when appropriate, including on promotion.
Short-term incentive (STI)
For FY24, the STI consisted of performance hurdles, including safety related measures, financial performance
through achieving targeted EBIT and individual performance ratings. Access to the STI was contingent on the
achievement of targeted EBIT. If targeted EBIT was achieved as well as the other performance hurdles, cash
payments of 50% of total fixed remuneration may have been made to the CEO and COO. The Company’s
overperformance against stretch targets may result in STI cash payments increasing above the target level. In FY24,
the maximum STI opportunity as a percentage of the target opportunity was up to two times for the CEO and COO.
The audited financial statements are the basis for measuring achievement against the EBIT target.
As the Company did not achieve its EBIT target in FY24, no STI payment was awarded to the Executive KMP in
respect of FY24 (i.e. each Executive KMP forfeited 100% of their FY24 STI opportunity).
21
Remuneration Report
Long-term incentive (LTI) - Performance Rights Plan
The Company’s Performance Rights Plan forms the
basis of the Company’s ongoing LTI scheme for
certain team members.
For performance rights granted under the
Performance Rights Plan, a $1.00 exercise price is
payable by the relevant participant for each tranche
exercised on a particular day, regardless of the
number of performance rights exercised on that day.
Upon vesting, the holder is entitled to one share in the
Company for each performance right held.
Until the performance rights vest, each participant has
no entitlement to receive any dividends and has no
voting rights associated with the underlying shares.
The Company’s Share Trading Policy prohibits each
participant from entering into transactions involving
products associated with the Company’s securities
which operate to limit the economic risk of their
security holding in the Company (e.g. hedging
arrangements).
FY24 LTI grant
The FY24 LTI grant was made to the Executive KMP
and certain other team members in August 2023.
The financial criteria upon which the performance
rights under the FY24 LTI grant are eligible to vest
concern achieving EPS growth measured over a
three-year period. The audited financial statements
are the basis for measuring achievement against the
financial performance target.
If the vesting conditions are satisfied, there will be
pro-rata straight line vesting between 50% and 100%
depending on the EPS growth and the relevant
performance rights will vest within 5 business days of
the date of the FY26 results announcement. The
Board may accelerate the vesting of any unvested
performance rights in the event of a change of control
(i.e. a person and their associates holding a relevant
interest in more than 50% of the ordinary shares in the
Company).
The Board retains the right to assess all aspects of the
vesting conditions for future LTI grants.
The number of performance rights issued in FY24 was
based on a specified percentage of each Executive
KMP’s total fixed remuneration (100% for the CEO and
75% for the COO) divided by the volume weighted
average market price between 1 June 2023 and 31 July
2023.
For financial reporting purposes, the value of each
performance right granted is measured using a
Black-Scholes option pricing model.
For details on the performance rights granted under
the FY24 LTI grant to each Executive KMP, refer to the
Performance Rights table in section I of this
Remuneration Report.
FY21 LTI grant outcomes
The financial criteria upon which the performance
rights issued under the FY21 LTI grant were eligible to
vest concern achieving EPS growth measured over a
three year period.
As the EPS growth measure was not achieved at
2 July 2023, the performance rights issued under the
FY21 LTI grant lapsed in August 2023.
For details on the lapse of performance rights in FY24
issued under the FY21 LTI grant to the Executive KMP,
refer to the Performance Rights table in section I of
this Remuneration Report.
FY22 LTI grant outcomes
The financial criteria upon which the performance
rights issued under the FY22 LTI grant were eligible to
vest concern achieving EPS growth measured over a
three year period with the ability to accelerate (33% of
rights) at year two if a specified EPS hurdle was
achieved.
As the EPS growth measure was achieved at 2 July
2023, vesting of 33% of the performance rights issued
under the FY22 LTI grant accelerated, with the
performance rights exercised in August 2023.
The remaining performance rights issued under the
FY22 LTI grant were tested at 30 June 2024. The EPS
growth measure was not achieved and the vesting
outcome was nil in respect of these performance
rights. These performance rights are expected to
lapse following the release of the FY24 results
announcement.
For details on the performance rights issued under the
FY22 LTI grant to the Executive KMP, refer to the
Performance Rights table in section I of this
Remuneration Report.
One-off allocations to Executive KMP in FY24
In August 2023, the Board granted 150,000
performance rights to the CEO and 100,000
performance rights to the COO with no financial
criteria to ensure the retention of their services for a
three year period.
If the vesting condition is satisfied, the relevant
performance rights will vest after the FY26 results
announcement. The Board will accelerate the vesting
of any unvested performance rights in the event of a
change of control (i.e. a person and their associates
holding a relevant interest in more than 50% of the
ordinary shares in the Company).
For details on the one-off allocation of performance
rights granted to each Executive KMP in FY24, refer to
the Performance Rights table in section I of this
Remuneration Report.
The Reject Shop | Annual Report 2024
22
Remuneration Report CONTINUED
One-off allocations vesting outcomes in FY24
In May 2022, the Board granted performance rights with no financial criteria as a one-off allocation to certain team
members, including the CEO and COO, to ensure the retention of their services for specified periods. During FY24,
a number of those performance rights vested and were exercised in August 2023 (50,000 for the CEO and 15,000 for
the COO) and February 2024 (25,000 for the CEO).
In February 2023, the Board granted performance rights with no financial criteria as a one-off allocation to certain
team members, including the CEO and COO, to ensure the retention of their services for specified periods. One third
of those performance rights vested and were exercised in August 2023 (50,000 for the CEO and 25,000 for the
COO), one third of those performance rights vested and were exercised in February 2024 (50,000 for the CEO and
25,000 for the COO) and the remaining third of those performance rights are exercisable after the half year results
announcement in February 2025.
For details on the vesting of one-off allocations of performance rights in FY24 granted to each Executive KMP, refer
to the Performance Rights table in section I of this Remuneration Report.
D – Company performance
The following table outlines the Company’s earnings and share performance over the last five financial periods:
FY20
FY21
FY22
FY23
FY24
Sales ($m)
820.6
778.7
788.2
819.3
852.7
NPAT (post AASB 16) ($m)
1.1
8.3
7.9
10.3
4.7
EPS (cents)
3.6
21.7
20.6
27.2
12.4
Share price at end of period ($)1
7.46
5.37
3.23
4.55
3.39
Share price growth
307.7%
(28.0%)
(39.9%)
40.9%
(25.5%)
Dividend per share (cents)2
-
-
-
16.0
10.0
1. Share price at the start of FY20 was $1.83.
2. Includes interim, final and special dividends declared in respect of that financial year.
23
Remuneration Report
E – Executive KMP remuneration
The table below sets out the statutory remuneration of the Executive KMP, including related parties, for FY24 and
FY23. This has been prepared in accordance with the requirements of the Corporations Act and relevant Australian
Accounting Standards. The amounts in the performance rights column in the table below are accounting values and
do not reflect actual payments received during the financial period.
SHORT-TERM BENEFITS
POST-
EMPLOYMENT
BENEFITS
LONG TERM
SHARE BASED
BENEFITS
TERMINATION
BENEFITS
Executive KMP
Financial
Year
Salary and
fees
Non-
monetary
STI and
Other
Super-
annuation
Performance
Rights1
Total
$
$
$
$
$
$
$
C Cahn2
FY24
565,972
-
-
27,399
756,774
-
1,350,145
FY23
526,432
-
-
25,292
578,792
-
1,130,516
A Eshuys3
FY24
475,188
-
-
27,399
530,056
-
1,032,643
FY23
184,261
-
-
8,984
196,456
-
389,701
TOTAL
FY24
1,041,160
-
-
54,798
1,286,830
-
2,382,788
FY234
710,693
-
-
34,276
775,248
-
1,520,217
1. The value of the performance rights shown in the table above for accounting purposes is determined using the Black-Scholes option
pricing model and is generally subject to performance and/or service conditions.
2. Effective 24 August 2023, C Cahn’s fixed remuneration increased from $553,830 to $600,000 on appointment as CEO.
3. A Eshuys became an Executive KMP on 1 February 2023. Effective 1 July 2023, A Eshuys’ fixed remuneration increased from $500,000 to
$502,107.
4. Total Executive KMP remuneration for FY23 excludes Executive KMP who ceased being an Executive in FY23. Total remuneration for
these Executive KMP in FY23 was $691,506.
For the purposes of this Remuneration Report, the amount reported as “Share-based Benefits” is the accounting
expense under AASB 2 (referred to in AASB 2 as “Share-based Payments”).
The fair value of Share-based Benefits is determined using a Black-Scholes option pricing model and will generally
be different to the volume weighted average market price, which is used to determine the number of rights that are
granted. No adjustment to the reported remuneration amounts is made in the event that the actual market price of
shares on the vesting of performance rights exceeds the fair value of those performance rights on their grant date.
Similarly, no reduction is made to remuneration where the market price of shares on the vesting of Performance
Rights is lower than the market price of shares on the date that performance rights are granted.
The Reject Shop | Annual Report 2024
24
Remuneration Report CONTINUED
F – Executive KMP employment contracts
Each Executive KMP has an employment contract with the Company specifying, among other matters, remuneration
arrangements, benefits, notice periods and other terms and conditions. The employment contracts do not have a
fixed term and continue until notice is given by either party.
The table below summarises the notice period and termination provisions, and treatment of short-term and long-
term incentives on termination.
Notice period
Either party may terminate employment at any time on six months’ notice
(or by the Company making a payment in lieu of notice).
In certain circumstances, the Company may reduce the notice period for
the COO by a period of one to two months in duration.
Termination for cause
The Company may immediately terminate employment without notice in
circumstances justifying summary dismissal.
Treatment of STI on termination
STI will be forfeited.
Treatment of unvested performance
rights on termination
Unvested performance rights will lapse unless the Board determines
otherwise.
Treatment of vested performance
rights on termination
On cessation of employment for any reason, vested but unexercised
performance rights will remain on foot subject to the original offer terms,
including discretion in relation to malus and clawback.
Treatment of one-off allocation of
sign-on performance rights granted to
the CEO in August 2023 (150,000
rights) on termination
• Summary termination by the Company: unvested rights will lapse.
• Termination by the Company (other than summary termination):
accelerated vesting of rights.
• Termination by employee: lapse or vesting of rights is subject to
Board discretion.
• Change of control of the Company: accelerated vesting of rights.
G – Non-executive Director remuneration
Non-executive Director remuneration policy
Non-executive Director fees are determined having regard to time commitment, workload and external
benchmarking. Non-executive Directors do not participate in the Company’s short or long-term incentive schemes.
The maximum annual aggregate director fee pool is $950,000 as approved by shareholders at the 2015 Annual
General Meeting of the Company.
Non-executive Directors are entitled to be reimbursed for reasonable expenses, including travel expenses, that may
be incurred when discharging their duties. Non-executive Directors may also be paid additional remuneration for
performing additional or special duties.
Non-executive Directors fees are reviewed from time to time. There is no guaranteed annual increase in Non-
executive Director fees.
Non-executive Directors enter into a service agreement with the Company in the form of a letter of appointment. The
letter summarises the Board policies and terms, including remuneration, relevant to the office of Director.
Non-executive Director fees
The annual base Non-executive Director fees (inclusive of superannuation) are set out below.
FY24 fees per annum ($)
Chair of the Board
240,000
Non-executive Director
120,438
Chair of a Board Committee
20,000
Member of a Board Committee
nil
The total amount of fees paid to Non-executive Directors in FY24 was within the aggregate director fee pool.
