for personal use only - asx · 2011. 10. 28. · level 12, 680 george street, sydney nsw 2000,...

AnnuAl RepoRt 2011

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2 | OrOtOnGrOup AnnuAl repOrt 2011

coRpoRAte diRectoRy

Australian Business Number (ABN) 14 000 038 675

Directorsross B lane (executive Chairman)Sally l Macdonald (Managing Director and CeO)eddy Chieng (non-executive Director)John p Schmoll (non-executive Director)J Will Vicars (non-executive Director)Samuel S Weiss (non-executive Director)

Company secretaryKevin Fine

Notice of annual general meetingthe annual general meeting of OrotonGroup limited will be held at:

pricewaterhouseCoopers level 10, Darling park tower 2 201 Sussex Street, Sydney nSW 1171 time 11:00 AM date Wednesday 30 november 2011

Registered office and principal place of businesslevel 2, 409 George Street, Waterloo nSW 2017, Australia

Share registerlink Market Services limitedlevel 12, 680 George Street, Sydney nSW 2000, Australiaphone: 02 8280 7100

Stock exchange listingOrotonGroup limited shares are listed on the Australian Securities exchange (ASX code: Orl)

Auditor pricewaterhouseCoopersChartered AccountantspO Box 2650201 Sussex Street, Sydney nSW 1171, Australia

Solicitors Watson Mangionilevel 13, 50 Carrington Street, Sydney nSW 2000, Australia

BankersWestpac Banking Corporation275 Kent Street, Sydney nSW 2000, Australia

Website addressesCorporate website: www.orotongroup.com Online boutique website: www.oroton.com

In line with OrotonGroup’s environmental initiatives this Annual report has been printed on carbon neutral FSC certified 100% recycled paper. We also selected an ISO14001 environmently certified print company.EnvironmentISO 14001

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http://www.orotongroup.com

http://www.oroton.com

OrOtOnGrOup AnnuAl repOrt 2011 | 3

Visual Overview of OrotonGroup 4Chairman and CeO Statement 1 9Financial Highlights 2 1Directors’ report 24Auditors’ Independence Declaration 38Corporate Governance Statement 39Financial report 48 Statement of Comprehensive Income 49 Statement of Financial position 50 Statement of Changes in equity 5 1 Statement of Cash Flows 52notes to the Financial Statements 53Directors’ Declaration 9 1Independent Auditors’ report to the Members of OrotonGroup limited 92Shareholder Information 94Brand retail Store listings 96

Contents

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6 | OrOtOnGrOup AnnuAl repOrt 2011OROtON

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10 | OrOtOnGrOup AnnuAl repOrt 2011RAlph lAuReN AuStRAliA & NZ

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MeDiA, MARketiNg & eveNtS

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SOCiAl MeDiA & ONliNe

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OROtON pRODuCt

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OROtONgROup teAM

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OROtONgROup BOARD

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While we have two great brands in Oroton and ralph lauren – with great heritage and a strong and loyal customer base – we don’t rest on these laurels. Operational excellence remains an important aim which supports our strategy. On this metric we believe we still have a way to go...there is always more to learn, more to analyze and more to do to improve all facets of the way we go to market. We don’t take our business for granted and as such we study on a daily basis our individual store data, average spends, links, best sellers and worst sellers, traffic patterns and customer insights extremely closely.

In the past 12 months our Finance team has undertaken individual store audits on all stores and we have as a group stepped up our data collection efforts with more mystery shopping visits and training to increase customer service levels to ensure our service and knowledge of our business is strong. this fact-based analytical approach is shared by everyone at OrotonGroup and is an important part of our culture. In this fast changing world we need to be more and more proactive in predicting the markets ebbs and flows and adapt our product strategies accordingly. In FY11, we launched our first directly operated Oroton stores in Asia – with two stores opened in Singapore and two in Kuala lumpur, Malaysia. the depth and size of the Asian market is vast compared with Australia and the Asian customer’s love of branded accessories is well documented already. We believe it’s a natural next step for the Oroton brand and one we researched and explored for a long time prior.

early results are encouraging; we have committed to opening four new Oroton stores in Asia each year for several years to come – with a focus on the Singapore, Malaysia and Hong Kong/Macau regions. We will continue to build our Asian management team and international marketing expertise as we progress these plans – and balance our need to invest for long term growth overseas with our domestic performance. In conclusion, we would like to thank-you for your support as shareholders over the past 12 months as well as all of our team members and business partners for their contribution towards our performance. We remain focused on driving shareholder value in the coming years.

ross B lane executive Chairman

Sally Macdonald Chief executive Officer (CeO) and Managing Director

chAiRmAn And ceo StAtement

In financial year 2011 we navigated a difficult environment carefully and reaffirmed our strategy of:

• focusingonourmulti-channel,retailmodel

• investment and innovation in two great brands – Ralphlauren and Oroton

• selectiveexpansionofOrotoninternationally

By varying our tactics, product ranges and strategies across our channels – online, retail, wholesale, factory outlets, shop-in-shop concession stores within department stores - and across countries – we were able to achieve a record FY11 net profit after tax of $24.8 million, which was 8% higher than last year. We also achieved solid growth in sales and margin levels and +7% growth in like for like sales performance as a group. the total fully franked annual dividend declared in FY11 was 50.0 cents per share (22 cents at half one, and 28 cents at year end). Importantly, as premium brand owners and retailers, we did not achieve our results via discounting – and in fact kept discount levels consistent with prior years – and consequently improved our margin significantly from 68% to 71%. We have continued to grow our online Oroton store (www.oroton.com) which we launched in 2006. It is now our largest Oroton store with more than six percent of total Oroton brand sales – well above the average for Australian based retail – and with material further growth potential. experimenting online in different languages and across different social media sites is a critical part of being a brand owner and developer today – and as such we keep these activities and knowledge strictly in-house.

Controlling our brand content tightly means no one dilutes or discounts our brand which erodes their long term value. Additionally, the good work of investing in and elevating our core brands over the past several years has paid dividends. Our store refurbishment program, investment in upgraded systems, people training and fixation on outstanding store service levels all support our performance and strategy. We focus on brand not price, although feel it’s important to provide good value at every price point – and our after sales service and product guarantees are an important part of who we are. Our job as brand developers and retailers is to embrace change and constantly seek ways to surprise and engage with our customers. today’s customer notices everything and is smarter and more informed than ever before as she can shop the world online and share brand stories, preferences, successes and failures on blogs and social media sites. the onus is therefore on us as brand owners to continue to innovate by seeking out new product ideas, upgrading our raw materials, leathers and design; inventing new ways of engaging with customers and marketing our brands and to be fanatical about continuously and incrementally improving our business and our customer offering. OrotonGroup is increasingly an international retailer – as the rise and rise of internet shopping as well as physical Oroton stores in four countries (Australia, new Zealand, Singapore, Malaysia) means we compete with all the brands and retailers of the world.

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FinAnciAl highlightS

Financial highlights

• revenue up 12.3% to $164.4m

• total expenses 49.6% of sales (2010: 47.1%)

• eBIt up 14.0% to $36.5m

• eBItDA up 15.6% to $43.8m

• npAt up 7.9% to $24.8m

• epS up 7.9% to 60.8 cents

• Full year, fully franked dividends of 50.0 cents per share (2010: 48.0 cents)

• Operating cash flow of $24.0m or 14.6% of revenue

Operational highlights

• like for like sales performance of Oroton +4% and ralph lauren +10%

• Opened 8 new Oroton stores and 1 new ralph lauren factory store bringing group total stores to 85

at 30 July 2011 (77 stores in Australia, 4 in new Zealand, 2 in Singapore, 2 in Malaysia)

- 57 stores and department store concessions in Oroton

- 28 stores and department store concessions in ralph lauren

• refurbished a total of 11 Oroton and 3 ralph lauren stores - refurbishment program now mostly

complete

• Successful launch of the Oroton brand in Asia

• Continued price elevation in core bag lines, introduced Oroton shoes and outerwear and launched

men’s sock category

• Focus on interactive marketing and social media resulting in higher brand awareness internationally

and more fashion recognition locally

• Oroton online sales growth of more than 180% since last year and online sales now at more than 6%

of total Oroton brand sales

• Strong growth for ralph lauren across all categories with:

- Increased conversion and average transaction levels

- Improved trading margin driven by more effective discounting, focused buying and range

planning

• Bank facility increased by $20m to support future growth plans

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Financial performance

20071 2008 2009 2010 2011

Sales revenue - continuing operations ($m) 108.9 121.2 134.0 145.3 163.4

eBItDA - continuing operations ($m) 20.3 28.8 32.9 37.9 43.8

eBIt - continuing operations ($m) 14.3 24.3 28.0 32.0 36.5

net profit after taxation- continuing operations ($m) 9.8 16.7 19.4 23.0 24.8

profitability ratios

2007 2008 2009 2010 2011

epS (cents) 23.0 40.4 47.7 56.3 60.8

return on capital employed (%)2 45.0% 97.4% 85.8% 81.0% 85.3%

Financial position

2007 2008 2009 2010 2011

Inventory ($m) 20.7 22.3 24.6 23.5 30.2

Inventory turnover (times) 1.8 1.7 1.9 1.9 1.8

total assets ($m) 44.5 47.3 52.3 57.8 65.9

net bank debt ($m) 7.5 1.3 (2.6) (6.7) (9.2)

total shareholder equity ($m) 26.8 22.1 26.2 28.7 29.7

net bank debt/equity ratio (%) 0.0% 0.0% 9.8% 23.3% 31.1%

Operating cash flow before interest & taxation ($m) 14.5 28.7 33.6 37.6 35.6

Dividends

2007 2008 2009 2010 2011

Ordinary and special dividends (cents) (fully franked)

23.0 35.0 41.0 48.0 50.0

1 Earnings are based on continuing operations only. OrotonGroup completed the sale of the ALDO footwear business effective 17 October

2006 and the combined sale of the MARCS and MORRISSEY apparel business effective 5 December 2006. These business area excluded from continuing operations in 2007.

2 Return on Capital Employed = EBIT/(Total Assets-Current Liabilities)

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30.0

2.0

1.8

1.7

1.6

1.5

1.4

25.0

20.0

15.0

10.0

5.0

35.0

Inventory Stock Turn

Inventory

A$M TIM

ES

0.0

2007

2008

2009

2010

2011

180.0

30.0

60.0

120.0

90.0

150.0

Sales Revenue

Sales Revenue - Continuing OperationsA$M

0.0

2007

2008

2009

2010

2011

EBITDA Operating Cash Flow BeforeInterest and Tax

Operating Cash flow20

11

2007

2008

2009

2010

40.0

20.0

60.0

80.0

Total Assets Debt/Equity

Total Assets And Debt: Equity

A$M %

0.0

2011

2007

2008

2009

2010

30.0

25.0

40.0

35.0

20.0

15.0

10.0

5.0

EBIT

45.0

EBIT & Return On Capital Employed

A$M %

0.0

2007

2008

2009

2010

2011

10.0

40.0

30.0

60.0

50.0

70.0

20.0

EPS Dividend

Basic EPS And Dividend

Cen

ts

0.0

2007

2008

2009

2010

2011

Return On Capital Employed

30.0

25.0

40.0

35.0

20.0

15.0

10.0

5.0

45.0

A$M

0.0

95

85

75

65

55

45

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30 JulY 2011

diRectoRS’ RepoRt

the directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the ‘consolidated entity’) consisting of OrotonGroup limited (referred to hereafter as the ‘company’ or ‘parent entity’) and the entities it controlled for the year ended 30 July 2011.

Directorsthe following persons were directors of OrotonGroup limited during the whole of the financial year and up to the date of this report, unless otherwise stated:

ross B lane Sally l Macdonald eddy Chieng John p Schmoll J Will Vicars Samuel S Weiss

principal activitiesDuring the financial year the principal continuing activities of the consolidated entity consisted of:

• Retailing and wholesaling of leather goods, fashionapparel and related accessories under the OrOtOn and rAlpH lAuren labels.

• LicensingoftheOROTONbrandname.

DividendsDividends paid during the financial year were as follows:

2011 2010

$’000 $’000

Final dividend for the year ended 31 July 2010 (2010: 25 July 2009) of 26.0 cents (2010: 22.0 cents) per fully paid ordinary share paid on 27 October 2010 (2010: 28 October 2009) fully franked based on a tax rate of 30%

Special dividend for the year ended 25 July 2009 of 3.0 cents per fully paid ordinary share paid on 28 October 2009 fully franked based on a tax rate of 30%

Interim dividend for the year ended 30 July 2011 (2010: 31 July 2010) of 22.0 cents (2010: 22.0 cents) per fully paid ordinary share paid on 13 April 2011 (2010: 7 April 2010) fully franked based on a tax rate of 30%

10,629 8,994

- 1,226

8,994 8,994

19,623 19,214

In addition to the above dividends, since year end the Directors have recommended the payment of a fully franked final dividend of 28 cents per ordinary share, out of current period profits, to be paid on 26 October 2011. this is an estimated distribution of $11,447,000 based on the number of ordinary shares on issue as at 30 July 2011.

Review of operationsthe profit for the consolidated entity after providing for income tax amounted to $24,789,000 (31 July 2010: $22,972,000).

Further information is contained in the Chairman and CeO statement on page 19 of this Annual report.

the year ended 30 July 2011 was a 52 week accounting period, whereas the year ended 31 July 2010 was a 53 week accounting period.

Significant changes in the state of affairsthere were no significant changes in the state of affairs of the consolidated entity during the financial year.

Matters subsequent to the end of the financial yearOn 19 September 2011 the consolidated entity signed a new financing facility with Westpac, increasing its total facility available from $40m to $60m. this facility is due for renewal on 31 October 2013.

Apart from the dividend declared as discussed above, no other matter or circumstance has arisen since 30 July 2011 that has significantly affected, or may significantly affect the consolidated entity’s operations, the results of those operations, or the consolidated entity’s state of affairs in future financial years.

likely developments and expected results of operationsthe consolidated entity’s focus is premium lifestyle brands in fashion related businesses. the consolidated entity continues to have a multi brand strategy and will build on its existing strengths as and when the right opportunities arise. the consolidated entity’s philosophy is to provide consistent profit growth supporting a stable dividend growth for shareholders. Further information as to likely developments in the operations of the consolidated entity have not been included in this report as the directors believe that to include such information would be likely to prejudice the consolidated entity.

environmental regulationthe consolidated entity is not subject to any significant environmental regulation under Australian Commonwealth or State law.

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noteS to the FinAnciAl StAtementS

30 JulY 2011


diRectoRS’ RepoRt

information on directorsName: Ross B lane Title: executive Chairman Experience and expertise: ross lane has held various positions within the consolidated entity over the past 24 years, including holding the position of Managing Director of OrotonGroup limited from 1996 to 2006.Other current directorships: none Former directorships (in the last 3 years): noneSpecial responsibilities: Member of the Audit Committee and people and Organisation CommitteeInterests in shares: ross and his personally related parties hold 2,150,000 (2010: 2,985,961) ordinary shares.

Mr robert lane, Mr ross lane, Mr tom lane and Mrs Anna Hookway (nee lane) entered into a Deed dated 21 October 2008 which requires them to act co-operatively with each other in relation to the consolidated entity’s affairs. under this deed, as at 30 July 2011, 8,600,000 (2010: 11,944,859) ordinary shares representing 21.04% (2010: 29.22%) of the issued share capital of OrotonGroup limited are beneficially owned by Mr robert lane, Mr ross lane, Mr tom lane and Mrs Anna Hookway (nee lane) in entities associated with them.Interests in options: none

Name: Sally l MacdonaldTitle: Managing Director and CeOQualifications: B.Com; MBA, Harvard Business SchoolExperience and expertise: Sally Macdonald became Chief executive of OrotonGroup in September 2006 having previously consulted to the group. Sally has 8 years experience as a management consultant with the Boston Consulting Group in Melbourne and new York City offices and also worked in buying and store operations at Banana republic (a division of the Gap Inc) in San Francisco. Other current directorships: noneFormer directorships (in the last 3 years): noneSpecial responsibilities: Member of the Audit Committee and people and Organisation CommitteeInterests in shares: Sally holds a relevant interest in 748,570 (2010: 748,570) ordinary shares.Interests in options: Sally has 280,869 (2010: 395,472) options over ordinary shares in her own name.

