OrotonGroup Limited Preliminary final report … final report 4. Name of entities ... Retailing and...

of 3

1. Company detailsName of entity:ABN:Reporting period:Previous corresponding period:

2.

up 12.3% to

up 7.9% to

up 7.9% to

Dividends

Final dividend for the year ended 31 July 2010 paid on 27 October 2010 26.000 cents 26.000 centsInterim dividend for the year ended 30 July 2011 paid on 13 April 2011 22 000 cents 22 000 cents

Franked amount per securityAmount per security

Year ended 31 July 2010 (53 weeks)

Profit from ordinary activities after tax attributable to the owners of OrotonGroup Limited

Profit for the period attributable to the owners of OrotonGroup Limited

$ 24,789,000

$ 24,789,000

Revenues from ordinary activities $ 164,423,000

Results for announcement to the market

OrotonGroup Limited14 000 038 675Year ended 30 July 2011 (52 weeks)

OrotonGroup LimitedPreliminary final report

APPENDIX 4EPRELIMINARY FINAL REPORT

on 13 April 2011 22.000 cents 22.000 cents

3.

Net tangible asset backing per ordinary security 71.01 cents 69.28 cents

NTA backing

Reporting period Previous corresponding period

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

Earnings Before Interest and Tax (EBIT) up 14.0% to $ 36,509,000

Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) up 15.6% to $ 43,805,000

On 22 September 2011 the directors declared a fully franked final dividend of 28 cents per ordinary share, out of current period profits, with a record date of 12 October 2011 to be paid on 26 October 2011.

Refer to the company announcement on 22 September 2011 for further information and explanation of the Appendix 4E.

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4.

Name of entities (or group of entities)

Date control gained

Contribution of such entities to the reporting entity's profit/(loss) from ordinary activities during the period (where material)

Profit/(loss) from ordinary activities after tax of the controlled entity (or group of entities) for the whole of the previous corresponding period (where material)

5.

Name of entities (or group of entities)

Date control lost

Contribution of such entities to the reporting entity's profit/(loss) from ordinary activities during the period (where material)

Profit/(loss) from ordinary activities after tax of the controlled entity (or group of entities) whilst controlled during the whole of the previous corresponding period

Control gained over entities

$ -

Not applicable.

$ -

Not applicable.

Loss of control over entities

$ -

du g t e o e o t e p e ous co espo d g pe od(where material)

6.

Current period

Final dividend for the year ended 31 July 2010 paid on 27 October 2010 26.000 cents 26.000 centsInterim dividend for the year ended 30 July 2011 paid on 13 April 2011 22.000 cents 22.000 cents

Previous corresponding period

Final dividend for the year ended 25 July 2009 paid on 28 October 2009 22.000 cents 22.000 centsSpecial dividend for the year ended 25 July 2009 paid on 28 October 2009 3.000 cents 3.000 centsInterim dividend for the year ended 31 July 2010 paid on 7 April 2010 22.000 cents 22.000 cents

Amount per security Franked amount per security

Amount per security Franked amount per security

On 22 September 2011 the directors declared a fully franked final dividend of 28 cents per ordinary share, out of currentperiod profits, with a record date of 12 October 2011 to be paid on 26 October 2011.

Dividends

$ -

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7.

8.

Name of associate / joint venture

Not applicable.

Group's aggregate share of associates and joint venture entities' profit/(loss) (where material)

9.

The following dividend or distribution plans are in operation:

The last date(s) for receipt of election notices for the dividend or distribution plans:

Dividend reinvestment plans

Not applicable.

percentage holdingContribution to profit/(loss)

(where material)Reporting entity's

Not applicable.

Details of associates and joint venture entities

periodcorresponding

Previous Previous

Current period periodcorresponding

Current period

Foreign entities

$ - $ -

Profit(loss) from ordinary activities before income taxIncome tax on operating activities $ -

$ -

10.

11.

12.

Attachments

The accounts have been audited and an unqualified opinion has been issued.

Details of audit/review dispute or qualification (if any):

Details of attachments (if any):

The Annual Report of OrotonGroup Limited for the year ended 30 July 2011 is attached.

Audit qualification or review

All foreign subsidiaries were prepared under the International Financial Reporting Standards ('IFRS').

Signed

SydneyManaging Director and CEOSally L Macdonald

Signed: ________________________________ Date: 22 September 2011

Details of origin of accounting standards used in compiling the report:

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Michael Berrington

Stamp

OrotonGroup Limited

Annual Report - 30 July 2011

ABN 14 000 038 675

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OrotonGroup Limited Contents 30 July 2011 Page Corporate directory 2 Directors' report 3 Auditor's independence declaration 18 Corporate Governance Statement 19 Financial report 30 Statement of comprehensive income 31 Statement of financial position 32 Statement of changes in equity 33 Statement of cash flows 34

Notes to the financial statements 35 Directors' declaration 76

Independent auditor's report to the members of OrotonGroup Limited 77 Shareholder information 79

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OrotonGroup Limited

30 July 2011Corporate directory

Kevin Fine

The annual general meeting of OrotonGroup Limited:

will be held at PricewaterhouseCoopersLevel 10, Darling Park Tower 2

Unit 15

11:00 AMWednesday 30 November 2011

Ross 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)

Unit 15

datetime

201 Sussex Street

Principal place of business

Registered office

Sydney NSW 1171

Samuel S Weiss (Non-Executive Director)

409 George StreetWaterloo NSW 2017Australia

Level 2

Company secretary

Notice of annual general meeting

Directors

Level 2409 George Street

50 Carrington Street

Sydney NSW 1171

Watson Mangioni

201 Sussex Street

Share register

Sydney NSW 2000

Westpac Banking Corporation

Sydney NSW 2000

Sydney NSW 2000

PricewaterhouseCoopersAuditorChartered Accountants

Phone: 02 8280 7100

680 George StreetLevel 12Link Market Services Limited

Corporate address: www.orotongroup.com

275 Kent Street

OrotonGroup Limited shares are listed on the Australian Securities Exchange (ASX code: ORL)

Website address

Stock exchange listing

Bankers

Waterloo NSW 2017Australia

409 George Street

Online boutique address: www.oroton.com

Solicitors

PO Box 2650

Level 13

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●

●

2011 2010$'000 $'000

Sally L Macdonald

30 July 2011

Ross B Lane

The directors present their report, together with the financial statements, on the consolidated entity (referred tohereafter 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.

Directors

OrotonGroup Limited

Principal activities

Eddy ChiengJohn P SchmollJ Will Vicars

The following persons were directors of OrotonGroup Limited during the whole of the financial year and up to the dateof this report, unless otherwise stated:

Directors' report

Samuel S Weiss

Dividends

During the financial year the principal continuing activities of the consolidated entity consisted of:Retailing and wholesaling of leather goods, fashion apparel and related accessories under the OROTONand RALPH LAUREN labels.Licensing of the OROTON brand name.

Dividends paid during the financial year were as follows:

10,629 8,994

- 1,226

8,994 8,994

19,623 19,214

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

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

Significant changes in the state of affairs

Refer to the company announcement on 22 September 2011 for further information and explanation of the Appendix4E.

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

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 October2009) 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 ordinaryshare 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%

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

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OrotonGroup LimitedDirectors' report

Executive Chairman

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

Experience and expertise:

The consolidated entity’s focus is premium lifestyle brands in fashion related businesses. The consolidated entitycontinues to have a multi brand strategy and will build on its existing strengths as and when the right opportunitiesarise. The consolidated entity’s philosophy is to provide consistent profit growth supporting a stable dividend growthfor shareholders. Further information as to likely developments in the operations of the consolidated entity have notbeen included in this report as the directors believe that to include such information would be likely to prejudice theconsolidated entity.

Ross Lane has held various positions within the consolidated entity over the past 24years, including holding the position of Managing Director of OrotonGroup Limitedfrom 1996 to 2006.

Matters subsequent to the end of the financial year

Name:

Environmental regulation

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

The consolidated entity is not subject to any significant environmental regulation under Australian Commonwealth orState law.

Ross B Lane

Information on directors

Likely developments and expected results of operations

Title:

Other current directorships:Former directorships (in the last 3 years):

None

Member of the Audit Committee and People and Organisation CommitteeRoss and his personally related parties hold 2,150,000 (2010: 2,985,961) ordinaryshares.

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-operativelywith each other in relation to the consolidated entity’s affairs. Under this deed, as at30 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 beneficiallyowned by Mr Robert Lane, Mr Ross Lane, Mr Tom Lane and Mrs Anna Hookway(nee Lane) in entities associated with them.

Interests in shares:

Interests in options:

Special responsibilities:

from 1996 to 2006.None

None

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Qualifications:Sally Macdonald became Chief Executive of OrotonGroup in September 2006 havingpreviously consulted to the group. Sally has 8 years experience as a managementconsultant with the Boston Consulting Group in Melbourne and New York City officesand also worked in buying and store operations at Banana Republic (a division ofThe Gap Inc) in San Francisco.

Member of the Audit Committee and People and Organisation CommitteeNone

Former directorships (in the last 3 years):Special responsibilities:

Sally holds a relevant interest in 748,570 (2010: 748,570) ordinary shares.

Independent Non-Executive DirectorQualifications:Experience and expertise:

Sally has 280,869 (2010: 395,472) options over ordinary shares in her own name.Interests in shares:Interests in options:

Name:

B.Com; MBA, Harvard Business School

Sally L MacdonaldName:Title: Managing Director and CEO

Mr Chieng is currently a director of three companies, all listed on the Malaysian stockexchange - Executive Chairman of Esthetics International Group (EIG) Berhad,Chairman of Selangor Dredging Berhad and Senior Independent Non-ExecutiveDirector of QL Resources Berhad.

None


Other current directorships:

Title:Eddy Chieng


Former directorships (in the

B.Com; ACAMr Chieng is a chartered accountant with extensive professional and entrepreneurialexperience across personal care, licensed brands, logistics, property, and agri andmarine resource companies in Australia, Malaysia, Singapore, Hong Kong, Thailand,China and other ASEAN Countries.



Former directorships (in the last 3 years):



B.Com, FCA, FAICDTitle:Qualifications:

Special responsibilities:

John Schmoll completed his executive career as Chief Financial Officer of ColesMyer Ltd. Prior to this he held senior corporate and professional roles in Australiaand South Africa including Arthur Young and Edgars Stores Ltd (South Africa’slargest apparel and home wares retailer). Since his retirement he has acceptedvarious non-executive director positions and undertaken some executive coachingroles. Accordingly he brings to OrotonGroup over 35 years of experience in finance,investor relations, information technology and corporate governance, primarily in thedistribution and financial sectors.

Non-Executive Chairman of Breville Group Ltd and Non-Executive Director of PattiesFoods Ltd.

Name:

Special responsibilities:None

John P Schmoll

None

Member of the Audit Committee and People and Organisation Committee.


None

John has an interest as a trustee and member in the Earlswood SuperannuationFund which holds 30,000 (2010: 30,000) ordinary shares.

None

Independent Non-Executive Director



Non-Executive Director of Golden Circle Ltd, Chandler Macleod Ltd and AWB Ltd.Prior to this, Non-Executive Director of Australian Leisure and Hospitality LtdChairman of the Audit Committee and Member of the People and OrganisationCommittee

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Name:


Title:

Qualifications:

None

Name:


J Will Vicars

Director of Caledonia (Private) Investments Pty Limited and The CaledoniaFoundation Pty Ltd. He is also a Non-Executive Director of Grays (Aust) Holdings PtyLimited.

Samuel Weiss is Chairman of Altium Ltd, a leading developer of electronic designsolutions and Open Universities Australia, the leading distance education provider inAustralia, 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 July2003 was appointed Chairman of the Board. On 8 December 2006 he retired asChairman in line with the directors’ resolution to restructure the board.

BA EcoWill Vicars was a Senior Portfolio Manager at NRMA Investments and later aPortfolio Manager at BT Australia. He has more than 23 years experience in a varietyof financial markets. He is a member of the St Luke's Hospital Foundation.