25
Remuneration Report
Non-executive Director remuneration
The remuneration of the Non-executive Directors, including related parties, for the current and prior financial
periods is set out below.
SHORT-TERM BENEFITS
POST-
EMPLOYMENT
BENEFITS1
LONG TERM
SHARE BASED
BENEFITS
TERMINATION
BENEFITS
Non-Executive
Director
Financial
Year
Salary and
fees
Non-
monetary
STI and
Other
Super-
annuation
Performance
Rights
Total
$
$
$
$
$
$
$
S Fisher
FY24
216,216
-
-
23,784
-
-
240,000
FY23
217,084
-
-
22,794
-
-
239,878
D Grant
FY24
140,438
-
-
-
-
-
140,438
FY23
140,438
-
-
-
-
-
140,438
N Perkins
FY24
120,438
-
-
-
-
-
120,438
FY23
120,323
-
-
-
-
-
120,323
M Zabel
FY24
126,521
-
-
13,917
-
-
140,438
FY23
127,566
-
-
13,394
-
-
140,960
TOTAL
FY24
603,613
-
-
37,701
-
-
641,314
FY232
605,411
-
-
36,188
-
-
641,599
1. Non-executive Directors do not receive post-employment benefits other than statutory superannuation contributions. Excludes
Australian Taxation Office approved exemptions.
2. Total Non-executive Director remuneration for FY23 excludes Non-executive Directors who ceased being a Non-executive Director in
FY23. Total remuneration for these Non-executive Directors in FY23 was $120,985.
H – Minimum shareholding policy
The Board implemented a Minimum Shareholding Policy in February 2022 to assist in aligning the interests of
Non-executive Directors with the interests of shareholders of the Company.
The policy encourages Non-executive Directors to acquire and hold a minimum shareholding in the Company
approximately equivalent to 100% of the annual base fee (excluding any committee fees, superannuation
contributions and higher duties fees (e.g. Chair of the Board fee)) paid to Non-executive Directors within a
reasonable timeframe (i.e. approximately 5 years from the time of appointment or the date of the policy, whichever is
the later).
For the purposes of calculating whether the minimum shareholding has been met, the calculation is based on the
Company’s share price at the time of acquisition.
The Reject Shop | Annual Report 2024
26
Remuneration Report CONTINUED
I – KMP equity interests
Ordinary shares
The tables below outline the number of shares in the Company held by KMP, including their related parties.
Non-executive Directors
Balance at the
start of FY24
Changes
during FY24
Balance at the
end of FY24
S Fisher
134,039
10,000
144,039
D Grant
17,000
6,500
23,500
N Perkins
41,938
13,928
55,866
M Zabel
6,000
9,000
15,000
Executive KMP
Balance at the
start of FY24
Received during
FY24 on the exercise
of performance rights
Other changes
during FY24
Balance at the
end of FY24
C Cahn
75,000
343,133
-
418,133
A Eshuys
649
65,000
-
65,649
Performance rights
The table below outlines the number of performance rights held by each Executive KMP, including their related
parties.
Number of Rights
Value of Rights ($)
Grant date
Fair value1
per right
at grant
date ($)
Vesting
date
Balance of
rights at
start of
FY24
Rights
granted
in FY24
Rights
vested
in FY24
Rights
lapsed /
forfeited
in FY24
Balance
of rights
at end of
FY24
Rights
granted in
FY24
Rights
vested in
FY24
Rights
lapsed /
forfeited
in FY24
Maximum
total value
of grants
that may
vest
C Cahn
23 Aug 2023
5.19
Aug 2026
-
130,400
-
-
130,400
676,372
-
-
676,372
23 Aug 2023
5.19
Aug 2026
-
150,000
-
-
150,000
778,035
-
-
778,035
2 Feb 2023
3.97
Feb 2025
50,000
-
-
-
50,000
-
-
-
198,715
2 Feb 2023
4.03
Feb 2024
50,000
-
50,000
-
-
-
201,715
-
-
2 Feb 2023
4.06
Aug 2023
50,000
-
50,000
-
-
-
203,230
-
-
21 Sept 2022
3.71
Aug 2025
120,300
-
-
-
120,300
-
-
-
446,590
11 May 2022
3.50
Feb 2024
25,000
-
25,000
-
-
-
87,595
-
-
11 May 2022
3.53
Aug 2023
50,000
-
50,000
-
-
-
176,515
-
-
5 Nov 2021
5.95
Aug 2023
18,133
-
18,133
-
-
-
107,837
-
-
5 Nov 2021
5.86
Aug 2024
36,267
-
-
-
36,267
-
-
-
212,459
30 Sep 2020
6.17
Aug 2023
63,700
-
-
63,700
-
-
-
392,755
-
27 Mar 2020
4.05
Mar 2023
150,000
-
150,000
-
-
-
607,500
-
-
TOTAL
613,400 280,400
343,133
63,700
486,967
1,454,407 1,384,392
392,755
2,312,171
A Eshuys
23 Aug 2023
5.19
Aug 2026
-
81,900
-
-
81,900
424,807
-
-
424,807
23 Aug 2023
5.19
Aug 2026
-
100,000
-
-
100,000
518,690
-
-
518,690
2 Feb 2023
3.97
Feb 2025
25,000
-
-
-
25,000
-
-
-
99,358
2 Feb 2023
4.03
Feb 2024
25,000
-
25,000
-
-
-
100,858
-
-
2 Feb 2023
4.06
Aug 2023
25,000
-
25,000
-
-
-
101,615
-
-
21 Sept 2022
3.71
Aug 2025
65,700
-
-
-
65,700
-
-
-
243,898
11 May 2022
3.43
Aug 2025
17,500
-
-
-
17,500
-
-
-
59,953
11 May 2022
3.48
Aug 2024
10,000
-
-
-
10,000
-
-
-
34,776
11 May 2022
3.53
Aug 2023
15,000
-
15,000
-
-
-
52,955
-
-
TOTAL
183,200
181,900
65,000
-
300,100
943,497
255,428
-
1,381,482
1. The fair value for accounting purposes is determined using the Black-Scholes option pricing model.
27
Options
There are no options over shares in the Company as at the date of this Remuneration Report.
J – KMP loans and other transactions
No loans were made to or from KMP, including related parties, or are outstanding as at 30 June 2024 (FY23 - $Nil).
No other transactions were undertaken with KMP, including related parties, during FY24 (FY23 - $Nil).
Remuneration Report
The Reject Shop | Annual Report 2024
28
29
Auditor’s Independence Declaration
Auditor’s Independence Declaration
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Auditor’s Independence Declaration
As lead auditor for the audit of The Reject Shop Limited for the 52 week period ended 30 June 2024, I
declare that to the best of my knowledge and belief, there have been:
(a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of The Reject Shop Limited and the entities it controlled during the
period.
Brad Peake
Melbourne
Partner
PricewaterhouseCoopers
22 August 2024
The Reject Shop | Annual Report 2024
30
2024
2023
Note
$’000
$’000
Revenue from continuing operations
Sales revenue
2
852,736
819,340
Other income
3
2,507
6,062
855,243
825,402
Expenses
Cost of sales
511,665
494,167
Store expenses
280,853
261,204
Administrative expenses
46,440
47,350
838,958
802,721
Finance costs
4
8,937
8,050
Profit before income tax
7,348
14,631
Income tax expense
5
2,635
4,321
Profit for the period attributable to shareholders of The Reject Shop
4,713
10,310
Other comprehensive income
Items that may be re-classified to profit or loss
Changes in the fair value of cash flow hedges
(4,563)
(6,902)
Income tax relating to components of other comprehensive income
1,369
2,071
Other comprehensive income for the period, net of tax
(3,194)
(4,831)
Total comprehensive income attributable to shareholders of The Reject Shop
1,519
5,479
Earnings per share
Cents
Cents
Basic earnings per share
27
12.4
27.2
Diluted earnings per share
27
12.1
26.4
Consolidated Statement
of Comprehensive Income
For the 52 week period ended 30 June 2024
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
31
Consolidated Balance Sheet
2024
2023
Note
$’000
$’000
Current Assets
Cash and cash equivalents
6
49,883
77,335
Inventories
7
146,446
135,550
Tax receivables
2,770
-
Derivative financial instruments
22
1,302
5,864
Other assets
8
3,322
4,056
Total Current Assets
203,723
222,805
Non-current Assets
Property, plant and equipment
9
53,095
50,631
Right-of-use assets
10
212,773
205,786
Deferred tax assets
11
21,144
20,050
Total Non-current Assets
287,012
276,467
Total Assets
490,735
499,272
Current Liabilities
Trade and other payables
12
59,539
59,765
Lease liabilities
10
81,309
84,305
Tax liabilities
-
3,300
Provisions
14
11,363
11,080
Other liabilities
15
9,714
11,428
Total Current Liabilities
161,925
169,878
Non-current Liabilities
Lease liabilities
10
154,909
144,124
Provisions
14
3,818
3,335
Total Non-current Liabilities
158,727
147,459
Total Liabilities
320,652
317,337
Net Assets
170,083
181,935
Equity
Contributed equity
16
62,589
67,598
Reserves
17
12,172
13,829
Retained profits
18
95,322
100,508
Total Equity
170,083
181,935
Consolidated Balance Sheet
As at 30 June 2024
The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.
The Reject Shop | Annual Report 2024
32
2024
Contributed
Equity
Capital
Profits
Share
Based
Payments
Hedging
Reserve
Retained
Earnings
Total
$’000
$’000
$’000
$’000
$’000
$’000
Balances as at 2 July 2023
67,598
739
8,984
4,106
100,508
181,935
Profit for the period
-
-
-
-
4,713
4,713
Other comprehensive income
-
-
-
(3,194)
-
(3,194)
Transaction with owners in
their capacity as owners:
Shares bought back
(5,009)
-
-
-
-
(5,009)
Dividends Paid
-
-
-
-
(9,899)
(9,899)
Share based remuneration
-
-
1,357
-
-
1,357
Tax credited directly to equity
-
-
180
-
-
180
Balances as at 30 June 2024
62,589
739
10,521
912
95,322
170,083
2023
Contributed
Equity
Capital
Profits
Share
Based
Payments
Hedging
Reserve
Retained
Earnings
Total
$’000
$’000
$’000
$’000
$’000
$’000
Balances as at 3 July 2022
70,326
739
6,603
8,937
90,198
176,803
Profit for the period
-
-
-
-
10,310
10,310
Other comprehensive income
-
-
-
(4,831)
-
(4,831)
Transaction with owners in
their capacity as owners:
Shares bought back
(2,728)
-
-
-
-
(2,728)
Share based remuneration
-
-
2,025
-
-
2,025
Tax credited directly to equity
-
-
356
-
-
356
Balances as at 2 July 2023
67,598
739
8,984
4,106
100,508
181,935
Consolidated Statement of
Changes in Equity
For the 52 week period ended 30 June 2024
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
33
Consolidated Statement of Cash Flows
2024
2023
Note
$’000
$’000
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax)
938,010
901,274
Payments to suppliers and employees (inclusive of goods and services tax)
(821,141)
(789,302)
Interest received
3
2,460
1,842
Insurance income received
3
47
4,220
Borrowing costs and facilities fees paid
4
(270)
(279)
Interest on lease liabilities
4
(8,667)
(7,771)
Income tax (paid) / received
(8,332)
1,036
Net cash inflows from operating activities
21
102,107
111,020
Cash flows from investing activities
Payments for property, plant and equipment
(15,741)
(12,126)
Net cash outflows used in investing activities
(15,741)
(12,126)
Cash flows from financing activities
Principal elements of lease payments
(98,910)
(96,300)
Payments for shares bought back
(5,009)
(2,728)
Dividends paid
(9,899)
-
Net cash outflows used in financing activities
(113,818)
(99,028)
Net decrease in cash held
(27,452)
(134)
Cash at the beginning of the financial period
77,335
77,469
Cash at the end of the financial period
49,883
77,335
Consolidated Statement of
Cash Flows
For the 52 week period ended 30 June 2024
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
The Reject Shop | Annual Report 2024
34
Note 1: Summary of Material Accounting
Policies
The principal accounting policies adopted in the
preparation of the Consolidated Financial Statements
(Financial Statements) are set out below. These
policies have been consistently applied to all the
periods presented, unless otherwise stated. The
Financial Statements are for the consolidated entity,
consisting of The Reject Shop Limited and its
subsidiaries (the Group). All information presented
within these Financial Statements relates to the
Group, unless otherwise stated.
