2016 annual report for billabong international limited asx bbg

Billabong International Limited Financial report ended 30 June 2015

Appendix 4E

Preliminary final report Name of entity BILLABONG INTERNATIONAL LIMITED

ABN Financial year ended 17 084 923 946 30 JUNE 2015 Comparative Financial year ended 30 JUNE 2014 Results for announcement to the market

Results $A'000

Revenues from continuing operations Up 2.8% to 1,056,130

Profit from ordinary activities after tax attributable to members Up

n/a to 4,150

Net profit for the period attributable to members Up n/a to 4,150

Dividends Amount per security

Franked amount per security

Tax rate for franking

Current period – 2015

Final dividend --- --- n/a

Interim dividend --- --- n/a

Previous corresponding period – 2014

Final dividend --- --- n/a

Interim dividend --- --- n/a The Board has not declared a final ordinary dividend for the year ended 30 June 2015. The Dividend Reinvestment Plan (DRP) remains suspended.

NTA backing 2015 2014 Net tangible asset backing per ordinary security $0.12 $0.14

Billabong International Limited Financial report ended 30 June 2015

Compliance statement This report is based on the consolidated financial report which has been audited. Refer to the attached full financial report for all other disclosures in respect of the Appendix 4E.

Signed: ............................................................ Date: 27 August 2015 Neil Fiske Chief Executive Officer

Billabong International

Limited ABN 17 084 923 946

Contents Page Directors’ report 2

Auditor’s independence declaration 46

Corporate governance statement 47

Financial report 48

Directors’ declaration 139

Independent auditor’s report to the members 140

Shareholder information 142

: : FULL FINANCIAL REPORT 2014 - 15

Directors’ report : :

Billabong International Limited 2014-15 Full Financial Report Page 2

Your Directors present their report on the consolidated entity (referred to hereafter as the Group) consisting of Billabong International Limited (the Company) and the entities it controlled at the end of, or during, the year ended 30 June 2015. Directors The following persons were Directors of the Company during the whole of the financial year and up to the date of this report: I. Pollard N. Fiske G.S. Merchant H. Mowlem J. Mozingo S.A.M Pitkin M. Wilson A. Doshi (Alternate to J. Mozingo) T. Casarella (Alternate to M. Wilson) Principal activities During the year the principal continuing activities of the Group consisted of the wholesaling and retailing of surf, skate, snow and sports apparel, accessories and hardware, and the licensing of the Group trademarks to specified regions of the world. Dividends – Billabong International Limited No dividends were paid to members during the financial year. The Board has not declared a final ordinary dividend for the year ended 30 June 2015. The Dividend Reinvestment Plan (DRP) remains suspended.

Directors’ report : :