AB, Harvard University; MS, Columbia Business School; FAICD

Non-Executive DirectorQualifications:

Samuel S WeissLead Independent Non-Executive Director

Special responsibilities:Interests in shares:

Chairman of Altium Ltd and Open Universities Australia and a non-executive directorof Breville Group Ltd IProperty Group Ltd The Sydney Festival and The Benevolent


None


Will has a relevant interest in 4,973,113 (2010: 4,822,401) ordinary shares.Member of the Audit Committee and People and Organisation Committee


Title:

Chairman of the People and Organisation Committee and Member of the AuditCommittee

Interests in options: None

Sam has an interest in the Garb-Weiss Superannuation Fund which holds 147,404(2010: 147,404) ordinary shares.

GLG Corp LtdSpecial responsibilities:



of Breville Group Ltd, IProperty Group Ltd, The Sydney Festival and The BenevolentSociety.

The company secretary since April 2007 is Kevin Fine. He is a current member of the Institute of CharteredAccountants in Australia and began his career in Audit and Advisory with firms including Arthur Andersen, MooresRowland and Ernst and Young. Kevin’s retail career began with Shoprite Holdings Ltd (South Africa). He then spent 7years with the Specialty Fashion Group as Head of Finance.

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

Company secretary

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

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Attended Held Attended Held Attended Held8 8 4 4 4 4 8 8 4 4 4 4 8 8 4 4 4 4 8 8 4 4 4 4 8 8 4 4 4 4 7 8 4 4 4 4

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, beingeligible, offers himself for re-election.

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

The remuneration report, which has been audited, outlines the director and executive remuneration arrangements forthe consolidated entity and the company, in accordance with the requirements of the Corporations Act 2001 and itsRegulations.

Remuneration report (audited)

The number of meetings of the company's Board of Directors and of each board committee held during the yearended 30 July 2011, and the number of meetings attended by each director were:

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

Ross B LaneSally L Macdonald

Full Board

Meetings of directors

Eddy Chieng

People and Organisation CommitteeAudit Committee

John P SchmollJ Will VicarsSamuel S Weiss

ABCDE

●

●

● attracts and retains high calibre executives.

focuses on sustained growth in shareholder wealth, consisting of dividends and growth in share price anddelivering a consistent return on assets as well as focusing the executives on key non-financial drivers ofvalue

Details of remuneration

The remuneration report is set out under the following main headings:Principles used to determine the nature and amount of remuneration

Additional information

Alignment to shareholders' interests:has profit as a core component of plan design

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

The objective of the consolidated entity’s executive reward framework is to ensure reward for performance iscompetitive and appropriate for the results delivered. The framework aligns executive reward with achievement ofstrategic objectives aligned to the creation of value for shareholders and takes account of market best practice forexecutive compensation.

Service agreementsShare-based compensation

A Principles used to determine the nature and amount of remuneration

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●

The framework provides a mix of fixed and variable pay, and a blend of short and long-term incentives. As executivesgain 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 andpractices and specific recommendations on remuneration packages for Executive Directors, other senior executivesand Non-Executive Directors. The Corporate Governance statement provides further information on the role of thisCommittee.

provides a clear structure for earning rewardsreflects competitive reward for contribution to growth in shareholder wealth

Alignment to program participants' interests:

Directors' fees

provides recognition for contribution.

Fees 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 ExecutiveChairman’s fees are determined independently to the fees of Non-Executive Directors based on comparable roles inthe external market. The Executive Chairman is not present at any discussions relating to determination of his ownremuneration.

Non-Executive Directors’ fees are determined within a Directors’ fee pool limit, which is periodically recommended forapproval by shareholders. The maximum currently stands at $700,000 per annum and was approved by shareholdersat 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.

rewards capability and results

●

●

●

●

●

●

●

●

●

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

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

Additional fees for Audit Committee Chairman $13,761 (2010: $13,761)Additional fees for People and Organisation Committee Chairman $9,175 (2010: $9,175)

Base fee for Executive Director $45,000 (2010: $45,000)Base fee for Executive Chairman $91,743 (2010: $45,000)Base fee for Non-Executive Director $91,743 (2010: $68,807)

The following annual fees (excluding superannuation and non-monetary benefits) have applied:

Executives are offered a competitive base pay that comprises a fixed component of pay and rewards. Base pay forsenior executives is reviewed annually to ensure the executive’s pay is competitive with the market. An executive’spay is also reviewed on promotion. It is the role of the People and Organisation Committee to review and approveremuneration levels.

Base pay

The executive compensation and reward framework has four components:

long term incentives through participation in the Oroton Performance Based Incentive Scheme

superannuation

The combination of these comprises the Executive’s total remuneration.

base pay and benefits

short term performance incentives

Executive Director and additional chair fees were last reviewed and changed with effect from 27 October 2010.

Executive compensation

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Each executive has a target STI opportunity depending on the accountabilities of their role and its impact on theorganisation's performance.

The consolidated entity operates short term incentive (STI) programs that reward senior management on theachievement 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 profitis consistent with the business plan. The rewards are generally cash bonuses. The Managing Director mayrecommend to the Board discretionary bonuses for exceptional circumstances.

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 underthe STI and minimum levels of performance to trigger payment of STI.

The STI target annual payment is reviewed annually.

Long term performance incentivesLong term incentives are provided to certain employees via the Oroton Performance Based Incentive Scheme (“theScheme’). These incentives are provided as performance rights in the form of zero priced share options. The

Short term performance incentives

The People and Organisation Committee is responsible for assessing whether the KPIs are met. The short-termbonus payments may be adjusted up or down in line with under or over achievement against the target performancelevels. This is at the discretion of the Board of Directors.

SuperannuationRetirement benefits are delivered to the employee’s choice of Superannuation Fund. The consolidated entity has nointerest or ongoing liability to the fund or the employee in respect of retirement benefits.

Shares provided to participants are purchased on market by the OrotonGroup Share Plan Company. These sharesare held in the OrotonGroup Trust when purchased until they are transferred to participants on the vesting of theiroptions.

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

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’sperformance against relevant long term performance hurdles. Depending upon their position and seniority in theorganisation, 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.

Scheme ). These incentives are provided as performance rights in the form of zero priced share options. Theobjective of the scheme is to reward executives and certain key management personnel in a manner that aligns thiselement of compensation with the creation of shareholder value.

An offer under the Scheme grants a participant options for a certain number of fully paid ordinary shares in thecompany. The company currently uses earnings per share as the performance hurdle for the Scheme. The use ofEPS ensures an alignment between shareholder return and reward for participants. EPS represents the earnings pershare from operations as reported in the audited accounts of OrotonGroup Limited. EPS hurdles are currently set bythe Board based on the Group’s EPS, increasing by a predetermined percentage compounded annually over a 3 yearterm. Options will vest and become exercisable where the EPS growth hurdle is satisfied in the third financial year ofthe 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.

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●

Post-employment Long-term Share-based

benefits benefits payments

Cash salary Non- Super- Long serviceand fees Bonus monetary annuation leave Options Total

$ $ $ $ $ $ $

Details of the remuneration of the directors, the key management personnel of the consolidated entity (as defined inAASB 124 Related Party Disclosures) and specified executives of OrotonGroup Limited are set out in the followingtables.

Short-term benefits

Amounts of remuneration

2011

There are no cash alternatives. The options cannot be transferred and are not quoted on the Australian StockExchange. Holders of options are not entitled to notice of, or attend, a meeting of shareholders of the company, orreceive 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 onshare options granted and the reversal of the expense on share options that are expected to lapse.

B Details of remuneration

Kevin Fine - Company Secretary and Chief Financial Officer (CFO)

Name

The key management personnel of the consolidated entity consisted of the directors of OrotonGroup Limited and thefollowing executive:

91,496 - - 8,235 - - 99,731 105,221 - - 9,470 - - 114,691 91,496 - - 8,235 - - 99,731

100,646 - - 9,058 - - 109,704

239,395 - - 21,546 3,364 - 264,305

531,216 250,000 - 15,109 8,117 296,520 1,100,962

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

Other Key Management Personnel:Kevin Fine

J Will Vicars

Sally L Macdonald(Managing Director and CEO)

Samuel S Weiss

Non-Executive Directors:

Executive Directors:Ross B Lane (Executive Chairman)

Eddy ChiengJohn P Schmoll

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Post-employment Long-term Share-based

benefits benefits payments

Cash salary Non- Super- Long serviceand fees Bonus monetary annuation leave Options Total

$ $ $ $ $ $ $

11,468 - - 1,032 - - 12,500 83,901 - - 7,551 - - 91,452 69,917 - - 6,293 - - 76,210 79,254 - - 7,132 - - 86,386

193,965 - - 29,825 6,782 - 230,572

535,470 442,000 - 14,710 10,589 906,446 1,909,215

John P Schmoll

Eddy Chieng (appointed on 23 June 2010)


Name

J Will VicarsSamuel S Weiss

Executive Directors:

Short-term benefits2010

Ross B Lane (Executive Chairman)Sally L Macdonald *(Managing Director and CEO) 535,470 442,000 14,710 10,589 906,446 1,909,215

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 theyear ended 31 July 2010.Options: includes the reimbursement of income tax expense on options.


CEO)

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2011 2010 2011 2010 2011 2010

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

100% 100%50% 30% 23% 23% 27% 47%

66% 62% 14% 17% 20% 21%

2011 2010 2011 2010

57% 66% 43% 34%

Ross B Lane

Kevin Fine

Samuel S Weiss

Fixed remuneration

John P SchmollJ Will Vicars

Cash bonus paid Cash bonus forfeited


Sally L Macdonald

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

Executive Directors:

Other Key Management Personnel:

Eddy Chieng

At risk - STI

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

NameAt risk - LTI

Executive Directors:Sally L Macdonald *

Name

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 yearended 31 July 2010.


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Remuneration and other terms of employment for the Managing Director, Chief Financial Officer and the other keymanagement personnel are also formalised in service agreements. Each of these agreements provide for theprovision of performance-related cash bonuses, other benefits including participation, when eligible, in the OrotonPerformance Based Incentive Scheme. Other major provisions of the agreements relating to remuneration are set outbelow.

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

Agreement commenced:

On appointment to the Board, all non-executive directors enter into a service agreement with the company in the formof a letter of appointment. The letter summarises the Board policies and terms, including compensation, relevant tothe office of Director.

Ross B Lane

OngoingBase 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 bythe People and Organisation Committee. Payment of a termination benefit on earlytermination by the company, other than for gross misconduct, equal to 6 timesmonthly base salary

Term of agreement:

C Service agreements

Executive ChairmanName:Title:

25 November 2009

Details:

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

Name:Managing Director and CEO25 September 2006Ongoing, 6 month notice period

monthly base salary.

Sally L Macdonald

Details:

Kevin Fine

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 forgross misconduct, equal to 8 times weekly base salary.

Company Secretary and Chief Financial Officer (CFO)29 January 2007Ongoing

Agreement commenced:Term of agreement:

Title:Name:

Term of agreement:

Title:Agreement commenced:

Details: 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 forgross misconduct, equal to 6 times monthly base salary.

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30 July 2011


No of shares Issue price $

200,000 $0.00 - 36,667 $0.00 -

Fair valueper option

Exercise price at grant date

$0.00 $2.260$0.00 $5.740$0.00 $5.420$0.00 $5.740$0.00 $6.660

Options granted carry no dividend or voting rights.

28 July 2012

28 July 2014

exercisable date

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

28 July 2014

28 July 201227 July 2015

29 July 200819 April 20102 August 20101 December 2010

Options

D Share-based compensation

5 October 2010

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

Grant dateVesting date and

Expiry date

30 July 2011

27 July 20151 December 2010

30 July 2013

27 July 2013

Kevin FineSally L Macdonald 5 October 2010

Name

Issue of shares

Date

27 July 2013

2011 2010 2011 2010

199,422 - 200,000 128,570 16,133 20,091 36,667 26,666

*

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

Kevin Fine

Number of options vestedduring the year

Number of options granted

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

Sally L Macdonald *

Name

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

during the year

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30 July 2011


Value of Value of Value of Remunerationoptions options options consisting ofgranted exercised lapsed options

during the during the during the for theyear year year year

$ $ $ %

1,221,996 1,538,000 - 27 87,441 281,969 - 20

Relationship between remuneration and company performance:The overall level of executive reward takes into account the performance of the consolidated entity over the currentyear. In years of poor performance executive bonuses have only been paid at the discretion of the Board based onindividual contributions or achievements or as required under contractual obligations.