(a) Basis of Preparation
The general purpose Financial Statements have been
prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian
Accounting Standards Board and the Corporations Act
2001 (Cth), as appropriate for for-profit oriented
entities.
Compliance with IFRS
Additionally, the Financial Statements of the Group
also comply with International Financial Reporting
Standards (IFRS) as issued by the International
Accounting Standards Board (IASB).
Historical cost convention
These Financial Statements have been prepared
under the historical cost convention, as modified for:
– certain financial assets and liabilities (including
derivative instruments) that are measured at fair
value; and
– certain classes of property, plant and equipment
and right-of-use assets that are measured at
historical cost less depreciation and impairment
(where applicable).
Critical accounting estimates
The preparation of Financial Statements requires
the use of certain critical accounting estimates.
It also requires management to exercise its
professional judgement in the process of applying
the Group’s accounting policies. The areas involving
a higher degree of judgement and complexity, or areas
where assumptions and estimates are significant to
the Financial Statements, are disclosed further in
Note 1 (z).
(b) Principles of Consolidation
(i) Subsidiaries
The Financial Statements incorporate all the assets
and liabilities of the subsidiaries of The Reject Shop
Limited as at 30 June 2024 and the results of the
subsidiaries for the period. As previously indicated,
The Reject Shop Limited and its subsidiaries are
referred to in the Financial Statements as the Group.
Subsidiaries are all entities (including structured
entities) over which the Group has control. The Group
controls an entity when the Group is exposed to, or
has rights to, variable returns from its involvement
with the entity and has the ability to affect those
returns through its power to direct the activities of
the entity. Subsidiaries are fully consolidated from the
date on which control is transferred to the Group.
They are deconsolidated from the date that
control ceases.
The acquisition method of accounting is used to
account for business combinations by the Group.
Intercompany transactions, balances and unrealised
gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated
unless the transaction provides evidence of an
impairment of the transferred asset. Accounting
policies of subsidiaries have been changed where
necessary to ensure consistency with the policies
adopted by the Group.
The Reject Shop Limited has a 100% owned non-
operating subsidiary, TRS Trading Group Pty Ltd
(ABN: 20059935465), which has not traded since
2003 and is domiciled in Australia.
The Reject Shop Limited has a 100% owned non-
operating subsidiary, TRS Sourcing Limited, which is
domiciled in Hong Kong. This subsidiary last provided
procurement services to the Group in 2019. The Group
is currently working through a process to deregister
TRS Sourcing Limited.
(ii) Employee Share Trust
The Reject Shop Limited has formed a trust to
administer the Group’s Performance Rights Plan. This
trust is consolidated as it is controlled by the Group.
(c) Segment Reporting
Operating segments are reported in a manner
consistent with the internal reporting provided to the
senior management personnel. The Group has only
one operating business segment. Refer to Note 30 for
further information.
(d) Income Tax
The income tax expense for the period is the tax
payable on the current period’s taxable income based
on the current income tax rate adjusted by changes in
deferred tax assets and liabilities attributable to
Notes to the Consolidated
Financial Statements
35
Notes to the Consolidated Financial Statements
temporary differences between the tax bases of
assets and liabilities and their carrying amounts in the
Financial Statements.
Deferred tax assets and liabilities are recognised for
temporary differences at the tax rates expected to
apply when the assets are recovered or liabilities are
settled. The relevant tax rates are applied to the
cumulative amounts of deductible and taxable
temporary differences to measure the deferred tax
asset or liability.
Deferred tax assets and liabilities are recognised for
deductible temporary differences and unused tax
losses only if it is probable that future taxable amounts
will be available to utilise those temporary differences
and losses.
Deferred tax assets and liabilities are offset when
there is a legally enforceable right to offset current tax
assets and liabilities and when the deferred tax
balances relate to the same taxation authority. Current
tax assets and tax liabilities are offset where the
Group has a legally enforceable right to offset and
intends either to settle on a net basis, or to realise the
asset and settle the liability simultaneously.
Current and deferred tax balances attributable to
amounts recognised directly in equity are also
recognised directly in equity.
The head entity, The Reject Shop Limited, and the
controlled entity in the tax consolidated Group,
account for their own current and deferred tax
amounts. These tax amounts are measured as if each
entity in the tax consolidated Group continues to be a
standalone taxpayer in its own right.
(e) Inventories
Inventories are measured at the lower of cost and net
realisable value. Costs are assigned on a weighted
average basis and include an appropriate proportion
of freight inwards, logistics, discounts, supplier
rebates and foreign exchange.
Storage, administrative overheads, selling and
abnormal costs are expensed in the period when they
are incurred.
Net realisable value is the estimated selling price in
the ordinary course of business less the estimated
costs necessary to make the sale.
(f) Property, Plant and Equipment
Each class of property, plant and equipment is carried
at historical cost less any accumulated depreciation
and impairment. The depreciable amount of all fixed
assets, including capitalised leased assets, is
depreciated on a straight-line basis over their
estimated useful lives. The useful life for each class of
asset is as follows:
Class of fixed asset
Useful Life
- Leasehold Improvements and
Office Equipment
5 – 13 years
- Fixtures and Fittings
5 – 13 years
- Computer Equipment
3 years
(g) Leases
The Group leases various retail stores, distribution
centres, offices and vehicles. Lease agreements are
typically made for fixed periods of tenure (usually
three to six years) and the arrangements may have an
option for a further term as described below. Lease
terms are negotiated on an individual basis and
contain a wide range of different terms and conditions.
The lease agreements do not impose any covenants,
but leased assets may not be used as security for
borrowing purposes.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities
include the net present value of the fixed payments
(including in-substance fixed payments), less any
landlord incentives receivable.
The lease payments are discounted using the interest
rate implicit in the lease. If that rate cannot be
determined, the Group’s incremental borrowing rate is
used, being the rate that the Group would have to pay
to borrow the funds necessary to obtain an asset of
similar value in a similar economic environment with
similar terms and conditions.
Right-of-use assets are measured at cost comprising
the following:
– the amount of the initial measurement of lease
liability;
– any lease payments made at or before the
commencement date less any landlord incentives
received; and
– any initial direct costs.
Payments associated with short-term leases and
leases of low-value assets are recognised on a
straight-line basis as an expense in profit or loss.
Short-term leases are those leases with a term of
12 months or less.
The Reject Shop | Annual Report 2024
36
Notes to the Consolidated Financial Statements CONTINUED
(h) Employee Benefits
(i) Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries, annual leave and
vested sick leave are recognised in respect of
employees’ services up to the reporting date and are
measured at the amounts reasonably expected to be
settled.
(ii) Long service leave
The liabilities for long service leave are not expected
to be settled wholly within 12 months after the end of
the period in which the employees render the related
service. They are therefore measured as the present
value of expected future payments to be made in
respect of services provided by employees up to the
end of the reporting period using the projected unit
credit method. Consideration is given to expected
future wage and salary levels, experience of employee
departures and periods of service. Expected future
payments are discounted using market yields at the
end of the reporting period on corporate bonds with
terms and currencies that match, as closely as
possible, the estimated future cash outflows.
The obligations are presented as current liabilities on
the Consolidated Balance Sheet if the Group does not
have an unconditional right to defer settlement for at
least 12 months after the reporting date, regardless of
when the actual settlement is expected to occur.
(iii) Bonus plans
A liability for employee benefits in the form of bonus
plans is recognised when there is a contractual or
constructive liability and at least one of the following
conditions are met:
– there are formal terms in the plan for determining
the amount of the benefit, including relevant
hurdles;
– the amounts to be paid are determined before the
time of completion of the Financial Statements; or
– past practice has created a constructive obligation.
Liabilities for short term cash incentives are expected
to be settled within 12 months and are measured at
amounts expected to be paid when settled.
(iv) Equity-based compensation benefits
Equity-based compensation benefits are provided
to selected employees through the Performance
Rights Plan.
The fair value of performance rights granted is
recognised as an employee benefit expense with a
corresponding increase in equity. The fair value is
measured at the grant date and recognised over the
period during which the employees become
unconditionally entitled to exercise those rights,
adjusted for the fair value of any rights which do not
ultimately vest.
The fair value at the grant date is determined using a
Black-Scholes option pricing model that takes into
account:
– exercise price;
– term of the Performance Rights;
– vesting and performance criteria;
– impact of dilution;
– non-tradeable nature of the Performance Rights;
– share price at the grant date and expected price
volatility of the underlying share;
– expected dividend yield; and
– risk-free interest rate for the term of the
Performance Rights.
The fair value of the Performance Rights granted
excludes the impact of any non-market vesting
conditions (for example, profitability and sales growth
targets). Non-market vesting conditions are included
in assumptions about the number of rights that are
expected to vest. At each balance sheet date, the
Group revises its estimates of the number of
Performance Rights that are expected to vest, net of
any Performance Rights that have been forfeited or
lapsed throughout the period. The employee benefit
expense recognised each period takes into account
the most recent estimate.
(i) Cash and Cash Equivalents
For presentation of Consolidated Statement of Cash
Flows, cash and cash equivalents includes, cash on
hand, cash in transit and at call, short-term deposits
with banks and financial institutions, and investments
in money market instruments maturing within two
months, net of bank overdrafts. Bank overdrafts (if any)
are shown with borrowings in current liabilities on the
Consolidated Balance Sheet.
(j) Revenue
Revenue from the sale of goods is recognised at the
point in time the sale occurs. All revenue is stated net
of the amount of goods and services tax (GST),
returns and discounts.
(k) Derivatives
Derivatives are initially recognised at fair value on the
date a derivative contract is entered into and are
subsequently remeasured to their fair value. The
method of recognising the resulting gain or loss
depends on whether the derivative is designated as a
hedging instrument, and if so, the nature of the item
being hedged. The Group designates derivatives as
hedges of the cash flows of highly probable forecast
transactions (cash flow hedges).
37
Notes to the Consolidated Financial Statements
At the inception of the transaction, the Group
documents the relationship between the hedging
instrument and hedged items, as well as its risk
management objective and strategy for undertaking
various hedge transactions. The Group also
documents its assessment, both at hedge inception
and on an ongoing basis, of whether the derivatives
that are used in hedging transactions have been and
will continue to be effective in offsetting changes in
cash flows of hedged items.
Cash flow hedges
The effective portion of changes in the fair value of
derivatives that are designated and qualify as cash
flow hedges is recognised in equity in the hedging
reserve. The gain or loss relating to the ineffective
portion is recognised immediately in the income
statement.
Amounts accumulated in equity are transferred out of
equity and included in the cost of the hedged item
when the forecast purchase that is hedged takes
place.