Name: eddy ChiengTitle: Independent non-executive DirectorQualifications: B.Com; ACAExperience and expertise: Mr Chieng is a chartered accountant with extensive professional and entrepreneurial experience across personal care, licensed brands, logistics, property, and agri and marine resource companies in Australia, Malaysia, Singapore, Hong Kong, thailand, China and other ASeAn Countries.Other current directorships: Mr Chieng is currently a director of three companies, all listed on the Malaysian stock exchange - executive Chairman of esthetics International Group (eIG) Berhad, Chairman of Selangor Dredging Berhad and Senior Independent non-executive Director of Ql resources Berhad.Former directorships (in the last 3 years): none

Special responsibilities: Member of the Audit Committee and people and Organisation Committee.Interests in shares: noneInterests in options: none

Name: John p SchmollTitle: Independent non-executive DirectorQualifications: B.Com, FCA, FAICDExperience and expertise: John Schmoll completed his executive career as Chief Financial Officer of Coles Myer ltd. prior to this he held senior corporate and professional roles in Australia and South Africa including Arthur Young and edgars Stores ltd (South Africa’s largest apparel and home wares retailer). Since his retirement he has accepted various non-executive director positions and undertaken some executive coaching roles. Accordingly he brings to OrotonGroup over 35 years of experience in finance, investor relations, information technology and corporate governance, primarily in the distribution and financial sectors.Other current directorships: non-executive Chairman of Breville Group ltd and non-executive Director of patties Foods ltd.Former directorships (in the last 3 years): non-executive Director of Golden Circle ltd, Chandler Macleod ltd and AWB ltd. prior to this, non-executive Director of Australian leisure and Hospitality ltdSpecial responsibilities: Chairman of the Audit Committee and Member of the people and Organisation CommitteeInterests in shares: John has an interest as a trustee and member in the earlswood Superannuation Fund which holds 30,000 (2010: 30,000) ordinary shares.Interests in options: none

Name: J Will vicarsTitle: non-executive DirectorQualifications: BA ecoExperience and expertise: Will Vicars was a Senior portfolio Manager at nrMA Investments and later a portfolio Manager at Bt Australia. He has more than 23 years experience in a variety of financial markets. He is a member of the St luke’s Hospital Foundation.Other current directorships: Director of Caledonia (private) Investments pty limited and the Caledonia Foundation pty ltd. He is also a non-executive Director of Grays (Aust) Holdings pty limited.Former directorships (in the last 3 years): noneSpecial responsibilities: Member of the Audit Committee and people and Organisation CommitteeInterests in shares: Will has a relevant interest in 4,973,113 (2010: 4,822,401) ordinary shares.Interests in options: noneF

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30 JulY 2011


Name: Samuel S WeissTitle: lead Independent non-executive DirectorQualifications: AB, Harvard university; MS, Columbia Business School; FAICDExperience and expertise: Samuel Weiss is Chairman of Altium ltd, a leading developer of electronic design solutions and Open universities Australia, the leading distance education provider in Australia, and a non-executive director of Breville Group ltd and Iproperty Group ltd. He is a Director of the Sydney Festival and is president of the Benevolent Society. He joined the Board on 3 June 2003 as a non-executive Director and on 31 July 2003 was appointed Chairman of the Board. On 8 December 2006 he retired as Chairman in line with the directors’ resolution to restructure the board.Other current directorships: Chairman of Altium ltd and Open universities Australia and a non-executive director of Breville Group ltd, Iproperty Group ltd, the Sydney Festival and the Benevolent Society.Former directorships (in the last 3 years): GlG Corp ltdSpecial responsibilities: Chairman of the people and Organisation Committee and Member of the Audit CommitteeInterests in shares: Sam has an interest in the Garb-Weiss Superannuation Fund which holds 147,404 (2010: 147,404) ordinary sharesInterests in options: none

‘Other current directorships’ quoted above are current directorships for listed entities only and excludes directorships in all other types of entities, unless otherwise stated.

‘Former directorships (in the last 3 years)’ quoted above are directorships held in the last 3 years for listed entities only and excludes directorships in all other types of entities, unless otherwise stated.

Company secretarythe company secretary since April 2007 is Kevin Fine. He is a current member of the Institute of Chartered Accountants in Australia and began his career in Audit and Advisory with firms including Arthur Andersen, Moores rowland and ernst and Young. Kevin’s retail career began with Shoprite Holdings ltd (South Africa). He then spent 7 years with the Specialty Fashion Group as Head of Finance.

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diRectoRS’ RepoRt

30 JulY 2011


Meetings of directorsthe number of meetings of the company’s Board of Directors and of each board committee held during the year ended 30 July 2011, and the number of meetings attended by each director were:

Full Board Audit Committeepeople and Organisation

Committee

Attended held Attended held Attended held

ross B lane 8 8 4 4 4 4

Sally l Macdonald 8 8 4 4 4 4

eddy Chieng 8 8 4 4 4 4

John p Schmoll 8 8 4 4 4 4

J Will Vicars 8 8 4 4 4 4

Samuel S Weiss 7 8 4 4 4 4

Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee

Retirement, election and continuation in office of directorsIn accordance with the constitution, John p Schmoll retires as a Director at the Annual General Meeting and, being eligible, offers himself for re-election.

Remuneration report (audited)the remuneration report, which has been audited, outlines the director and executive remuneration arrangements for the consolidated entity and the company, in accordance with the requirements of the Corporations Act 2001 and its regulations.

the remuneration report is set out under the following main headings:

A principles used to determine the nature and amount of remunerationB Details of remunerationC Service agreementsD Share-based compensatione Additional information

A Principles used to determine the nature and amount of remunerationthe objective of the consolidated entity’s executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. the framework aligns executive reward with achievement of strategic objectives aligned to the creation of value for shareholders and takes account of market best practice for executive compensation.

the consolidated entity has structured an executive remuneration framework that is market competitive and complementary to the reward strategy of the organisation.

Alignment to shareholders’ interests:• hasprofitasacorecomponentofplandesign• focusesonsustainedgrowthinshareholderwealth,consistingofdividendsandgrowthinsharepriceanddeliveringa

consistent return on assets as well as focusing the executives on key non-financial drivers of value• attractsandretainshighcalibreexecutives.

Alignment to program participants’ interests• rewardscapabilityandresults• reflectscompetitiverewardforcontributiontogrowthinshareholderwealth• providesaclearstructureforearningrewards• providesrecognitionforcontribution.

the framework provides a mix of fixed and variable pay, and a blend of short and long-term incentives. As executives gain seniority with the group, the balance of this mix shifts to a higher proportion of “at risk” rewards.

the Board has a people and Organisation Committee which provides advice on remuneration, incentive policies and practices and specific recommendations on remuneration packages for executive Directors, other senior executives and non-executive Directors. the Corporate Governance statement provides further information on the role of this Committee.

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diRectoRS’ RepoRt

30 JulY 2011


Directors’ feesFees and payments to non-executive Directors reflect the demands which are made on, and the responsibilities of, the Directors. non-executive Directors’ fees and payments are reviewed annually by the Board. the executive Chairman’s fees are determined independently to the fees of non-executive Directors based on comparable roles in the external market. the executive Chairman is not present at any discussions relating to determination of his own remuneration.

non-executive Directors’ fees are determined within a Directors’ fee pool limit, which is periodically recommended for approval by shareholders. the maximum currently stands at $700,000 per annum and was approved by shareholders at the 2010 Annual General Meeting.

the non-executive directors who chair a committee receive as part of their remuneration additional fees. non-executive Director and additional chair fees were last reviewed and changed with effect from 27 October 2010.

the following annual fees (excluding superannuation and non-monetary benefits) have applied:• BasefeeforExecutiveDirector$45,000(2010:$45,000)• BasefeeforExecutiveChairman$91,743(2010:$45,000)• BasefeeforNon-ExecutiveDirector$91,743(2010:$68,807)• AdditionalfeesforAuditCommitteeChairman$13,761(2010:$13,761)• AdditionalfeesforPeopleandOrganisationCommitteeChairman$9,175(2010:$9,175)

executive compensationthe executive compensation and reward framework has four components:• basepayandbenefits• superannuation• shorttermperformanceincentives• longtermincentivesthroughparticipationintheOrotonPerformanceBasedIncentiveScheme

the combination of these comprises the executive’s total remuneration.

Information on the Oroton performance Based Incentive Scheme is set out in note 39 to the financial statements.

Base payBase pay is structured as a total employment cost package which may be delivered as a combination of cash and prescribed non-financial benefits.

executives are offered a competitive base pay that comprises a fixed component of pay and rewards. Base pay for senior executives is reviewed annually to ensure the executive’s pay is competitive with the market. An executive’s pay is also reviewed on promotion. It is the role of the people and Organisation Committee to review and approve remuneration levels.

Superannuationretirement benefits are delivered to the employee’s choice of Superannuation Fund. the consolidated entity has no interest or ongoing liability to the fund or the employee in respect of retirement benefits.

Short term performance incentivesthe consolidated entity operates short term incentive (StI) programs that reward senior management on the achievement of predetermined profit targets and personal performance criteria established for each financial year. using a profit target ensures variable reward is only available when value is created for shareholders and when profit is consistent with the business plan. the rewards are generally cash bonuses. the Managing Director may recommend to the Board discretionary bonuses for exceptional circumstances.

each executive has a target StI opportunity depending on the accountabilities of their role and its impact on the organisation’s performance.

each year, the people and Organisation Committee considers the appropriate targets and key performance indicators (KpIs) to link the StIs and the level of payout if targets are met. this includes setting out a maximum payout under the StI and minimum levels of performance to trigger payment of StI.

the people and Organisation Committee is responsible for assessing whether the KpIs are met. the short-term bonus payments may be adjusted up or down in line with under or over achievement against the target performance levels. this is at the discretion of the Board of Directors.

the StI target annual payment is reviewed annually.

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diRectoRS’ RepoRt

30 JulY 2011


long term performance incentiveslong term incentives are provided to certain employees via the Oroton performance Based Incentive Scheme (‘the Scheme’). these incentives are provided as performance rights in the form of zero priced share options. the objective of the scheme is to reward executives and certain key management personnel in a manner that aligns this element of compensation with the creation of shareholder value.

the Scheme is only made available to executives and certain key management personnel (collectively “participants”) who are able to influence the generation of shareholder value and have a direct impact on the company’s performance against relevant long term performance hurdles. Depending upon their position and seniority in the organisation, participants are eligible for an option award based on a percentage of their fixed annual remuneration. the number of options granted is then calculated based on the company share price at the time of the award.

Option grants to participants (excluding the Managing Director) are recommended by the Managing Director to the people and Organisation Committee and this recommendation is then put to the Board for approval. Option grants to the Managing Director are recommended by the people and Organisation Committee and this recommendation is then put to the shareholders of OrotonGroup limited for approval at the Annual General Meeting.

An offer under the Scheme grants a participant options for a certain number of fully paid ordinary shares in the company. the company currently uses earnings per share as the performance hurdle for the Scheme. the use of epS ensures an alignment between shareholder return and reward for participants. epS represents the earnings per share from operations as reported in the audited accounts of OrotonGroup limited. epS hurdles are currently set by the board based on the Group’s epS, increaseing by a predetermined percentage compounded annually over a 3 year term. Options will vest and become exercisable where the epS growth hurdle is satisfied in the third financial year of the vesting period. If the performance hurdle is not met or if the participant ceases to be employed by the company, any unvested options will lapse unless otherwise determined by the Board.

Shares provided to participants are purchased on market by the OrotonGroup Share plan Company. these shares are held in the OrotonGroup trust when purchased until they are transferred to participants on the vesting of their options.

there are no cash alternatives. the options cannot be transferred and are not quoted on the Australian Stock exchange. Holders of options are not entitled to notice of, or attend, a meeting of shareholders of the company, or receive any dividends declared by the company, until the options have vested and are then converted into shares.

Share-based payments remuneration as disclosed in Section B of the remuneration report includes the expense on share options granted and the reversal of the expense on share options that are expected to lapse.

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B Details of remunerationAmounts of remunerationDetails of the remuneration of the directors, the key management personnel of the consolidated entity (as defined in AASB 124 related party Disclosures) and specified executives of OrotonGroup limited are set out in the following tables.

the key management personnel of the consolidated entity consisted of the directors of OrotonGroup limited and the following executive:• KevinFine-CompanySecretaryandChiefFinancialOfficer(CFO)

2011Short-term

benefits

post-employment

benefitslong-term

benefitsShare-based

payments

Name

Cash salaryand fees Bonus

Super-annuation

long serviceleave Options total

$ $ $ $ $ $

Non-executive Directors:

eddy Chieng 91,496 - 8,235 - - 99,731

John p Schmoll 105,221 - 9,470 - - 114,691

J Will Vicars 91,496 - 8,235 - - 99,73 1

Samuel S Weiss 100,646 - 9,058 - - 109,704

executive Directors:

ross B lane (executive Chairman) 239,395 - 21,546 3,364 - 264,305

Sally l Macdonald(Managing Director and CeO) 531,216 250,000 15,109 8 , 1 1 7 296,520 1,100,962

Other key Management personnel:

Kevin Fine 295,540 64,833 15,206 6,566 95,738 477,883

1,455,010 314,833 86,859 18,047 392,258 2,267,007

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2010Short-term

benefits

post-employment

benefitslong-term

benefitsShare-based

payments

Name

Cash salaryand fees Bonus

Super-annuation

long serviceleave Options total

$ $ $ $ $ $


eddy Chieng (appointed on 23 June 2010) 11,468 - 1,032 - - 12,500

John p Schmoll 83,901 - 7,551 - - 91,452

J Will Vicars 69,9 1 7 - 6,293 - - 76,210

Samuel S Weiss 79,254 - 7,132 - - 86,386


ross B lane (executive Chairman) 193,965 - 29,825 6,782 - 230,572

Sally l Macdonald*(Managing Director and CeO) 535,470 442,000 14,710 10,589 906,446 1,909,215


Kevin Fine 278,485 80,465 14,744 4,551 103,251 481,496

1,252,460 522,465 81,287 21,922 1,009,697 2,887,831

* Bonus: includes $150,000 cash bonus relating to the year ended 25 July 2009 and deferred to and paid in the year ended 31 July 2010. Options: includes the reimbursement of income tax expense on options.

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the proportion of remuneration linked to performance and the fixed proportion are as follows:

Fixed remuneration At risk - Sti At risk - lti

Name 2011 2010 2011 2010 2011 2010


eddy Chieng 100% 100%

John p Schmoll 100% 100%

J Will Vicars 100% 100%

Samuel S Weiss 100% 100%


ross B lane 100% 100%

Sally l Macdonald 50% 30% 23% 23% 27% 47%


Kevin Fine 66% 62% 14% 17% 20% 21%

the proportion of the StI cash bonus paid and forfeited is as follows:

Cash bonus paid Cash bonus forfeited

Name 2011 2010 2011 2010


Sally l Macdonald * 57% 66% 43% 34%


Kevin Fine 51% 70% 49% 30%

* 37.5% of Sally L Macdonald’s cash bonus for the year ended 25 July 2009 was deferred to and paid in the year ended 31 July 2010.

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C Service agreementsOn appointment to the Board, all 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 compensation, relevant to the office of Director.

remuneration and other terms of employment for the Managing Director, Chief Financial Officer and the other key management personnel are also formalised in service agreements. each of these agreements provide for the provision of performance-related cash bonuses, other benefits including participation, when eligible, in the Oroton performance Based Incentive Scheme. Other major provisions of the agreements relating to remuneration are set out below.

All contracts with executives may be terminated early by either party with three months notice, subject to termination payments as detailed below.

remuneration and other terms of employment for executive key management personnel are formalised in service agreements. Details of these agreements are as follows:

Name: Ross B laneTitle: executive ChairmanAgreement commenced: 25 november 2009Term of agreement: OngoingDetails: Base salary, inclusive of superannuation, for the year ending 28 July 2012 of $270,000 which is inclusive of $100,000 directors fees, to be reviewed annually by the people and Organisation Committee. payment of a termination benefit on early termination by the company, other than for gross misconduct, equal to 6 times monthly base salary.

Name: Sally l MacdonaldTitle: Managing Director and CeOAgreement commenced: 25 September 2006Term of agreement: Ongoing, 6 month notice periodDetails: Base salary, inclusive of superannuation, for the year ending 28 July 2012 of $550,000, to be reviewed annually by the people and Organisation Committee. payment of a termination benefit on early termination by the Company, other than for gross misconduct, equal to 6 times monthly base salary.

Name: kevin FineTitle: Company Secretary and Chief Financial Officer (CFO)Agreement commenced: 29 January 2007Term of agreement: OngoingDetails: Base salary, inclusive of superannuation, for the year ending 28 July 2012 of $315,000, to be reviewed annually by the people and Organisation Committee. payment of a termination benefit on early termination by the Company, other than for gross misconduct, equal to 8 times weekly base salary.

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D Share-based compensationissue of sharesDetails of shares issued during the year ended 30 July 2011 to directors and other key management personnel as part of compensation are set out below:

Name Date No of shares issue price $

Sally l Macdonald 5 October 2010 200,000 $0.00 -

Kevin Fine 5 October 2010 36,667 $0.00 -

Optionsthe terms and conditions of each grant of options affecting remuneration of directors and other key management personnel in this financial year or future reporting years are as follows:

grant datevesting date andexercisable date expiry date exercise price

Fair valueper option

at grant date

29 July 2008 30 July 2011 30 July 2013 $0.00 $2.260

19 April 2010 28 July 2012 28 July 2014 $0.00 $5.740

2 August 2010 27 July 2013 27 July 2015 $0.00 $5.420

1 December 2010 28 July 2012 28 July 2014 $0.00 $5.740

1 December 2010 27 July 2013 27 July 2015 $0.00 $6.660

Options granted carry no dividend or voting rights.

For information relating to vesting hurdles, please refer to share-based payments note 39.

Details of options over ordinary shares issued to directors and other key management personnel as part of compensation during the year ended 30 July 2011 are set out below:

Number of options grantedduring the year

Number of options vestedduring the year

Name 2011 2010 2011 2010

Sally l Macdonald * 199,422 - 200,000 128,570

Kevin Fine 16,133 20,091 36,667 26,666

* The 2 tranches of options allocated to Sally L Macdonald by the Board for the years ended 31 July 2010 (115,385 options) and 30 July 2011 (84,037 options) were granted with shareholder approval at the Annual General Meeting on 1 December 2010

Values of options over ordinary shares granted, exercised and lapsed for directors and other key management personnel during the year ended 30 July 2011 are set out below:

value of options granted during

the year

value of options exercised during

theyear

value of optionslapsed during

the year

Remunerationconsisting of options for

the year

Name $ $ $ %

Sally l Macdonald 1,221,996 1,538,000 - 27

Kevin Fine 87,441 281,969 - 20

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E Additional informationprinciples used to determine the nature and amount of remuneration:relationship between remuneration and company performance:the overall level of executive reward takes into account the performance of the consolidated entity over the current year. In years of poor performance executive bonuses have only been paid at the discretion of the Board based on individual contributions or achievements or as required under contractual obligations.