Sally L MacdonaldKevin Fine

Name

E Additional information

Principles used to determine the nature and amount of remuneration:

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

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

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

2008 2009 2010 2011$'000 $'000 $'000 $'000

121,170 133,953 145,324 163,367 28,822 32,941 37,901 43,805 24,343 27,958 32,016 36,509 16,739 19,436 22,972 24,789

96% 68% 67% 56%

*

2008 2009 2010 2011

3.10 3.56 6.69 7.33 35.00 41.00 48.00 50.00 40.40 47.71 56.33 60.77 6,824 998 - -

**

This concludes the remuneration report, which has been audited.

EBITDAEBIT

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

Sale of goods

Profit after income tax

Short term incentive targets include non-financial objectives.

The factors that are considered to affect total shareholders return (TSR) are summarised below:

STI cash bonus paid as a % of available *

Total dividends declared (cents per share)Share price at financial year end ($A)

Share buy-backs in 2008 and 2009 consisted of 1,749,897 shares bought at an average price of $3.90 and285,000 shares bought at an average price of $3.50 respectively.

Basic earnings per share (cents per share)Share buy-back ($'000) **

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30 July 2011


Exercise Numberprice under option

$0.00 174,527 $0.00 76,682 $0.00 76,924 $0.00 115,385 $0.00 84,037

527,555

Expiry dateGrant date

Indemnity and insurance of officers

31 July 2013

28 July 201427 July 2015

2 August 2010

29 July 2008

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

28 July 201427 July 2015

The company has indemnified the directors of the company for costs incurred, in their capacity as a director, for whichthey may be held personally liable, except where there is a lack of good faith.

1 December 20101 December 2010

There have not been any loans made to directors of OrotonGroup Limited or any other key management personnel ofthe 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 theOroton Performance Base Incentive Scheme. These shares were purchased on-market by the Oroton share plancompany during the year ended 31 July 2010.

Loans to directors and executives

19 April 2010

Proceedings on behalf of the company

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

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

Indemnity and insurance of auditor

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

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings onbehalf of the company, or to intervene in any proceedings to which the company is a party for the purpose of takingresponsibility on behalf of the company for all or part of those proceedings.

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30 July 2011


●

●

Auditor's independence declaration

Officers of the company who are former audit partners of PricewaterhouseCoopersThere are no officers of the company who are former audit partners of PricewaterhouseCoopers.

all non-audit services have been reviewed and approved to ensure that they do not impact the integrity andobjectivity of the auditor, andnone of the services undermine the general principles relating to auditor independence as set out in APES110 Code of Ethics for Professional Accountants issued by the Accounting Professional and EthicalStandards 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 andrewards.

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

Rounding of amounts

The directors are of the opinion that the services as disclosed in note 28 to the financial statements do notcompromise the external auditor’s independence for the following reasons:

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

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

Non-audit services

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

This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act2001.

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

Sydney

22 September 2011

Executive Chairman

________________________________Ross B Lane

On behalf of the directors

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Michael Berrington

Stamp

.PricewaterhouseCoopers, ABN 52 780 433 757Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

Auditor’s Independence Declaration

As lead auditor for the audit of OrotonGroup Limited for the year ended 30 July 2011, I declare that tothe best of my knowledge and belief, there have been:

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

relation to the audit; and

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

This declaration is in respect of OrotonGroup Limited and the entities it controlled during the period.

Paddy CarneyPartner 22 September 2011PricewaterhouseCoopers

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OrotonGroup Limited Corporate Governance Statement 30 July 2011 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 oversight

The ASX Corporate Governance Council states that a company should “Recognise and publish the respective roles and responsibilities of board and management”.

The Board of Directors

The 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 Board

All 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:

• The election of the Chairman from amongst its members whose primary role is to manage the affairs of the Board and to represent the Board;

• Selection, monitoring and evaluation of the Managing Director and senior executives;

• Ensuring the adequacy of the OrotonGroup risk management policies and internal compliance (including relevant systems and controls in place) to ensure that the assets of the Consolidated Entity are adequately safeguarded;

• Providing strategic guidance to the OrotonGroup through regular and careful consultation with executive key management personnel and ensuring appropriate resources are available to achieve strategic objectives;

• Approving and monitoring the progress of major capital expenditure, capital management, acquisitions and divestitures;

• Approving and monitoring statutory financial reporting to shareholders and also internal management reporting provided to the Board;

• Enhancing and protecting the reputation of the organisation;

• Ensuring that OrotonGroup acts responsibly and ethically in meeting all internal codes of conduct and meets all relevant legal and regulatory requirements.

Principle 2 – Structure the board to add value

The 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 Membership

The 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.

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OrotonGroup Limited Corporate Governance Statement 30 July 2011 Board Composition

Guidance on the composition of the Board states that:

• The Board should be comprised of not less than three Directors (and not more than ten in accordance with the current Constitution of OrotonGroup);

• The Board should be comprised of Directors with a broad range of expertise and proven ability to make a contribution to strategy and policy, and be able to participate fully in the oversight and guidance of management;

• The term of any appointment is subject to continuing shareholder approval;

• The board is required to undertake an annual board performance review and consider the appropriate mix of skills required by the board to maximise its effectiveness and its contribution to the Consolidated Entity.

The Board of OrotonGroup:

• Comprises four Non-Executive Directors and two Executive Directors (including the Chairman);

• Has appointed Mr Samuel S Weiss as Lead Independent Director in accordance with the ASX Corporate Councils best practice recommendations 2.1.

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

Director Year appointed to OrotonGroup Limited

Term 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.

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OrotonGroup Limited Corporate Governance Statement 30 July 2011 Chairman of the Board

The 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 Secretary

The role of the Company Secretary is to:

• Provide support to the Board by monitoring Board policy and procedures;

• Be accountable to the Board for governance matters;

• In consultation with the Managing Director and the Board, be responsible for communications with the ASX. 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 office

The 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 Director (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 Independence

OrotonGroup 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:

• Is a substantial shareholder of the Consolidated Entity or an officer of, or otherwise associated directly with, a substantial shareholder of the company;

• Is or has been employed in an executive capacity by the Consolidated Entity within three years before commencing to serve on the board;

• Within the last three years has been a principal of a material professional adviser or a material consultant to the Consolidated Entity member, or an employee materially associated with the service provided;

• Is a material supplier or customer of the Consolidated Entity, or an officer of or otherwise associated directly or indirectly with a material supplier or customer;

• Has a material contractual relationship with the Consolidated Entity other than as a director; • Is free from any business or other relationship which could, or could reasonably be perceived to materially

interfere with the director’s independent exercise of their judgement. 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.

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OrotonGroup Limited Corporate Governance Statement 30 July 2011 The following directors are not independent:

• Mr Ross B Lane (Executive Chairman) due to substantial shareholdings;

• Mr J Will Vicars (Non-Executive director) due to substantial shareholdings;

• Ms Sally L Macdonald (Managing Director and CEO) due to role in OrotonGroup Limited.

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 Board

Currently, 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-Executive Directors spend approximately 30 days each year on Board business and activities including, Board and Committee meetings, visits to operations and meeting employees, customers, business associates and other stakeholders;

• The Chairman regularly meets with the Managing Director to review key issues and performance trends affecting the business of OrotonGroup.

• The 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 is disclosed in the Directors’ report;

• It is the company’s practice to allow its executive directors to accept appointments outside the company with prior written 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.

• The Chairmen on the 2 Board committees, being the Audit Committee and the People and Organisation Committee, are both independent non-executive directors.

Director Performance

Performance reviews of the Board and its subcommittees are undertaken on a periodic basis. The Board has implemented a process to:

• Evaluate the performance of the Board, committees, individual Directors and key executives.

• The Board assesses, reviews and discusses its overall performance against set objectives.

• The Chairman assesses the performance of individual Directors and key executives.

• The composition of each subcommittee is reviewed. This exercise takes into consideration each Director’s competency, 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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OrotonGroup Limited Corporate Governance Statement 30 July 2011 Conflict of Interest

In 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 information

Management 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 committees The 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:

• The People and Organisation Committee (as detailed below); • The Audit Committee (the details of this committee are discussed in Principle 4- Safeguard Integrity in

Financial Reporting). 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 Committee

The 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 Charter

The 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;

• Has remuneration policies and practices that are observed, and that enable OrotonGroup to attract and retain people at all levels who will create value for shareholders;

• Fairly and responsibly rewards Directors, management and staff, taking into consideration the performance of OrotonGroup, the creation of value for shareholders, the performance of the individual and the external remuneration environment;

• Plans and implements the development and succession of Board members, management and staff.

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OrotonGroup Limited Corporate Governance Statement 30 July 2011 Members of the People and Organisation Committee:

• Samuel S Weiss- Lead Independent Non-Executive Director and Chairman of the People and Organisation Committee;

• Ross B Lane- Executive Chairman of the Board of Directors

• Sally L Macdonald- Managing Director and CEO

• Eddy Chieng- Independent Non-Executive Director

• John P Schmoll- Independent Non-Executive Director and Chairman of the Audit Committee

• J Will Vicars- Non-Executive Director

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 making

The ASX Corporate Governance Council states that OrotonGroup should “Actively promote ethical and responsible decision-making”.

Ethical Standards

All 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.

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 Employees

The 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 Compliance

OrotonGroup 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.

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OrotonGroup Limited Corporate Governance Statement 30 July 2011 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:

• Equal Employment Opportunity Policies

• Awareness training and education on the issue of sexual harassment, bullying, stereotyping and unconscious bias

• Recruitment, training and promotion based on measureable performance and long-term management potential

• Development and implementation of flexible work practices where possible and appropriate, and/or from time to time to support family responsibilities

• Promotion of company’s core values of Openness, Quality, Courage and Solutions to drive an inclusive workplace culture which is fair for all

• Ensure a safe workplace free of harassment of any kind

• Implementation since 2007 of a 12 week paid parental leave scheme across the organisation

OrotonGroup Diversity Facts as at 2011

There 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 reporting

The 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 Statement

The 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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OrotonGroup Limited Corporate Governance Statement 30 July 2011 Audit Committee

Members of the Audit Committee:

• John P Schmoll- Independent Non-Executive Director and Chairman of the Audit Committee;

• Ross B Lane- Executive Chairman of the Board of Directors;

• Sally L Macdonald- Managing Director and CEO;

• Eddy Chieng- Independent Non-Executive Director;

• J Will Vicars- Non-Executive Director;

• Samuel S Weiss- Lead Independent Non-Executive Director and Chairman of the People and Organisation Committee.

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

Audit Committee Charter and Responsibilities

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

• To ensure the OrotonGroup accounting policies and practices are in accordance with current and emerging accounting standards promulgated by the Australian Accounting Standards Board (AASB);

• Reviewing the scope of the audit through discussion with the external auditors of the Consolidated Entity;

• To ensure adherence to the External Auditors’ independence requirements, including reviewing and approving the level of non-audit services provided by the External Auditors and ensure it does not adversely impact on auditor independence;

• To monitor and approve the selection, appointment and continued engagement of the External Auditor and for the rotation of External Audit Engagement Partners;

• Review any significant disagreements between the auditors and management, irrespective of whether they have been resolved;

• Provide external auditors with a clear line of direct communication at any time to either the Chairman of the Audit Committee or the Chairman of the Board;

• To ensure compliance with legal and regulatory requirements and policies in this regard;

• To oversee the adequacy of internal controls and the overall efficiency and effectiveness of financial operations;

• Oversee the effective operation of the risk management framework.

Meetings of the Audit Committee

The 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 Auditor

PricewaterhouseCoopers 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.

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OrotonGroup Limited Corporate Governance Statement 30 July 2011 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 18. 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 disclosure

The 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.

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 shareholders

The ASX Corporate Governance Council states that a company should “Respect the rights of shareholders and facilitate the effective exercise of those rights”.

Communications with Shareholders

OrotonGroup 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:

• The OrotonGroup Annual Report;

• The Annual General Meeting;

• The Interim Report (6 months results report);

• Results announcements and press releases;

• OrotonGroup website, which has a dedicated investor relations section.

The Board’s strategy to promote effective communication with shareholders is as follows:

• All announcements made to the market and all related information (such as information provided to analysts or media 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.

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OrotonGroup Limited Corporate Governance Statement 30 July 2011 Shareholder and External Auditor Attendance

The 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 risk

The ASX Corporate Governance Council states that a company should “Establish a sound system of risk oversight and management and internal control”.