When a hedging instrument expires or is sold or
terminated, or when a hedge no longer meets the
criteria for hedge accounting, any cumulative gain or
loss existing in equity at that time remains in equity
and is recognised when the forecast transaction is
ultimately recognised in the income statement. When
a forecast transaction is no longer expected to occur,
the cumulative gain or loss that was reported in equity
is immediately transferred to the income statement.
(l) Foreign Currency Translation
(i) Functional and presentation currency
Items included in the Financial Statements of the
Group are measured using the currency of the primary
economic environment in which the Group operates
(“the functional currency”). The Financial Statements
are presented in Australian dollars, which is the
Group’s primary functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the
functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the
settlement of such transactions and from the
translation at period end exchange rates of monetary
assets and liabilities denominated in foreign currency
are recognised in the income statement, except
derivatives which comprise effective hedges.
(m) Trade and Other Payables
These amounts represent liabilities for goods and
services provided to the Group prior to the end of the
financial period and which are unpaid. The amounts
are unsecured and are usually paid within 30-60 days
of recognition.
(n) Borrowing Costs
Borrowing costs are recognised as expenses in the
period in which they are incurred. Borrowing costs
incurred for the construction of a qualifying asset are
capitalised during the period of time that is required to
complete and prepare the asset for its intended use.
(o) Impairment of Property, Plant and Equipment
and Right-Of-Use Assets
Assets that are subject to amortisation are reviewed
for impairment at each reporting date and when
events or changes in circumstances indicate that the
carrying amount may not be recoverable. An
impairment loss is recognised for the amount by
which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the
higher of an asset’s fair value less costs to sell and
value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels
for which there are separately identifiable cash flows
(cash generating units).
(p) Dividends
Provision is made for the amount of any dividends
declared, determined or publicly recommended by the
Directors on or before the end of the financial period
but not distributed at balance date.
(q) Borrowings
Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are
subsequently measured at amortised cost. Any
difference between the proceeds (net of transaction
costs) and the redemption amount is recognised in
the income statement over the period of the
borrowings using the effective interest rate.
(r) Contributed Equity
Ordinary shares are classified as equity.
(s) Earnings per Share
(i) Basic earnings per share
Basic earnings per share is determined by dividing net
profit after income tax attributable to members of the
Group, excluding any costs of servicing equity other
The Reject Shop | Annual Report 2024
38
Notes to the Consolidated Financial Statements CONTINUED
than ordinary shares, by the weighted average number
of ordinary shares outstanding during the financial
period.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in
the determination of basic earnings per share to take
into account the after income tax effect of interest and
other financing costs associated with dilutive potential
ordinary shares (including Performance Rights) and the
weighted average number of shares assumed to have
been issued in relation to dilutive potential ordinary
shares.
(t) Software Costs
Costs in relation to software development, including
website costs and cloud computing, are charged as
expenses in the period in which they are incurred
unless they relate to the acquisition or development of a
Group controlled asset, in which case they are
capitalised and amortised over the useful life which is
generally three years.
(u) Restoration Costs
An expense is provided for in the period in which the
legal, equitable or constructive obligation arises, usually
on a lease being agreed. The provision is measured at
the present value of management’s best estimate of
make-good costs with a corresponding asset added to
the cost of the fit out with the asset amortised over the
lease life.
(v) Store Opening Costs
Non-capital costs associated with the setup of a new
store are expensed in the period in which they are
incurred.
(w) Cost of Sales
The Group includes warehousing and logistics costs as
part of its “Cost of Sales” line in the Consolidated
Statement of Comprehensive Income.
The Group considers that all costs associated with
getting stock to stores ready for sale is a cost
attributable to the sale of such inventory.
(x) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of
the amount of associated GST, unless the GST incurred
is not recoverable from the taxation authority. In this
case it is recognised as part of the cost of acquisition of
the asset or as part of the expense.
Receivables and payables are stated inclusive of the
amount of GST receivable or payable. The net amount
of GST recoverable from, or payable to, the taxation
authority is included with other receivables or payables
on the Consolidated Balance Sheet.
Cash flows are presented on a gross basis. The GST
components of cash flows arising from investing or
financing activities which are recoverable from, or
payable to the taxation authority, are presented as
operating cash flows.
(y) Rounding of Amounts
The Group is of a kind referred to in ASIC Corporations
(Rounding in Financial/Directors’ Reports) Instrument
2016/191, relating to the “rounding off” of amounts in the
Directors’ Report and Financial Statements. In
accordance with that instrument, amounts in these
reports are rounded to the nearest thousand dollars
unless otherwise stated.
(z) Critical Accounting Estimates and Judgements
For the 30 June 2024 reporting period, certain
accounting estimates and judgements were made in
relation to the following:
(i) Impairment test of store assets
The Group offers a wide range of discount variety
merchandise through its network of 385 stores
(FY2023: 380) and store assets, including the right-of-
use asset, which represents one of the largest amounts
on the Consolidated Balance Sheet.
The assessment of impairment on store assets is a
critical judgement. A test for impairment is triggered by
a change in a number of indicators, both internal and
external. These indicators include, but are not limited to,
physical damage to the asset, declining economic
performance of the asset, technological changes,
market or economic changes and plans to discontinue
or restructure operations.
Impairment testing can only be done for an individual
asset that generates cash inflows that are largely
independent of cash inflows from other assets. A ‘cash
generating unit’ (CGU) is the smallest identifiable group
of assets that generates cash inflows that are largely
independent of the cash inflows of other assets or
groups of assets. The Group has defined each individual
store as a CGU as the cash inflows from an individual
store are largely independent from the inflows of any
other store. Accordingly, the assessment of the carrying
value of the relevant assets is on an individual store
basis for store fixtures and fittings and right-of-use
assets.
39
Notes to the Consolidated Financial Statements
The recoverable amount is defined as the higher of the
asset’s fair value less costs of disposal or its value in
use. The Group determines value in use by making
certain assumptions relating to forecast future cash
flows and discount rates. The assumptions on future
cash flows have been developed based on past
performance and reasonable expectations in relation
to the future. The discount rate has been determined
using market information relevant to the industry in
which the Group operates.
The impairment assessments could be sensitive to the
judgements made in the impairment test and the
assumptions outlined above. Refer to Note 9 for
details.
(ii) Impairment test for corporate and distribution
centre assets
Due to impairment indicators at year end, corporate
and distribution centre assets were tested for
impairment using a discounted cash flow model. The
Group determines value in use by making certain
assumptions relating to forecast future cash flows and
discount rates, giving regard to past performance,
external industry forecasts and board approved
budgets. The discount rate has been determined using
market information relevant to the industry in which
the Group operates.
The impairment assessments could be sensitive to the
judgements made in the impairment test and the
assumptions outlined above. Refer to Note 9 for
details.
(iii) Determining the lease term for the lease liability
In determining the lease term, management considers
all facts and circumstances that create an economic
incentive to exercise an option for a further term, or
vacate the premises at lease expiry. An option for a
further term is only included in the lease term if the
lease is reasonably certain to be extended (or not
terminated). For leases of distribution centres and
stores, the following factors are most relevant:
– if there are significant penalties to terminate (or
not extend), the Group is typically reasonably
certain to extend (or not terminate);
– if any leasehold improvements are expected to
have a significant remaining value, the Group is
typically reasonably certain to extend (or not
terminate); and
– otherwise, the Group considers other factors
including historical lease durations and the costs
and business disruption required to replace the
leased asset.
The Group’s practice is not to exercise an option for a
further term, unless there is a site-specific and
commercial rationale for doing so. Typically the Group
negotiates a new lease at the end of the term.
The lease term is reassessed if an option for a further
term is actually exercised (or not exercised) or the
Group becomes obliged to exercise (or not exercise) it.
The assessment of reasonable certainty is only
revised if a significant event or a significant change in
circumstances occurs, which affects this assessment,
and that is within the control of the Group.
(iv) Net realisable value of inventory
The net realisable value of inventories is the estimated
selling price in the ordinary course of business less
estimated costs to sell. The key assumptions require
the use of management’s judgement. These key
assumptions are the variables affecting the expected
selling price. Any reassessment of the selling price in a
particular period will affect the cost of goods sold.
This provision is calculated by applying an assumed
percentage markdown to certain inventory on hand at
period end. The specific write-down amount depends,
in part, on the age of the inventory and estimated
inventory weeks cover and incorporates information
on known loss-making products.
(v) Provisioning for shrinkage expense
The Group provides for shrinkage expense, recognised
net against inventory, for the period by applying an
estimated shrink loss percentage to the sales since
the date of the last stock count to period-end, on a
store-by-store basis. Stock counts are performed
across stores to calculate the estimated shrink loss
percentage for the whole store network. This estimate
includes stock count information obtained from
counts performed during the financial period and
those completed post period-end. Factors that could
impact the estimated provision include the length of
the time period since a store last completed a stock
take or a change in the actual stocktake results
ultimately recognised.
Other than the matters outlined above, there are no
other accounting estimates or judgements within
these accounts which have a significant effect on the
amounts recognised in the Financial Statements.
(aa) New accounting standards and interpretations
There are no new standards that are not yet effective
and that would be expected to have a material impact
on the Group in the current or future reporting
periods.
The Reject Shop | Annual Report 2024
40
Notes to the Consolidated Financial Statements CONTINUED
Note 2: Revenue from Continuing Operations
2024
$’000
2023
$’000
Sales of goods
852,736
819,340
Note 3: Other Income
2024
$’000
2023
$’000
Interest
2,460
1,842
Insurance recovery(i)
47
4,220
2,507
6,062
(i) Insurance recoveries relate to insured losses of property, plant and equipment, inventory and loss of profit from four stores that were
flood/water damaged in FY2022 and one in FY2023.
Note 4: Expenses
2024
$’000
2023
$’000
Profit before income tax expense includes the following expenses:
Finance Costs:
Interest and finance charges paid/payable for borrowing costs and facilities fees
270
279
Interest and finance charges paid/payable for lease liabilities
8,667
7,771
8,937
8,050
Depreciation of Property, plant and equipment included in:
Cost of sales
256
72
Store expenses
11,314
11,387
Administrative expenses
688
601
12,258
12,060
Depreciation of Right-of-use assets included in:
Cost of sales
5,979
5,820
Store expenses
90,186
88,303
Administrative expenses
729
772
96,894
94,895
Other expenses:
Store exit costs
974
117
Employee benefits expense
180,849
166,028
Store opening and relocation costs
1,480
796
41
Notes to the Consolidated Financial Statements
2024
2023
Note 5: Income tax expense
$’000
$’000
(a) Income tax expense
Current tax
1,369
4,140
Deferred tax
842
188
Adjustments relating to prior periods
424
(7)
2,635
4,321
Deferred income tax expense included in income tax expense comprises:
Decrease in net deferred tax assets
842
188
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Profit before income tax expense
7,348
14,631
Tax at the Australian tax rate of 30% (FY2023: 30%)
2,204
4,389
Tax effect of amounts which are not deductible in calculating taxable income:
Other
7
(61)
Adjustments for current tax of prior periods
424
(7)
Income tax expense
2,635
4,321
(c) Amounts recognised directly in equity
Aggregate current and deferred tax arising in the reporting period and
not recognised in net profit or loss but directly debited or credited in equity
180
356
(d) Income tax relating to items of other comprehensive income
Cash flow hedges
(1,369)
(2,071)
2024
2023
Note 6: Current Assets – Cash and cash equivalents
$’000
$’000
Cash on hand
1,610
1,607
Cash at bank
48,273
75,728
49,883
77,335
2024
2023
Note 7: Current Assets – Inventories
$’000
$’000
Inventory at cost
139,964
129,945
Inventory at net realisable value
6,482
5,605
146,446
135,550
Inventories recognised as an expense during the period ended 30 June 2024 amounted to $437,486,000 (FY2023:
$429,191,000). These were included in the ‘Cost of sales’. Write-downs of inventories to net realisable value
amounted to $2,051,000 (FY2023: $3,179,000). These were recognised as an expense during the period ended 30
June 2024 and included in ‘Cost of sales’.
