Just Group Annual Report 2004 Growing, Connecting, Responding, Delivering

Just Group Annual Report 2004 Growing, Connecting, Responding, Delivering

GROWING page 4 CONNECTING page 6 RESPONDING page 8 DELIVERING page 10 CONTENTS KEY DATES Chairman s Report 2 Scorecard 3 Managing Director s Review 4 Our Portfolio 12 The Board 14 Senior Management Team 16 Corporate Governance 18 Financial Report 21 Directors Report 22 Shareholder Information 68 Corporate Directory 69 LISTED ON AUSTRALIAN STOCK EXCHANGE 7 MAY 2004 FINANCIAL YEAR END 31 JULY 2004 DIVIDEND RECORD DATE 27 OCTOBER 2004 DIVIDEND PAID 17 NOVEMBER 2004 ANNUAL GENERAL MEETING 23 NOVEMBER 2004 INTERIM RESULTS MARCH 2005 Just Group Limited ABN 97 096 911 410 The Annual General Meeting will be held as follows: PLACE The Como, Melbourne DATE 23 November 2004 TIME 3.00pm Front cover: Melissa, Mal and Jodie

Just Group is one of Australasia s leading specialty apparel retailers. We have a portfolio of well-recognised retail brands and stores across Australia and New Zealand. Each brand operates within a carefully targeted customer segment. Our operating performance is underpinned by strict financial discipline. JUST GROUP ANNUAL REPORT 2004 1

Welcome all new shareholders. We are pleased to have exceeded our prospectus forecast result. The 2004 result was underpinned by the continued strong performance of our casualwear and womenswear businesses. Just Group s record profit and sales performance exceeded prospectus forecasts. Net profit after tax increased by 77 per cent over the previous year to $40 million. Group sales grew by 10.3 per cent to $620 million, exceeding the prospectus forecast by 1.6 per cent. While some of this growth resulted from new store openings, comparable store sales grew by an average of 5.8 per cent. Earnings before interest, tax and amortisation (EBITA) grew by 53 per cent to $75.3 million, exceeding the prospectus forecast by 16.6 per cent. Based on our strong result, the board declared a fully-franked dividend of 3.5 cents per share, an increase of 25 per cent on the 2.8 cents the prospectus forecast. Sales of all our brands exceeded the levels predicted, with the exception of Urban Brands. Our womenswear businesses delivered outstanding results, generating EBITA of $21 million and surpassing prospectus forecasts by 54 per cent. Our casualwear businesses also produced a strong result, delivering EBITA of $54 million and outperforming the prospectus forecast by 6.7 per cent. Overall margins increased on the back of double-digit sales growth and significant improvements in gross margins. This was supported by the tight management of markdowns across the board. A strong cash flow performance reduced our net debt to $82 million, down from $115 million as at 1 January 2004. The company s achievements are a tribute to the energy and enthusiasm of all our people. On behalf of the Board, I would like to thank and congratulate the entire Just Group team on their outstanding performance. The Group is well placed to continue its success in future years. Jonathan Pinshaw Chairman 2 JUST GROUP ANNUAL REPORT 2004

Scorecard. Just Group s strong financial performance continues across the board. Prospectus Adjusted Historical* Actual Forecast Growth vs Growth vs $ million, unless otherwise stated 2001 2002 2003 2004 2004 2003 Prospectus Weeks in year 52 52 52 53 53 Sales Revenue 378.8 442.6 562.1 610.4 619.8 +10.3% +1.6% Gross Profit 198.7 232.1 312.2 349.3 359.1 +15.0% +2.8% EBITDA 34.7 47.0 68.6 79.7 94.1 +37.2% +18.1% EBITA 23.1 31.9 49.2 64.6 75.3 +53.0% +16.6% EBIT 22.7 29.2 43.8 59.1 69.3 +58.2% +17.2% NPAT (post amortisation) 22.6 32.6 40.0 +77.0% +22.6% NPAT (pre amortisation) 27.9 38.1 45.9 +64.5% +20.5% Gross Profit Margin 52.5% 52.4% 55.5% 57.2% 57.9% +240bp +71bp EBITA Margin 6.1% 7.2% 8.8% 10.6% 12.1% +340bp +157bp Stock Turns 4.4x 4.4x 4.3x 4.3x 4.4x +0.1x +0.1x DPS 2.8 3.5 +25.0% * Adjusted to show continuing business only with a consistent application of accounting policies. STORE NUMBERS SALES $ million EBITA $ million RETURN ON CAPITAL % 700 700 80 60 600 500 400 300 200 100 514 632 655 687 600 500 400 300 200 100 378.8 442.6 559.4 619.8 70 60 50 40 30 20 10 23.1 31.9 49.2 75.3 50 40 30 20 10 34 30 34 56 0 2001 2002 2003 2004 0 2001 2002 2003 2004 0 2001 2002 2003 2004 0 2001 2002 2003 2004 JUST GROUP ANNUAL REPORT 2004 3