Risk Management

The responsibility for Risk Management and oversight is coordinated through the Audit Committee, in conjunction with Management. Management is required to:

• Identify the risk profile from a company-wide perspective and prioritise such risks;

• Develop, implement, monitor, assess and review risk management, risk compliance and risk control strategies with an emphasis on continuous improvement;

• Attend formal strategic planning sessions;

• Prepare and review periodic reports to the Board and Audit Committee identifying and prioritising issues that represent risk and the manner in which these are being responded to.

Risk Policies

For the 2011 year, the Risk Management function continued to apply the appropriate compliance and control elements by way of the management certification process (see below). 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:

• Business Risk – focusing on principles and policies to manage OrotonGroup’s strategic planning, decision making and execution risks;

• Financial Risk – focusing on principles and policies to manage OrotonGroup’s exposures to foreign currencies and interest rates;

• Legal Compliance Risk – focusing on principles and policies to manage compliance with all major legal requirements in the 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 Profile

Significant 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 Process

A 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.

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OrotonGroup Limited Corporate Governance Statement 30 July 2011 The certification process carried out by the Managing Director and Chief Financial Officer and reported to the Board provides that:

• The financial statements provide a true and fair view, in all material respects of OrotonGroup’s financial condition and operating results (in accordance with ASX Corporate Governance best practice recommendation 4.1);

• A sound system of risk management and internal compliance and control is in place;

• There is compliance with relevant laws and regulations;

• OrotonGroup’s risk management, internal compliance and control systems are operating efficiently and effectively in all material respects.

The process of certification serves the following purposes:

• Provide assurance to the Board to support their approval of the Annual Report and other financial reports;

• Formalises the process by which the Executive Team signs-off on those areas of risk responsibility delegated to them by the Board;

• Ensures a true and fair view of OrotonGroup’s financial statements.

Internal Audit Function

There 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 reporting

The 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’s financial reports present a true and fair view, in all material respects of the financial condition and operational 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 risk management and internal compliance and control which 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.

Principle 8 – Remunerate fairly and responsibly

The 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 Committee

The 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 Disclosure

The Directors’ Report discloses the Directors’, Non-Executive Directors’ and Executive’s remuneration, benefits, incentives and allowances where relevant.

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Unit 15

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

OrotonGroup Limited

For the year ended 30 July 2011Financial report

Contents

Financial report

Notes to the financial statementsDirectors' declaration

Independent auditor's report to the members of OrotonGroup Limited

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

Statement of comprehensive incomeStatement of financial positionStatement of changes in equityStatement of cash flows

General information

The financial report covers OrotonGroup Limited as a consolidated entity consisting of OrotonGroup Limited and theentities it controlled. The financial report is presented in Australian dollars, which is OrotonGroup Limited's functionaland presentation currency.

Unit 15Level 2409 George StreetWaterloo NSW 2017Australia

A description of the nature of the consolidated entity's operations and its principal activities are included in thedirectors' 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 pressreleases, financial reports and other information are available on our website: www.orotongroup.com.

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Note 2011 2010$'000 $'000

4 164,423 146,368

5 71 60

(47,511) (46,042)(4,207) (2,989)(4,569) (3,523)

(57,380) (48,517)(14,303) (13,326)

6 (1,110) (648)

35,414 31,383

7 (10,625) (8,411)

24 24,789 22,972

(3,296) (284)(100) (14)Foreign currency translation

Profit before income tax expense

Finance costs

Net change in the fair value of cash flow hedges taken to equity, net of tax

SellingMarketingWarehouse and distribution

Consolidated

Expenses

Administration

OrotonGroup Limited

For the year ended 30 July 2011Statement of comprehensive income

Other income

Revenue

Cost of sales

Other comprehensive income

Profit after income tax expense for the year attributable to the owners of OrotonGroup Limited

Income tax expense

(3,396) (298)

21,393 22,674

Cents Cents

38 60.77 56.33 38 60.57 56.10

Basic earnings per share

Other comprehensive income for the year, net of tax

Total comprehensive income for the year attributable to the owners of OrotonGroup Limited

Diluted earnings per share

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

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Note 2011 2010$'000 $'000

8 607 267 9 6,857 6,993 10 30,208 23,521 11 9 96

37,681 30,877

12 22,192 22,977 13 658 383 14 5,357 3,546

28,207 26,906

65,888 57,783

15 13,878 14,434 16 1,828 942 17 2,855 209

OrotonGroup LimitedStatement of financial positionAs at 30 July 2011

Consolidated

Trade and other payablesBorrowingsDerivative financial instruments

Total assets

Trade and other receivablesInventoriesTax receivable

Deferred tax

Current liabilities

Non-current assets

Total current assets

Current assets

Assets

Cash and cash equivalents

Property, plant and equipmentIntangibles

Liabilities

Total non-current assets

17 2,855 209 18 3,883 2,031 19 663 630

23,107 18,246

20 8,000 6,000 21 5,094 4,832

13,094 10,832

36,201 29,078

29,687 28,705

22 22,523 22,523 23 (6,228) (2,044)24 13,392 8,226

29,687 28,705

Derivative financial instrumentsIncome taxProvisions

Contributed equityEquity

Non-current liabilities

ProvisionsTotal non-current liabilities

Net assets

Borrowings

Total equity

Retained profits

Total current liabilities

Reserves

Total liabilities

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

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Totalequity

$'000 $'000 $'000 $'000 $'000 $'000

22,523 (767) 4,468 26,224

- - - (298) - (298)

- - - - 22,972 22,972

- - - (298) 22,972 22,674

- 77 - 77

- (1,056) - (1,056) - - (19,214) (19,214)

- - 22,523 (2,044) 8,226 28,705

Totalequity

$'000 $'000 $'000 $'000 $'000 $'000

Reserves profitsRetained

equityContributed

ReservesRetainedprofits

ConsolidatedBalance at 26 July 2009

Profit after income tax expense for the year

Net movement in share-based payments trust reserve

Total comprehensive income for the year

Net movement in share-based payments reserve

Dividends paid

Balance at 31 July 2010

Transactions with owners in their capacity as owners:

OrotonGroup Limited

For the year ended 30 July 2011Statement of changes in equity

Other comprehensive income for the year, net of tax

Contributedequity

$ 000 $ 000 $ 000 $ 000 $ 000 $ 000

22,523 (2,044) 8,226 28,705

- - - (3,396) - (3,396)

- - - - 24,789 24,789

- - - (3,396) 24,789 21,393

- (932) - (932)

- 144 - 144 - - (19,623) (19,623)

- - 22,523 (6,228) 13,392 29,687

Consolidated

Other comprehensive income for the year, net of taxProfit after income tax expense for the year

Total comprehensive income for the year

Balance at 1 August 2010

Dividends paid

Net movement in share-based payments reserveNet movement in share-based payments trust reserve


Transactions with owners in their capacity as owners:

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

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Note 2011 2010$'000 $'000

180,515 160,427 (144,920) (122,779)

35,595 37,648 15 15

(1,110) (648)(1,431) (1,587)(9,083) (10,848)

36 23,986 24,580

(6,318) (9,252)(591) (213)

(6,909) (9,465)

39,623 36,214 25 (19,623) (19,214)

(37,623) (32,214)

Cash flows from financing activities

Net cash used in investing activities

Dividends paidRepayment of borrowings

Income taxes paid

OrotonGroup Limited

For the year ended 30 July 2011Statement of cash flows

Cash flows from investing activities

Payments for software

Consolidated

Cash flows from operating activitiesReceipts from customers (inclusive of GST)

Interest received

Payments for property, plant and equipment

Payments to suppliers and employees (inclusive of GST)

Interest and other finance costs paid

Net cash from operating activities

Proceeds from borrowings

Payments for share-based payments trust purchases

(17,623) (15,214)

(546) (99)(675) (576)

8 (1,221) (675)

Net decrease in cash and cash equivalentsCash and cash equivalents at the beginning of the financial year

Cash and cash equivalents at the end of the financial year

Net cash used in financing activities

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

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New, revised or amending Accounting Standards and Interpretations adopted

Note 1. Significant accounting policies

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

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

The consolidated entity has applied AASB 2009-5 amendments from 1 August 2010. The amendments result in someaccounting changes for presentation, recognition or measurement purposes, while some amendments that relate toterminology and editorial changes had no or minimal effect on accounting. The main changes were: AASB 101 'Presentation of Financial Statements' - classification is not affected by the terms of a liability that could besettled by the issuance of equity instruments at the option of the counterparty;AASB 107 'Statement of Cash Flows' - only expenditure that results in a recognised asset can be classified as a cashflow from investing activities;

AASB 2009-5 Amendments to Australian Accounting Standards arising from the Annual Improvements Project

Notes to the financial statements

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

The consolidated entity has adopted all of the new, revised or amending Accounting Standards and Interpretationsissued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.

OrotonGroup Limited

30 July 2011

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

Critical accounting estimates

Historical cost convention

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

Accounting period

flow from investing activities;AASB 117 'Leases' - removal of specific guidance on classifying land as a lease; AASB 118 'Revenue' - provides additional guidance to determine whether an entity is acting as a principal or agent;andAASB 136 'Impairment of Assets' - clarifies that the largest unit permitted for allocating goodwill, acquired in abusiness combination, is the operating segment as defined in AASB 8 'Operating Segments' before aggregation forreporting purposes.

The 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.

The current accounting period is for the 52 weeks ended 30 July 2011 and the comparative accounting period is for53 weeks ended 31 July 2010.

These general purpose financial statements have been prepared in accordance with Australian Accounting Standardsand 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 theInternational Accounting Standards Board ('IASB').

Basis of preparation

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Notes to the financial statementsOrotonGroup Limited

30 July 2011

Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entityare eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment ofthe asset transferred. Accounting policies of subsidiaries and special purpose entities have been changed where

The 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 theyear then ended. OrotonGroup Limited, its subsidiaries and special purpose entities together are referred to in thesefinancial statements as the 'consolidated entity'.

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

Parent entity information

Note 1. Significant accounting policies (continued)

The consolidated entity utilises a trust to administer the consolidated entity's employee share scheme. The trust isconsolidated into the consolidated entity.

Principles of consolidation

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

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

Operating segments are presented using the 'management approach', where the information presented is on thesame basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM isresponsible for the allocation of resources to operating segments and assessing their performance. Refer to note 3for more information.

Operating segments

the asset transferred. Accounting policies of subsidiaries and special purpose entities have been changed wherenecessary 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 'businesscombinations' accounting policy for further details. A change in ownership interest, without the loss of control, isaccounted for as an equity transaction, where the difference between the consideration transferred and the bookvalue 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, liabilitiesand 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 investmentretained together with any gain or loss in profit or loss.

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30 July 2011


Foreign currency transactions

The financial report is presented in Australian dollars, which is OrotonGroup Limited's functional and presentationcurrency.

Foreign currency translation

The consolidated entity recognises revenue when the amount of revenue can be reliably measured, it is probable thatfuture economic benefits will flow to the entity and specific criteria have been met for each of the consolidated entity'sactivities as described below.

Sale of goods

Foreign operations

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

Revenue recognition

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

Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates ofthe transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from thetranslation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currenciesare recognised in profit or loss.

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

Sale of goodsThe consolidated entity operates retail stores and a premium wholesaling business. Revenue from the sale of goodsis 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 thefees are earned.

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30 July 2011

●

●

Income tax

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

Current and deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset currenttax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the

When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset orliability in a transaction that is not a business combination and that, at the time of the transaction, affectsneither the accounting nor taxable profits; or

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probablethat 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. Deferredtax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be availablefor the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extentthat it is probable that there are future taxable profits available to recover the asset.

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

When the taxable temporary difference is associated with investments in subsidiaries, associates orinterests in joint ventures, and the timing of the reversal can be controlled and it is probable that thetemporary difference will not reverse in the foreseeable future.


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 fromcontrolled entities in the tax consolidated group.

Cash 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 amountsof cash and which are subject to an insignificant risk of changes in value. For the statement of cash flowspresentation purposes, cash and cash equivalents also includes bank overdrafts, which are shown within borrowingsin current liabilities on the statement of financial position.

tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to thesame taxable authority on either the same taxable entity or a different taxable entity which intends to settlesimultaneously.