The Reject Shop | Annual Report 2024
42
Notes to the Consolidated Financial Statements CONTINUED
2024
2023
Note 8: Current Assets – Other assets
$’000
$’000
Prepayments
2,644
2,961
Other current assets
678
1,095
3,322
4,056
2024
2023
Note 9: Non-Current Assets – Property, plant and equipment
$’000
$’000
Leasehold improvements
At cost
100,357
95,135
Less accumulated depreciation and impairment
(82,690)
(80,447)
Net book amount
17,667
14,688
Plant and equipment
At cost
181,878
177,460
Less accumulated depreciation and impairment
(146,450)
(141,517)
Net book amount
35,428
35,943
Total Property, plant and equipment
53,095
50,631
Movements in carrying amounts
Movements in the carrying amounts for each class of property, plant and equipment between the beginning and the
end of the current financial period are as follows:
Leasehold
improvements
Plant and
equipment
Total
$’000
$’000
$’000
Balances as at 2 July 2023
14,688
35,943
50,631
Additions at cost
8,606
7,135
15,741
Asset write offs
(435)
(584)
(1,019)
Depreciation expense
(5,192)
(7,066)
(12,258)
Balances as at 30 June 2024
17,667
35,428
53,095
Leasehold
improvements
Plant and
equipment
Total
$’000
$’000
$’000
Balances as at 3 July 2022
14,702
36,441
51,143
Additions at cost
5,760
6,366
12,126
Asset write offs
(221)
(357)
(578)
Depreciation expense
(5,553)
(6,507)
(12,060)
Balances as at 2 July 2023
14,688
35,943
50,631
During the period, there was no impairment recognised by the Group in relation to stores (FY2023: $Nil).
43
Notes to the Consolidated Financial Statements
Impairment testing of Property, plant and equipment (PP&E) and Right-of-use assets
The Group assesses Property, plant and equipment and the Right-of-use assets (see Note 10) for indicators of
impairment at each reporting date in accordance with AASB 136 Impairment of Assets.
The Group performed the review for indicators of impairment first at the CGU level. This consists of individual stores
as this is the smallest group of assets for which independent cash flows can be determined (the “Stores CGU”). For
indicators at the individual store level, the Group calculated the recoverable amount of the Stores CGU using a
value-in-use (“VIU”) discounted cash flow model. The model uses cash flow projections based on board approved
budgets.
For testing of the distribution centre and corporate assets, the Group determined a CGU comprising these assets
along with the store assets as it is only at this level that independent cash flows can be determined (the “Corporate
CGU”). The Group calculated the recoverable amount of the Corporate CGU using a VIU discounted cash flow
model. The model uses cash flow projections based on board approved budgets.
The Group determined that no reasonable change in the key assumptions used in the impairment assessments
would result in an impairment charge at the reporting date.
Note 10: Leases
2024
$’000
2023
$’000
Right-of-use assets
Property
212,773
205,725
Vehicles
-
61
212,773
205,786
Lease Liabilities
Current
81,309
84,305
Non-current
154,909
144,124
236,218
228,429
Interest expense (included in finance costs)
8,667
7,771
Additions to the right-of-use assets during the year ended 30 June 2024 were $99,801,000 (FY2023: $100,928,000).
The total cash outflow for leases during the year was $102,101,000 (FY2023: $100,057,000).
The Group assesses these assets with property, plant and equipment for indicators of impairment at each reporting
date in accordance with AASB 136 Impairment of Assets. For details of this assessment see Note 9.
The Reject Shop | Annual Report 2024
44
Notes to the Consolidated Financial Statements CONTINUED
Note 11: Non-Current Assets – Deferred tax assets
2024
$’000
2023
$’000
The balance comprises temporary differences attributable to:
Amounts recognised in profit or loss
Employee benefits
6,776
7,022
Leases
7,033
6,793
Inventories
1,390
1,249
Property, plant and equipment
6,232
5,469
Other provisions and accruals
957
1,282
Employee share trust
679
1,294
Sundry items
57
57
23,124
23,166
Set-off of deferred tax liabilities of Group pursuant to set-off provisions
Other current assets
(392)
75
Derivative financial instruments
(159)
(1,760)
Sundry items
(1,429)
(1,431)
Net deferred tax assets
21,144
20,050
Movements:
Carrying amount at beginning of period
20,050
17,712
(Charged) / credited to profit or loss and direct to equity
(275)
173
Charged to other comprehensive income
1,369
2,071
Under / (over) provision from prior years
-
94
Carrying amount at end of period
21,144
20,050
Note 12: Current Liabilities – Trade and other payables
2024
$’000
2023
$’000
Trade payables
50,590
52,202
Payroll tax and other statutory liabilities
5,141
4,031
Sundry payables
3,808
3,532
59,539
59,765
Note 13: Current Liabilities – Borrowings
The Group has banking facilities with ANZ Bank. These facilities include an interchangeable facility with a limit of
$10 million while the limit for the seasonal facility is $20 million. The seasonal facility can only be drawn between
October and December each year.
The Group has fully complied with all of its banking covenants at the balance sheet date.
In August 2024, subsequent to the period-end, the Group extended its existing banking facilities with ANZ Bank
from August 2024 to August 2025.
All secured liabilities listed within Notes 13 and 21, including bank overdraft and bank loans, finance purchases and
hire purchase agreements, are secured by The Reject Shop Limited and TRS Trading Group Pty Ltd.
45
Notes to the Consolidated Financial Statements
Note 14: Liabilities – Provisions
2024
2023
Current
$’000
Non-Current
$’000
Total
$’000
Current
$’000
Non-Current
$’000
Total
$’000
Provision for make good
Employee entitlement
392
2,522
2,914
350
2,067
2,417
10,971
1,296
12,267
10,730
1,268
11,998
11,363
3,818
15,181
11,080
3,335
14,415
Amounts not expected to be settled within the next 12 months
The current provision for employee entitlements includes annual leave, long service leave and bonus accruals. For
long service leave, it covers all unconditional entitlements where employees have completed the required period of
service and where employees are entitled to pro-rata payments in certain circumstances. The entire amount of the
provision for annual leave is presented as current, since the Group does not have an unconditional right to defer
settlement for any of these obligations. The provision for long service leave has both a current and non-current
portion. However, based on past experience, the Group does not expect all employees to take the full amount of
accrued annual leave or require payment within the next 12 months. Expected future payments are discounted using
appropriate market yields at the end of the reporting period that match, as closely as possible, the estimated future
cash outflows. The following amounts reflect leave that is not expected to be taken or paid within the next 12 months.
2024
$’000
2023
$’000
Leave obligations expected to be settled after 12 months
4,217
4,031
Note 15: Current Liabilities - Other Liabilities
2024
$’000
2023
$’000
Accrued expenses
9,586
11,203
Deferred income
128
225
9,714
11,428
Note 16: Contributed Equity
Movements in ordinary share capital:
Date
Details
Number of
issued shares
Contributed
Equity $‘000
3 July 2022
Balance
38,326,622
70,326
24 August 2022
Exercise of performance rights
96,675
-
9 September 2022
to 3 February 2023
Shares bought back
(647,222)
(2,728)
2 July 2023
Balance
37,776,075
67,598
24 August 2023
Exercise of performance rights
571,842
-
9 November 2023
Exercise of performance rights
33,000
-
1 March 2024
Exercise of performance rights
120,342
-
11 September 2023
to 28 June 2024
Shares bought back
(1,186,367)
(5,009)
30 June 2024
Balance
37,314,892
62,589
All shares carry one vote per share and rank equally in terms of dividends and on winding up. Ordinary shares have
no par value and the Group does not have a limited amount of authorised capital.
Between September 2023 and June 2024, the Company purchased 1,186,367 shares through an on-market share
buy-back. The buy-back was announced on 24 August 2023. The shares were acquired at an average price of $4.22
per share, with prices ranging from $3.07 to $5.85 per share. The total cost of the shares bought back was
$5,009,055. All the acquired shares were cancelled prior to the end of the period.
The on-market share buy-back will end on 10 September 2024.
The Reject Shop | Annual Report 2024
46
Notes to the Consolidated Financial Statements CONTINUED
Note 17: Equity – Reserves
2024
$’000
2023
$’000
Capital profits reserve
739
739
Share based payments reserve(i)
10,521
8,984
Hedging reserve – cash flow hedges(ii)
912
4,106
12,172
13,829
Movements:
Share based payments reserve(i)
Balance at beginning of period
8,984
6,603
Performance Rights expense
1,357
2,025
Deferred tax – share based payments
180
356
10,521
8,984
Hedging reserve – cash flow hedges(ii)
Balance at beginning of period
4,106
8,937
Transfer to inventory
(4,106)
(8,937)
Revaluation of cash flow hedges
912
4,106
912
4,106
(i) The share-based payments reserve is used to recognise the fair value of performance rights issued.
(ii) The hedging reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised directly in
equity, as described in Note 22. Amounts accumulated in equity are included in the cost of the hedged item when the forecast purchase
that is hedged takes place.
Note 18: Equity – Retained Profits
2024
$’000
2023
$’000
Retained profits at the beginning of the financial period
100,508
90,198
Net profit attributable to the shareholders of the Group
4,713
10,310
Fully franked dividends paid during period
(9,899)
-
Retained profits at end of financial period
95,322
100,508
Note 19: Capital Commitments
The Group has capital commitments totalling $8,173,000 (FY2023: $5,287,000) all payable within one year.
Note 20: Contingent Assets and Liabilities
The Company is named as the respondent in a class action commenced by a former store manager in the Federal
Court of Australia (filed on 18 April 2023) on behalf of store managers and assistant store managers employed by
the Company between 24 April 2017 to 18 April 2023. The applicant is represented by Adero Law.
The premise of the initial proceeding is that the General Retail Industry Award 2010 applied to the relevant store
manager’s employment and that there was an underpayment under that award together with alleged associated
contraventions of the Fair Work Act 2009 (Cth) however, the applicant is seeking leave to file an amended statement
of claim. The application for leave is currently listed to be heard on 11 October 2024.
47
Notes to the Consolidated Financial Statements
The Company is continuing to defend the proceeding and any potential financial impact is presently unknown.
Note 21: Consolidated Statement of Cash Flow Information
2024
$’000
2023
$’000
Reconciliation of Cash Flow from operating activities with profit after income
tax from ordinary activities:
Profit from ordinary activities after income tax
4,713
10,310
Non-cash items in profit from ordinary activities
Depreciation – Property, plant and equipment
12,258
12,060
Depreciation – Right-of-use assets
96,894
94,895
Assets written off
1,019
578
Non-cash share-based payments expense
1,357
2,025
Tax credited directly to equity
180
356
Changes in assets and liabilities
Decrease in other assets
2,102
2,496
(Increase) in inventories
(10,896)
(22,536)
Decrease in right-of-use assets net of lease liabilities
802
3,695
(Increase) in deferred tax assets
(1,094)
(2,338)
Decrease in trade and other payables, provisions and other liabilities
842
4,286
(Decrease) / increase in tax liabilities
(6,070)
5,193
Net cash provided by operations
102,107
111,020
Credit standby arrangement and loan facilities
The ongoing funding requirements of the Group, reviewed annually, are provided under the terms of a facility
agreement. The key facilities and their utilisation are as follows:
2024
2023
Limit
Utilised
Limit
Utilised
$’000
$’000
$’000
$’000
Interchangeable Facility(i)
10,000
-
10,000
-
Seasonal Facility(ii)
-
-
-
-
Other Facilities(iii)
550
258
550
420
Total Facilities
10,550
258
10,550
420
(i) The interchangeable facility may be allocated to the following sub-facilities: documentary credit issuance/documents surrendered facility,
foreign currency overdraft facility and loan facility.