Managing Director s Review 4 JUST GROUP ANNUAL REPORT 2004 Growing When we talk about growth at Just Group, we do so from a number of different perspectives: sales growth, profit growth, gross margin growth and growth in numbers of new stores. But equally importantly, we also talk about growth in terms of increased opportunity for our people; each of whom has the opportunity to develop a challenging and rewarding career within our diverse and expanding company. This year we opened 48 new stores in what was one of the most aggressive store opening programmes of any retailer in Australia. We also closed 16 stores which did not generate an adequate return on funds employed as part of our active property portfolio management. We achieved comparable store sales growth of 5.8 per cent across the Group, thanks in part to a powerful performance from Jay Jays. When we purchased the brand in 1993, it was providing discount denim products to the over 35-year-old market. After extensive market research and brand repositioning, Jay Jays now offers value-for-money casual apparel to street smart 16 to 24-year-olds. Since 1997, the total number of Jay Jays stores has increased from 80 to 189 (160 in Australia and 29 in New Zealand). Judging by the strong performances of the 20 Jay Jays stores we launched this year, there is plenty of demand left in the market. To help satisfy it, we plan to open an additional 14 new Jay Jays stores in 2005. We rolled out seven new Portmans stores and identified numerous sites with solid potential. A further six Portmans outlets have been earmarked for establishment in 2005. Following its successful repositioning after our June 2002 acquisition of the brand, Portmans now targets youthful, but professional, office and casualwear for 20 to 26-year-old women. This year Portmans sales grew by 14.9 per cent to $106.9 million. The brand is now well-placed to make steadily growing contributions to Just Group profits in the years ahead. Our gross margins improved across the board. As well as confirming that our fashion direction was right, this reduced the pressure on our stores to offer markdowns. The fewer the markdowns, the better our prospects for sustained profit growth. In 2005, we plan to open over 30 new stores across the Group, and look forward to establishing a compelling store presence for Peter Alexander. In subsequent years, we anticipate strong and growing contributions from our recently purchased chain of Dotti stores.

Growing When we talk about growth at Just Group, we do so from a number of different perspectives: sales growth, profit growth, gross margin growth and growth in absolute numbers of new stores. Aaron, Megan and Robert JUST GROUP ANNUAL REPORT 2004 5

Connecting We promote our brands in all media, and are the only specialty apparel retailer in Australasia to regularly advertise on television. Every advertisement is carefully targeted. 6 JUST GROUP ANNUAL REPORT 2004 Amanda, Fiona and Helen

Managing Director s Review Connecting To ensure we truly connect with our customers, we conduct carefully targeted advertising campaigns based on advanced market research. We have teams of buyers constantly travelling the globe to identify the fashion trends emerging in America and Europe, before coming home to assess their suitability for our markets in Australia and New Zealand. Once our buyers have formed a point of view about a particular line or trend, we perform tests in selected stores using advanced analytical tools. If the results are positive, our sophisticated development, sourcing and distribution facilities have the capacity to produce the required volumes of the relevant product in record time. We promote our brands in all media, and are the only specialty apparel retailer in Australasia to regularly advertise on television. Every advertisement is carefully targeted. We closely analyse each campaign to determine the return on funds employed. Using our market research and reporting systems, we can determine at any point of any day exactly how we are performing; in other words, how well our people and products are connecting with our customers. With its market repositioning now complete, Portmans is well-placed to make growing contributions to Group profits in the years ahead. We work with a number of advertising agencies to develop effective campaigns for each of our brands, but to improve efficiency, we buy the majority of our media through a single media agency. This year, our total budget for marketing and promotional activities was $18 million, making us the most active promoter of specialty apparel at the retail level in Australasia. Our business lives and dies with our consumers, each of whom we strive to understand, communicate and connect with as effectively as we possibly can. Extensive market research is regularly conducted with over 2,000 consumers being interviewed in 2004 about their shopping behaviour and preferences. JUST GROUP ANNUAL REPORT 2004 7