Cash and cash equivalents

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

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

The head entity, OrotonGroup Limited, and the controlled entities in the tax consolidation group continue to accountfor their own deferred tax amounts. These tax assets are measured as if each entity in the tax consolidated groupcontinues to be a stand alone taxpayer in its own right.

Tax consolidation legislationOrotonGroup Limited and its wholly owned Australian controlled entities implemented the tax consolidation legislationas of 3 August 2003.

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30 July 2011

Inventories


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

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

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using theeffective interest method, less any provision for impairment. Trade receivables are generally due for settlement within45 days.

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

Derivative financial instruments

Trade and other receivables

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

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequentlyremeasured to their fair value at each reporting date. The accounting for subsequent changes in fair value dependson 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 hedges are used to cover the consolidated entity's exposure to variability in cash flows that is attributable toparticular risk associated with a recognised asset or liability or a firm commitment which could affect income orexpenses. The effective portion of the gain or loss on the hedging instrument is recognised directly in equity, whilstthe ineffective portion is recognised in profit or loss. Amounts taken to equity are transferred out of equity andincluded in the measurement of the hedged transaction when the forecast transaction occurs.

Cash flow hedges

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

Cash flow hedges are tested for effectiveness on a regular basis both retrospectively and prospectively to ensure thateach hedge is highly effective and continues to be designated as a cash flow hedge. If the forecast transaction is nolonger expected to occur, amounts recognised in equity are transferred to profit or loss.

Derivative financial instruments

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30 July 2011

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

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at eachreporting date.

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

Leases

Property, plant and equipment

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

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

Plant and equipment is depreciated on a straight line basis over their estimated useful lives commencing from thetime the asset is held ready for use. Items of plant and equipment are depreciated at rates ranging from 7.5% to33.3% per annum. Motor vehicles are depreciated at 15.0% per annum.

Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical costincludes expenditure that is directly attributable to the acquisition of the items.


Software

Intangible assets

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

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.

the risks and benefits incidental to ownership of leased assets, and operating leases, under which the lessoreffectively retains substantially all such risks and benefits.

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

Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fairvalue at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Intangibleassets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised inprofit or loss arising from the derecognition of intangible assets are measured as the difference between net disposalproceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangibles arereviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively bychanging the amortisation method or period.

Finance leases are capitalised. A lease asset and liability are established at the present value of minimum leasepayments. 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.

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30 July 2011

Borrowings

These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of thefinancial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and notdiscounted. The amounts are unsecured and are usually paid within 30 days of recognition.

Borrowings are classified as current liabilities unless the consolidated entity has an unconditional right to defer

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


Trade and other payables

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequentlymeasured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemptionamount 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 ofthe facility, are recognised as prepayments and amortised on a straight-line basis over the term of the facility.

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

Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs areexpensed in the period in which they are incurred, including:- interest on the bank overdraft

Provisions

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

Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result of apast event, it is probable the consolidated entity will be required to settle the obligation, and a reliable estimate can bemade of the amount of the obligation. The amount recognised as a provision is the best estimate of the considerationrequired to settle the present obligation at the reporting date, taking into account the risks and uncertaintiessurrounding the obligation. If the time value of money is material, provisions are discounted using a current pre-taxrate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a financecost.

- interest on short-term and long-term borrowings

Finance costs

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Wages and salaries and annual leave

Employee benefits

The liability for long service leave is recognised in current and non-current liabilities, depending on the unconditionalright to defer settlement of the liability for at least 12 months after the reporting date. The liability is measured as thepresent value of expected future payments to be made in respect of services provided by employees up to thereporting date using the projected unit credit method. Consideration is given to expected future wage and salarylevels, experience of employee departures and periods of service. Expected future payments are discounted usingmarket yields at the reporting date on national government bonds with terms to maturity and currency that match, asclosely as possible, the estimated future cash outflows.

Bonuses

Employee benefit on-costs, including payroll tax, are recognised and included in employee benefit liabilities when therelated employee benefit liability is incurred.

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

Defined contribution superannuation expense

Employee benefit on-costs

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

The consolidated entity recognises a liability and an expense for bonuses based on a formula that takes into

Long service leave

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

The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independentlydetermined 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 theunderlying share, the expected dividend yield and the risk free interest rate for the term of the option, together withnon-vesting conditions that do not determine whether the consolidated entity receives the services that entitle theemployees 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 thevesting 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. Theamount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date lessamounts already recognised in previous periods.

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

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

Share-based payments

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●

●

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

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


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

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

from the end of the vesting period until settlement of the award, the liability is the full fair value of the liabilityat the reporting date.

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

during the vesting period, the liability at each reporting date is the fair value of the award at that datemultiplied by the expired portion of the vesting period.

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

Basic 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 ordinaryshares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during thefinancial year.

Earnings per share

Contributed equity

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


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

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

Ordinary shares are classified as equity.

Dividends

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Rounding of amounts

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yetmandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 July2011. The consolidated entity's assessment of the impact of these new or amended Accounting Standards andInterpretations, most relevant to the consolidated entity, are set out below.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financingactivities 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 taxauthority.

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 notrecoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or aspart of the expense.

New Accounting Standards and Interpretations not yet mandatory or early adopted


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

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GSTrecoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement offinancial position.

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 and2010-7 Amendments to Australian Accounting Standards arising from AASB 9This standard and its consequential amendments are applicable to annual reporting periods beginning on or after 1January 2013 and completes phase I of the IASB's project to replace IAS 39 (being the international equivalent toAASB 139 'Financial Instruments: Recognition and Measurement'). This standard introduces new classification andmeasurement models for financial assets, using a single approach to determine whether a financial asset ismeasured at amortised cost or fair value. To be classified and measured at amortised cost, assets must satisfy thebusiness model test for managing the financial assets and have certain contractual cash flow characteristics. All otherfinancial instrument assets are to be classified and measured at fair value. This standard allows an irrevocableelection on initial recognition to present gains and losses on equity instruments (that are not held-for-trading) in othercomprehensive 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 applyany 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 inother comprehensive income unless it would create an accounting mismatch. The consolidated entity will adopt thisstandard from 28 July 2013 but the impact of its adoption is yet to be assessed by the consolidated entity.

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AASB 2010-4 Further Amendments to Australian Accounting Standards arising from the Annual ImprovementsProject

AASB 1054 A t li Additi l Di l


This revised standard is applicable to annual reporting periods beginning on or after 1 January 2011. This revisedstandard simplifies the definition of a related party by clarifying its intended meaning and eliminating inconsistenciesfrom the definition. The definition now identifies a subsidiary and an associate with the same investor as relatedparties of each other; entities significantly influenced by one person and entities significantly influenced by a closemember of the family of that person are no longer related parties of each other; and whenever a person or entity hasboth joint control over a second entity and joint control or significant influence over a third party, the second and thirdentities are related to each other. This revised standard introduces a partial exemption of disclosure requirement forgovernment-related entities. The adoption of this standard from 31 July 2011 will not have a material impact on theconsolidated entity.

AASB 124 Related Party Disclosures (December 2009)

These amendments are applicable to annual reporting periods beginning on or after 1 January 2011. Theseamendments are a consequence of the annual improvements project and make numerous non-urgent but necessaryamendments to a range of Australian Accounting Standards and Interpretations. The amendments provideclarification of disclosures in AASB 7 'Financial Instruments: Disclosures', in particular emphasis of the interactionbetween quantitative and qualitative disclosures and the nature and extent of risks associated with financialinstruments; clarifies that an entity can present an analysis of other comprehensive income for each component ofequity, either in the statement of changes in equity or in the notes in accordance with AASB 101 'Presentation ofFinancial 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 onthe 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 theAustralian-specific disclosures, which are in addition to International Financial Reporting Standards, for entities thathave adopted Australian Accounting Standards. The adoption of these amendments from 31 July 2011 will not have amaterial impact on the consolidated entity.

AASB 2011-1 Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence Projectand AASB 2011-2 Amendments to Australian Accounting Standards arising from the Trans-Tasman ConvergenceProject – Reduced Disclosure RequirementsThese amendments are applicable to annual reporting periods beginning on or after 1 July 2011. They make changesto a range of Australian Accounting Standards and Interpretations for the purpose of closer alignment to IFRSs andharmonisation between Australian and New Zealand Standards. The amendments remove certain guidance anddefinitions from Australian Accounting Standards for conformity of drafting with International Financial ReportingStandards but without any intention to change requirements. The adoption of these amendments from 31 July 2011will not have a material impact on the consolidated entity.

AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management PersonnelDisclosure RequirementThese amendments are applicable to annual reporting periods beginning on or after 1 July 2013, with early adoptionnot permitted. They amend AASB 124 ‘Related Party Disclosures’ by removing the disclosure requirements forindividual key management personnel (KMP). The adoption of these amendments from 28 July 2013 will remove theduplication relating to individual KMP in the notes to the financial statements and the directors report. As theaggregate disclosures are still required by AASB 124 and during the transitional period the requirements may beincluded in the Corporations Act or other legislation, it is expected that the amendments will not have a materialimpact on the consolidated entity.

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Share-based payment transactions

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

Note 2. Critical accounting judgements, estimates and assumptions

The provision for impairment of inventories assessment requires a degree of estimation and judgement. The level ofthe provision is assessed by taking into account the recent sales experience the ageing of inventories and other

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

Provision for impairment of receivables

Provision for impairment of inventories

The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair valueof the equity instruments at the date at which they are granted. The fair value is determined by using either theBinomial or Black-Scholes model taking into account the terms and conditions upon which the instruments weregranted. The accounting estimates and assumptions relating to equity-settled share-based payments would have noimpact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profitor loss and equity.

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

Estimation of useful lives of assets

Recovery of deferred tax assets

The consolidated entity assesses impairment of non-financial assets other than goodwill and other indefinite lifeintangible assets at each reporting date by evaluating conditions specific to the consolidated entity and to theparticular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset isdetermined. This involves fair value less costs to sell or value-in-use calculations, which incorporate a number of keyestimates and assumptions.

the provision is assessed by taking into account the recent sales experience, the ageing of inventories and otherfactors that affect inventory obsolescence.

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

Deferred tax assets are recognised for deductible temporary differences only if the consolidated entity considers it isprobable that future taxable amounts will be available to utilise those temporary differences and losses.

Income tax

Impairment of non-financial assets other than goodwill and other indefinite life intangible assets

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

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

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

Long service leave provision

Note 3. Operating segments

The consolidated entity has two operating segments. These segments have been determined based on the internalreports that are reviewed and used by the Board of Directors (collectively referred to as the Chief Operating DecisionMaker ('CODM')) in assessing performance and in determining the allocation of resources. The operating segmentshave been aggregated in accordance with AASB 8 on the basis that they share similar economic characteristics.

Types of products and services

Identification of reportable operating segments

The reportable segment operates principally in the retailing and wholesaling of luxury fashion apparel and

2011 2010$'000 $'000

163,367 145,324 1,041 1,029

- - 164,408 146,353

15 15

- - 164,423 146,368

2011 2010$'000 $'000

71 60

Revenue

Sales revenue

Other revenue

Sale of goodsLicence and franchise fees

Interest received

Consolidated

Note 5. Other income

Consolidated

Note 4. Revenue

Other revenue

The reportable segment operates principally in the retailing and wholesaling of luxury fashion apparel andaccessories.

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2011 2010$'000 $'000

6,980 5,497 316 388

- - 7,296 5,885

1,110 648

221 199

111 441

20,678 18,256 (656) (541)

Amortisation of software

Total depreciation and amortisation of assets

Consolidated

Note 6. Expenses

Finance costs

Minimum lease payments

Net foreign exchange loss

Net loss on disposal of property, plant and equipment

Interest and finance charges paid/payable

Depreciation of plant and equipment

Rental expense relating to operating leases

Depreciation and amortisation of assets

Amortisation of deferred lease incentives

Profit before income tax includes the following specific expenses:

Net loss on disposal

Net foreign exchange loss

(656) (541)

- - 20,022 17,715

1,754 1,467

26,559 22,776

2,504 1,140

5,242 3,913

Other charges against assets

Total rental expense relating to operating leases

Inventories

Superannuation expenseDefined contribution superannuation expense

Employee benefits expense

Other expensesRoyalties and licence fees paid/payable

Amortisation of deferred lease incentives

Employee benefits expense excluding superannuation

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2011 2010$'000 $'000

11,007 8,625 (397) 137

15 (351)

- - 10,625 8,411

- - (397) 155 - - - (18)

- - (397) 137

35,414 31,383

10,624 9,415

Consolidated

Deferred tax included in income tax expense comprises:

Current tax

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

Numerical reconciliation of income tax expense to prima facie tax payable

Tax at the Australian tax rate of 30%

Profit before income tax expense

Decrease in deferred tax liabilities

Income tax expense

Under/(over) provision in prior years

Aggregate income tax expense

Deferred tax

Note 7. Income tax expense

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

- (347)(14) (306)

- - 10,610 8,762 15 (351)

- - 10,625 8,411

(1,414) 100

Income tax expense

Amounts charged/(credited) directly to equity

Investment allowanceSundry items

Tax consolidation legislationOrotonGroup Limited and its wholly owned Australian subsidiaries implemented the tax consolidation legislation as of3 August 2003.