(ii) A seasonal facility of $20,000,000 was available to the Group from October to December 2023. The facility was unutilised during the
period (FY2023: unutilised).
(iii) Other facilities include an ANZ Bank indemnity guarantee of $550,000 of which $258,000 (FY2023: $420,000) was utilised in relation to
property leases at 30 June 2024.
The Reject Shop | Annual Report 2024
48
Notes to the Consolidated Financial Statements CONTINUED
Note 22: Financial Instruments and Financial Risk Management
Derivative Financial Instruments
2024
$’000
2023
$’000
Current assets and (liabilities)
Forward foreign exchange contracts – cash flow hedges
1,302
5,864
Forward exchange contracts – cash flow hedges
The Group imports product from overseas. In order to protect against exchange rate movements, the Group enters
into forward exchange contracts to purchase foreign currency for most overseas purchases. These contracts are
hedging contracts for highly probable forecast purchases for the ensuing financial period. The contracts are timed to
mature when payments for shipments of products are scheduled to be made.
At the balance date, the details of outstanding forward exchange contracts to be settled within 12 months are:
Average Exchange Rate
Sell
Buy
2024
AUD $’000
2023
AUD $’000
2024
$
2023
$
Australian Dollars
United States Dollars
126,259
131,672
0.67
0.70
The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised
in other comprehensive income. When the cash flows occur, the Group adjusts the initial measurement of the
component recognised in the Consolidated Balance Sheet by the related amount deferred in equity.
At the balance sheet date, the revaluation of these contracts to fair value resulted in an asset of $1,302,000 (FY2023:
asset of $5,864,000).
During the period, $4,106,000 (FY2023: $8,937,000) was transferred from equity and included in inventory and a net
gain of $Nil (FY2023: net $Nil) was transferred to the Consolidated Statement of Comprehensive Income.
Exposure to Foreign Currency Risk
The Group’s exposure to foreign currency risk at the end of the reporting period was as follows:
2024
USD $’000
2023
USD $’000
Cash at bank
14
532
Trade and other payables
9,966
9,920
Forward exchange contracts – Balance Date Sensitivity Analysis
The following table summarises the sensitivity of the Group as at balance date to movements in the value of the
Australian Dollar compared to the United States Dollar, the principal currency that the Group has an exposure to.
The sensitivity analysis as at balance date relates to the conversion of the United States Dollar foreign currency bank
account and foreign currency payables and the impact on other components of equity arises from foreign forward
exchange contracts designated as cash flow hedges as follows:
Sensitivity Analysis – foreign exchange AUD/USD
2024
$’000
2023
$’000
For every 1c increase in AUD:USD rate, total exposures (increase) / decrease by:
Income Statement
223
210
Equity
(1,908)
(2,062)
For every 1c decrease in AUD:USD rate, total exposures (increase) / decrease by:
Income Statement
(230)
(217)
Equity
1,967
2,125
49
Notes to the Consolidated Financial Statements
Interest Rate Risk
The Group’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a
result of changes in market interest rates and the effective weighted average interest rates on classes of financial
assets and financial liabilities, is as follows:
2024
Weighted
Average
Effective
Interest Rate(i)
Floating
Interest Rate
$’000
Fixed Interest
Rate Maturing
within 1 Year
$’000
Fixed Interest
Rate Maturing
1 to 5 Years
$’000
Non-Interest
Bearing
$’000
Total
$’000
Financial Assets
Cash and cash equivalents
4.62%
42,770
-
-
7,113
49,883
Total Financial Assets
-
42,770
-
-
7,113
49,883
Financial Liabilities
Bank loans and overdrafts
-
-
-
-
-
-
Trade, sundry and other
creditors
-
-
-
-
69,125
69,125
Lease liabilities
-
-
-
-
236,218
236,218
Total Financial Liabilities
-
-
-
-
305,343
305,343
(i) There were no borrowings throughout the period.
2023
Weighted
Average
Effective
Interest Rate(i)
Floating
Interest Rate
$’000
Fixed Interest
Rate Maturing
within 1 Year
$’000
Fixed Interest
Rate Maturing
1 to 5 Years
$’000
Non-Interest
Bearing
$’000
Total
$’000
Financial Assets
Cash and cash equivalents
3.17%
69,477
-
-
7,858
77,335
Total Financial Assets
-
69,477
-
-
7,858
77,335
Financial Liabilities
Bank loans and overdrafts
-
-
-
-
-
-
Trade, sundry and other
creditors
-
-
-
-
70,968
70,968
Lease liabilities
-
-
-
-
228,429
228,429
Total Financial Liabilities
-
-
-
-
299,397
299,397
(i) There were no borrowings throughout the period.
Applying a sensitivity of 50 basis points to the Group’s period-end interest rate results in an immaterial impact on
post tax profit and equity.
Credit Risk
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date in
respect of recognised financial assets is the carrying amount of those assets, net of any provisions for doubtful debts
of those assets, as disclosed in the Consolidated Balance Sheet and Notes to the Financial Statements.
Credit risk for derivative financial instruments arises from the potential failure by counterparties to the contract to
meet their obligations. The credit risk exposure to forward exchange contracts is the net fair value of these contracts.
The Group does not have any material credit risk exposure to any single debtor or group of debtors under financial
instruments entered into by the Group.
Capital Risk Management
The Group’s objectives when managing capital are to safeguard the ability to continue as a going concern, so that it
can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce cost of capital.
The Reject Shop | Annual Report 2024
50
Notes to the Consolidated Financial Statements CONTINUED
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The gearing ratios at 30 June 2024 and 2 July 2023 were as follows:
2024
$’000
2023
$’000
Net debt (cash and cash equivalents)
(49,883)
(77,335)
Total equity
170,083
181,935
Net debt to equity ratio(i)
0%
0%
(i) The Group has no net debt so debt to equity ratio is not applicable
Liquidity Risk
The Group manages liquidity risk by continuously monitoring forecast and actual cashflow and matching the
maturity profiles of financial assets and liabilities.
The tables below analyse the Group’s financial liabilities as well as net and gross settled derivative financial
instruments into relevant maturity groupings based on the remaining period at the reporting date to the contractual
maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
Less than 6
months
6 – 12 months
Between 1
and 2 years
Between 2
and 5 years
Over 5 years
Total
contractual
cash flows
Carrying
Amount
(assets) /
liabilities
30 June 2024
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Non-derivatives
Non-interest bearing
(including lease
liabilities)
118,703
42,689
67,827
91,748
7,189
328,156
305,343
Total non-derivatives
118,703
42,689
67,827
91,748
7,189
328,156
305,343
Derivatives
Gross settled
- (inflow)
(97,606)
(29,954)
-
-
-
(127,560)
(1,302)
- outflow
96,275
29,983
-
-
-
126,258
-
Total derivatives
(1,331)
29
-
-
-
(1,302)
(1,302)
Less than 6
months
6 – 12 months
Between 1
and 2 years
Between 2
and 5 years
Over 5 years
Total
contractual
cash flows
Carrying
Amount
(assets) /
liabilities
2 July 2023
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Non-derivatives
Non-interest bearing
(including lease
liabilities)
120,046
43,089
67,848
77,962
1,374
310,319
299,397
Total non-derivatives
120,046
43,089
67,848
77,962
1,374
310,319
299,397
Derivatives
Gross settled
- (inflow)
(95,519)
(42,018)
-
-
-
(137,537)
(5,864)
- outflow
91,588
40,085
-
-
-
131,673
-
Total derivatives
(3,931)
(1,933)
-
-
-
(5,864)
(5,864)
51
Notes to the Consolidated Financial Statements
Net Fair Values
For other assets and other liabilities the net fair value approximates their carrying value.
Fair Value Measurements
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for
disclosure purposes.
AASB 7 Financial Instruments: Disclosures requires disclosure of fair value measurements by level of the following
fair value measurement hierarchy:
(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
(b) inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
(as prices) or indirectly (derived from prices) (level 2); and
(c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
No financial assets and financial liabilities are readily traded on organised markets in standardised form other than
listed investments, forward exchange contracts and interest rate swaps.
The following table presents the Group’s assets and liabilities measured and recognised at fair value:
2024
$’000
Level 2
2023
$’000
Level 2
Derivatives used for hedging
1,302
5,864
Note 23: Key Management Personnel (KMP) Disclosures
Non-Executive Directors
Steven Fisher (Chair)
David Grant
Nicholas Perkins
Margaret Zabel
All of the above persons were directors of The Reject Shop Limited for the entire period ended 30 June 2024, unless
otherwise stated.
Other Key Management Personnel
The following persons had authority and responsibility for planning, directing, and controlling the activities of the
Group directly or indirectly during the financial period:
Clinton Cahn – Chief Executive Officer(i) and Chief Financial Officer(ii)
Amy Eshuys
– Chief Operating Officer
(i) Clinton Cahn was appointed Chief Executive Officer on 24 August 2023 and served as Acting Chief Executive Officer from 1 February
2023 to 23 August 2023.
(ii) Following the appointment of Andrew Woolf on 1 July 2024, Clinton Cahn ceased as the Group’s Chief Financial Officer.
All of the above persons were employed by The Reject Shop Limited and were key management personnel for the
entire period ended 30 June 2024 unless otherwise stated.
The Reject Shop | Annual Report 2024
52
Notes to the Consolidated Financial Statements CONTINUED
Remuneration of Directors and Key Management Personnel
2024
$
2023
$
Short-term cash rewards
-
-
Short-term employee benefits
1,644,773
1,773,987
Post-employment benefits
92,499
100,072
Termination benefits
-
325,000
Share-based payments
1,286,830
775,248
3,024,102
2,974,307
No other long-term or termination benefits were paid or payable with respect to the current or prior period.
Note 24: Share-based Payments
Performance Rights Plan (PRP)
The PRP is the basis of the Group’s long-term reward scheme for selected employees. In summary, eligible
employees identified by the Directors may be granted performance rights, which is an entitlement to a share subject
to satisfaction of exercise conditions on terms determined by the Directors.