Short term incentive (StI) payments to participating executives mirror the performance of the consolidated entity as summarised below. StI’s are also paid on achieving non-financial objectives set by the Board and management.

the earnings of the consolidated entity for the four years to 30 July 2011 are summarised below:

2008 2009 2010 2011

$’000 $’000 $’000 $’000

Sale of goods 121,170 133,953 145,324 163,367

eBItDA 28,822 32,941 37,901 43,805

eBIt 24,343 27,958 32,016 36,509

profit after income tax 16,739 19,436 22,972 24,789

StI cash bonus paid as a % of available* 96% 68% 67% 56%

* Short term incentive targets include non-financial objectives.

the factors that are considered to affect total shareholders return (tSr) are summarised below:

2008 2009 2010 2011

Share price at financial year end ($A) 3.10 3.56 6.69 7.33

total dividends declared (cents per share) 35.00 41.00 48.00 50.00

Basic earnings per share (cents per share) 40.40 47.71 56.33 60.77

Share buy-back ($’000) ** 6,824 998 - -

** Share buy-backs in 2008 and 2009 consisted of 1,749,897 shares bought at an average price of $3.90 and 285,000 shares bought at an average price of $3.50 respectively.

This concludes the remuneration report, which has been audited.

loans to directors and executivesthere have not been any loans made to directors of OrotonGroup limited or any other key management personnel of the consolidated entity, including their personally related parties, for the 2011 and 2010 years.

exercise of optionsDuring the year ended 30 July 2011, 236,667 options were converted to OrotonGroup limited shares under the Oroton performance Base Incentive Scheme. these shares were purchased on-market by the Oroton share plan company during the year ended 31 July 2010.

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Shares under optionunissued ordinary shares of OrotonGroup limited under option at the date of this report are as follows:

grant date expiry dateexercise

priceNumber

under option

29 July 2008 31 July 2013 $0.00 174,527

19 April 2010 28 July 2014 $0.00 76,682

2 August 2010 27 July 2015 $0.00 76,924

1 December 2010 28 July 2014 $0.00 115,385

1 December 2010 27 July 2015 $0.00 84,037

527,555

indemnity and insurance of officersthe company has indemnified the directors of the company for costs incurred, in their capacity as a director, for which they may be held personally liable, except where there is a lack of good faith.

During the financial year, the company paid a premium in respect of a contract to insure the directors of the company against a liability to the extent permitted by the Corporations Act 2001. the contract of insurance prohibits disclosure of the nature of liability and the amount of the premium.

indemnity and insurance of auditorthe company has not, during or since the financial year, indemnified or agreed to indemnify the auditor of the company or any related entity against a liability incurred by the auditor.

During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company or any related entity.

proceedings on behalf of the companyno person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the company, or to intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or part of those proceedings.

Non-audit servicesDetails of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are outlined in note 28 to the financial statements.

the directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another person or firm on the auditor’s behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.

the directors are of the opinion that the services as disclosed in note 28 to the financial statements do not compromise the external auditor’s independence for the following reasons:• allnon-auditserviceshavebeenreviewedandapprovedtoensurethattheydonotimpacttheintegrityandobjectivity

of the auditor, and• noneof theservicesunderminethegeneralprinciplesrelatingtoauditor independenceassetout inAPES110Code

of ethics for professional Accountants issued by the Accounting professional and ethical Standards Board, including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the company, acting as advocate for the company or jointly sharing economic risks and rewards.

Officers of the company who are former audit partners of pricewaterhouseCoopers

there are no officers of the company who are former audit partners of pricewaterhouseCoopers.

Rounding of amountsthe company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission, relating to ‘rounding-off’. Amounts in this report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, the nearest dollar.

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Auditor’s independence declarationA copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on the following page.

AuditorpricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001.

this report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.

On behalf of the directors

ross B laneexecutive Chairman 22 September 2011Sydney

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coRpoRAte goveRnAnce StAtement

the Corporate Governance principles that guide the operations of OrotonGroup (the “Consolidated entity”) are detailed in this statement. OrotonGroup and the board are committed to achieving and demonstrating the highest standards of corporate governance. these standards are based on the ASX Corporate Governance Council’s principles of Good Corporate Governance and Best practice recommendations.

the ASX principles that have been adopted are outlined below. Where an alternative approach has been adopted, this is outlined within the relevant section. All these practices unless otherwise stated, were in place for the entire year.

principle 1 – lay solid foundations for management and oversightthe ASX Corporate Governance Council states that a company should “recognise and publish the respective roles and responsibilities of board and management”.

the Board of Directorsthe Board of Directors (the Board) is elected by the shareholders to represent the interests of all shareholders, collectively. In this regard, its primary purpose is to safeguard the financial security of OrotonGroup and to act in good faith and in a way most likely to promote the success of the Consolidated entity for the benefit of its members as a whole.

Role and Responsibility of the BoardAll directors are individually briefed on appointment, on the duties they owe as directors to the Company. Although responsibility for the operation of the OrotonGroup business is delegated to executive key management personnel, the Board remains responsible for, amongst other things:• TheelectionoftheChairmanfromamongstitsmemberswhoseprimaryroleistomanagetheaffairsoftheBoardandto

represent the Board;• Selection,monitoringandevaluationoftheManagingDirectorandseniorexecutives;• EnsuringtheadequacyoftheOrotonGroupriskmanagementpoliciesandinternalcompliance(includingrelevantsystems

and controls in place) to ensure that the assets of the Consolidated entity are adequately safeguarded;• ProvidingstrategicguidancetotheOrotonGroupthroughregularandcarefulconsultationwithexecutivekeymanagement

personnel and ensuring appropriate resources are available to achieve strategic objectives;• Approvingandmonitoringtheprogressofmajorcapitalexpenditure,capitalmanagement,acquisitionsanddivestitures;• Approvingandmonitoringstatutoryfinancialreportingtoshareholdersandalsointernalmanagementreportingprovided

to the Board;• Enhancingandprotectingthereputationoftheorganisation;• EnsuringthatOrotonGroupactsresponsiblyandethicallyinmeetingallinternalcodesofconductandmeetsallrelevant

legal and regulatory requirements.

principle 2 – Structure the board to add valuethe ASX Corporate Governance Council states that a company should “Have a board of an effective composition, size and commitment to adequately discharge its responsibilities and duties”.

Board Membershipthe members of the Board and details regarding their appointment, removal, term of office, attendance at Board meetings and other Committee meetings, skills and experience are detailed in the Directors’ report section of this Annual report.

Board CompositionGuidance on the composition of the Board states that:• TheBoardshouldbecomprisedofnotlessthanthreeDirectors(andnotmorethanteninaccordancewiththecurrent

Constitution of OrotonGroup); • TheBoardshouldbecomprisedofDirectorswithabroadrangeofexpertiseandprovenabilitytomakeacontributionto

strategy and policy, and be able to participate fully in the oversight and guidance of management;• Thetermofanyappointmentissubjecttocontinuingshareholderapproval;• Theboardisrequiredtoundertakeanannualboardperformancereviewandconsidertheappropriatemixofskillsrequired

by the board to maximise its effectiveness and its contribution to the Consolidated entity.the Board of OrotonGroup:• ComprisesfourNon-ExecutiveDirectorsandtwoExecutiveDirectors(includingtheChairman);• HasappointedMrSamuelSWeissasLeadIndependentDirector inaccordancewiththeASXCorporateCouncilsbest

practice recommendations 2.1.

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the following table shows the detail of the recent election of each of the Directors of OrotonGroup.

Director

Year appointed to Orotongroup

limitedterm in office

Non- executive independent last elected

Seeking election or re-election

in 2011

ross B lane (executive Chairman) 1993 18 years no no 2010 no

Sally l Macdonald 2006 5 years no no not required no

eddy Chieng 2010 1 year Yes Yes 2010 no

John p Schmoll 2005 6 years Yes Yes 2008 Yes1

J Will Vicars 2001 10 years Yes no 2009 no

Samuel S Weiss 2003 8 years Yes Yes 2009 no

1 In accordance with the constitution, John P Schmoll retires as a Director at the Annual General Meeting and, being eligible, offers himself for re-election

Chairman of the Boardthe Chairman is responsible for the management of the affairs of the Board and represents the Board in periods between Board Meetings. the executive Chairman of the Board is not an independent Director, and is elected by the Board.

Role of the Company Secretarythe role of the Company Secretary is to:• ProvidesupporttotheBoardbymonitoringBoardpolicyandprocedures;• BeaccountabletotheBoardforgovernancematters;• InconsultationwiththeManagingDirectorandtheBoard,beresponsible forcommunicationswiththeASX.This role

includes responsibility for ensuring compliance with the continuous disclosure requirements in the ASX listing rules and overseeing and coordinating information disclosure to the ASX, analysts, brokers, shareholders, the media and the public.

term of officethe Directors believe that limits on tenure may cause loss of experience and expertise that are important contributors to the efficient working of the Board. As a consequence, the Board does not support arbitrary limits on tenure and regards nominations for re-election as not being automatic but is based on the needs of OrotonGroup.

the Constitution sets out the rules to which OrotonGroup must adhere and which include rules as to the nomination, appointment and re-election of Directors. the Constitution provides that a Directors (excluding the Managing Director) must not hold after the later of i) the third Annual General Meeting held after the Director was last appointed or elected ii)3 years after the date on which the Director was last appointed or elected, whichever is the longer. Directors appointed during the year by the Board stand for re-election at the next Annual General Meeting.

Director independenceOrotonGroup acknowledges that the ASX Corporate Governance Council’s best practice recommendation 2.1 requires the majority of the Board to be independent. In assessing the criteria for independence the board has adopted specific principles in relation to directors’ independence. these state that when determining independence, a director must be a non-executive and the board should consider whether the director:• IsasubstantialshareholderoftheConsolidatedEntityoranofficerof,orotherwiseassociateddirectlywith,asubstantial

shareholder of the company;• IsorhasbeenemployedinanexecutivecapacitybytheConsolidatedEntitywithinthreeyearsbeforecommencingto

serve on the board;• WithinthelastthreeyearshasbeenaprincipalofamaterialprofessionaladviseroramaterialconsultanttotheConsolidated

entity member, or an employee materially associated with the service provided;• IsamaterialsupplierorcustomeroftheConsolidatedEntity,oranofficeroforotherwiseassociateddirectlyorindirectly

with a material supplier or customer;• HasamaterialcontractualrelationshipwiththeConsolidatedEntityotherthanasadirector;• Isfreefromanybusinessorotherrelationshipwhichcould,orcouldreasonablybeperceivedtomateriallyinterferewith

the director’s independent exercise of their judgement.

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Materiality for these purposes is determined on both quantitative and qualitative bases. An amount of over 5% of annual turnover of the company or Consolidated entity or 5% of the individual directors’ net worth is considered material for these purposes. In addition, a transaction of any amount or a relationship is deemed material if knowledge of it may impact the shareholders’ understanding of the director’s performance.

Independent directors of OrotonGroup are those not involved in the day to day management of the company and are free from any real or reasonably perceived business or other relationship that could materially interfere with the exercise of their unfettered and independent judgement.

In accordance with the definition of independence and the materiality thresholds above, it is the Board’s view that Mr Samuel S Weiss, Mr John p Schmoll and Mr eddy Chieng are all independent directors.

the following directors are not independent:• MrRossBLane(ExecutiveChairman)duetosubstantialshareholdings;• MrJWillVicars(Non-Executivedirector)duetosubstantialshareholdings;• MsSallyLMacdonald(ManagingDirectorandCEO)duetoroleinOrotonGroupLimited.

regardless of whether directors are defined as independent, all directors are expected to bring independent views and judgement to Board deliberations. the Board regularly assesses the independence of each director.

Majority independence and commitment of BoardCurrently, three of the six Directors are not independent. these interests have been disclosed in the Directors’ report.

notwithstanding this, the board supports the comments made by the ASX Implementation review Group (“IrG”) that:

“Other board structures which do not include a majority of independent directors may also provide an acceptable level of objectivity. the IrG does not believe that an individual director will necessarily be unwilling or unable to safeguard shareholders’ interests or will necessarily lack objectivity or independence of mind, simply because they are not deemed to be ‘independent’. Safeguarding shareholder interests is a fundamental duty of all directors.”

In respect of the Board of OrotonGroup:• Non-ExecutiveDirectorsspendapproximately30dayseachyearonBoardbusinessandactivitiesincluding,Boardand

Committee meetings, visits to operations and meeting employees, customers, business associates and other stakeholders;• TheChairman regularlymeetswith theManagingDirector to reviewkey issuesandperformance trendsaffecting the

business of OrotonGroup.• Thenumberofmeetingsofthecompany’sboardofdirectorsandofeachboardcommitteeheldduringtheyearended30

July 2011, and the number of meetings attended by each director is disclosed in the Directors’ report;• Itisthecompany’spracticetoallowitsexecutivedirectorstoacceptappointmentsoutsidethecompanywithpriorwritten

approval of the board. Details of the appointments of each of the Directors is included in the Directors’ report;• The commitments of non-executive directors are considered by the nomination committee prior to the directors’

appointment to the board of the company and are reviewed each year as part of the annual performance assessment.• TheChairmenonthe2Boardcommittees,beingtheAuditCommitteeandthePeopleandOrganisationCommittee,are

both independent non-executive directors.

Director performanceperformance reviews of the Board and its subcommittees are undertaken on a periodic basis. the Board has implemented a process to:• EvaluatetheperformanceoftheBoard,committees,individualDirectorsandkeyexecutives.• TheBoardassesses,reviewsanddiscussesitsoverallperformanceagainstsetobjectives.• TheChairmanassessestheperformanceofindividualDirectorsandkeyexecutives.• Thecompositionofeachsubcommitteeisreviewed.ThisexercisetakesintoconsiderationeachDirector’scompetency,

skills, experience and expertise.

the results and any action plans are documented together with specific performance goals. the last assessment of the Board performance was conducted by the Board during the financial year.

Where necessary, OrotonGroup will provide the required resources to assist Directors in improving their performance.

the people and Organisation Committee are involved in the performance review of key management. the Charter, referred to in the people and Organisation Committee section of this Corporate Governance Statement, outlines their responsibility in this area.

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Conflict of interestIn accordance with the Corporations Act 2001 (Clth) and OrotonGroup’s Constitution, Directors must keep the Board advised on an ongoing basis, of any interest that could potentially conflict with those of OrotonGroup. Where the Board believes that a significant conflict exists, the Director concerned does not receive the relevant Board papers and is not present at the meeting while the item is considered.

Access to informationManagement supplies the Board with information that enables them to effectively and efficiently fulfil their responsibilities. the Board has access to OrotonGroup’s Company Secretary and independent professional advice.

independent professional Advice each Director has the right to seek independent professional advice at the expense of OrotonGroup. prior written approval of the Chairman is required, which will not be unreasonably withheld. All Directors are made aware of the professional advice sought and obtained.

Board committeesthe board has established a number of committees to assist in the execution of its duties and to allow detailed consideration of complex issues. Current committees of the board are:• ThePeopleandOrganisationCommittee(asdetailedbelow);• TheAuditCommittee(thedetailsofthiscommitteearediscussedinPrinciple4-SafeguardIntegrityinFinancialReporting).

each of the committees is comprised of all of the Directors. Minutes of committee meetings are tabled at the subsequent board meeting for review and approval.

people and Organisation Committeethe people and Organisation Committee provides additional support for the human resources strategy of OrotonGroup. It assists the Board by ensuring that the appropriate people, people related strategies, policies and procedures are in place to support OrotonGroup’s vision and values, and its strategic and financial goals.

people and Organisation Committee Charterthe Charter ensures that OrotonGroup:• Has an appropriate human resources strategy that is aligned to the overall business strategy and which supports

OrotonGroup’s vision and values;• Hasremunerationpoliciesandpracticesthatareobserved,andthatenableOrotonGrouptoattractandretainpeopleatall

levels who will create value for shareholders;• FairlyandresponsiblyrewardsDirectors,managementandstaff,takingintoconsiderationtheperformanceofOrotonGroup,

the creation of value for shareholders, the performance of the individual and the external remuneration environment;• PlansandimplementsthedevelopmentandsuccessionofBoardmembers,managementandstaff.

Members of the people and Organisation Committee:• SamuelSWeiss-LeadIndependentNon-ExecutiveDirectorandChairmanofthePeopleandOrganisationCommittee;• RossBLane-ExecutiveChairmanoftheBoardofDirectors;• SallyLMacdonald-ManagingDirectorandCEO;• EddyChieng-IndependentNon-ExecutiveDirector;• JohnPSchmoll-IndependentNon-ExecutiveDirectorandChairmanoftheAuditCommittee;• JWillVicars-Non-ExecutiveDirector.

Details of membership, member qualifications and attendance are contained in the Directors’ report.

the Committee seeks advice and guidance, as appropriate, from the Managing Director. It may also seek advice from external experts, as appropriate.

principle 3 – promote ethical and responsible decision makingthe ASX Corporate Governance Council states that OrotonGroup should “Actively promote ethical and responsible decision-making”.

ethical StandardsAll Directors, Officers and employees are expected to perform their duties professionally and act with the utmost integrity and objectivity, striving at all times to enhance the reputation and performance of OrotonGroup and its brands.

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the Board oversees the identification, implementation of procedures and development of policies in respect of the maintenance of appropriate ethical standards. OrotonGroup has a Code of Conduct, which sets out the standards as to how Directors and employees of OrotonGroup are expected to act. employees are required to read the updated employee Code of Conduct in the performance of their duties and to sign an acknowledgement stating that they have read and understood this document. the intention of this Code of Conduct is to provide stakeholders with the opportunity to communicate any areas of concern over potential acts of misconduct.

Dealings in Orotongroup shares by Directors, Officers and employeesthe Constitution permits Directors, Officers and employees to acquire shares in OrotonGroup. OrotonGroup’s policy prohibits Directors, officers and certain employees, who might be aware of price sensitive information about OrotonGroup from dealing in OrotonGroup shares 6 weeks before each annual and half year financial period ends and 24 hours after the release of the annual or half year results announcement, provided that outside of these periods they are not in possession of price sensitive information.