Deferred tax assets (note 14)

OrotonGroup Limited, as the head entity in the tax consolidated group, recognises current tax amounts relating totransactions, events and balances of the wholly owned Australian Controlled Entities in this group in its financialstatements as if those transactions, events and balances were its own transactions, events and balances. There is noformal tax sharing agreement in place.

Under/(over) provision in prior years

calculating taxable income:

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2011 2010$'000 $'000

331 226 276 41

- - 607 267

607 267 (1,828) (942)

- - (1,221) (675)

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:

Balance as per statement of cash flows

Consolidated

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

Note 8. Current assets - cash and cash equivalents

Balances as above

Cash on deposit

Note 9. Current assets - trade and other receivables

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

Bank overdraft (note 16)

Cash at bank

2011 2010$'000 $'000

2,954 2,586 - (1)

- - 2,954 2,585

204 168 3,699 4,240

- - 6,857 6,993

2011 2010$'000 $'000

- 1

Prepayments

Consolidated

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

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

Other receivables

Trade receivables

3 to 6 months overdue

Less: Provision for impairment of receivables

Impairment of receivables

Consolidated

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2011 2010$'000 $'000

1 17 - 1 (1) (17)

- - - 1

Unused amounts reversed

Opening balanceAdditional provisions recognised

Consolidated

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

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

Past due but not impaired

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

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

Consolidated

Closing balance

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

2011 2010$'000 $'000

25 144 11 12 28 2

- - 64 158

Consolidated

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

Over 6 months overdue

Foreign exchange and interest rate riskInformation about the consolidated entity's exposure to foreign currency risk and interest rate risk in relation to tradeand 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.

1 to 3 months overdue3 to 6 months overdue

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2011 2010$'000 $'000

31,260 24,418 (1,052) (897)

- - 30,208 23,521

2011 2010$'000 $'000

9 96

2011 2010$'000 $'000

Consolidated

Income tax refund due

Note 11. Current assets - tax receivable

Note 10. Current assets - inventories

Consolidated

Finished goods - at costLess: Provision for impairment

Consolidated

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

49,257 43,366 (27,065) (20,389)

- - 22,192 22,977

Total$'000 $'000 $'000 $'000 $'000 $'000

- - - - 19,427 19,427 - - - - 9,490 9,490 - - - - (441) (441) - - - - (2) (2) - - - - (5,497) (5,497)

- - - - 22,977 22,977 - - - - 6,318 6,318 - - - - (111) (111) - - - - (12) (12) - - - - (6,980) (6,980)

- - - - 22,192 22,192 Balance at 30 July 2011

Reconciliations of the written down values at the beginning and end of the current and previous financial year are setout below:

Depreciation expense

Additions

Reconciliations

Additions

Disposals

Disposals

Less: Accumulated depreciation

equipment


Plant and

Exchange differences

Consolidated

Depreciation expense

Plant and equipment - at cost


Exchange differences

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2011 2010$'000 $'000

5,309 4,718 (4,651) (4,335)

- - 658 383

Total$'000 $'000 $'000 $'000 $'000 $'000

- - - - 558 558 - - - - 213 213 - - - - (388) (388)

- - - - 383 383 - - - - 591 591 - - - - (316) (316)

Note 13. Non-current assets - intangibles

Software - at cost

Consolidated

Amortisation expense


Less: Accumulated amortisation

Reconciliations

Consolidated

Additions

Software

Additions

Amortisation expense


Reconciliations of the written down values at the beginning and end of the current and previous financial year are setout below:

- - - - 658 658 Balance at 30 July 2011

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2011 2010$'000 $'000

853 679 311 473 103 105 39 43 32 59

1,238 1,122 1,105 803

- - 3,681 3,284

1,676 262

- - 1,676 262

5,357 3,546

Lease incentives and fixed rental increasesStock valuation

Stock provision

Consolidated

Amounts recognised in equity:

Employee benefitsAmounts recognised in profit or loss:

Deferred revenue

Deferred tax asset

The balance comprises temporary differences attributable to:

Accrued expenses

Depreciation

Note 14. Non-current assets - deferred tax

4,147 2,427

1,210 1,119

- - 5,357 3,546

3,546 3,801 397 (155)

1,414 (100)

- - 5,357 3,546

2011 2010$'000 $'000

6,054 6,614 7,824 7,820

- - 13,878 14,434

Credited/(charged) to profit or loss (note 7)Opening balance

Deferred tax asset to be recovered after more than 12 months

Note 15. Current liabilities - trade and other payables

Closing balance

Movements:

Deferred tax asset to be recovered within 12 months

Credited/(charged) to equity

Other payables

Consolidated

Refer to note 26 for detailed information on financial instruments.

Trade payables

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2011 2010$'000 $'000

162 111

2011 2010$'000 $'000

1,828 942

Annual leave obligation expected to be settled after 12 months

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

Note 15. Current liabilities - trade and other payables (continued)

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 consolidatedentity does not have an unconditional right to defer settlement. However, based on past experience, the consolidatedentity does not expect all employees to take the full amount of accrued leave within the next 12 months.

Consolidated

Consolidated

Refer to note 20 for further information on assets pledged as security and financing arrangements and note 26 fordetailed information on financial instruments

Note 16. Current liabilities - borrowings

Bank overdraft

2011 2010$'000 $'000

2,855 209

2011 2010$'000 $'000

3,883 2,031

Forward foreign exchange contracts - cash flow hedges


Consolidated

Provision for income tax

Consolidated

Note 18. Current liabilities - income tax

detailed information on financial instruments.

Note 17. Current liabilities - derivative financial instruments

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2011 2010$'000 $'000

165 176 498 454

- - 663 630

Deferredlease

incentives$'000 $'000 $'000 $'000 $'000

454 100 559

Movements in provisions

Consolidated

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

Deferred lease incentives

Additional provisions recognised

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

Carrying amount at the start of the year

Amounts transferred from non-current

Consolidated - 2011

Employee benefitsDeferred lease incentives

Note 19. Current liabilities - provisions

559 (615)

- - - - 498

2011 2010$'000 $'000

152 154

Amounts transferred from non current

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

Amounts used

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

Long service leave obligation expected to be settled after 12 months

Consolidated

Carrying amount at the end of the year

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2011 2010$'000 $'000

8,000 6,000

2011 2010$'000 $'000

1,828 942 8,000 6,000

- - 9,828 6,942

2011 2010

Bank loans

Financing arrangements


Consolidated

Bank loans

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

Consolidated

Total secured liabilities

Consolidated

Note 20. Non-current liabilities - borrowings

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

Bank overdraft

2011 2010$'000 $'000

3,000 3,000 37,000 37,000

- - 40,000 40,000

1,828 942 13,920 12,182

- - 15,748 13,124

1,172 2,058 23,080 24,818

- - 24,252 26,876

*

The bank overdraft facilities and bank bill acceptance facility may be drawn at any time. In addition to the unusedcredit facilities disclosed above, the consolidated entity has access to the cash balances as disclosed in note 8. Bankfacilities 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 forrenewal on 31 October 2013.

Used at the reporting date

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

Working capital facilities

Total facilities

Bank overdraft

Bank overdraftUnused at the reporting date

Bank overdraft

Working capital facilities *

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


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2011 2010$'000 $'000

355 342 2,051 2,210 1,101 1,242 1,587 1,038

- - 5,094 4,832


Employee benefits

Lease make good

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

Movements in provisions

Lease make good

Consolidated


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

Note 21. Non-current liabilities - provisions

Fixed rental increases

Fixed rental increases

The consolidated entity is required to straight line fixed rental increases over the lease term resulting in a provision forfixed rental increases.

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

Fixed rentalincreases

$'000 $'000 $'000 $'000 $'000

2,210 1,242 1,038 400 - 549

(559) - - - (12) - - (129) -

- - 2,051 1,101 1,587

2011 2010 2011 2010Shares Shares $'000 $'000

40,880,902 40,880,902 22,523 22,523

make good

Amounts usedUnused amounts reversed

Carrying amount at the end of the year

Deferredlease

Ordinary shares - fully paid

Consolidated

Amounts transferred to current

incentives

Additional provisions recognised

Consolidated - 2011

Lease

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

Carrying amount at the start of the year

Note 22. Equity - contributed

Consolidated

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Capital risk management

The OrotonGroup trust holds 174,527 (2010: 236,667) shares purchased on-market at the end of the year. See note23 for more details.

The 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 capitalstructure to reduce the cost of capital.

Note 22. Equity - contributed (continued)

Ordinary shares

Oroton Share Plan

Oroton Performance Based Incentive Scheme

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

There is no current on-market share buy-back.

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

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

Information relating to the Oroton Performance Based Incentive Scheme, including details of shares provided underthe scheme, is set out in note 39.

Share buy-back

2011 2010$'000 $'000

(271) (171)(625) 307

(3,901) (605)(1,431) (1,575)

- - (6,228) (2,044)

Hedging reserve - cash flow hedgesShare-based payments trust reserve

Note 23. Equity - reserves

Consolidated

Foreign currency reserve

shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

Share-based payments reserve

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

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Total$'000 $'000 $'000 $'000 $'000 $'000

(157) 230 (321) (519) (767)(14) - - - (14)

- - 1,234 - 1,234

- - (370) - (370)

- - (1,640) - (1,640)

- - 492 - 492

- 830 - - 830

- - - (1,587) (1,587) - - - (222) (222) - (753) - 753 -

- (171) 307 (605) (1,575) (2,044)(100) - - - (100)

Purchase of shares by share trust

payments



Deferred tax effect on revaluation of cash flow

Share-basedpayments

Deferred tax effect on transfer to inventory

Revaluation of cash flow

HedgingShare-based

Deferred tax

Consolidated

currency trust *



Note 23. Equity - reserves (continued)

Shares exercised

Share-based payment expense

Foreign

Revaluation of cash flow hedges - gross

Transfer from inventory - gross

- - (2,646) - (2,646)

- - 795 - 795

- - (2,064) - (2,064)

- - 619 - 619

- 643 - - 643

- - - (1,431) (1,431) - (1,575) - 1,575 -

- (271) (625) (3,901) (1,431) (6,228)

*

hedges - gross

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

Shares exercised

Deferred tax effect on transfer to inventory

Purchase of shares by share trust

Share-based payment expense


Transfer from inventory - gross

Deferred tax effect on revaluation of cash flow

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2011 2010$'000 $'000

- - 8,226 4,468 24,789 22,972

The reserve is used to recognise the cost of shares purchased through the Oroton share plan company.


Note 23. Equity - reserves (continued)

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

Retained profits at the beginning of the financial year

The reserve is used to recognise exchange differences arising from translation of the financial statements of foreignoperations 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 notexercised under the employee share plans.