The details of all grants made and outstanding for each financial period are detailed in the tables below:
2024
Date of Grant
Expiry Date
Date
Exercisable
Fair Value
at Grant
Date
Balance at
the Start of
Period
Granted
During
Period
Exercised
During The
Period
Lapsed
forfeited or
cancelled
during the
Period
Balance at
the End of
the Period
Vested and
Exercisable
at the End
of Period
27 March 2020
28 March 2025
27 March 2023
4.05
150,000
-
(150,000)
-
-
-
30 September 2020 31 August 2025
31 August 2023
6.17
185,300
-
-
(185,300)
-
-
5 November 2021
31 August 2025
31 August 2023
5.95
65,767
-
(62,467)
(3,300)
-
-
5 November 2021
1 November 2024
5 November 2023
5.92
66,000
-
(33,000)
(33,000)
-
-
5 November 2021
31 August 2026
31 August 2024
5.86
131,533
-
-
(54,800)
76,733
-
11 May 2022
28 February 2025
31 August 2023
3.53
50,000
-
(50,000)
-
-
-
11 May 2022
14 September 2023 31 August 2023
3.53
55,000
-
(55,000)
-
-
-
11 May 2022
13 September 2024 31 August 2023
3.53
166,875
-
(166,875)
-
-
-
11 May 2022
28 February 2025
28 February 2024
3.50
25,000
-
(25,000)
-
-
-
11 May 2022
13 September 2024 31 August 2024
3.48
95,000
-
(7,842)
(27,158)
60,000
-
11 May 2022
12 September 2025 29 August 2025
3.43
17,500
-
-
-
17,500
-
21 September 2022
31 October 2025
31 August 2025
3.71
638,100
-
-
(186,300)
451,800
-
28 November 2022
31 October 2025
31 August 2025
4.37
28,700
-
-
(7,300)
21,400
-
2 February 2023
31 October 2023
31 August 2023
4.06
87,500
-
(87,500)
-
-
-
2 February 2023
30 April 2024
29 February 2024
4.03
87,500
-
(87,500)
-
-
-
2 February 2023
30 April 2025
28 February 2025
3.97
87,500
-
-
(12,500)
75,000
-
23 August 2023
5 September 2026 31 August 2026
5.19
-
751,600
-
(130,500)
621,100
-
22 February 2024
4 March 2027
28 February 2027
4.13
-
30,000
-
-
30,000
-
Total
1,937,275
781,600
(725,184)
(640,158)
1,353,533
-
53
Notes to the Consolidated Financial Statements
2023
Date of Grant
Expiry Date
Date
Exercisable
Fair Value
at Grant
Date
Balance at
the Start of
Period
Granted
During
Period
Exercised
During The
Period
Lapsed
forfeited or
cancelled
during the
Period
Balance at
the End of
the Period
Vested and
Exercisable
at the End
of Period
18 October 2019
16 October 2023
1 July 2022
2.07
21,675
-
(21,675)
-
-
-
27 March 2020
28 March 2025
27 March 2023
4.05
150,000
-
-
-
150,000
150,000
30 September 2020 31 August 2025
31 August 2023
6.17
198,200
-
-
(12,900)
185,300
-
5 November 2021 31 August 2025
31 August 2023
5.95
69,466
-
-
(3,700)
65,766
-
5 November 2021 1 November 2024 5 November 2023
5.92
66,000
-
-
-
66,000
-
5 November 2021 31 August 2026
31 August 2024
5.86
138,934
-
-
(7,400)
131,534
-
11 May 2022
31 August 2022
31 August 2022
3.60
75,000
-
(75,000)
-
-
-
11 May 2022
28 February 2025 31 August 2023
3.53
50,000
-
-
-
50,000
-
11 May 2022
14 September 2023 31 August 2023
3.53
75,000
-
-
(20,000)
55,000
-
11 May 2022
13 September 2024 31 August 2023
3.53
190,000
-
-
(23,125)
166,875
-
11 May 2022
28 February 2025 28 February 2024
3.50
25,000
-
-
-
25,000
-
11 May 2022
13 September 2024 31 August 2024
3.48
110,000
-
-
(15,000)
95,000
-
11 May 2022
12 September 2025 29 August 2025
3.43
17,500
-
-
-
17,500
-
22 July 2022
31 October 2024
31 August 2024
2.76
-
40,000
-
(40,000)
-
-
22 July 2022
31 October 2025
31 August 2025
2.72
-
40,000
-
(40,000)
-
-
22 July 2022
31 October 2026
31 August 2026
2.68
-
20,000
-
(20,000)
-
-
21 September 2022 31 October 2025
31 August 2025
3.71
-
869,600
-
(231,500)
638,100
-
28 November 2022 31 October 2025
31 August 2025
4.37
-
28,700
-
-
28,700
-
2 February 2023
31 October 2023
31 August 2023
4.06
-
87,500
-
-
87,500
-
2 February 2023
30 April 2024
29 February 2024
4.03
-
87,500
-
-
87,500
-
2 February 2023
30 April 2025
28 February 2025
3.97
-
87,500
-
-
87,500
-
Total
1,186,775
1,260,800
(96,675)
(413,625)
1,937,275
150,000
For the grants made during the period, the fair value was determined using the Black-Scholes option pricing model,
taking into account the following inputs:
Date of new grants
23 August 2023
22 February 2024
Exercise price
-
-
Share price
$5.70
$4.54
Expected dividend yield
3.1%
3.1%
The expected price volatility is based on the historic volatility, adjusted for any expected changes to future volatility
due to publicly available information.
Performance rights do not carry voting or dividend entitlements.
Remuneration Expense arising from share-based payment transactions
2024
$
2023
$
Performance rights granted
1,356,166
2,025,141
The Reject Shop | Annual Report 2024
54
Notes to the Consolidated Financial Statements CONTINUED
Note 25: Remuneration of Auditors
During the period, the following fees for services were paid or payable to PricewaterhouseCoopers Australia and
its related parties as the auditor:
2024
$
2023
$
Audit and Assurance Related Services
Audit and review work
394,740
389,000
Other assurance services
47,940
51,000
442,680
440,000
Tax Compliance and Consulting Services
Tax compliance
30,160
144,755
Tax consulting advice
6,200
81,406
36,360
226,161
Total remuneration
479,040
666,161
Note 26: Dividends
2024
$’000
2023
$’000
Dividend declared subsequent to the period end
-
6,044
Balance of franking account at period end(i)
63,320
62,614
(i) Adjusted for franking credits arising from payment of provision for income tax and dividends recognised as receivables, franking debits
arising from payment of proposed dividends and any credits that may be prevented from distribution in subsequent periods based on a
tax rate of 30%
Dividends recognised during the reporting period:
During the financial period $9,899,093 was paid to shareholders (FY2023: $Nil).
Note 27: Earnings per share
2024
Cents
2023
Cents
Basic earnings per share
12.4
27.2
Diluted earnings per share
12.1
26.4
Weighted average number of ordinary shares used as the denominator in
calculating basic earnings per share
38,049,685
37,965,407
Adjustments for dilutive portion of performance rights
995,552
1,078,176
Weighted average number of ordinary shares and potential ordinary shares
used as the denominator in calculating diluted earnings per share.
39,045,237
39,043,583
Performance rights granted under the Performance Rights Plan are considered to be potential ordinary shares and
have been included in the determination of diluted earnings per share, to the extent they are dilutive. Details relating
to the performance rights are set out in Note 24.
Note 28: Net Tangible Assets
2024
Cents
2023
Cents
Net tangible asset backing per ordinary share(i)
450.2
481.6
(i) Net tangible assets backing per ordinary share include right-of-use assets.
55
Notes to the Consolidated Financial Statements
Parent Entity
Note 29: Parent Entity Financial Information
2024
$’000
2023
$’000
(a) Summary financial information
The individual financial statements for the parent entity show the following
aggregate amounts:
Balance Sheet
Current assets
203,723 222,805
Total assets
490,735
499,272
Current liabilities
162,537
170,532
Total liabilities
321,654
318,341
Shareholders’ equity
Issued capital
62,589
67,598
Reserves
12,170
13,862
Retained earnings
94,322
99,472
169,081
180,932
Profit for the financial period
4,713
10,828
Total Comprehensive Profit for the financial period
1,519
5,997
(b) Guarantees entered into by the parent entity
Carrying amount included in current liabilities
Refer to Notes 19 and 20 for disclosures concerning contractual
commitments and contingent assets and liabilities for the parent entity.
-
-
Note 30: Segment Information
The Group operates within one reportable segment (retailing of discount variety merchandise). Total revenues of
$852,736,000 (FY2023: $819,340,000) all relate to the sale of discount variety merchandise in the Group’s country of
domicile (Australia), in this single reportable segment. The Group is not reliant on any single customer.
Note 31: Subsidiaries
The consolidated financial statements of the Reject Shop Limited include the following subsidiaries:
% of share capital
Name of entity
2024
2023
Place of incorporation
TRS Trading Group Pty Ltd
100%
100%
Australia
TRS Sourcing Limited(i)
100%
100%
Hong Kong
(i) TRS Sourcing Limited is in the process of being deregistered.
There were no transactions between the parent entity and its subsidiaries during the period (FY2023: Nil).
In addition, The Reject Shop Limited has effective control over The Reject Shop Limited Employee Share Trust,
which administers shares issued through the Group’s Performance Rights Plan. This entity is also consolidated.
The Reject Shop | Annual Report 2024
56
Notes to the Consolidated Financial Statements CONTINUED
Note 32: Matters Subsequent to the End of the Financial Period
Subsequent to the end of the financial period:
– The Group extended its existing banking facilities with ANZ Bank from August 2024 to August 2025.
See Note 13 for further information.
– The directors have determined not to declare a final dividend in respect of the financial period ended
30 June 2024.
– Andrew Woolf was appointed Chief Financial Officer of the Company and Patrick Myers was appointed
as Chief Commercial Officer of the Company.
Other than the above, no other matters or circumstances have arisen since the end of the financial period which
significantly affect or may significantly affect the operations of the Group, the results of those operations, or the
state of affairs of the Group in future financial periods.
Note 33: Related Party Transactions
During the period, the Group transacted with related parties of Kin Group Pty Ltd to purchase goods. Transactions
totalled $1,915,685 (FY2023: $1,380,035). All transactions were on commercial terms and on an arms-length basis.
There were no other related party transactions, other than those with key management personnel in the normal
course of business, during the period ended 30 June 2024.
57
Consolidated Entity Disclosure Statement
Name of entity
Type of entity
% of share
capital
Place of
incorporation
Australian
resident or
foreign
resident
Foreign
jurisdiction
of foreign
residents
The Reject Shop Limited
Body Corporate
n/a
Australia
Australian
n/a
TRS Trading Group Pty Ltd
Body Corporate
100%
Australia
Australian
n/a
The Reject Shop Limited
Employee Share Trust
Trust
n/a
n/a
Australian
n/a
TRS Sourcing Limited(i)
Body Corporate
100%
Hong Kong
n/a
n/a
(i) TRS Sourcing Limited is currently in the process of being deregistered. The entity’s residency is marked as n/a because for Hong Kong
local tax purposes, corporate residency is not relevant in determining the taxability of an entity.
Basis of preparation
This consolidated entity disclosure statement (CEDS) has been prepared in accordance with the Corporations Act
2001 (Cth) and includes information for each entity that was part of the consolidated entity as at the end of the
financial year in accordance with AASB 10 Consolidated Financial Statements.
Consolidated Entity Disclosure Statement
The Reject Shop | Annual Report 2024
58
Directors’ Declaration
In the Directors’ opinion:
(a) the Financial Statements and notes set out on pages 30 to 56 are in accordance with the Corporations Act 2001
(Cth), including:
(i)
complying with Accounting Standards, the Corporations Regulations 2001 (Cth) and other mandatory
professional reporting requirements; and
(ii)
giving a true and fair view of the Group’s financial position as at 30 June 2024 and of its performance for
the financial period ended on that date; and
(b) the consolidated entity disclosure statement on page 57 is true and correct; and
(c) there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become
due and payable.
The directors draw attention to Note 1(a) to the Financial Statements, which includes a statement of compliance with
International Financial Reporting Standards, as issued by the International Accounting Standards Board.
The directors have been given a declaration by the Chief Executive Officer and Chief Financial Officer required by
Section 295A of the Corporations Act 2001 (Cth).
This declaration is made in accordance with a resolution of the Directors.