Directors must notify the Company Secretary and Chairman before they sell or buy shares in OrotonGroup. In accordance with provisions of the Corporations Act 2001 (Clth) and the listing rules of the Australian Securities exchange (ASX), Directors or their related entities advise the ASX of any transaction conducted by them in buying or selling any shares in OrotonGroup.

ethical ComplianceOrotonGroup is dedicated to ensuring that all its products are manufactured in accordance with local and internationally accepted labour, environmental and employment laws. OrotonGroup is also dedicated to ensuring that manufacturing occurs under working conditions that meet legal standards and without the use of child, forced or prison labour.

Orotongroup Diversity policy Objectives OrotonGroup believes in the value of a diverse workforce and as such is committed to actively supporting diversity of gender, race, sexuality and professional/educational backgrounds at all levels of the organisation.

Activities include:• EqualEmploymentOpportunityPolicies• Awarenesstrainingandeducationontheissueofsexualharassment,bullying,stereotypingandunconsciousbias• Recruitment,trainingandpromotionbasedonmeasureableperformanceandlong-termmanagementpotential• Developmentandimplementationofflexibleworkpracticeswherepossibleandappropriate,and/orfromtimetotimeto

support family responsibilities• Promotionofcompany’scorevaluesofOpenness,Quality,CourageandSolutionstodriveaninclusiveworkplaceculture

which is fair for all• Ensureasafeworkplacefreeofharassmentofanykind• Implementationsince2007ofa12weekpaidparentalleaveschemeacrosstheorganisation

Orotongroup Diversity Facts as at 2011there has been an increase in the number of women in management positions across the organisation since last year.

the proportion of women employees in the business as at 30 July 2011 are as follows:

positions % of women Women on the board 17% Women in senior executive roles 60%Women in management positions 73%Women in the organisation 78%

principle 4 – Safeguard integrity in financial reportingthe ASX Corporate Governance Council states that a company should “Have a structure to independently verify and safeguard the integrity of the company’s financial reporting”.

Managing Director and Chief Financial Officer Statementthe Managing Director and Chief Financial Officer state in writing to the Board that the financial reports present a true and fair view, in all material respects, of OrotonGroup’s financial condition and operational results and are in accordance with relevant accounting standards.

the Managing Director and Chief Financial Officer carry out a management certification process which provides assurance and enables them to make this statement to the Board. this process is detailed under principle 7 – recognise and Manage risk.

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Audit Committee

Members of the Audit Committee:• JohnPSchmoll-IndependentNon-ExecutiveDirectorandChairmanoftheAuditCommittee;• RossBLane-ExecutiveChairmanoftheBoardofDirectors;• SallyLMacdonald-ManagingDirectorandCEO;• EddyChieng-IndependentNon-ExecutiveDirector;• JWillVicars-Non-ExecutiveDirector;• SamuelSWeiss-LeadIndependentNon-ExecutiveDirectorandChairmanofthePeopleandOrganisationCommittee.

Details of membership, member qualifications and attendance are contained in the Directors’ report.

Audit Committee Charter and Responsibilitiesthe purpose, importance and responsibilities of the Audit Committee are to assist the Board in its oversight responsibilities. It has the following functions:• ToensuretheOrotonGroupaccountingpoliciesandpracticesareinaccordancewithcurrentandemergingaccounting

standards promulgated by the Australian Accounting Standards Board (AASB);• ReviewingthescopeoftheauditthroughdiscussionwiththeexternalauditorsoftheConsolidatedEntity;• ToensureadherencetotheExternalAuditors’independencerequirements,includingreviewingandapprovingthelevelof

non-audit services provided by the external Auditors and ensure it does not adversely impact on auditor independence;• Tomonitorandapprovetheselection,appointmentandcontinuedengagementoftheExternalAuditorandfortherotation

of external Audit engagement partners;• Reviewanysignificantdisagreementsbetweentheauditorsandmanagement, irrespectiveofwhethertheyhavebeen

resolved;• Provide external auditorswith a clear line of direct communication at any time to either the Chairman of the Audit

Committee or the Chairman of the Board;• Toensurecompliancewithlegalandregulatoryrequirementsandpoliciesinthisregard;• Tooverseetheadequacyofinternalcontrolsandtheoverallefficiencyandeffectivenessoffinancialoperations;• Overseetheeffectiveoperationoftheriskmanagementframework.

Meetings of the Audit Committeethe Audit Committee may have in attendance or by invitation such members of management or others as it may deem necessary to provide appropriate information or explanations.

the Audit Committee meets at least 4 times per year.

external AuditorpricewaterhouseCoopers was appointed as the external auditor on 14 December 2000 following the completion of a tender process. pricewaterhouseCoopers policy is to rotate audit engagement partners on listed companies at least every five years. the performance of the external auditor is reviewed annually by the Audit Committee and applications for tender of external audit services are requested as deemed appropriate, taking into consideration assessment of performance, existing value and tender costs.

An analysis of fees paid to the external auditors, including a break-down of fees for non-audit services, is provided in note 28 to the financial statements. It is the policy of the external auditors to provide an annual declaration of their independence. this declaration is included in the 2011 Annual report on page 38.

the external Auditor attends Audit Committee meetings when requested by the Audit Committee Chairman. the external auditor will attend the annual general meeting and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the audit report.

principle 5 – Make timely and balanced disclosurethe ASX Corporate Governance Council states that OrotonGroup should “promote timely and balanced disclosure of all material matters concerning OrotonGroup”.

ASX listing rule 3.1 requires OrotonGroup once it is or becomes aware of any information concerning it that a reasonable person would expect to have a material effect on the price or value of OrotonGroup securities, to immediately advise the ASX of that information. OrotonGroup has a policy that all shareholders and investors have equal access to OrotonGroup information and has procedures to ensure that all price sensitive information is disclosed to the ASX in accordance with the disclosure requirements of the Corporations Act 2001 (Clth) and ASX listing rules.

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OrotonGroup is committed to the provision of timely, full and accurate disclosure of material information and has this publicly available on its website at www.orotongroup.com

Financial information is contained in the Annual report under the Financial report. this information is also publicly available on its website at www.orotongroup.com

principle 6 – Respect the rights of shareholdersthe ASX Corporate Governance Council states that a company should “respect the rights of shareholders and facilitate the effective exercise of those rights”.

Communications with ShareholdersOrotonGroup has adopted a Shareholder Communications policy which requires OrotonGroup to communicate information effectively, to facilitate participation in shareholder meetings and deal with shareholders’ inquiries in an open and helpful manner, within the constraints of its continuous disclosure obligations.

Information is communicated to shareholders through:• TheOrotonGroupAnnualReport;• TheAnnualGeneralMeeting;• TheInterimReport(6monthsresultsreport);• Resultsannouncementsandpressreleases;• OrotonGroupwebsite,whichhasadedicatedinvestorrelationssection.

the Board’s strategy to promote effective communication with shareholders is as follows:• Allannouncementsmadetothemarketandallrelatedinformation(suchasinformationprovidedtoanalystsormedia

during briefings) are placed on the OrotonGroup website at www.orotongroup.com immediately after they have been released to the ASX;

• The full text of all Notices of Meetings and explanatory material are placed on the OrotonGroup website at www.orotongroup.com

the OrotonGroup website, www.orotongroup.com includes the financial reports for the last 9 years and major announcements from January 2004.

Shareholder and external Auditor Attendancethe Board encourages full participation of shareholders at the Annual General Meeting.

the external Auditor is also notified and invited to the OrotonGroup Annual General Meeting and is provided with the agenda. the external Auditor is provided time to answer any questions from the shareholders and the members concerning the audit and the content of the Auditor’s report.

principle 7 – Recognise and Manage riskthe ASX Corporate Governance Council states that a company should “establish a sound system of risk oversight and management and internal control”.

Risk Managementthe responsibility for risk Management and oversight is coordinated through the Audit Committee, in conjunction with Management. Management is required to:• Identifytheriskprofilefromacompany-wideperspectiveandprioritisesuchrisks;• Develop, implement,monitor, assessand review riskmanagement, risk complianceand riskcontrol strategieswithan

emphasis on continuous improvement;• Attendformalstrategicplanningsessions;• PrepareandreviewperiodicreportstotheBoardandAuditCommitteeidentifyingandprioritisingissuesthatrepresent

risk and the manner in which these are being responded to.

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Risk policiesFor the 2011 year, the risk Management function continued to apply the appropriate compliance and control elements by way of the management certification process (see following). OrotonGroup will continue to enhance its policies and processes around oversight, risk profile and risk management across all areas of the business.

policy areas under continuing development include:• BusinessRisk– focusingonprinciplesandpolicies tomanageOrotonGroup’sstrategicplanning,decisionmakingand

execution risks;• FinancialRisk–focusingonprinciplesandpoliciestomanageOrotonGroup’sexposurestoforeigncurrenciesandinterest

rates;• LegalComplianceRisk–focusingonprinciplesandpoliciestomanagecompliancewithallmajorlegalrequirementsinthe

conduct of OrotonGroup business;• Safety, Health and Environment – focusing on principles and policies to manage OrotonGroup’s safety, health and

environmental liabilities and legal responsibilities.

the effectiveness of risk Management is reviewed by the Board and the Audit Committee.

Risk profileSignificant changes to OrotonGroup’s risk profile are communicated to investors by way of its continuous disclosure obligations. this is particularly so in cases where the change is likely to have a material impact on the value of OrotonGroup’s shares.

Management Certification processA management certification process is in place across the business.

the key steps in the certification process are the completion of a questionnaire by key management covering information that is critical to the financial statements, risk management and internal controls.

the certification process carried out by the Managing Director and Chief Financial Officer and reported to the Board provides that:• Thefinancialstatementsprovideatrueandfairview, inallmaterial respectsofOrotonGroup’sfinancialconditionand

operating results (in accordance with ASX Corporate Governance best practice recommendation 4.1);• Asoundsystemofriskmanagementandinternalcomplianceandcontrolisinplace;• Thereiscompliancewithrelevantlawsandregulations;• OrotonGroup’sriskmanagement,internalcomplianceandcontrolsystemsareoperatingefficientlyandeffectivelyinall

material respects.

the process of certification serves the following purposes:• ProvideassurancetotheBoardtosupporttheirapprovaloftheAnnualReportandotherfinancialreports;• FormalisestheprocessbywhichtheExecutiveTeamsigns-offonthoseareasofriskresponsibilitydelegatedtothemby

the Board;• EnsuresatrueandfairviewofOrotonGroup’sfinancialstatements.

internal Audit Functionthere is not a dedicated internal audit function, however, considerable importance is placed on maintaining a strong control environment in the Consolidated entity. there is an organisation structure with clearly drawn lines of accountability and delegation of authority. Internal control reviews are undertaken on a periodic basis and the results are reported to OrotonGroup’s Audit Committee. these reviews are conducted by employees independent to the function they are reviewing.

the external audit function is separate and independent of the above processes.

Corporate reportingthe Board is provided by the Managing Director and Chief Financial Officer with reports from management on the financial performance of OrotonGroup. the reports include details of all key financial results reported against budgets approved by the Board, with regular updates on forecasts for the year. Similarly, the written statement by the Managing Director and Chief Financial Officer provided to the Board, in relation to OrotonGroup’s half and full year accounts states that:• OrotonGroup’sfinancialreportspresentatrueandfairview,inallmaterialrespectsofthefinancialconditionandoperational

results of the company and Consolidated entity and are in accordance with relevant accounting standards;• The above statement is founded on a sound system of riskmanagement and internal compliance and controlwhich

implements the policies adopted by the board and that the company’s risk management and internal compliance and control is operating efficiently and effectively in all material respects.

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principle 8 – Remunerate fairly and responsiblythe ASX Corporate Governance Council states that a company should “ensure that the level and composition of remuneration is sufficient and reasonable and that its relationship to corporate and individual performance is defined”.

Remuneration Committeethe people and Organisation Committee review OrotonGroup remuneration policies and strategies including specific remuneration structures, levels and performance criteria for the Managing Director and executive team. For more details in respect of the remuneration Committee, see principle 2 of this Corporate Governance Statement.

Remuneration Disclosurethe Directors’ report discloses the Directors’, non-executive Directors’ and executive’s remuneration, benefits, incentives and allowances where relevant.

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FinAnciAl RepoRt

FOr tHe YeAr enDeD 30 JulY 2011

general informationthe financial report covers OrotonGroup limited as a consolidated entity consisting of OrotonGroup limited and the entities it controlled. the financial report is presented in Australian dollars, which is OrotonGroup limited’s functional and presentation currency.

the financial report consists of the financial statements, notes to the financial statements and the directors’ declaration.

OrotonGroup limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

level 2 409 George Street Waterloo nSW 2017 Australia

A description of the nature of the consolidated entity’s operations and its principal activities are included in the directors’ report, which is not part of the financial report.

the financial report was authorised for issue, in accordance with a resolution of directors, on 22 September 2011. the directors have the power to amend and reissue the financial report.

through the use of the internet, we have ensured that our corporate reporting is timely and complete. All press releases, financial reports and other information are available on our website: www.orotongroup.com

Contents pageFinancial report 48 Statement of Comprehensive Income 49 Statement of Financial position 50 Statement of Changes in equity 5 1 Statement of Cash Flows 52notes to the Financial Statements 53Directors’ Declaration 9 1Independent Auditors’ report to the Members of OrotonGroup limted 92

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StAtement oF compRehenSive income


Consolidated

2011 2010

Note $’000 $’000

Revenue 4 164,423 146,368

Other income 5 71 60

expenses

Cost of sales (47,511) (46,042)

Warehouse and distribution (4,207) (2,989)

Marketing (4,569) (3,523)

Selling (57,380) (48,517)

Administration (14,303) (13,326)

Finance costs 6 (1,110) (648)

profit before income tax expense 35,414 31,383

Income tax expense 7 (10,625) (8,411)

profit after income tax expense for the year attributable to the owners of Orotongroup limited 24 24,789 22,972

Other comprehensive income

net change in the fair value of cash flow hedges taken to equity, net of tax (3,296) (284)

Foreign currency translation (100) (14)

Other comprehensive income for the year, net of tax (3,396) (298)

total comprehensive income for the year attributable to the owners of Orotongroup limited 21,393 22,674

Cents Cents

Basic earnings per share 38 60.77 56.33

Diluted earnings per share 38 60.57 56.10

The above statement of comprehensive income should be read in conjunction with the accompanying notes.

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AS At 30 JulY 2011

StAtement oF FinAnciAl poSition

Consolidated

2011 2010

Note $’000 $’000

Assets

Current assets

Cash and cash equivalents 8 607 267

trade and other receivables 9 6,857 6,993

Inventories 10 30,208 23,521

tax receivable 11 9 96

total current assets 37,681 30,877

Non-current assets

property, plant and equipment 12 22,192 22,977

Intangibles 13 658 383

Deferred tax 14 5,357 3,546

total non-current assets 28,207 26,906

total assets 65,888 57,783

liabilities

Current liabilities

trade and other payables 15 13,878 14,434

Borrowings 16 1,828 942

Derivative financial instruments 17 2,855 209

Income tax 18 3,883 2,031

provisions 19 663 630

total current liabilities 23,107 18,246

Non-current liabilities

Borrowings 20 8,000 6,000

provisions 21 5,094 4,832

total non-current liabilities 13,094 10,832

total liabilities 36,201 29,078

Net assets 29,687 28,705

equity

Contributed equity 22 22,523 22,523

reserves 23 (6,228) (2,044)

retained profits 24 13,392 8,226

total equity 29,687 28,705

The above statement of financial position should be read in conjunction with the accompanying notes.

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StAtement oF chAngeS in equity

Contributed equity Reserves Retained profits total equity

$’000 $’000 $’000 $’000

Consolidated

Balance at 26 July 2009 22,523 (767) 4,468 26,224

Other comprehensive income for the year, net of tax - (298) - (298)

profit after income tax expense for the year - - 22,972 22,972

total comprehensive income for the year - (298) 22,972 22,674

Transactions with owners in their capacity as owners:

net movement in share-based payments reserve - 77 - 77

net movement in share-based payments trust reserve - (1,056) - (1,056)

Dividends paid - - (19,214) (19,214)

Balance at 31 July 2010 22,523 (2,044) 8,226 28,705

Contributed equity Reserves Retained profits total equity

$’000 $’000 $’000 $’000

Consolidated

Balance at 1 August 2010 22,523 (2,044) 8,226 28,705

Other comprehensive income for the year, net of tax - (3,396) - (3,396)

profit after income tax expense for the year - - 24,789 24,789

total comprehensive income for the year - (3,396) 24,789 21,393

Transactions with owners in their capacity as owners:

net movement in share-based payments reserve - (932) - (932)

net movement in share-based payments trust reserve - 144 - 144

Dividends paid - - (19,623) (19,623)

Balance at 30 July 2011 22,523 (6,228) 13,392 29,687

The above statement of changes in equity should be read in conjunction with the accompanying notes.

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StAtement oF cASh FlowS


Consolidated

2011 2010

Note $’000 $’000

Cash flows from operating activities

receipts from customers (inclusive of GSt) 180,515 160,427

payments to suppliers and employees (inclusive of GSt) (144,920) (122,779)

35,595 37,648

Interest received 15 15

Interest and other finance costs paid (1,110) (648)

payments for share-based payments trust purchases (1,431) (1,587)

Income taxes paid (9,083) (10,848)

net cash from operating activities 36 23,986 24,580

Cash flows from investing activities

payments for property, plant and equipment (6,318) (9,252)

payments for software (591) (213)

net cash used in investing activities (6,909) (9,465)

Cash flows from financing activities

proceeds from borrowings 39,623 36,214

Dividends paid 25 (19,623) (19,214)

repayment of borrowings (37,623) (32,214)

net cash used in financing activities (17,623) (15,214)

net decrease in cash and cash equivalents (546) (99)

Cash and cash equivalents at the beginning of the financial year (675) (576)

Cash and cash equivalents at the end of the financial year 8 (1,221) (675)

The above statement of cash flows should be read in conjunction with the accompanying notes.