Managing Directors Review Responding In order to meet our customers needs, we must be able to get our products to market very quickly. If we can get our products to market rapidly and replenish items promptly we enhance our ability of achieving both sales and margin growth. Our centralised IT system keeps us in close touch with the market. Turnover of each item in each store is measured daily. Every morning, we present our buyers with accurate figures reflecting how each range has performed. To ensure we can continue to replenish our products on time, we shortened our product development and supply cycle by a further seven days. Over the past three years, we ve reduced the time it takes for a product to go from concept to sale from 17 to 14 weeks. To help maintain the freshness of our image in the marketplace, we change our store window displays every two weeks. To keep our operation performing at its peak, we invested a further $6 million in point-of-sale systems that provide us with the data we need on a daily basis. We also built an advanced new distribution centre in Altona, Melbourne. Working in conjunction with our other two distribution centres, Altona uses state-of-the-art IT and stock-control processes to distribute garments efficiently to our stores. We also spent $17.6 million opening and upgrading 163 stores. We never stop refreshing our in-store presentations. To keep our stores fresh and interesting, we constantly review our product offers, brand positionings and standards of presentation. To maximise the frequency of customer visits, we change our window displays every two weeks. In our business, you can t respond too quickly to market information. We will continue to invest in our ability to identify, collect and react to such information rapidly and commercially. A new state-of-the-art distribution centre was opened in Altona in January 2004. 8 JUST GROUP ANNUAL REPORT 2004

Responding In order to meet our customers needs, we must be able to get our products to market very quickly. If we can get our products to market rapidly and replenish items promptly we enhance our ability of achieving both sales and margin growth. Kerry, Kate and Stephen JUST GROUP ANNUAL REPORT 2004 9

Delivering We are proud of how much we delivered during the year across all areas of the business. But we are not stopping here. There is so much more we can achieve. 10 JUST GROUP ANNUAL REPORT 2004 Deborah and Karen Left to right: Con, Deb, Nancy, Frank, Jo, Dani, Leah, Ann and Scott

Managing Director s Review Delivering We are proud of how much we ve delivered during the year across all areas of the business. But we are not stopping here. There is so much more we can achieve. To our customers, we ve delivered exciting and continually refreshed stores and ranges. To our people, we ve delivered the opportunity to develop careers as challenging as they are rewarding. To our investors, we ve delivered a public company with well-known brand names that provides good-and-growing shareholder returns. As a public company, we now have more of the resources required to continue to grow the business for the benefit of all stakeholders. Our October 2004 purchase of the Dotti fashion business is a case in point. Dotti is a retailer of women s fashion apparel to the teenage market. A total of 10 stores are being purchased, each located in a prime retail strip or major shopping centre. Dotti already has one of the highest levels of awareness in the youth market and will form the basis of Just Group s newest national fashion chain. Dotti, which Just Group is acquiring, already enjoys strong support from the teenage girl s market. The brand will form the basis of our newest national fashion chain. A complementary fit with our existing portfolio of retail brands, Dotti will integrate well with our existing structure. We will develop it into a brand the clarity and quality of which will equal our other great brands. How? By leveraging the people, systems, infrastructure and performance culture which unite and distinguish the entire Group. In contrast, the Urban brands business has proven unable to properly leverage the Group s supply chain capability and hence the decision to exit the business. As Just Group grows, we will be able to deliver more product, investment, employment and other opportunities to a wider range of people. And as we do, the value of the company to its various stakeholders will steadily increase. Just Group is a youthful company with enormous potential. We look forward to contributing to the realisation of that potential at every turn. The first Peter Alexander flagship store was opened in Melbourne Central in September 2004, adding a new growth dimension to his already strong catalogue and internet sleepwear business. Howard McDonald Managing Director JUST GROUP ANNUAL REPORT 2004 11

Our Portfolio We have a valuable portfolio of highly visible brands. Each customer segment is clearly defined. There is little overlap between target markets. CASUALWEAR JUST JEANS SALES 2004 $242m 2004 NUMBER OF STORES 290 CONCEPT Fashionable casualwear at mid-market price-points, targeted at the 16 to 39-year-old JAY JAYS SALES 2004 $166m 2004 NUMBER OF STORES 189 CONCEPT Value-for-money street smart casual apparel for the 16 to 24-year-old youth market, offering a range of clothing and accessories that covers basic casual, street, surf and club styles 12 JUST GROUP ANNUAL REPORT 2004