Billabong International Limited 2014-15 Full Financial Report Page 3

Operating and Financial Review Group overview The Group’s business is the wholesaling and retailing of surf, skate, snow and sports apparel, accessories and hardware currently comprising multiple brands and retail banners over three key reporting segments being Asia Pacific, Americas and Europe. The Group’s brands at year-end included Billabong, Element, RVCA, Kustom, Palmers, Honolua, Xcel, Tigerlily, Sector 9 and Von Zipper. The Group operates 404 retail stores as at 30 June 2015 in regions/countries around the world including but not limited to: North America (60 stores), Europe (102 stores), Australia (123 stores), New Zealand (30 stores), Japan (46 stores) and South Africa (27 stores). Stores trade under a variety of banners including but not limited to: Billabong, Element, Surf Dive ‘n’ Ski (SDS), Jetty Surf, Rush, Amazon, Honolua, Two Seasons and Quiet Flight. The Group also operates online retail ecommerce for each of its key brands. Significant changes in the state of affairs The statement below should be read in conjunction with note 41 (events occurring after the balance sheet date) of the annual report for the year ended 30 June 2014 and any public announcements made by the Company during the financial year. On 5 September 2014 the Group sold its 51% stake in the multi-brand ecommerce business SurfStitch.com in Australia and Europe (“SurfStitch”) and its 100% ownership of Swell.com in North America (“Swell”). Refer to note 10 of the financial statements for detailed disclosure in relation to these divestments. Other than matters dealt with in this report there were no significant changes in the state of affairs of the Group during the financial year. Group financial performance The Group results for the period and the prior corresponding period (“pcp”) include certain significant items including but not limited to contingent consideration and fair value adjustment charges and costs associated with the various control/refinancing proposals and strategic reform programs announced during the years ended 30 June 2013 and 30 June 2014. Refer to note 8 of the financial statements for detailed disclosure in relation to these items. During the period the Group sold its 51% stake in the multi-brand ecommerce business SurfStitch and its 100% ownership of Swell. During the year ended 30 June 2014, the Company made the decision to write off the majority of its deferred tax assets (net of deferred tax liabilities) as it was estimated that it was not probable for taxable profits to be generated in a period where the conditions for utilisation of the assets would be met including continuity of ownership tests. During the year ended 30 June 2015, the Company maintains this same position in most tax jurisdictions with the exception of Australia and Japan where it has been estimated that previously unrecognised temporary differences will now meet the conditions for utilisation of these assets. The reinstatement of these deferred tax assets resulted in a tax benefit of $16.8 million. In order to provide users with additional information regarding the continuing operations excluding the aforementioned significant items and to help understand the impact of these events on the results of the Group (and the impact of currency movements on the translation of the Group’s international operations into AUD), the segment results are presented in three separate tables. Table A presents the segment results on a basis including all significant items and including the operations of SurfStitch and Swell (and in the pcp DaKine and West 49) for the relevant period of ownership. See Table A “Segment Results As Reported – Including significant items and discontinued operations”. Table B presents the results excluding significant items and discontinued operations (SurfStitch and Swell are excluded from both the current year and pcp and previously divested businesses DaKine and West 49 are removed from the pcp). See Table B “Adjusted Segment Results – Continuing Operations As Reported – Excluding significant items and discontinued operations”. Table C presents the results on the same basis as in Table B but on a constant currency basis (i.e. using the current period monthly average exchange rates to convert the prior period foreign earnings) to remove the impact of foreign exchange movements from the Group’s performance against the pcp. The constant currency comparatives are not compliant with Australian Accounting Standards. See Table C “Adjusted Segment Results – Continuing Operations (Constant Currency) – Excluding significant items and discontinued operations”.

Directors’ report : :

Billabong International Limited 2014-15 Full Financial Report Page 4

Operating and Financial Review (continued) Table A: Segment Results As Reported – Including significant items and discontinued operations

Segment revenues Segment EBITDAI* 2015 2014 2015 2014 $’000 $’000 $’000 $’000

Asia Pacific 428,476 480,500 10,461 14,593 Americas 455,565 537,969 15,345 (48,988) Europe 179,699 199,041 25,937 (20,754) Third party royalties 3,461 2,842 3,461 2,842 Segment revenues / EBITDAI* 1,067,201 1,220,352 55,204 (52,307) Less: Net interest expense (28,354) (34,205) Depreciation and amortisation (33,489) (39,654) Fair value adjustment on reclassification of West 49

as held for sale during the prior year

--- (17,718) Impairment charge (3,040) (29,255)

Profit/(loss) before income tax expense (9,679) (173,139) Income tax benefit/(expense) 12,231 (66,794) Profit/(loss) after income tax expense 2,552 (239,933) Loss attributable to non-controlling interests 1,598 6,221 Profit/(loss) attributable to members of Billabong International Limited 4,150 (233,712)

* Segment Earnings Before Interest, Taxes, Depreciation, Amortisation and Impairment (EBITDAI) excludes inter-company royalties and sourcing fees and includes an allocation of global overhead costs (which include corporate overhead, international advertising and promotion costs, central sourcing costs and foreign exchange movements). Table B: Adjusted Segment Results – Continuing Operations As Reported – Excluding significant items and discontinued operations

Adjusted EBITDAI by Segment:

2015 Excluding

significant items and discontinued

operations* $’000

2014 Excluding

significant items and discontinued

operations* $’000

Asia Pacific 29,446 33,391 Americas 27,180 25,192 Europe 5,592 (1,080) Third party royalties 3,461 2,842 Adjusted EBITDAI 65,679 60,345 Less: Depreciation and amortisation (32,831) (34,458) Net interest expense (28,340) Adjusted net profit/(loss) before income tax benefit 4,508 Adjusted income tax benefit/(expense) (1,497) Adjusted net profit/(loss) after income tax benefit 3,011 Loss attributable to non-controlling interest --- Adjusted net profit/(loss) attributable to members of Billabong International Limited 3,011