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Note 1. Significant accounting policies

the principal accounting policies adopted in the preparation of the financial statements are set out below. these policies have been consistently applied to all the years presented, unless otherwise stated.

New, revised or amending Accounting Standards and interpretations adoptedthe consolidated entity has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period.

Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

Any significant impact on the accounting policies of the consolidated entity from the adoption of these Accounting Standards and Interpretations are disclosed in the relevant accounting policy. the adoption of these Accounting Standards and Interpretations did not have any impact on the financial performance or position of the consolidated entity.

the following Accounting Standards and Interpretations are most relevant to the consolidated entity:

AASB 2009-5 Amendments to Australian Accounting Standards arising from the Annual Improvements Projectthe consolidated entity has applied AASB 2009-5 amendments from 1 August 2010. the amendments result in some accounting changes for presentation, recognition or measurement purposes, while some amendments that relate to terminology and editorial changes had no or minimal effect on accounting. the main changes were: • AASB101 ‘PresentationofFinancialStatements’-classification isnotaffectedbythetermsofa liabilitythatcouldbe

settled by the issuance of equity instruments at the option of the counterparty;• AASB107‘StatementofCashFlows’-onlyexpenditurethatresultsinarecognisedassetcanbeclassifiedasacashflow

from investing activities;• AASB117‘Leases’-removalofspecificguidanceonclassifyinglandasalease;• AASB118‘Revenue’-providesadditionalguidancetodeterminewhetheranentityisactingasaprincipaloragent;and• AASB136‘ImpairmentofAssets’-clarifiesthatthelargestunitpermittedforallocatinggoodwill,acquiredinabusiness

combination, is the operating segment as defined in AASB 8 ‘Operating Segments’ before aggregation for reporting purposes.

Accounting periodthe current accounting period is for the 52 weeks ended 30 July 2011 and the comparative accounting period is for 53 weeks ended 31 July 2010.

Basis of preparationthese general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001. these financial statements also comply with International Financial reporting Standards as issued by the International Accounting Standards Board (‘IASB’).

Historical cost conventionthe financial statements have been prepared under the historical cost convention, except for, where applicable, certain classes of property, plant and equipment and derivative financial instruments.

Critical accounting estimatesthe preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the consolidated entity’s accounting policies. the areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 2.

parent entity informationIn accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only. Supplementary information about the parent entity is disclosed in note 32.

principles of consolidationthe consolidated financial statements incorporate the assets and liabilities of all subsidiaries of OrotonGroup limited (‘company’ or ‘parent entity’) as at 30 July 2011 and the results of all subsidiaries and special purpose entities for the year then ended. OrotonGroup limited, its subsidiaries and special purpose entities together are referred to in these financial statements as the ‘consolidated entity’.

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Note 1. Significant accounting policies (continued)

Subsidiaries are all those entities over which the consolidated entity has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. the effects of potential exercisable voting rights are considered when assessing whether control exists. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. they are de-consolidated from the date that control ceases.

the consolidated entity utilises a trust to administer the consolidated entity’s employee share scheme. the trust is consolidated into the consolidated entity.

treasury shares acquired by the trust are recorded in the share-based payment trust reserve. Information relating to these shares is disclosed in note 23.

Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are eliminated. unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries and special purpose entities have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity.

the acquisition of subsidiaries is accounted for using the acquisition method of accounting. refer to the ‘business combinations’ accounting policy for further details. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent.

Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. the consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss.

Operating segmentsOperating segments are presented using the ‘management approach’, where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers (‘CODM’). the CODM is responsible for the allocation of resources to operating segments and assessing their performance. refer to note 3 for more information.

Foreign currency translationthe financial report is presented in Australian dollars, which is OrotonGroup limited’s functional and presentation currency.

Foreign currency transactionsForeign currency transactions are translated into Australian dollars 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 financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

Foreign operationsthe assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date. the revenues and expenses of foreign operations are translated into Australian dollars using the average exchange rates for the period, which approximates the rate at the date of the transaction. All resulting foreign exchange differences are recognised in the foreign currency reserve in equity.

Revenue recognitionrevenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties.

the consolidated entity recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the consolidated entity’s activities as described below.

Sale of goodsthe consolidated entity operates retail stores and a premium wholesaling business. revenue from the sale of goods is recognised when a group entity sells a product to the customer. retail sales are usually paid via credit card or cash. revenue from licence fees, franchise fees and commissions are recognised and accrued in the period in which the fees are earned.

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Interest incomeInterest income is recognised on a time proportion basis using the effective interest method. When a receivable is impaired, the consolidated entity reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans is recognised using the original effective interest rate.

Other revenueOther revenue is recognised when it is received or when the right to receive payment is established.

income taxthe income tax expense or benefit for the period is the tax payable on that period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and unused tax losses and under and over provision in prior periods, where applicable.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:• Whenthedeferredincometaxassetorliabilityarisesfromtheinitialrecognitionofgoodwilloranassetorliabilityina

transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or

• When the taxable temporary difference is associatedwith investments in subsidiaries, associates or interests in jointventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

the carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.

Current and deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or a different taxable entity which intends to settle simultaneously.

Tax consolidation legislationOrotonGroup limited and its wholly owned Australian controlled entities implemented the tax consolidation legislation as of 3 August 2003.

the head entity, OrotonGroup limited, and the controlled entities in the tax consolidation group continue to account for their own deferred tax amounts. these tax assets are measured as if each entity in the tax consolidated group continues to be a stand alone taxpayer in its own right.

In addition to its own current and deferred tax amounts, OrotonGroup limited also recognises the current tax liabilities (or assets) and the deferred tax assets arising from the unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group.

Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the group.

Any difference between the amounts assumed and amounts receivable or payable under the funding agreement are recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities.

Cash and cash equivalentsCash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the statement of cash flows presentation purposes, cash and cash equivalents also includes bank overdrafts, which are shown within borrowings in current liabilities on the statement of financial position.

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trade and other receivablestrade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment. trade receivables are generally due for settlement within 45 days.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is objective evidence that the consolidated entity will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or delinquency in payments (more than 60 days overdue) are considered indicators that the trade receivable may be impaired. the amount of the impairment allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.

Other receivables are recognised at amortised cost, less any provision for impairment.

inventoriesFinished goods are stated at the lower of cost and net realisable value determined on the basis of moving average cost. Cost comprises purchase and delivery costs, net of rebates and discounts received or receivable.

net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

Derivative financial instrumentsDerivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. the accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.

Derivatives are classified as current or non-current depending on the expected period of realisation.

Cash flow hedgesCash flow hedges are used to cover the consolidated entity’s exposure to variability in cash flows that is attributable to particular risk associated with a recognised asset or liability or a firm commitment which could affect income or expenses. the effective portion of the gain or loss on the hedging instrument is recognised directly in equity, whilst the ineffective portion is recognised in profit or loss. Amounts taken to equity are transferred out of equity and included in the measurement of the hedged transaction when the forecast transaction occurs.

Cash flow hedges are tested for effectiveness on a regular basis both retrospectively and prospectively to ensure that each hedge is highly effective and continues to be designated as a cash flow hedge. If the forecast transaction is no longer expected to occur, amounts recognised in equity are transferred to profit or loss.

If the hedging instrument is sold, terminated, expires, exercised without replacement or rollover, or if hedge becomes ineffective and is no longer a designated hedge, amounts previously recognised in equity remain in equity until the forecast transaction occurs.

property, plant and equipmentplant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

plant and equipment is depreciated on a straight line basis over their estimated useful lives commencing from the time the asset is held ready for use. Items of plant and equipment are depreciated at rates ranging from 7.5% to 33.3% per annum. Motor vehicles are depreciated at 15.0% per annum.

the residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.

leasehold improvements are depreciated over a period of 5 years or the estimated useful life of the assets, whichever is shorter.

An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.

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leasesthe determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of leased assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits.

Finance leases are capitalised. A lease asset and liability are established at the present value of minimum lease payments. lease payments are allocated between the principal component of the lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.

leased assets acquired under a finance lease are depreciated over the asset’s useful life or over the shorter of the asset’s useful life and the lease term if there is no reasonable certainty that the consolidated entity will obtain ownership at the end of the lease term.

Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis over the term of the lease.

intangible assetsIntangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Intangible assets are subsequently measured at cost less amortisation and any impairment. the gains or losses recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. the method and useful lives of finite life intangibles are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period.

SoftwareSignificant costs associated with software are deferred and amortised on a straight-line basis over the period of their expected benefit, being their finite life of 4 years.

impairment of non-financial assetsGoodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.

recoverable amount is the higher of an asset’s fair value less costs to sell and value-in-use. the value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.

trade and other payablesthese amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and not discounted. the amounts are unsecured and are usually paid within 30 days of recognition.

BorrowingsBorrowings 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 method. Fees paid on the establishment of loan facilities, which are not an incremental cost relating to the actual draw-down of the facility, are recognised as prepayments and amortised on a straight-line basis over the term of the facility.

Borrowings are classified as current liabilities unless the consolidated entity has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

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Finance costsFinance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred, including:• interestonthebankoverdraft• interestonshort-termandlong-termborrowings

provisionsprovisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result of a past event, it is probable the consolidated entity will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. the amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. the increase in the provision resulting from the passage of time is recognised as a finance cost.

employee benefitsWages and salaries and annual leaveliabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be settled within 12 months of the reporting date are recognised in current liabilities in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

Long service leave the liability for long service leave is recognised in current and non-current liabilities, depending on the unconditional right to defer settlement of the liability for at least 12 months after the reporting date. the liability is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date 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 reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

Defined contribution superannuation expenseContributions to defined contribution superannuation plans are expensed in the period in which they are incurred.

Employee benefit on-costsemployee benefit on-costs, including pay-roll tax, are recognised and included in employee benefit liabilities when the related employee benefit liability is incurred.

Bonusesthe consolidated entity recognises a liability and an expense for bonuses based on a formula that takes into consideration the profit attributable to the company’s shareholders after certain adjustments. the consolidated entity recognises a provision when contractually obliged or where there is a past practice that has created a constructive obligation.

Share-based paymentsequity-settled and cash-settled share-based compensation benefits are provided to employees.

equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash is determined by reference to the share price.

the cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the consolidated entity receives the services that entitle the employees to receive payment. no account is taken of any other vesting conditions.

the cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. the cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. the amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods.

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the cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was granted. the cumulative charge to profit or loss until settlement of the liability is calculated as follows:• duringthevestingperiod,theliabilityateachreportingdateisthefairvalueoftheawardatthatdatemultipliedbythe

expired portion of the vesting period.• fromtheendofthevestingperioduntilsettlementoftheaward,the liability isthefull fairvalueofthe liabilityatthe

reporting date.

All changes in the liability are recognised in profit or loss. the ultimate cost of cash-settled transactions is the cash paid to settle the liability.

Market conditions are taken into consideration in determining fair value. therefore any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied.

If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification.

If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.

If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification.

Contributed equityOrdinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

DividendsDividends are recognised when declared during the financial year and no longer at the discretion of the company.

earnings per shareBasic earnings per shareBasic earnings per share is calculated by dividing the profit attributable to the owners of OrotonGroup limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.

Diluted earnings per shareDiluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

goods and Services tax (‘gSt’) and other similar taxesrevenues, expenses and assets are recognised net of the amount of associated GSt, unless the GSt incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the 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 tax authority is included in other receivables or other payables in the statement of financial position.

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 tax authority, are presented as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GSt recoverable from, or payable to, the tax authority.

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Rounding of amountsthe company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission, relating to ‘rounding-off’. Amounts in this report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, the nearest dollar.

New Accounting Standards and interpretations not yet mandatory or early adoptedAustralian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 July 2011. the consolidated entity’s assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the consolidated entity, are set out below.

AASB 9 Financial Instruments, 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 and 2010-7 Amendments to Australian Accounting Standards arising from AASB 9this standard and its consequential amendments are applicable to annual reporting periods beginning on or after 1 January 2013 and completes phase I of the IASB’s project to replace IAS 39 (being the international equivalent to AASB 139 ‘Financial Instruments: recognition and Measurement’). this standard introduces new classification and measurement models for financial assets, using a single approach to determine whether a financial asset is measured at amortised cost or fair value. to be classified and measured at amortised cost, assets must satisfy the business model test for managing the financial assets and have certain contractual cash flow characteristics. All other financial instrument assets are to be classified and measured at fair value. this standard allows an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for-trading) in other comprehensive income, with dividends as a return on these investments being recognised in profit or loss. In addition, those equity instruments measured at fair value through other comprehensive income would no longer have to apply any impairment requirements nor would there be any ‘recycling’ of gains or losses through profit or loss on disposal. the accounting for financial liabilities continues to be classified and measured in accordance with AASB 139, with one exception, being that the portion of a change of fair value relating to the entity’s own credit risk is to be presented in other comprehensive income unless it would create an accounting mismatch. the consolidated entity will adopt this standard from 28 July 2013 but the impact of its adoption is yet to be assessed by the consolidated entity.

AASB 2010-4 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Projectthese amendments are applicable to annual reporting periods beginning on or after 1 January 2011. these amendments are a consequence of the annual improvements project and make numerous non-urgent but necessary amendments to a range of Australian Accounting Standards and Interpretations. the amendments provide clarification of disclosures in AASB 7 ‘Financial Instruments: Disclosures’, in particular emphasis of the interaction between quantitative and qualitative disclosures and the nature and extent of risks associated with financial instruments; clarifies that an entity can present an analysis of other comprehensive income for each component of equity, either in the statement of changes in equity or in the notes in accordance with AASB 101 ‘presentation of Financial Instruments’; and provides guidance on the disclosure of significant events and transactions in AASB 134 ‘Interim Financial reporting’. the adoption of these amendments from 31 July 2011 will not have a material impact on the consolidated entity.

AASB 124 Related Party Disclosures (December 2009)this revised standard is applicable to annual reporting periods beginning on or after 1 January 2011. this revised standard simplifies the definition of a related party by clarifying its intended meaning and eliminating inconsistencies from the definition. the definition now identifies a subsidiary and an associate with the same investor as related parties of each other; entities significantly influenced by one person and entities significantly influenced by a close member of the family of that person are no longer related parties of each other; and whenever a person or entity has both joint control over a second entity and joint control or significant influence over a third party, the second and third entities are related to each other. this revised standard introduces a partial exemption of disclosure requirement for government-related entities. the adoption of this standard from 31 July 2011 will not have a material impact on the consolidated entity.

AASB 1054 Australian Additional Disclosuresthis Standard is applicable to annual reporting periods beginning on or after 1 July 2011. the standard sets out the Australian-specific disclosures, which are in addition to International Financial reporting Standards, for entities that have adopted Australian Accounting Standards. the adoption of these amendments from 31 July 2011 will not have a material impact on the consolidated entity.

AASB 2011-1 Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence Project and AASB 2011-2 Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence Project – Reduced Disclosure Requirementsthese amendments are applicable to annual reporting periods beginning on or after 1 July 2011. they make changes to a range of Australian Accounting Standards and Interpretations for the purpose of closer alignment to IFrSs and harmonisation between Australian and new Zealand Standards. the amendments remove certain guidance and definitions from Australian

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Accounting Standards for conformity of drafting with International Financial reporting Standards but without any intention to change requirements. the adoption of these amendments from 31 July 2011 will not have a material impact on the consolidated entity.

AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirementthese amendments are applicable to annual reporting periods beginning on or after 1 July 2013, with early adoption not permitted. they amend AASB 124 ‘related party Disclosures’ by removing the disclosure requirements for individual key management personnel (KMp). the adoption of these amendments from 28 July 2013 will remove the duplication relating to individual KMp in the notes to the financial statements and the directors report. As the aggregate disclosures are still required by AASB 124 and during the transitional period the requirements may be included in the Corporations Act or other legislation, it is expected that the amendments will not have a material impact on the consolidated entity.

Note 2. Critical accounting judgements, estimates and assumptions

the preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. the resulting accounting judgements and estimates will seldom equal the related actual results. the judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Share-based payment transactionsthe consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. the fair value is determined by using either the Binomial or Black-Scholes model taking into account the terms and conditions upon which the instruments were granted. the accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity.

provision for impairment of receivablesthe provision for impairment of receivables assessment requires a degree of estimation and judgement. the level of provision is assessed by taking into account the recent sales experience, the ageing of receivables, historical collection rates and specific knowledge of the individual debtors financial position.

provision for impairment of inventoriesthe provision for impairment of inventories assessment requires a degree of estimation and judgement. the level of the provision is assessed by taking into account the recent sales experience, the ageing of inventories and other factors that affect inventory obsolescence.

estimation of useful lives of assetsthe consolidated entity determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and definite life intangible assets. the useful lives could change significantly as a result of technical innovations or some other event. the depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.

impairment of non-financial assets other than goodwill and other indefinite life intangible assetsthe consolidated entity assesses impairment of non-financial assets other than goodwill and other indefinite life intangible assets at each reporting date by evaluating conditions specific to the consolidated entity and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. this involves fair value less costs to sell or value-in-use calculations, which incorporate a number of key estimates and assumptions.

income taxthe consolidated entity is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining the provision for income tax. there are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. the consolidated entity recognises liabilities for anticipated tax audit issues based on the consolidated entity’s current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.