Consolidated

Note 24. Equity - retained profits

Share-based payments trust reserve

Hedging reserve - cash flow hedges

Foreign currency reserve

24,789 22,972 (19,623) (19,214)

- - 13,392 8,226

2011 2010$'000 $'000

10,629 8,994

- 1,226

8,994 8,994

19,623 19,214

Profit after income tax expense for the yearDividends paid (note 25)

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

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

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 October2009) fully franked based on a tax rate of 30%

Note 25. Equity - dividends

Retained profits at the end of the financial year

Dividends

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 April2010) fully franked based on a tax rate of 30%

Consolidated

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2011 2010$'000 $'000

20,112 17,561

●

●

●

Consolidated

franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date

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

franking debits that will arise from the payment of dividends recognised as a liability at the reporting date

Franking credits available for subsequent financial years based on a tax rate of 30%

Financial risk management objectives

Note 25. Equity - dividends (continued)

Note 26. Financial instruments

The 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 theunpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance ofthe consolidated entity. The consolidated entity uses derivative financial instruments such as foreign exchangecontracts to hedge certain risk exposures Derivatives are exclusively used for hedging purposes ie not as trading or

franking credits that will arise from the payment of the amount of the provision for income tax at the reporting date

Franking credits

The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:

Foreign currency risk

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

The consolidated entity undertakes certain transactions denominated in foreign currency and is exposed to foreigncurrency risk through foreign exchange rate fluctuations. This is primarily through the purchase of inventory andpayment of Ralph Lauren royalties in United States Dollars.

Market risk

contracts to hedge certain risk exposures. Derivatives are exclusively used for hedging purposes, ie not as trading orother speculative instruments. The consolidated entity uses different methods to measure different types of risk towhich it is exposed. These methods include sensitivity analysis in the case of interest rate and foreign exchange risksand aging analysis for credit risk.

In order to protect against exchange rate movements, the consolidated entity has entered into forward exchangecontracts to purchase US dollars. These contracts are hedging highly probable forecasted cash flows for the ensuingfinancial year. Management has a risk management policy to hedge between 30% and 70% of anticipatedtransactions in US dollars for the subsequent 18 months. Approximately 90% (2010: 90%) of projected purchasesand sales qualify as ''highly probable'' forecast transactions for hedge accounting purposes.

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

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2011 2010 2011 2010$'000 $'000

16,946 18,387 0.9755 0.8883 13,440 5,450 0.9684 0.8736 3,936 - 1.0167 -

2011 2010 2011 2010$'000 $'000

- 489 - 1.2415

0 - 6 monthsMaturity:Buy US dollars

Sell NZ dollars

Average exchange rates

0 - 6 months

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

Note 26. Financial instruments (continued)

Maturity:Buy Australian dollars

The proportion of gain or loss on the hedging instrument that is determined to be an effective hedge is recogniseddirectly in equity. When the cash flows occur, the consolidated entity adjusts the initial measurement of the

Average exchange rates

6 - 12 months12 - 18 months

Amounts disclosed above represent currency sold measured at contract rate.

2011 2010 2011 2010$'000 $'000 $'000 $'000

1,652 2,527 1,706 2,656 212 179 - - 52 - - - 64 - - - 59 - - -

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

Liabilities

Hong Kong dollarsNew Zealand dollars

The carrying amount of the consolidated entity's foreign currency denominated financial assets and financial liabilitiesat the reporting date was as follows:

US dollarsConsolidated

Singapore dollars

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

Malaysia ringgit

Assets

directly in equity. When the cash flows occur, the consolidated entity adjusts the initial measurement of thecomponent recognised in the statement of financial position by the related amount deferred in equity.

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

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The consolidated entity has credit exposure to a major Australian retailer

Price risk

The consolidated entity's main interest rate risk arises from borrowings. Borrowings issued at variable rates exposethe consolidated entity to interest rate risk.

For the consolidated entity the bank overdraft and loans outstanding, totalling $9,828,000 (2010: $6,942,000), aresubject to variable interest rates. Monthly cash outlays of approximately $54,000 (2010: $38,000) per month arerequired 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 itscontractual obligations resulting in financial loss to the consolidated entity. The consolidated entity has policies inplace to ensure that sales of products are made to customers with an appropriate credit history. Derivativecounterparts and cash transactions are limited to high credit quality financial institutions. The maximum exposure tocredit 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 financialposition and notes to the financial statements.

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

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

Interest rate risk

2011 2010$'000 $'000

1,172 2,058 23,080 24,818

- - 24,252 26,876

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

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

Financing arrangements

Consolidated

Unused borrowing facilities at the reporting date:


Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability offunding through an adequate amount of committed credit facilities and the ability to close out market positions. Theconsolidated entity manages liquidity risk by continuously monitoring forecast and actual cash flows and matching thematurity 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 linesavailable. Surplus funds are generally only invested in instruments that are tradeable in highly liquid markets.

Liquidity risk

Bank overdraft

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Weighted average

interest rate1 year or

lessBetween 1 and 2 years

Between 2 and 5 years Over 5 years

Remaining contractual maturities

% $'000 $'000 $'000 $'000 $'000

- 6,054 - - - 6,054 - 7,824 - - - 7,824

6.20 1,828 - - - 1,828 6.60 528 528 8,132 - 9,188

16,234 528 8,132 - 24,894

- 2,855 - - - 2,855 2,855 - - - 2,855

Consolidated - 2011

Non-derivatives

Interest-bearing - variable

Forward foreign exchange contracts net settled

Bank overdraftBank loans

Trade payables


Derivatives


The 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 dateon which the financial liabilities are required to be paid. The tables include both interest and principal cash flowsdisclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in thestatement of financial position.

Total non-derivatives

Other payables

Non-interest bearing

Total derivatives 2,855 2,855

Weighted average

interest rate1 year or

lessBetween 1 and 2 years

Between 2 and 5 years Over 5 years


% $'000 $'000 $'000 $'000 $'000

- 6,614 - - - 6,614 - 7,820 - - - 7,820

8.95 942 - - - 942 6.10 366 366 6,458 - 7,190

15,742 366 6,458 - 22,566

- 209 - - - 209 209 - - - 209

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

Bank loans

Non-interest bearing

Derivatives

Other payables

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

Trade payables

Interest-bearing - variable

Forward foreign exchange contracts net settledTotal derivatives

Non-derivatives

Consolidated - 2010

Total non-derivatives

Fair value of financial instruments

Bank overdraft

Total derivatives

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2011 2010$ $

1,769,843 1,774,925

Samuel S WeissNon-Executive Director

Kevin Fine

The aggregate compensation made to directors and other members of key management personnel of theconsolidated entity is set out below:

Note 27. Key management personnel disclosures

Consolidated

J Will Vicars

The following person also had the authority and responsibility for planning, directing and controlling the majoractivities of the consolidated entity, directly or indirectly, during the financial year:

Non-Executive Director

Executive Chairman

Eddy Chieng

Other key management personnel


Directors

John P Schmoll

The following persons were directors of OrotonGroup Limited during the financial year:

Managing Director and CEO

Compensation

Sally L Macdonald

Company Secretary and Chief Financial Officer (CFO)

Ross B Lane


Short-term employee benefits 1,769,843 1,774,925 86,859 81,287 18,047 21,922

392,258 1,009,697

- - 2,267,007 2,887,831

Balance at Received Balance atthe start of as part of Disposals/ the end of

the year remuneration Additions other the year

2,985,961 - - (835,961) 2,150,000 748,570 200,000 - (200,000) 748,570 30,000 - - - 30,000

4,822,401 - 150,712 - 4,973,113 147,404 - - - 147,404 26,666 36,667 - - 63,333

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

J Will Vicars

Detailed remuneration disclosures are provided in the Remuneration Report on pages 7 to 15.

Share-based paymentsLong-term benefits

Ross B Lane

Kevin Fine

Post-employment benefits

Sally L Macdonald

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

Ordinary shares

Shareholding

2011

Samuel S Weiss

John P Schmoll

Short term employee benefits

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Balance at Received Balance atthe start of as part of Disposals/ the end of

the year remuneration Additions other the year

2,985,961 - - - 2,985,961 620,000 128,570 - - 748,570 30,000 - - - 30,000

4,822,401 - - - 4,822,401 147,404 - - - 147,404

- 26,666 - - 26,666 8,605,766 155,236 - - 8,761,002

Kevin Fine

Ross B Lane

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 ofOrotonGroup Limited and the specified executives of the consolidated entity were 236,667 (2010: 155,236). No

The interest held by Ross B Lane, as shown in the table above, is his interest in shares held in his own name and inthe names of his personally related parties. It does not include the interest of the Lane family Deed (to which he is aparty). See directors’ report page 4 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, eachoption is convertible into one ordinary share of OrotonGroup Limited. Further information on the options is set out innote 39.

J Will VicarsSamuel S Weiss

Ordinary shares

John P Schmoll

2010

Sally L Macdonald

Balance at Expired/ Balance atthe start of forfeited/ the end of

the year Granted Exercised other the year

395,472 199,422 (200,000) - 394,894 94,207 16,133 (36,667) - 73,673

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

*

Balance at Expired/ Balance atthe start of forfeited/ the end of

the year Granted Exercised other the year

524,042 - (128,570) - 395,472 100,782 20,091 (26,666) - 94,207 624,824 20,091 (155,236) - 489,679

Sally L Macdonald *

OrotonGroup Limited and the specified executives of the consolidated entity were 236,667 (2010: 155,236). Noamounts are unpaid on any shares provided on the exercise of options.

2010

The number of options over ordinary shares in the parent entity held during the financial year by each director andother members of key management personnel of the consolidated entity, including their personally related parties, isset out below:

Option holding

Sally L Macdonald

2011

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

Options over ordinary shares

Kevin Fine

Kevin Fine

Options over ordinary shares

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2011 2010$ $

259,500 229,500

- 1,500 77,850 107,100

There have not been any loans made to the directors of OrotonGroup Limited or any other key managementpersonnel 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.

Audit services - PricewaterhouseCoopers

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:

Note 27. Key management personnel disclosures (continued)

Other services

Related party transactions are set out in note 31.

Note 28. Remuneration of auditors

Consolidated

Audit of regulatory returns

Audit or review of the financial report

Related party transactions

Tax compliance services, including review of company

Other services - PricewaterhouseCoopers

Loans to key management personnel

29,100 25,000

- - 106,950 133,600

- - 366,450 363,100

30,000 -

11,000 -

30,000 -

- - 41,000 -

- - 71,000 -

It is the consolidated entity’s policy to employ PricewaterhouseCoopers on assignment additional to their statutoryaudit 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 wherePricewaterhouseCoopers is awarded assignments on a competitive basis. It is the consolidated entity’s policy to seekcompetitive tenders for all major consulting projects.

Other servicesTax compliance services, including review of company income tax returns

Audit or review of the financial reportAudit services - related practices

Other services - related practices

Tax compliance services, including review of company income tax returns

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2011 2010$'000 $'000

Capital commitments - Property, plant and equipment

Consolidated

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

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 lettersof credit of controlled entities in the normal course of business. Entities in the consolidated entity have guaranteedeach other in respect of amounts advanced under banking and finance arrangements in the normal course ofbusiness.

Note 30. Commitments for expenditure

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

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 inthe 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).

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

Note 29. Contingent liabilities

343 2,069

192 23

16,230 13,491 39,301 39,757 2,404 6,090

- - 57,935 59,338

1,506 1,406 3,031 4,886

- - 4,537 6,292


Within one year

One to five years

liabilities, payable:

Lease commitments - operating

Within one yearOne to five yearsMore than five years

Lease commitments - operating - sub-leases

Capital commitments - Intangible assets

Within one year

Within one year



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Key management personnel

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 havevarious escalation clauses. On renewal, the terms of the leases are renegotiated.

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

Note 30. Commitments for expenditure (continued)

Transactions with related parties

Interests in subsidiaries are set out in note 33.

Note 31. Related party transactions

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

Subsidiaries

OrotonGroup Limited is the parent entity.

Receivable from and payable to related parties

Parent entity

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

2011 2010$'000 $'000

20,031 19,213

20,031 19,213 Total comprehensive income

Profit after income tax

Loans to/from related parties

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

There were no trade receivables from or trade payables to related parties at the reporting date.

Note 32. Parent entity information

ParentStatement of comprehensive income

Receivable from and payable to related parties

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

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2011 2010$'000 $'000

7,551 5,292

39,551 37,292

3,903 2,052

3,903 2,052

22,523 22,523 32 32

13,093 12,685

35,648 35,240

Contributed equityEquity

Reserves

Note 32. Parent entity information (continued)

Statement of financial positionParent

Total current liabilities

Total assets

Contingent liabilities

Total current assets

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 inthe 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)

Retained profits

Total equity

Total liabilities

●

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 policies

Investments in subsidiaries are accounted for at cost, less any impairment.

is assessed at $57,935,000 at 30 July 2011 (2010: $59,338,000).