Steven Fisher
Non-executive Chair
22 August 2024
59
Independent Auditor’s Report to the Members of The Reject Shop Limited
Independent Auditor’s Report to the
Members of The Reject Shop Limited
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999
Liability limited by a scheme approved under Professional Standards Legislation.
Independent auditor’s report
To the members of The Reject Shop Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of The Reject Shop Limited (the Company) and its controlled
entities (together the Group) is in accordance with the Corporations Act 2001, including:
(a)
giving a true and fair view of the Group's financial position as at 30 June 2024 and of its
financial performance for the 52 week period ended 30 June 2024.
(b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The financial report comprises:
the consolidated balance sheet as at 30 June 2024
the consolidated statement of comprehensive income for the 52 week period ended 30 June
2024
the consolidated statement of changes in equity for the 52 week period ended 30 June 2024
the consolidated statement of cash flows for the 52 week period ended 30 June 2024
the notes to the consolidated financial statements, including material accounting policy
information and other explanatory information
the consolidated entity disclosure statement as at 30 June 2024
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (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.
The Reject Shop | Annual Report 2024
60
Independent Auditor’s Report to the Members of The Reject Shop Limited CONTINUED
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
Audit scope
Key audit matters
Our audit focused on where the Group made
subjective judgements; for example,
significant accounting estimates involving
assumptions and inherently uncertain future
events.
Amongst other relevant topics, we
communicated the following key audit
matters to the Audit and Risk Committee:
Carrying Value of Property, Plant and
Equipment and Right of Use Assets
Inventory provision - Net Realisable Value
Inventory provision - Shrinkage
These are further described in the Key audit
matters section of our report.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context.
Key audit matter
How our audit addressed the key audit matter
Carrying Value of Property, Plant and
Equipment and Right of Use Assets
(Refer to Note 9 Non-Current Assets – Property,
Plant and Equipment and Note 10 Leases)
At 30 June 2024, The Group had property, plant
and equipment of $53.1 million, and right of use
assets of $212.8 million.
Due to impairment indicators existing at period
end, the Group tested Property, Plant and
Equipment, and Right of Use Assets for
impairment.
We performed the following procedures,
amongst others:
evaluated whether the Group’s assessment
of the determination of cash generating units
was consistent with our knowledge of the
Group’s operations;
tested the mathematical accuracy of
selected significant data included in the
models and compared selected significant
data to the latest board approved budget;
assessed the appropriateness, with
consideration to relevant external indicators
and historical Group performance, of
61
Independent Auditor’s Report to the Members of The Reject Shop Limited
Key audit matter
How our audit addressed the key audit matter
The Group performed impairment assessments
by preparing value-in-use models (“the models”)
for each cash generating unit, to determine if the
carrying value of these assets was supported by
forecast future cash flows discounted to their
present value.
We considered this to be a key audit matter
because of:
the financial significance of Property, Plant
and Equipment and Right of Use Assets to
the consolidated balance sheet;
the level of judgement involved by the Group
in determining the key assumptions used in
preparing the models, in particular, estimating
future cash flows over the forecast period and
the discount rate used to discount the
estimated cash flows.
selected significant assumptions used to
estimate the future cash flows;
compared actual historical results to the
Board approved budgeted figures to assess
the level of the Group’s accuracy in
forecasting cash flows;
considered the appropriateness of the
period over which cash flows were projected
based on our knowledge of the business
and the Group’s lease portfolio management
strategy;
with the assistance of PwC valuation
experts, assessed the appropriateness of
the discount rate assumptions used in the
models by comparing to market data,
comparable companies and industry
research;
considered the reasonableness of
disclosures made in light of the
requirements of Australian Accounting
Standards.
Inventory provision - Net Realisable Value
(Refer to Note 1(z)(iv) Net realisable value of
inventory and Note 7 Current Assets -
Inventories)
At 30 June 2024, the Group held $146.4 million
of inventory, of which $6.5 million was
recognised at net realisable value.
The Group assesses the net realisable value
(“NRV”) of inventory held at balance date, and
recognises an NRV provision by applying a
percentage markdown to any inventory items
expected to sell with an NRV below cost.
We considered this to be a key audit matter
because of:
the financial significance of the inventory
balance as at 30 June 2024 and therefore the
potential impact of the NRV provision on the
We performed the following procedures,
amongst others:
developed an understanding of how the
Group determines the NRV provision;
evaluated the appropriateness of significant
assumptions used in developing the
assumed markdown percentage to
determine the NRV provision in the context
of Australian Accounting Standards, by
having regard to:
aggregate inventory sold below cost
during the financial period;
aggregate inventory wastage incurred
during the financial period;
inventory written off subsequent to the
end of the financial period and up to the
completion of our audit.
considered the reasonableness of
disclosures made in light of the requirements
of Australian Accounting Standards.
The Reject Shop | Annual Report 2024
62
Independent Auditor’s Report to the Members of The Reject Shop Limited CONTINUED
Key audit matter
How our audit addressed the key audit matter
consolidated statement of comprehensive
income and consolidated balance sheet;
the subjective nature in estimating the
assumed percentage markdown applied to
certain inventory on hand.
Inventory provision – Shrinkage
(Refer to Note 1(z)(v) Provisioning for shrinkage
expense and Note 7 Current Assets -
Inventories)
The Group recognised a provision against
inventory at 30 June 2024 for the estimated loss
related to shrinkage.
The shrinkage provision is calculated by
applying an estimated shrink loss percentage to
the sales since the date of the last stock count to
the end of the financial period, on a store-by-
store basis.
We considered this to be a key audit matter
because of:
the financial significance of the inventory
balance as at 30 June 2024 and therefore
the potential impact of the provision for
shrinkage on the consolidated statement of
comprehensive income and the consolidated
balance sheet;
the subjective nature in estimating the shrink
loss percentage to apply to sales.
We performed the following audit procedures,
amongst others:
developed an understanding of how the
Group determines the shrinkage provision;
attended stock counts for a selection of
stores and developed an understanding of
the Group’s process for reviewing stock
count results for other stores;
evaluated the reasonableness of the shrink
loss percentage by comparing the estimated
shrink loss to the actual shrinkage results
noted from the stock counts performed in the
current period;
tested the mathematical accuracy of selected
significant data in the shrinkage provision
calculation;
considered the appropriateness of the
Group’s significant assumptions and tested a
selection of the significant data used in the
Group’s calculation by reference to historical
performance;
considered the reasonableness of
disclosures in light of the requirements of
Australian Accounting Standards.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the 52 week period ended 30 June 2024, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon through our opinion on the financial report. We
have issued a separate opinion on the remuneration report.
63
Independent Auditor’s Report to the Members of The Reject Shop Limited
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report in accordance
with Australian Accounting Standards and the Corporations Act 2001, including giving a true and fair
view, and for such internal control as the directors determine is necessary to enable the preparation of
the financial report that is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in the directors’ report for the 52 week period
ended 30 June 2024.
In our opinion, the remuneration report of The Reject Shop Limited for the 52 week period ended 30
June 2024 complies with section 300A of the Corporations Act 2001.
The Reject Shop | Annual Report 2024
64
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Brad Peake
Melbourne
Partner
22 August 2024
Independent Auditor’s Report to the Members of The Reject Shop Limited CONTINUED
65
Distribution of shareholders
Size of holding
Number of Shareholders
Number of Shares
% Issued Capital
1 – 1,000
2,944
1,093,992
2.93
1,001 – 5,000
1,168
2,843,096
7.62
5,001 – 10,000
221
1,667,645
4.47
10,001 – 100,000
183
4,614,564
12.37
100,001 and over
18
27,095,595
72.61
TOTAL
4,534
37,314,892
100
The number of shareholders holding less than a marketable parcel of ordinary shares was 1,019 (based on the
closing market price of $3.28 on 31 July 2024).
Substantial shareholders1
Name
Date most recent
notice received
Number of Shares2
% Issued Capital2
Bennamon Pty Ltd
17 June 2021
7,651,495
19.99
Bennelong Funds Management Group Pty Ltd
6 January 2022
6,349,779
16.57
Wilson Asset Management Group
5 June 2024
3,960,232
10.52
1. As notified to the Company in accordance with section 671B of the Corporations Act.
2. As disclosed in the most recent substantial holding notice lodged by the substantial shareholder with the ASX.
20 largest shareholders
Name
Number of Shares
% Issued Capital
Citicorp Nominees Pty Ltd
11,470,299
30.74
Bennamon Pty Ltd
7,751,495
20.77
J P Morgan Nominees Australia Pty Limited
2,656,433
7.12
SCJ Pty Ltd
1,500,000
4.02
Bond Street Custodians Limited
812,000
2.18
HSBC Custody Nominees (Australia) Limited
485,302
1.30
HLJT Nominees Pty Ltd
418,133
1.12
Dorothy Productions Pty Ltd
300,000
0.80
Mr Mike Fegelson
270,500
0.72
NCH Pty Ltd
266,868
0.72
Violante Pty Ltd
222,949
0.60
Macren Pty Ltd
149,860
0.40
Danlar Nominees Pty Ltd
144,039
0.39
Ace Property Holding Pty Ltd
140,000
0.38
BNP Paribas Nominees Pty Ltd
135,654
0.36
Pacific Custodians Pty Ltd TRS PLANS CTRL A/C
130,501
0.35
National Nominees Limited
127,962
0.34
Kgari Investments Pty Ltd
113,600
0.30
R I Finances Pty Ltd
89,200
0.24
Mr Gil Yahalom
88,952
0.24
TOTAL
27,273,747
73.09
Shareholder Information
as at 31 July 2024
Shareholder Information
The Reject Shop | Annual Report 2024
66
Voting rights
The Company’s Constitution sets out the voting rights attached to shares. In summary, subject to any rights or
restrictions for the time being attached to any class or classes of shares and the Company’s Constitution:
• on a show of hands, each shareholder present in person and each other person present as a proxy, attorney
or shareholder representative has one vote; and
• on a poll, each shareholder present in person has one vote for each fully paid share held by the shareholder
and each person present as proxy, attorney or shareholder representative has one vote for each fully paid
share held by the shareholder that the person represents.
Unquoted equity securities
The number of performance rights on issue under The Reject Shop’s Performance Rights Plan was 1,353,533 and
the number of holders of those performance rights was 31. There are no voting rights attached to performance
rights.
Current on-market buy-back
On 24 August 2023, the Company announced an on-market share buy-back of up to $10 million for the period
between 11 September 2023 and 10 September 2024.
Corporate Directory
THE REJECT SHOP LIMITED
ABN 33 006 122 676
Board of Directors
Steven Fisher (Chair)
David Grant
Nicholas Perkins
Margaret Zabel
Company Secretary
Lauren Harris
Registered Office
245 Racecourse Road
Kensington VIC 3031
(03) 9371 5555
Share Registry
Link Market Services Limited1
Level 10, Tower 4, 727 Collins St
Melbourne VIC 3008
1300 554 474 (within Australia)
+61 1300 554 474 (outside Australia)
Auditor
PricewaterhouseCoopers
2 Riverside Quay
Southbank VIC 3006
Securities Exchange Listing
The Reject Shop Limited shares are listed on the Australian Securities Exchange
(ASX code: TRS)
Website
www.rejectshop.com.au
1. Link Market Services Limited is now known as MUFG Pension & Market Services. Over the coming months, Link Market Services will
progressively rebrand to its new name MUFG Corporate Markets, a division of MUFG Pension & Market Services.
Corporate Directory
67
The Reject Shop | Annual Report 2024
www.rejectshop.com.au