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Note 2. Critical accounting judgements, estimates and assumptions (continued)

Recovery of deferred tax assetsDeferred tax assets are recognised for deductible temporary differences only if the consolidated entity considers it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

long service leave provisionAs discussed in note 1, the liability for long service leave is recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases through promotion and inflation have been taken into account.

lease make good provisionA provision has been made for the present value of anticipated costs for future restoration of leased premises. the provision includes future cost estimates associated with closure of the premises. the calculation of this provision requires assumptions such as application of closure dates and cost estimates. the provision recognised for each site is periodically reviewed and updated based on the facts and circumstances available at the time. Changes to the estimated future costs for sites are recognised in the statement of financial position by adjusting both the expense or asset, if applicable, and provision.

Note 3. Operating segments

identification of reportable operating segmentsthe consolidated entity has two operating segments. these segments have been determined based on the internal reports that are reviewed and used by the Board of Directors (collectively referred to as the Chief Operating Decision Maker (‘CODM’)) in assessing performance and in determining the allocation of resources. the operating segments have been aggregated in accordance with AASB 8 on the basis that they share similar economic characteristics.

types of products and servicesthe reportable segment operates principally in the retailing and wholesaling of luxury fashion apparel and accessories.

Note 4. RevenueConsolidated

2011 2010

$’000 $’000

Sales revenue

Sale of goods 163,367 145,324

licence and franchise fees 1,041 1,029

164,408 146,353

Other revenue

Interest received 15 15

revenue 164,423 146,368

Note 5. Other incomeConsolidated

2011 2010

$’000 $’000

Other revenue 71 60

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Note 6. ExpensesConsolidated

2011 2010

$’000 $’000

profit before income tax includes the following specific expenses:

Depreciation and amortisation of assets

Depreciation of plant and equipment 6,980 5,497

Amortisation of software 316 388

total depreciation and amortisation of assets 7,296 5,885

Rental expense relating to operating leases

Minimum lease payments 20,678 18,256

Amortisation of deferred lease incentives (656) (541)

total rental expense relating to operating leases 20,022 17,715

Finance costs

Interest and finance charges paid/payable 1,110 648

Net foreign exchange loss

net foreign exchange loss 221 199

Net loss on disposal

net loss on disposal of property, plant and equipment 111 441

Superannuation expense

Defined contribution superannuation expense 1,754 1,467

Employee benefits expense

employee benefits expense excluding superannuation 26,559 22,776

Other charges against assets

Inventories 2,504 1,140

Other expenses

royalties and licence fees paid/payable 5,242 3,913

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Note 7. Income tax expenseConsolidated

2011 2010

$’000 $’000

Income tax expense

Current tax 11,007 8,625

Deferred tax (397) 137

under/(over) provision in prior years 15 (351)

Aggregate income tax expense 10,625 8,411

Deferred tax included in income tax expense comprises:

Decrease/(increase) in deferred tax assets (note 14) (397) 155

Decrease in deferred tax liabilities - (18)

(397) 137

Numerical reconciliation of income tax expense to prima facie tax payable

profit before income tax expense 35,414 31,383

tax at the Australian tax rate of 30% 10,624 9,415

tax effect amounts which are not deductible/(taxable) in calculating taxable income:

Investment allowance - (347)

Sundry items (14) (306)

10,610 8,762

under/(over) provision in prior years 15 (351)

Income tax expense 10,625 8,411

Amounts charged/(credited) directly to equity

Deferred tax assets (note 14) (1,414) 100

tax consolidation legislationOrotonGroup limited and its wholly owned Australian subsidiaries implemented the tax consolidation legislation as of 3 August 2003.

OrotonGroup limited, as the head entity in the tax consolidated group, recognises current tax amounts relating to transactions, events and balances of the wholly owned Australian Controlled entities in this group in its financial statements as if those transactions, events and balances were its own transactions, events and balances. there is no formal tax sharing agreement in place.F

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Note 8. Current assets - cash and cash equivalentsConsolidated

2011 2010

$’000 $’000

Cash at bank 331 226

Cash on deposit 276 41

607 267

Reconciliation to cash and cash equivalents at the end of the financial year

the above figures are reconciled to cash and cash equivalents at the end of the financial year as shown in the statement of cash flows as follows:

Balances as above 607 267

Bank overdraft (note 16) (1,828) (942)

Balance as per statement of cash flows (1,221) (675)

the cash balances as at 30 July 2011 and 31 July 2010 were non-interest bearing.

Note 9. Current assets - trade and other receivablesConsolidated

2011 2010

$’000 $’000

trade receivables 2,954 2,586

less: provision for impairment of receivables - (1)

2,954 2,585

Other receivables 204 168

prepayments 3,699 4,240

6,857 6,993

impairment of receivablesthe consolidated entity has recognised a gain of $1,000 (2010: gain of $16,000) in profit or loss in respect of impairment of receivables for the year ended 30 July 2011.

the ageing of the impaired receivables recognised above are as follows:

Consolidated

2011 2010

$’000 $’000

3 to 6 months overdue - 1

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Note 9. Current assets - trade and other receivables (continued)

Movements in the provision for impairment of receivables are as follows:

Consolidated

2011 2010

$’000 $’000

Opening balance 1 17

Additional provisions recognised - 1

unused amounts reversed (1) (17)

Closing balance - 1

the creation and release of the provision for impaired receivables has been included in operating expenses in the income statement. Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.

past due but not impairedCustomers with balances past due but without provision for impairment of receivables amount to $64,000 as at 30 July 2011 ($158,000 as at 31 July 2010). the consolidated entity did not consider a credit risk on the aggregate balances after reviewing agency credit information and credit terms of customers based on recent collection practices.

the ageing of the past due but not impaired receivables are as follows:

Consolidated

2011 2010

$’000 $’000

1 to 3 months overdue 25 144

3 to 6 months overdue 11 12

Over 6 months overdue 28 2

64 158

Foreign exchange and interest rate riskInformation about the consolidated entity’s exposure to foreign currency risk and interest rate risk in relation to trade and other receivables is provided in note 26.

Fair value and credit riskDue to the short-term nature of these receivables, their carrying amount is assumed to approximate their fair value.

the maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivables mentioned above. the fair value of securities held for certain trade receivables is insignificant. refer to note 26 for more information on the risk management policy of the consolidated entity and the credit quality of the entity’s trade receivables.

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Note 10. Current assets - inventoriesConsolidated

2011 2010

$’000 $’000

Finished goods - at cost 31,260 24,418

less: provision for impairment (1,052) (897)

30,208 23,521

Note 11. Current assets - tax receivableConsolidated

2011 2010

$’000 $’000

Income tax refund due 9 96

Note 12. Non-current assets - property, plant and equipmentConsolidated

2011 2010

$’000 $’000

plant and equipment - at cost 49,257 43,366

less: Accumulated depreciation (27,065) (20,389)

22,192 22,977

Reconciliationsreconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

plant andequipment total

$’000 $’000

Consolidated

Balance at 26 July 2009 19,427 19,427

Additions 9,490 9,490

Disposals (441) (441)

exchange differences (2) (2)

Depreciation expense (5,497) (5,497)

Balance at 31 July 2010 22,977 22,977

Additions 6,318 6,318

Disposals (111) (111)

exchange differences (12) (12)

Depreciation expense (6,980) (6,980)

Balance at 30 July 2011 22,192 22,192

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Note 13. Non-current assets - intangiblesConsolidated

2011 2010

$’000 $’000

Software - at cost 5,309 4,718

less: Accumulated amortisation (4,651) (4,335)

658 383

Reconciliationsreconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

Software total

$’000 $’000

Consolidated

Balance at 26 July 2009 558 558

Additions 213 213

Amortisation expense (388) (388)


Additions 591 591

Amortisation expense (316) (316)


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Note 14. Non-current assets - deferred taxConsolidated

2011 2010

$’000 $’000

The balance comprises temporary differences attributable to:

Amounts recognised in profit or loss:

employee benefits 853 679

Accrued expenses 311 473

Deferred revenue 103 105

Depreciation 39 43

Stock provision 32 59

lease incentives and fixed rental increases 1,238 1,122

Stock valuation 1,105 803

3,681 3,284

Amounts recognised in equity 1,676 262

Deferred tax asset 5,357 3,546

Deferred tax asset to be recovered within 12 months 4,147 2,427

Deferred tax asset to be recovered after more than 12 months 1,210 1,119

Deferred tax asset 5,357 3,546

Movements:

Opening balance 3,546 3,801

Credited/(charged) to profit or loss (note 7) 397 (155)

Credited/(charged) to equity 1,414 (100)

Closing balance 5,357 3,546

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Note 15. Current liabilities - trade and other payablesConsolidated

2011 2010

$’000 $’000

trade payables 6,054 6,614

Other payables 7,824 7,820

13,878 14,434

refer to note 26 for detailed information on financial instruments.

Amounts not expected to be settled within the next 12 monthsOther payables include accruals for annual leave. the entire obligation is presented as current, since the consolidated entity does not have an unconditional right to defer settlement. However, based on past experience, the consolidated entity does not expect all employees to take the full amount of accrued leave within the next 12 months.

the following amounts reflect leave that is not expected to be taken within the next 12 months:

Consolidated

2011 2010

$’000 $’000

Annual leave obligation expected to be settled after 12 months 162 111

Note 16. Current liabilities - borrowingsConsolidated

2011 2010

$’000 $’000

Bank overdraft 1,828 942

refer to note 20 for further information on assets pledged as security and financing arrangements and note 26 for detailed information on financial instruments.

Note 17. Current liabilities - derivative financial instrumentsConsolidated

2011 2010

$’000 $’000

Forward foreign exchange contracts - cash flow hedges 2,855 209

refer to note 26 for detailed information on financial instruments.For

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Note 18. Current liabilities - income taxConsolidated

2011 2010

$’000 $’000

provision for income tax 3,883 2,031

Note 19. Current liabilities - provisionsConsolidated

2011 2010

$’000 $’000


Deferred lease incentives 498 454

663 630

Deferred lease incentivesthe provision represents operating lease incentives received. the incentives are allocated to profit or loss in such a manner that the rent expense is recognised on a straight-line basis over the lease term.

Movements in provisionsMovements in each class of provision during the current financial year, other than employee benefits, are set out below:

Deferredlease

incentives

$’000

Consolidated - 2011

Carrying amount at the start of the year 454

Additional provisions recognised 100

Amounts transferred from non-current 559

Amounts used (615)

Carrying amount at the end of the year 498

Amounts not expected to be settled within the next 12 monthsthe current provision for long service leave includes all unconditional entitlements where employees have completed the required period of service and also those where employees are entitled to pro-rata payments in certain circumstances. the entire amount is presented as current, since the consolidated entity does not have an unconditional right to defer settlement. However, based on past experience, the consolidated entity does not expect all employees to take the full amount of accrued long service leave or require payment within the next 12 months.

the following amounts reflect leave that is not expected to be taken within the next 12 months:

Consolidated

2011 2010

$’000 $’000

long service leave obligation expected to be settled after 12 months 152 154

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Note 20. Non-current liabilities - borrowingsConsolidated

2011 2010

$’000 $’000

Bank loans 8,000 6,000

refer to note 26 for detailed information on financial instruments.

total secured liabilitiesthe total secured liabilities (current and non-current) are as follows:

Consolidated

2011 2010

$’000 $’000


Bank loans 8,000 6,000

9,828 6,942

Financing arrangementsunrestricted access was available at the reporting date to the following lines of credit:

Consolidated

2011 2010

$’000 $’000

total facilities

Bank overdraft 3,000 3,000

Working capital facilities 37,000 37,000

40,000 40,000

used at the reporting date


Working capital facilities* 13,920 12,182

15,748 13,124

unused at the reporting date



24,252 26,876

* Working capital facilities used includes bank loans of $8,000,000 (2010: $6,000,000).

the financing arrangements are secured by a first mortgage over the consolidated entity’s assets.

the bank overdraft facilities and bank bill acceptance facility may be drawn at any time. In addition to the unused credit facilities disclosed above, the consolidated entity has access to the cash balances as disclosed in note 8. Bank facilities are arranged with the general terms, conditions and covenants being set and agreed from time to time. the $3m bank overdraft facility is repayable and terminable on demand and the $37m working capital facilities are due for renewal on 31 October 2013.

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Note 21. Non-current liabilities - provisionsConsolidated

2011 2010

$’000 $’000


Deferred lease incentives 2,051 2,210

lease make good 1,101 1,242

Fixed rental increases 1,587 1,038

5,094 4,832

Deferred lease incentivesthe provision represents operating lease incentives received. the incentives are allocated to profit or loss in such a manner that the rent expense is recognised on a straight-line basis over the lease term.

lease make goodthe provision represents the present value of the estimated costs to make good the premises leased by the consolidated entity at the end of the respective lease terms.

Fixed rental increasesthe consolidated entity is required to straight line fixed rental increases over the lease term resulting in a provision for fixed rental increases.

Movements in provisionsMovements in each class of provision during the current financial year, other than employee benefits, are set out below:

Deferredlease

incentiveslease

make goodFixed rental

increases

$’000 $’000 $’000

Consolidated - 2011

Carrying amount at the start of the year 2,210 1,242 1,038

Additional provisions recognised 400 - 549

Amounts transferred to current (559) - -

Amounts used - (12) -

unused amounts reversed - (129) -

Carrying amount at the end of the year 2,051 1,101 1,587

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Note 22. Equity - contributedConsolidated Consolidated

2011 2010 2011 2010

Shares Shares $’000 $’000

Ordinary shares - fully paid 40,880,902 40,880,902 22,523 22,523

Ordinary sharesOrdinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held. the fully paid ordinary shares have no par value.

On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

Share buy-backthere is no current on-market share buy-back.

Oroton performance Based incentive SchemeInformation relating to the Oroton performance Based Incentive Scheme, including details of shares provided under the scheme, is set out in note 39.

Oroton Share planthe OrotonGroup trust holds 174,527 (2010: 236,667) shares purchased on-market at the end of the year. See note 23 for more details.

Capital risk managementthe consolidated entity’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

the capital risk management policy remains unchanged from the 31 July 2010 Annual report.

Note 23. Equity - reservesConsolidated

2011 2010

$’000 $’000

Foreign currency reserve (271) (171)

Share-based payments reserve (625) 307

Hedging reserve - cash flow hedges (3,901) (605)

Share-based payments trust reserve (1,431) (1,575)

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Note 23. Equity - reserves (continued)

Foreign currency

Share-basedpayments hedging

Share-based

paymentstrust * total

$’000 $’000 $’000 $’000 $’000

Consolidated

Balance at 26 July 2009 (157) 230 (321) (519) (767)

Foreign currency translation (14) - - - (14)

revaluation of cash flow hedges - gross - - 1,234 - 1,234

Deferred tax effect on revaluation of cash flow hedges - - (370) - (370)

transfer from inventory - gross - - (1,640) - (1,640)

Deferred tax effect on transfer to inventory - - 492 - 492

Share-based payment expense - 830 - - 830

purchase of shares by share trust - - - (1,587) (1,587)

Deferred tax - - - (222) (222)

Shares exercised - (753) - 753 -

Balance at 31 July 2010 (171) 307 (605) (1,575) (2,044)

Foreign currency translation (100) - - - (100)

revaluation of cash flow hedges - gross - - (2,646) - (2,646)

Deferred tax effect on revaluation of cash flow hedges - - 795 - 795

transfer from inventory - gross - - (2,064) - (2,064)

Deferred tax effect on transfer to inventory - - 619 - 619

Share-based payment expense - 643 - - 643

purchase of shares by share trust - - - (1,431) (1,431)

Shares exercised - (1,575) - 1,575 -

Balance at 30 July 2011 (271) (625) (3,901) (1,431) (6,228)

* Represents 174,527 (2010: 236,667) shares.

Foreign currency reservethe reserve is used to recognise exchange differences arising from translation of the financial statements of foreign operations to Australian dollars.

Share-based payments reservethe reserve is used to recognise the fair value of all shares, options and rights both issued and issued but not exercised under the employee share plans.

hedging reserve - cash flow hedgesthe reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised directly in equity. Amounts are recognised in profit and loss when the associated hedged transaction affects profit and loss.

Share-based payments trust reservethe reserve is used to recognise the cost of shares purchased through the Oroton share plan company.F

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Note 24. Equity - retained profitsConsolidated

2011 2010

$’000 $’000

retained profits at the beginning of the financial year 8,226 4,468

profit after income tax expense for the year 24,789 22,972

Dividends paid (note 25) (19,623) (19,214)

retained profits at the end of the financial year 13,392 8,226

Note 25. Equity - dividends

Consolidated

2011 2010

Dividends $’000 $’000

Final dividend for the year ended 31 July 2010 (2010: 25 July 2009) of 26.0 cents (2010: 22.0 cents) per fully paid ordinary share paid on 27 October 2010 (2010: 28 October 2009) fully franked based on a tax rate of 30% 10,629 8,994

Special dividend for the year ended 25 July 2009 of 3.0 cents per fully paid ordinary share paid on 28 October 2009 fully franked based on a tax rate of 30% - 1,226

Interim dividend for the year ended 30 July 2011 (2010: 31 July 2010) of 22.0 cents (2010: 22.0 cents) per fully paid ordinary share paid on 13 April 2011 (2010: 7 April 2010) fully franked based on a tax rate of 30% 8,994 8,994

19,623 19,214

In addition to the above dividends, since year end the Directors have recommended the payment of a fully franked final dividend of 28 cents per ordinary share, out of current period profits, to be paid on 26 October 2011. this is an estimated distribution of $11,447,000 based on the number of ordinary shares on issue as at 30 July 2011.

Consolidated

2011 2010

Franking Credits $’000 $’000

Franking credits available for subsequent financial years based on a tax rate of 30% 20,112 17,561

the above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:• frankingcreditsthatwillarisefromthepaymentoftheamountoftheprovisionforincometaxatthereportingdate• frankingdebitsthatwillarisefromthepaymentofdividendsrecognisedasaliabilityatthereportingdate• frankingcreditsthatwillarisefromthereceiptofdividendsrecognisedasreceivablesatthereportingdate

the impact on the franking account of the dividend recommended by the directors since year end, but not recognised as a liability at year end, will be reduction in the franking account of $4,906,000 (2010: $4,555,000).