The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1,except for the following:

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2011 2010% %

100.00 100.00

100.00 100.00

100.00 100.00 - 100.00 - 100.00

100.00 100.00

100.00 100.00

100.00 -

100.00 - 100.00 - Hong Kong

Singapore

Australia

Name of entity

AustraliaMacbray Pty Ltd *

Australia

Marcs Wholesale Pty Ltd *

OrotonGroup (New Zealand) Pty Limited

OrotonGroup (Malaysia) SDN BHD

OrotonGroup (International) Pty Limited

Polo Ralph Lauren Australia Pty Limited

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

Australia

Australia

incorporation

Equity holding

Oroton Share Plan Company Pty Limited

Country of

OrotonGroup (Hong Kong) Ltd

OrotonGroup (Singapore) Pte Ltd

Australia

New Zealand

Note 33. Subsidiaries

Malaysia

OrotonGroup (Australia) Pty Limited

*

OrotonGroup (New Zealand) Pty Limited

The above companies represent a 'Closed Group' for the purposes of the Class Order, and as there are no otherparties to the Deed of Cross Guarantee that are controlled by OrotonGroup Limited, they also represent the 'ExtendedClosed Group'.

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

These companies were deregistered in February 2011.

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

OrotonGroup (Australia) Pty Limited

Oroton Share Plan Company Pty Limited

OrotonGroup Limited

Polo Ralph Lauren Australia Pty Limited

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

Note 34. Deed of cross guarantee

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30 July 2011

2011 2010$'000 $'000

- - 24,789 22,972

7,296 5,885 111 441

(115) (207)

643 830 (1,431) (1,587)

(88) (12)

Consolidated


Depreciation and amortisationNet loss on disposal of property, plant and equipment

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

Foreign currency differencesShare-based payments trust purchases

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

Amortisation of landlord contributions

Adjustments for:

Note 35. Events occurring after the reporting date

Non-cash employee benefits expense share-based payments

Apart from the dividend declared as disclosed in note 25, no other matter or circumstance has arisen since 30 July2011 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of thoseoperations, or the consolidated entity's state of affairs in future financial years.

(405) (621)(8,751) (546)

87 (96)(397) 155 541 (2,668)

(556) 2,156 1,852 (2,478)

- (18)410 374

- - 23,986 24,580

2011 2010$'000 $'000

- 238

Net cash from operating activities

(Increase)/decrease in deferred tax assets

Increase in inventoriesIncrease in trade and other receivables

Increase/(decrease) in trade and other payables(Increase)/decrease in other operating assets

Change in operating assets and liabilities:

Increase in other provisions

Leasehold improvements - lease make good

Consolidated

Increase/(decrease) in provision for income taxDecrease in deferred tax liabilities

(Increase)/decrease in income tax refund due

Note 37. Non-cash investing and financing activities

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30 July 2011

2011 2010$'000 $'000

24,789 22,972

Number Number

40,793,367 40,782,702

130,463 162,853

40,923,830 40,945,555

Cents Cents

60.77 56.33 60.57 56.10 Diluted earnings per share

Adjustments for calculation of diluted earnings per share:

Weighted average number of ordinary shares used in calculating basic earnings per share

Note 38. Earnings per share

Options


Weighted average number of ordinary shares used in calculating diluted earnings per share

Note 39. Share-based payments

Oroton Performance Based Incentive Scheme

Profit after income tax attributable to the owners of OrotonGroup Limited

Consolidated

Balance at Expired/ Balance atExercise the start of forfeited/ the end of

price the year Granted Exercised other the year

$0.00 236,667 - (236,667) - - $0.00 288,552 - - - 288,552 $0.00 81,712 - - (5,030) 76,682 $0.00 - 82,451 - (5,527) 76,924 $0.00 - 115,385 - - 115,385 $0.00 - 84,037 - - 84,037

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

Grant date Expiry date

01/12/10 28/07/14

The amount of options that will vest depends on OrotonGroup Limited’s earnings per share (EPS) meetingpredetermined levels or other performance related pre-determined targets.

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

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

Oroton Performance Based Incentive SchemeThe Oroton Performance Based Incentive Scheme is designed to provide long and short term incentives to delivershareholder returns. Under the scheme, participants are granted options which only vest if certain performancestandards are met. Participation in the scheme is at the Board’s discretion and no individual has a contractual right toparticipate in the scheme or to receive any guaranteed benefits.

19/04/10 28/07/1429/07/08 30/07/13

01/12/10 27/07/15

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

2011

02/08/10 27/07/15

29/07/07 31/07/12

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30 July 2011

Balance at Expired/ Balance atExercise the start of forfeited/ the end of

price the year Granted Exercised other the year

$0.00 188,570 - (188,570) - - $0.00 26,666 - (26,666) - - $0.00 236,667 - - - 236,667 $0.00 288,552 - - - 288,552 $0.00 - 81,712 - - 81,712

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

15/09/06 31/07/11

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

Note 39. Share-based payments (continued)

The model inputs for options granted during the years ended 30 July 2011 and 31 July 2010 are as follows:● options are granted with no consideration and vest based on OrotonGroup Limited’s performance; or based on

other pre-determined performance related targets

29/07/07 31/07/12

19/04/10 28/07/14

2010

29/01/07 31/07/11

29/07/08 30/07/13


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 isdisclosed in the table below. The fair value at grant date is independently determined using a Black-Scholes pricingmodel that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grantdate and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate forthe term of the option.

Share price Exercise Expected Dividend Risk-free Fair valueat grant date price volatility yield interest rate at grant date

$6.97 $0.00 39.00% 9.30% 5.10% $5.740$6.78 $0.00 56.00% 7.10% 4.60% $5.420$7.98 $0.00 53.00% 7.10% 4.90% $5.740$7.98 $0.00 53.00% 7.10% 4.90% $6.660

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

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

02/08/10 27/07/15

01/12/10 27/07/15

other pre determined performance related targets● all options granted during the year have a nil exercise price.

01/12/10 28/07/14

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

19/04/10 28/07/14


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●

●

●

●

●

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.

at the date of this declaration, there are reasonable grounds to believe that the members of the ExtendedClosed Group will be able to meet any obligations or liabilities to which they are, or may become, subject byvirtue of the deed of cross guarantee described in note 34 to the financial statements.

On behalf of the directors

Directors' declarationOrotonGroup Limited

there are reasonable grounds to believe that the company will be able to pay its debts as and when theybecome due and payable; and

In the directors' opinion:

the attached financial statements and notes thereto comply with the Corporations Act 2001, the AccountingStandards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;

the attached financial statements and notes thereto give a true and fair view of the consolidated entity'sfinancial position as at 30 July 2011 and of its performance for the financial year ended on that date;

the attached financial statements and notes thereto comply with International Financial Reporting Standardsas issued by the International Accounting Standards Board as described in note 1 to the financialstatements;

________________________________

Sydney

22 September 2011

Ross B LaneExecutive Chairman

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Michael Berrington

Stamp

PricewaterhouseCoopers, ABN 52 780 433 757Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation

Independent auditor’s report to the members of OrotonGroup Limited

Report on the financial report

We have audited the accompanying financial report of OrotonGroup Limited (‘the company’),which comprises the statement of financial position as at 30 July 2011, and the statement ofcomprehensive income, statement of changes in equity and statement of cash flows for the yearended on that date, a summary of significant accounting policies, other explanatory notes and thedirectors’ declaration for the OrotonGroup Limited Group (‘the consolidated entity’). Theconsolidated entity comprises the company and the entities it controlled at the year's end or fromtime to time during the financial year.

Directors’ responsibility for the financial report

The directors of the company are responsible for the preparation of the financial report that gives atrue and fair view in accordance with Australian Accounting Standards and the Corporations Act2001 and for such internal control as the directors determine is necessary to enable the preparationof the financial report that is free from material misstatement, whether due to fraud or error. InNote 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation ofFinancial Statements, that the financial statements comply with International Financial ReportingStandards.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based on our audit. Weconducted our audit in accordance with Australian Auditing Standards. These Auditing Standardsrequire that we comply with relevant ethical requirements relating to audit engagements and planand perform the audit to obtain reasonable assurance whether the financial report is free frommaterial misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial report. The procedures selected depend on the auditor’s judgement,including the assessment of the risks of material misstatement of the financial report, whether dueto fraud or error. In making those risk assessments, the auditor considers internal control relevantto the entity’s preparation and fair presentation of the financial report in order to design auditprocedures that are appropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the entity’s internal control. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of accounting estimates madeby the directors, as well as evaluating the overall presentation of the financial report.

Our procedures include reading the other information in the Annual Report to determine whetherit contains any material inconsistencies with the financial report.

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

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Independence

In conducting our audit, we have complied with the independence requirements of theCorporations Act 2001.

Auditor’s opinion

In our opinion:

(a) the financial report of OrotonGroup Limited is in accordance with the Corporations Act2001, including:

(i) giving a true and fair view of the consolidated entity’s financial position as at 30July 2011 and of its performance for the year ended on that date; and

(ii) complying with Australian Accounting Standards (including the AustralianAccounting Interpretations) and the Corporations Regulations 2001; and

(b) the financial report also complies with International Financial Reporting Standards asdisclosed in Note 1.

Report on the Remuneration Report

We have audited the remuneration report included in pages 7 to 15 of the directors’ report for theyear ended 30 July 2011. The directors of the company are responsible for the preparation andpresentation of the remuneration report in accordance with section 300A of the Corporations Act2001. Our responsibility is to express an opinion on the remuneration report, based on our auditconducted in accordance with Australian Auditing Standards.

Auditor’s opinion

In our opinion, the remuneration report of OrotonGroup Limited for the year ended 30 July 2011,complies with section 300A of the Corporations Act 2001.

PricewaterhouseCoopers

Paddy Carney SydneyPartner 22 September 2011

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Numberof holdersof ordinary

shares

1,426 1,371

234 173 31

3,235

58

% of total

Twenty largest quoted equity security holders

Ordinary shares

Equity security holders

100,001 and over 10,001 to 100,000

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

Holding less than a marketable parcel

OrotonGroup Limited

Distribution of equitable securities

30 July 2011

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

Shareholder information

Analysis of number of equitable security holders by size of holding:

1 to 1,000

5,001 to 10,000 1,001 to 5,000

% of totalshares

Number held issued

4,087,919 10.00 2,824,723 6.91 2,150,000 5.26 2,150,000 5.26 2,121,250 5.19 2,097,974 5.13 2,072,114 5.07 1,504,896 3.68 1,381,575 3.38 1,356,333 3.32 1,313,743 3.21 1,110,921 2.72

872,848 2.14 760,020 1.86 748,570 1.83 621,830 1.52 569,757 1.39 540,729 1.32 500,000 1.22 400,000 0.98

29,185,202 71.39

Cogent Nominees Pty Limited

RBC Dexia Investor Services Australia Nominees Pty Limited (PIPOOLED A/C)

J P Morgan Nominees Australia Limited

Robert Boyd LaneNational Nominees LimitedVelcara Pty LimitedJosseck Pty Limited

Grahger Capital Securities Pty LtdGrahger Capital Securities Pty Ltd

Sally Leanne Macdonald

Manderrah Pty Ltd (GJJ Family A/C)CJH Holdings Pty Limited

Citicorp Nominees Pty LimitedUBS Nominees Pty Ltd (PB SEG A/C)

HSBC Custody Nominees (Australia) Limited

JW Investments Pty Ltd

Hazakson Pty LtdHubbas Pty LtdBatiha Pty Ltd (Sixways Trust)

HSBC Custody Nominees (Australia) Limited - GSCO ECA

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OrotonGroup Limited

30 July 2011Shareholder information

Number Numberon issue of holders

527,555 10

% of totalshares

Number held issued

8,600,000 21.04 4,973,113 12.16 4,093,817 10.01

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.

Ordinary shares

Ordinary shares

Robert Lane, Ross Lane, Tom Lane and Anna Hookway under the deed dated 21 October 2008J W VicarsRBC Dexia Investor Services

Substantial holdersSubstantial holders in the company are set out below:

Unquoted equity securities

There are no other classes of equity securities.

Voting rightsThe voting rights attached to ordinary shares are set out below:

Options over ordinary shares issued

There are no other classes of equity securities.

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OrotonGroup Limited Preliminary final report … final report 4. Name of entities ... Retailing and...

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