WOMENSWEAR PORTMANS SALES 2004 $107m 2004 NUMBER OF STORES 97 CONCEPT Office and casualwear targeted at the fashion conscious 20 to 26-year-old woman JACQUI E SALES 2004 $75m 2004 NUMBER OF STORES 87 CONCEPT Quality and fashionable womenswear at mid-market price-points, targeted at the 30 to 35-year-old career and family woman PETER ALEXANDER SALES 2004 $14m 2004 NUMBER OF STORES 1 2004 NUMBER OF CATALOGUES 8 editions 880,000 catalogues with 400,000 email copies CONCEPT Sleepwear, intimates, fashionable fitness apparel, bed linen, resortwear and accessories sold primarily by way of catalogue and the internet DOTTI SALES 2004 N/A 2004 NUMBER OF STORES 10 (being purchased in October 2004) CONCEPT Fast, fashionable clothes and accessories for the teenage girl JUST GROUP ANNUAL REPORT 2004 13

The Board 14 JUST GROUP ANNUAL REPORT 2004

Jonathan Pinshaw Chairman and Non-Executive Director Jonathan Pinshaw has held the position of Chairman of the company since August 2003. Jonathan has 14 years experience in retailing, having previously held the positions of Chief Executive Officer of OPSM Group Limited, Managing Director of Freedom Furniture Limited and Vice President/Regional Director of McDonald s Australia Limited. Jonathan has held a number of non-executive director roles for Australian public companies, including John Fairfax Holdings Limited, where he was Deputy Chairman, James Hardie Industries Limited, Australian Consolidated Investments Limited, where he was Chairman, and Rabbit Photo Limited. Jonathan holds a Bachelor of Business Science (Hons) from the University of Cape Town and a Bachelor of Commerce (Hons) from the University of South Africa. Howard McDonald Managing Director Howard McDonald has held the position of Managing Director of the company since December 1997. Howard has over 15 years experience in the clothing and textile industry, having previously held the position of Managing Director of Pacific Brands Clothing Group. Howard held a number of senior positions with Pacific Dunlop Limited and previously at Hoechst Australia and ACI in the area of marketing and sales. Howard holds a Bachelor of Economics from Monash University. Laura Anderson Non-Executive Director Laura Anderson became a Non-Executive Director of the company in September 2004. Laura was the National Partner in charge of Strategy and Development for KPMG Australia. She is a governor and on the Victorian Board of the American Chamber of Commerce. She is also a Member of the Board of the Australian Grand Prix Corporation and on the Victorian Advisory Board of the Starlight Children's Foundation. Laura is a fellow of the Chartered Institute of Logistics and Transport and is a selected member of the Women Chiefs of Enterprise International, the American Institute of Company Directors and the National Association of Corporate Directors in Washington DC. Educated in the United States, Laura holds Advanced Degrees in Applied Mathematics and English from Southern Methodist University. Ian Pollard Non-Executive Director Ian Pollard became a Non-Executive Director of Just Group Limited (previously Just JJS Pty Limited) in March 2004 and is Chairman of the Audit and Risk Committee. He has extensive experience in corporate finance and strategic investment, and was previously Managing Director of Development Finance Corporation Ltd and Development Capital of Australia Ltd. Ian is also a director of Australian Business Limited, Corporate Express Australia Limited, DCA Group Limited, Milton Corporation Limited, RGA Reinsurance Limited and InTech Pty Limited. Previously, Ian held the role of non-executive director of OPSM Group Limited. He is an executive coach with Global Coaching Partnership. Ian, an actuary and Rhodes Scholar, holds a Bachelor of Arts from Macquarie University, a Master of Arts (First Class Honours) from Oxford University and a Doctor of Philosophy from the International Management Centre. Alison Watkins Non-Executive Director Alison Watkins became a Non-Executive Director of Just Group Limited (previously Just JJS Pty Limited) in March 2004 and is Chairman of the Remuneration and Nomination Committee. Alison is currently Chief Executive Officer of Berri Limited, a position she has held since 2002. Previously, Alison was Managing Director, Regional Banking, ANZ Banking Group Limited and has over 10 years experience as a management consultant with McKinsey and Company where retailing was an area of focus. Alison has also represented ANZ Banking Group Limited on the board of ETRADE Australia Securities Limited. Alison holds a Bachelor of Commerce from the University of Tasmania, and is a member of the Institute of Chartered Accountants of Australia. Laura, Ian and Alison Howard and Jonathan JUST GROUP ANNUAL REPORT 2004 15