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Note 26. Financial instruments

Financial risk management objectivesthe consolidated entity’s activities exposes it to a variety of financial risks: market risk (including foreign currency risk, credit risk, and liquidity risk). the consolidated entity’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the consolidated entity. the consolidated entity uses derivative financial instruments such as foreign exchange contracts to hedge certain risk exposures. Derivatives are exclusively used for hedging purposes, ie not as trading or other speculative instruments. the consolidated entity uses different methods to measure different types of risk to which it is exposed. these methods include sensitivity analysis in the case of interest rate and foreign exchange risks and aging analysis for credit risk.

Financial risk management is carried out by the Finance department (Finance) under policies approved by the Board of Directors. Finance identifies and evaluates financial risks in close co-operation with the consolidated entity’s operating units. the Board provides written principles for overall risk management, as well as written policies covering specific areas, such as mitigating foreign exchange, interest rate and credit risk and use of derivative financial instruments.

Market riskForeign currency riskthe consolidated entity undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through foreign exchange rate fluctuations. this is primarily through the purchase of inventory and payment of ralph lauren royalties in united States Dollars.

Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities denominated in a currency that is not the entity’s functional currency. the risk is measured using sensitivity analysis and cash flow forecasting.

In order to protect against exchange rate movements, the consolidated entity has entered into forward exchange contracts to purchase uS dollars. these contracts are hedging highly probable forecasted cash flows for the ensuing financial year. Management has a risk management policy to hedge between 30% and 70% of anticipated transactions in uS dollars for the subsequent 18 months. Approximately 90% (2010: 90%) of projected purchases and sales qualify as ‘’highly probable’’ forecast transactions for hedge accounting purposes.

the maturity, settlement amounts and the average contractual exchange rates of the consolidated entity’s outstanding forward foreign exchange contracts at the reporting date was as follows:

Sell Australian dollars Average exchange rates

2011 2010 2011 2010

$’000 $’000

Buy uS dollars

Maturity:

0 - 6 months 16,946 18,387 0.9755 0.8883

6 - 12 months 13,440 5,450 0.9684 0.8736

12 - 18 months 3,936 - 1.0167 -

Sell NZ dollars Average exchange rates

2011 2010 2011 2010

$’000 $’000

Buy Australian dollars

Maturity:

0 - 6 months - 489 - 1.2415

Amounts disclosed above represent currency sold measured at contract rate.

the proportion of gain or loss on the hedging instrument that is determined to be an effective hedge is recognised directly in equity. When the cash flows occur, the consolidated entity adjusts the initial measurement of the component recognised in the statement of financial position by the related amount deferred in equity.

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Note 26. Financial instruments (continued)

At the reporting date the fair value of these contracts represented a liability of $2,855,000 (2010: liability of $209,000).

the carrying amount of the consolidated entity’s foreign currency denominated financial assets and financial liabilities at the reporting date was as follows:

Assets liabilities

2011 2010 2011 2010

$’000 $’000 $’000 $’000

Consolidated

uS dollars 1,652 2,527 1,706 2,656

new Zealand dollars 212 179 - -

Hong Kong dollars 52 - - -

Singapore dollars 64 - - -

Malaysia ringgit 59 - - -

2,039 2,706 1,706 2,656

the consolidated entity had net assets denominated in foreign currency of AuD$333,000 (assets AuD$2,039,000 less liabilities AuD$1,706,000) as at 30 July 2011. Based on this exposure, had the Australian Dollar weakened/strengthened by 10% against the these foreign currencies with all other variables held constant, the consolidated entity’s profit for the year would have been $82,000 lower/$30,000 higher and equity for the year would have been $2,444,000 higher/$1,988,000 lower. the equity adjustment is higher because the consolidated entity uses hedging accounting. the 10% change is the expected overall volatility of the uS Dollar. the actual foreign exchange loss for the year ended 30 July 2011 was $221,000 (2010: loss of $199,000).

price riskthe consolidated entity is not exposed to any significant price risk.

interest rate riskthe consolidated entity has no interest rate risk arising from cash at bank, as the cash balances as at 30 July 2011 were non-interest bearing.

the consolidated entity’s main interest rate risk arises from borrowings. Borrowings issued at variable rates expose the consolidated entity to interest rate risk.

For the consolidated entity the bank overdraft and loans outstanding, totalling $9,828,000 (2010: $6,942,000), are subject to variable interest rates. Monthly cash outlays of approximately $54,000 (2010: $38,000) per month are required to service the interest payments. An official increase in interest rates one percentage point (100 basis points) would have an adverse affect on profit after tax of $69,000 (2010: $49,000) per annum.

Credit riskCredit risk is managed on a consolidated entity basis. Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the consolidated entity. the consolidated entity has policies in place to ensure that sales of products are made to customers with an appropriate credit history. Derivative counterparts and cash transactions are limited to high credit quality financial institutions. the maximum exposure to credit risk, excluding the value of any collateral or other security, at the reporting date to recognised financial assets, is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements.

the consolidated entity has credit exposure to a major Australian retailer.

liquidity riskprudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. the consolidated entity manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Due to the dynamic nature of the underlying businesses, consolidated entity Finance department aims at maintaining flexibility in funding by keeping committed credit lines available. Surplus funds are generally only invested in instruments that are tradeable in highly liquid markets.

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Financing arrangementsunused borrowing facilities at the reporting date:

Consolidated

2011 2010

$’000 $’000



24,252 26,876

the bank overdraft facilities may be drawn at any time and may be terminated by the bank without notice. the bank loan facilities may be drawn at any time and have an average maturity of 2 years (2010: 3 years).

Remaining contractual maturitiesthe following tables detail the consolidated entity’s remaining contractual maturity for its financial instrument liabilities. the tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. the tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.

Weighted average

interest rate1 year or

lessBetween 1

and 2 yearsBetween 2 and 5 years Over 5 years

Remaining contractual maturities

Consolidated - 2011 % $’000 $’000 $’000 $’000 $’000

Non-derivatives

Non-interest bearing

trade payables - 6,054 - - - 6,054

Other payables - 7,824 - - - 7,824

Interest-bearing - variable rate

Bank overdraft 6.20 1,828 - - - 1,828

Bank loans 6.60 528 528 8,132 - 9,188

total non-derivatives 16,234 528 8,132 - 24,894

Derivatives

Forward foreign exchange contracts net settled - 2,855 - - - 2,855

total derivatives 2,855 - - - 2,855

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Weighted average

interest rate1 year or

lessBetween 1

and 2 yearsBetween 2 and 5 years Over 5 years

Remaining contractual maturities

Consolidated - 2010 % $’000 $’000 $’000 $’000 $’000

non-derivatives

Non-interest bearing

trade payables - 6,614 - - - 6,614

Other payables - 7,820 - - - 7,820

Interest-bearing - variable rate

Bank overdraft 8.95 942 - - - 942

Bank loans 6.10 366 366 6,458 - 7,190

total non-derivatives 15,742 366 6,458 - 22,566

Derivatives

Forward foreign exchange contracts net settled - 209 - - - 209

total derivatives 209 - - - 209

the cash flows in the maturity analysis above are not expected to occur significantly earlier than disclosed.

Fair value of financial instrumentsunless otherwise stated, the carrying amounts of financial instruments reflect their fair value. the carrying amounts of trade receivables and trade payables are assumed to approximate their fair values due to their short-term nature. the fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market interest rate that is available for similar financial instruments.

Note 27. Key management personnel disclosures

Directorsthe following persons were directors of OrotonGroup limited during the financial year:

ross B lane executive ChairmanSally l Macdonald Managing Director and CeOeddy Chieng non-executive DirectorJohn p Schmoll non-executive DirectorJ Will Vicars non-executive DirectorSamuel S Weiss non-executive Director

Other key management personnelthe following person also had the authority and responsibility for planning, directing and controlling the major activities of the consolidated entity, directly or indirectly, during the financial year:

Kevin Fine Company Secretary and Chief Financial Officer (CFO)

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Note 27. Key management personnel disclosures (continued)

Compensationthe aggregate compensation made to directors and other members of key management personnel of the consolidated entity is set out below:

Consolidated

2011 2010

$’000 $’000

Short-term employee benefits 1,769,843 1,774,925

post-employment benefits 86,859 81,287

long-term benefits 18,047 21,922

Share-based payments 392,258 1,009,697

2,267,007 2,887,831

Detailed remuneration disclosures are provided in the remuneration report on pages 27 to 35.

Shareholdingthe number of shares in the parent entity held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below:

2011

Balance atthe start of

the year

Receivedas part of

remuneration AdditionsDisposals/

other

Balance atthe end ofthe year

Ordinary shares

ross B lane 2,985,961 - - (835,961) 2,150,000

Sally l Macdonald 748,570 200,000 - (200,000) 748,570

John p Schmoll 30,000 - - - 30,000

J Will Vicars 4,822,401 - 150,712 - 4,973,113

Samuel S Weiss 147,404 - - - 147,404

Kevin Fine 26,666 36,667 - - 63,333

8,761,002 236,667 150,712 (1,035,961) 8,112,420

2010


the year

Receivedas part of

remuneration AdditionsDisposals/

other


Ordinary shares

ross B lane 2,985,961 - - - 2,985,961

Sally l Macdonald 620,000 128,570 - - 748,570

John p Schmoll 30,000 - - - 30,000

J Will Vicars 4,822,401 - - - 4,822,401

Samuel S Weiss 147,404 - - - 147,404

Kevin Fine - 26,666 - - 26,666

8,605,766 155,236 - - 8,761,002

the interest held by ross B lane, as shown in the table above, is his interest in shares held in his own name and in the names of his personally related parties. It does not include the interest of the lane family Deed (to which he is a party). See directors’ report page 24 for the relevant interest of ross B lane as part of the lane Deed.

Options provided as remunerationDetails of options over ordinary shares in the company provided as remuneration and shares provided on the exercise of such options, together with the terms and conditions of the options are set out below. When exercisable, each option is convertible into one ordinary share of OrotonGroup limited. Further information on the options is set out in note 39.

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Note 27. Key management personnel disclosures (continued)

Shares provided on exercise of remuneration optionsOrdinary shares in the company provided as a result of the exercise of remuneration options by Directors of OrotonGroup limited and the specified executives of the consolidated entity were 236,667 (2010: 155,236). no amounts are unpaid on any shares provided on the exercise of options.

Option holdingthe number of options over ordinary shares in the parent entity held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below:

2011


the year granted exercised

expired/forfeited/

other


Options over ordinary shares

Sally l Macdonald* 395,472 199,422 (200,000) - 394,894

Kevin Fine 94,207 16,133 (36,667) - 73,673

489,679 215,555 (236,667) - 468,567

•The2tranchesofoptionsallocatedtoSallyLMacdonaldbytheBoardfortheyearsended31July2010(115,385options)and 30 July 2011 (84,037 options) were granted with shareholder approval at the Annual General Meeting on 1 December 2010

2010



expired/forfeited/

other


Options over ordinary shares

Sally l Macdonald 524,042 - (128,570) - 395,472

Kevin Fine 100,782 20,091 (26,666) - 94,207

624,824 20,091 (155,236) - 489,679

loans to key management personnelthere have not been any loans made to the directors of OrotonGroup limited or any other key management personnel of the consolidated entity, including their personally related parties for the 2011 and 2010 financial years. there are no other transactions involving key management personnel during the 2011 and 2010 financial years.

Related party transactionsrelated party transactions are set out in note 31.

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Note 28. Remuneration of auditors

During the financial year the following fees were paid or payable for services provided by pricewaterhouseCoopers, the auditor of the company, and its related practices:

2011 2010

$ $

Audit services - PricewaterhouseCoopers

Audit or review of the financial report 259,500 229,500

Other services - PricewaterhouseCoopers

Audit of regulatory returns - 1,500

Other services 77,850 107,100

tax compliance services, including review of company income tax returns 29,100 25,000

106,950 133,600

366,450 363,100

Audit services - related practices

Audit or review of the financial report 30,000 -

Other services - related practices

Other services 11,000 -

tax compliance services, including review of company income tax returns 30,000 -

41,000

71,000

It is the consolidated entity’s policy to employ pricewaterhouseCoopers on assignment additional to their statutory audit duties where pricewaterhouseCoopers’ expertise and experience with the consolidated entity are important. these assignments are principally tax advice and due diligence reporting on acquisitions, or where pricewaterhouseCoopers is awarded assignments on a competitive basis. It is the consolidated entity’s policy to seek competitive tenders for all major consulting projects.

Note 29. Contingent liabilities

Details and estimates of maximum amounts of contingent liabilities are as follows:

Guarantees and letters of responsibility have been given to lending institutions by OrotonGroup limited, OrotonGroup (Australia) pty limited and polo ralph lauren Australia pty limited in respect of borrowings and documentary letters of credit of controlled entities in the normal course of business. entities in the consolidated entity have guaranteed each other in respect of amounts advanced under banking and finance arrangements in the normal course of business.

OrotonGroup limited has guaranteed OrotonGroup (Australia) pty limited, polo ralph lauren Australia pty limited, OrotonGroup (new Zealand) pty limited in respect of the tenancy of a total of 74 (2010: 66) properties, occupied in the normal course of business. the contingent liability under the leases, covering the period to the lease expiry dates, is assessed at $57,935,000 at 30 July 2011 (2010: $59,338,000).

no material liabilities, not already provided for in the financial statements, are anticipated in respect of the above.

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Note 30. Commitments for expenditureConsolidated

2011 2010

$’000 $’000

Capital commitments - Property, plant and equipment

Committed at the reporting date but not recognised as liabilities, payable:

Within one year 343 2,069

Capital commitments - Intangible assets


Within one year 192 23

Lease commitments - operating


Within one year 16,230 13,491

One to five years 39,301 39,757

More than five years 2,404 6,090

57,935 59,338

Lease commitments - operating - sub-leases


Within one year 1,506 1,406

One to five years 3,031 4,886

4,537 6,292

not included in the above operating lease commitments are contingent rental payments which may arise in the event that a pre-determined percentage of sales produced in certain leased shops exceed the basic rent provided for in the lease. the contingent rentals payable are based on varying percentages of sales revenue.

Operating lease commitments includes contracted amounts for various retail outlets and offices under non-cancellable operating leases expiring within one to ten years with, in some cases, options to extend. the leases have various escalation clauses. On renewal, the terms of the leases are renegotiated.

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Note 31. Related party transactions

parent entityOrotonGroup limited is the parent entity.

SubsidiariesInterests in subsidiaries are set out in note 33.

key management personnelDisclosures relating to key management personnel are set out in note 27 and the remuneration report in the directors’ report.

transactions with related partiesthere were no transactions with related parties during the financial year.

Receivable from and payable to related partiesthere were no trade receivables from or trade payables to related parties at the reporting date.

loans to/from related partiesthere were no loans to or from related parties at the reporting date.

Note 32. Parent entity information

Set out below is the supplementary information about the parent entity.

Statement of comprehensive income

parent

2011 2010

$’000 $’000

profit after income tax 20,031 19,213

total comprehensive income 20,031 19,213

Statement of financial position

parent

2011 2010

$’000 $’000

total current assets 7,551 5,292

total assets 39,551 37,292

total current liabilities 3,903 2,052

total liabilities 3,903 2,052

equity

Contributed equity 22,523 22,523

reserves 32 32

retained profits 13,093 12,685

total equity 35,648 35,240

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Note 32. Parent entity information (continued)

Contingent liabilitiesOrotonGroup limited has guaranteed OrotonGroup (Australia) pty limited, polo ralph lauren Australia pty limited, OrotonGroup (new Zealand) pty limited in respect of the tenancy of a total of 74 (2010: 66) properties, occupied in the normal course of business. the contingent liability under the leases, covering the period to the lease expiry dates, is assessed at $57,935,000 at 30 July 2011 (2010: $59,338,000).

Capital commitments - property, plant and equipmentthe parent entity had no capital commitments for property, plant and equipment at as 30 July 2011 and 31 July 2010.

Significant accounting policiesthe accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1, except for the following:• Investmentsinsubsidiariesareaccountedforatcost,lessanyimpairment.

Note 33. Subsidiaries

the consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 1:

Name of entity Country of incorporation

equity holding

2011 2010

% %

OrotonGroup (Australia) pty limited Australia 100 100

polo ralph lauren Australia pty limited Australia 100 100

Macbray pty ltd * Australia - 100

Marcs Wholesale pty ltd * Australia - 100

Oroton Share plan Company pty limited Australia 100 100

OrotonGroup (International) pty limited Australia 100 100

OrotonGroup (new Zealand) pty limited new Zealand 100 100

OrotonGroup (Malaysia) SDn BHD Malaysia 100 -

OrotonGroup (Singapore) pte ltd Singapore 100 -

OrotonGroup (Hong Kong) ltd Hong Kong 100 -

* These companies were deregistered in February 2011.

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Note 34. Deed of cross guarantee

the following entities are party to a deed of cross guarantee under which each company guarantees the debts of the others:

OrotonGroup limitedOrotonGroup (Australia) pty limitedpolo ralph lauren Australia pty limitedOrotonGroup (new Zealand) pty limitedOroton Share plan Company pty limited

By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare a financial report and directors’ report under Class Order 98/1418 (as amended) issued by the Australian Securities and Investments Commission (‘ASIC’).

the above companies represent a ‘Closed Group’ for the purposes of the Class Order, and as there are no other parties to the Deed of Cross Guarantee that are controlled by OrotonGroup limited, they also represent the ‘extended Closed Group’.

the statement of comprehensive income and statement of financial position are substantially the same as the consolidated entity and therefore have not been separately disclosed.

Note 35. Events occurring after the reporting date

On 19 September 2011 the consolidated entity signed a new financing facility with Westpac, increasing its total facility available from $40m to $60m. this facility is due for renewal on 31 October 2013.

Apart from the dividend declared as disclosed in note 25, no other matter or circumstance has arisen since 30 July 2011 that has significantly affected, or may significantly affect the consolidated entity’s operations, the results of those operations, or the consolidated entity’s state of affairs in future financial years.

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Note 36. Reconciliation of profit after income tax to net cash from operating activities

Consolidated

2011 2010

$’000 $’000

profit after income tax expense for the year 24,789 22,972

Adjustments for:

Depreciation and amortisation 7,296 5,885

net loss on disposal of property, plant and equipment 111 441

Amortisation of landlord contributions (115) (207)

non-cash employee benefits expense share-based payments 643 830

Share-based payments trust purchases (1,431) (1,587)

Foreign currency differences (88) (12)

Change in operating assets and liabilities:

Increase in trade and other receivables (405) (621)

Increase in inventories (8,751) (546)

(Increase)/decrease in income tax refund due 87 (96)

(Increase)/decrease in deferred tax assets (397) 155

(Increase)/decrease in other operating assets 541 (2,668)

Increase/(decrease) in trade and other payables (556) 2,156

Increase/(decrease) in provision for income tax 1,852 (2,478)

Decrease in deferred tax liabilities - (18)

Increase in other provisions 410 374

net cash from operating activities 23,986 24,580

Note 37. Non-cash investing and financing activities

Consolidated

2011 2010

$’000 $’000

leasehold improvements - lease make good - 238

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Note 38. Earnings per share

Consolidated

2011 2010

$’000 $’000

profit after income tax attributable to the owners of OrotonGroup limited 24,789 22,972

Number Number

Weighted average number of ordinary shares used in calculating basic earnings per share 40,793,367 40,782,702

Adjustments for calculation of diluted earnings per share:

Options 130,463 162,853

Weighted average number of ordinary shares used in calculating diluted earnings per share 40,923,830 40,945,555

Cents Cents

Basic earnings per share 60.77 56.33

Diluted earnings per share 60.57 56.10

Note 39. Share-based payments

Oroton performance Based incentive Schemethe Oroton performance Based Incentive Scheme is designed to provide long and short term incentives to deliver shareholder returns. under the scheme, participants are granted options which only vest if certain performance standards are met. participation in the scheme is at the Board’s discretion and no individual has a contractual right to participate in the scheme or to receive any guaranteed benefits.

the amount of options that will vest depends on OrotonGroup limited’s earnings per share (epS) meeting predetermined levels or other performance related pre-determined targets.

Once vested, the options remain exercisable for a period of two years. Options are granted under the scheme for no consideration. Options granted under the plan carry no dividend or voting rights.

When exercisable, each option is convertible into one ordinary share. the options have no exercise price.

Set out below are summaries of options granted under the scheme:

2011exercise

price



expired/forfeited/

other

Balance atthe end ofthe yeargrant date expiry date

29/07/07 31/07/12 $0.00 236,667 - (236,667) - -

29/07/08 30/07/13 $0.00 288,552 - - - 288,552

19/04/10 28/07/14 $0.00 81,712 - - (5,030) 76,682

02/08/10 27/07/15 $0.00 - 82,451 - (5,527) 76,924

01/12/10 28/07/14 $0.00 - 115,385 - - 115,385

01/12/10 27/07/15 $0.00 - 84,037 - - 84,037

606,931 281,873 (236,667) (10,557) 641,580

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Note 39. Share-based payments (continued)

2010exercise

price



expired/forfeited/

other

Balance atthe end ofthe yeargrant date expiry date

15/09/06 31/07/11 $0.00 188,570 - (188,570) - -

29/01/07 31/07/11 $0.00 26,666 - (26,666) - -

29/07/07 31/07/12 $0.00 236,667 - - - 236,667

29/07/08 30/07/13 $0.00 288,552 - - - 288,552

19/04/10 28/07/14 $0.00 - 81,712 - - 81,712

740,455 81,712 (215,236) - 606,931

the weighted average remaining contractual life of share options outstanding at the end of the period was 2.80 years (2010: 2.95 years).

Fair value of options grantedthe assessed fair value at grant date of options granted during the years ended 30 July 2011 and 31 July 2010 is disclosed in the table below. the fair value at grant date is independently determined using a Black-Scholes pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.

the model inputs for options granted during the years ended 30 July 2011 and 31 July 2010 are as follows:• optionsaregrantedwithnoconsiderationandvestbasedonOrotonGroupLimited’sperformance;orbasedonotherpre-

determined performance related targets• alloptionsgrantedduringtheyearhaveanilexerciseprice.

grant date expiry date

Share priceat grant

dateexercise

priceexpectedvolatility

Dividendyield

Risk-freeinterest rate

Fair valueat grant

date

19/04/10 28/07/14 $6.97 $0.00 39.00% 9.30% 5.10% $5.740

02/08/10 27/07/15 $6.78 $0.00 56.00% 7.10% 4.60% $5.420

01/12/10 28/07/14 $7.98 $0.00 53.00% 7.10% 4.90% $5.740

01/12/10 27/07/15 $7.98 $0.00 53.00% 7.10% 4.90% $6.660

the expected price volatility is based on the historic volatility (based on the remaining life of the options), adjusted for any expected changes to future volatility due to publicly available information.

Options granted under the scheme carry no dividend or voting rights. there were 281,873 (2010: 81,712) options granted in the 2011 financial year.

expenses arising from share-based payment transactionstotal expenses arising from share-based payment transactions recognised during the period as part of employee benefit expense was $643,000 in 2011 (2010: $830,000) for the consolidated entity.

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In the directors’ opinion:

• theattachedfinancialstatementsandnotestheretocomplywiththeCorporationsAct2001,theAccountingStandards,the Corporations regulations 2001 and other mandatory professional reporting requirements;

• theattachedfinancialstatementsandnotestheretocomplywithInternationalFinancialReportingStandardsasissuedbythe International Accounting Standards Board as described in note 1 to the financial statements;

• theattachedfinancialstatementsandnotestheretogiveatrueandfairviewoftheconsolidatedentity’sfinancialpositionas at 30 July 2011 and of its performance for the financial year ended on that date;

• therearereasonablegroundstobelievethatthecompanywillbeabletopayitsdebtsasandwhentheybecomedueandpayable; and

• atthedateofthisdeclaration,therearereasonablegroundstobelievethatthemembersoftheExtendedClosedGroupwill be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee described in note 34 to the financial statements.

the directors have been given the declarations required by section 295A of the Corporations Act 2001.

Signed in accordance with a resolution of directors made pursuant to section 295(5) of the Corporations Act 2001. On behalf of the directors

ross B laneexecutive Chairman 22 September 2011Sydney

diRectoR’S declARAtionF

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ShAReholdeR inFoRmAtion

the shareholder information set out below was applicable as at 20 September 2011.

Distribution of equitable securitiesAnalysis of number of equitable security holders by size of holding:

Number of holdersof ordinary shares

1 to 1,000 1,426

1,001 to 5,000 1,371

5,001 to 10,000 234

10,001 to 100,000 173

100,001 and over 31

3,235

Holding less than a marketable parcel 58

equity security holders

Twenty largest quoted equity security holdersthe names of the twenty largest security holders of quoted equity securities are listed below:

Ordinary shares

Number held% of total

shares issued

rBC Dexia Investor Services Australia nominees pty limited (pIpOOleD A/C) 4,087,919 10.00

HSBC Custody nominees (Australia) limited 2,824,723 6.91

Hazakson pty ltd 2,150,000 5.26

Hubbas pty ltd 2,150,000 5.26

Batiha pty ltd (Sixways trust) 2,121,250 5.19

robert Boyd lane 2,097,974 5.13

national nominees limited 2,072,114 5.07

Velcara pty limited 1,504,896 3.68

Josseck pty limited 1,381, 575 3.38

Cogent nominees pty limited 1,356,333 3.32

Citicorp nominees pty limited 1,313,743 3.21

uBS nominees pty ltd (pB SeG A/C) 1 ,1 10,921 2.72

HSBC Custody nominees (Australia) limited 0 GSCO eCA 872,848 2.14

J p Morgan nominees Australia limited 760,020 1.86

Sally leanne Macdonald 748,570 1.83

JW Investments pty ltd 621,830 1.52

Manderrah pty ltd (GJJ Family A/C) 569,757 1.39

CJH Holdings pty limited 540,729 1.32

Grahger Capital Securities pty ltd 500,000 1.22

Grahger Capital Securities pty ltd 400,000 0.98

29,185,202 71.39

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ShAReholdeR inFoRmAtion

unquoted equity securities

Numberon issue

Numberof holders

Options over ordinary shares issued 527,555 10

Substantial holdersSubstantial holders in the company are set out below:

Ordinary shares

Number held% of total

shares issued

robert lane, ross lane, tom lane and Anna Hookway under the deed dated 21 October 2008 8,600,000 21.04

JW Vicars 4,973,113 12.16

rBC Dexia Investor Services 4,093,817 10.01

voting rightsthe voting rights attached to ordinary shares are set out below:

Ordinary sharesOn a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

there are no other classes of equity securities.

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BRAnd RetAil StoRe liStingS

SiNgApORe

IOn Mall unit 3-10, Ion Orchard2 Orchard turn,Singapore

Marina Bay SandsShop B1-11, level B1 Bayfront AvenueMarina Bay Sands, Singapore

MAlAYSiA

the Gardens G-208A, the Gardens Mall Mid Valley Citylingkaran Syed putra59200Kuala lumpur

KlCCShop 118A-2, level 1 Suria KlCCKuala lumpur City Centre 50088Kuala lumpur

AuStRAliA

ACt

Canberra Shop CF22, Canberra Centre, City WalkCAnBerrA ACt 2601

NeW SOuth WAleS

Bondi Junction Shop 3076Westfield Shopping town500 Oxford StreetBOnDI JunCtIOn nSW 2022

BurwoodShop 209Westfield Shopping town100 Burwood roadBurWOOD nSW 2134

Castle Hill Shop 528Castle towers Shopping Centre, Castle StreetCAStle HIll nSW 2154

Chatswood Shop l128, Gallery levelChatswood Chase91 Archer StreetCHAtSWOOD nSW 2067

David Jones86 – 108 Castlereagh StreetSYDneY nSW 2000

Drummoyne (Factory Outlet) Shop 4 Birkenhead point Shopping Centreroseby StreetDruMMOYne nSW 2047

Homebush (Factory Outlet) Shop 46Direct Factory Outlets (DFOs)3-5 underwood roadHOMeBuSH nSW 2140

Hornsby Shop 2081Westfield Hornsby236 pacific HighwayHOrnSBY nSW 2077

Kotara Shop 2059Westfield KotaraCnr park Ave and northcott DriveKOtArA nSW 2289

Macquarie Centre Shop 51/52 Macquarie Shopping CentreCnt Herring & Waterloo roadsnOrtH rYDe nSW 2113

Miranda Shop 2063Westfield Shoppingtown600 the KingswayMIrAnDA nSW 2228

Mosman Shop 6732 Military roadMOSMAn nSW 2088

parramatta Shop 4052Westfield parramatta159-175 Church StreetpArrAMAttA nSW 2150

pitt St Mall Shop 1A183 pitt Street Mall(cnr King St)SYDneY nSW 2000

QVB FlagshipShop 19Ground Floor, Queen Victoria Building SYDneY nSW 2000

Sydney Domestic Airport Shop 64, terminal 3,Sydney Domestic Airport,MASCOt nSW 2020

Sydney International Airport Shop Bt-773, terminal 1, DeparturesSydney International Airport, MASCOt nSW 2020

Warringah Mall Shop 208Warringah MallCnr Old pittwater rd & Condamine Street BrOOKVAle nSW 2100

Westfield SydneyShop 4014ACnr pitt St Mall and Market StSYDneY 2000

Woollahra Shop192 Queens St WOOllAHrA nSW 2100

QueeNSlAND

Biggera Waters (Factory Outlet) Shop C48Harbourtown Shopping Centre9 Gateway DriveBIGGerA WAterS QlD 4216

Brisbane International AirportShop 319the CircuitBrISBAne AIrpOrt QlD 4007

Brisbane Airport (Factory Outlet)Shop t30 DFOBrISBAne AIrpOrt QlD 4007

Cairns (Factory Outlet)Shop t62Cairns DFO274 Mulgrave roadCAIrnS QlD 4870

Carindale Shop 1047Westfield Carindale1151 Creek roadCArInDAle QlD 4152

ChermsideShop 380 Westfield Chermsidecnr Gympie & Hamilton roadsCHerMSIDe QlD 4032

BrisbaneShop 14A Macarthur CentralCnr elizabeth & edwards StreetsBrISBAne QlD 4000

Indooroopily Shop 2011Indooroopilly Shopping Centre318 Moggill roadInDOOrOOpIllY QlD 4068

pacific Fair Shop 316the ArcadeHooker BoulevardepACIFIC FAIr QlD 4218

robinaShop 4080Arobina town Centre DriverOBInA QlD 4230

SOuth AuStRAliA

Adelaide 32 Gawler place(Off rundle Mall)ADelAIDe SA 5000

Oaklands park Shop 1054/5 Westfield Marion297 Diagonal roadOAKlAnDS pArK SA 5046

viCtORiA

Armadale 1041 High StreetArMADAle VIC 3148

ChadstoneShop 444Chadstone Shopping Centre1341 Dandenong road

CHADStOne VIC 3148Chapel Street513 Chapel StreetSOutH YArrA VIC 3141

Collins StreetShop 88 Collins StreetMelBOurne VIC 3000

David Jones310 Bourke StreetMelBOurne VIC 3000

DoncasterShop 1153Westfield Doncaster Shopping Centre619 Doncaster road (Cnr Williamsons rd)DOnCASter VIC 3108

essendon (Factory Outlet) Oroton DFOShop t105 essendon100 Bulla road, Strathmore VIC 3046

HighpointShop 3094, Highpoint Shopping Centrerosamond roadMArIBYrnOnG VIC 3032

Howey place 3-5 Howey placepresgrave Building277-279 little Collins StreetMelBOurne VIC 3000

Melbourne Central Shop 230Melbourne Cent. Shopping Centre300 lonsdale StreetMelBOurne VIC 3000

nunawading (Factory Outlet) Shop 02Brand Smart Outlet Mall286 Whitehorse roadnunAWADInG VIC 3131

the GlenShop 2.210a the Glen Shopping Centre235 Springvale roadGlen WAVerleY VIC 3150

WeSteRN AuStRAliA

Booragoon Shop 175Garden City Shopping Centre125 riseley StreetBOOrAGOOn WA 6154

Claremont Claremont QuarterShop l1.10023 St Quentin AvenueClAreMOnt WA 6010

perthShop 30, Carillion City ShoppingHay StreetpertH WA 6000

Whitford CityShop 16A WestfieldWestpoint Shopping CentreCnr Marmion & Whitfords AveHIllArY WA 6025

Karrinyup Shop G25200 Karrinyup roadKArrInYup WA 6018

NeW ZeAlAND

24 Osborne StnewmarketAuCKlAnD

Vulcan lane31 Vulcan laneAuCKlAnD

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BRAnd RetAil StoRe liStingS

NeW SOuth WAleS

QVBGround Floor455 George StSydney nSW 2000

Chatswood Chase Shopping Centre Cnr of Anderson and Victoria Avelevel 1, Shop 1-3Chatswood, nSW 2067

Bondi Junction4043-4044 Westfield Shoppingtown 500 Oxford St, Bondi Junction nSW 2022

David Jones Sydney1st Floor,Market StreetSYDneY nSW 2000

Drummoyne (Factory Outlet) Shop 90-91Birkenhead point Shopping Centreroseby StreetDruMMOYne nSW 2047

Myer Sydney436 George StreetSYDneY nSW 2000

Myer Chatswood49 Albert AvenueCHAtSWOOD nSW 2067

Homebush (Factory Outlet)Shop t51-t52Direct Factory Outlets (DFO)3-5 underwood roadHOMeBuSH nSW 2140

viCtORiA

Melbourne 181 Collins StMelbourne VICV3000

Chadstone 1341 Dandenong roadChadstone VIC 3148

David Jones Melbourne299 Bourke StreetMelBOurne VIC 3000

DoncasterWestfield Doncaster Shopping CentreShop 1082, 619 Doncaster roadDoncaster, VIC 3108

Myer Doncaster619 Doncaster roadDOnCASter VIC 3108

Myer Melbourne295 lonsdale StreetMelBOurne VIC 3000

Myer Chadstone1341 Dandenong roadCHADStOne VIC 3148

essendon (Factory Outlet)Shop 91 essendon100 Bulla road StrAtHMOre VIC 3046

QueeNSlAND

David Jones Brisbane194 Queen StreetBrISBAne QlD 4000

Macarthur CentralShop Gt13 Macarthur Central259 Queen Street BrISBAne QlD 4000

Myer Brisbane91 Queen StreetBrISBAne QlD 4000

Myer pacific FairHooker BoulevardBrOADBeACH QlD 4218

Cairns (Factory Outlet)Shop t64 274 Mulgrave roadCAIrnS QlD 4870

Harbourtown (Factory Outlet)Shop C61 Harbourtown Shopping Centre9 Gateway DriveBIGGerA WAterS QlD 4216

SOuth AuStRAliA

David Jones Adelaidelevel 2/100 rundle MallADelAIDe SA 5000

Myer Adelaide22 rundle MallADelAIDe SA 5000

WeSteRN AuStRAliA

David Jones perth622 Hay StreetpertH WA 6000

Myer perth200 Murray StreetpertH WA 6000

NeW ZeAlAND

Auckland277 BroadwaynewmarketAucklandF

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for personal use only - asx · 2011. 10. 28. · level 12, 680 george street, sydney nsw 2000,...

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