Senior Management Team 16 JUST GROUP ANNUAL REPORT 2004

Jason Murray Chief Financial Officer Jason Murray has been with the company since July 2003 and was recently appointed Chief Financial Officer, having previously held the position of General Manager, Strategy and Corporate Development. Jason has over 10 years experience as a management consultant with McKinsey and Company, focusing on the retail industry. Jason holds a Bachelor of Economics (Hons) from the University of Sydney and a MBA (Hons) from IMD in Lausanne, Switzerland. Jacquie Naylor Merchandising Director Jacquie Naylor has held the position of Merchandising Director since November 2001, having been General Manager, Merchandising since 1998. Jacquie is responsible for range development, product sourcing and brand promotion. Jacquie has over 30 years experience in the fashion industry (20 of these at Just Group Limited). She has previously held the positions of General Manager, Just Jeans and General Manager, Jacqui E. Glenys Shearer Commercial Director Glenys Shearer has held the position of Commercial Director since November 2001, having been General Manager, Commercial since 1998. Glenys is responsible for the management of the Just Group store portfolio. Glenys has over 25 years experience in the retail industry (primarily with Just Group Limited). She has previously held the positions of General Manager, Jay Jays and General Manager, Jacqui E. Wai Tang Operations Director Wai Tang has held the position of Operations Director since November 2001, having been General Manager Operations since 1999. Wai is responsible for supply chain management, distribution and information technology functions. Wai has over 18 years experience in operations and general management, having previously held positions at Pacific Brands (formerly a division of Pacific Dunlop Limited) and IBM Management Consulting. Wai holds a Bachelor and Master of Science from the Royal Melbourne Institute of Technology, a Master of Business Administration from Melbourne Business School and a Diploma from AICD. Janice Payne General Manager, Finance and Company Secretary Janice Payne has been with the company since June 1998 and has held the position of General Manager, Finance and Company Secretary since April 2000. Janice previously spent 10 years with Evans Partners (now Horwath), Chartered Accountants. Janice holds a Bachelor of Economics from the University of Melbourne and is a member of the Institute of Chartered Accountants. Anita Muller General Manager, Human Resources Anita Muller has held the position of General Manager, Human Resources, since June 2003. Anita has over 15 years experience in human resources, having previously held positions at Foster s Group Limited, CSR Limited and ICI Australia Limited. Anita holds a Bachelor of Arts (Hons) from Monash University. Janice, Jacquie and Wai Anita, Jason and Glenys JUST GROUP ANNUAL REPORT 2004 17

CORPORATE GOVERNANCE This statement sets out Just Group s corporate governance principles and practices formally adopted on 23 March 2004, in preparation for the company s listing on Australian Stock Exchange (ASX). The policies and practices of the company are in accordance with ASX corporate governance council recommendations unless otherwise stated. ROLE OF THE BOARD The role of the board is to provide effective governance over the Group s affairs to ensure the interests of shareholders are protected and enhanced and the confidence of the investment market is maintained whilst having regard for the interests of all stakeholders, including customers, employees, suppliers and local communities. The board s key responsibilities are set out in its board charter and include: establish, monitor and modify financial objectives and corporate strategies of the company; appoint, evaluate the performance of, determine the remuneration of, plan for the successor of and, where appropriate, remove the CEO; ensure that the board continues to have the mix of skills and experience necessary to conduct the company s activities, and to this end ensure that appropriate directors are selected and appointed as required; oversee the conduct of Just Group business in order to evaluate whether the business is being properly managed; monitor financial results; ensure that appropriate risk management systems, internal control and reporting systems and compliance frameworks are in place and operating effectively and efficiently; approve and monitor the progress of major capital expenditure, capital management and acquisitions and divestments; ensure responsible corporate governance; and monitor the performance of Just Group management. COMPOSITION OF THE BOARD The board currently comprises of five directors, which is made up of four non-executive directors and the Managing Director. The names of the directors, details of their experience, expertise and qualifications are set out in the Directors Report. The board charter specifies: a majority of the board will be comprised of independent directors; and the Chairman will be an independent director and a person cannot hold the positions of both Chairman and Chief Executive Officer (CEO). The company considers the non-executive directors and Chairman of the board to be independent directors. INDEPENDENCE OF DIRECTORS The board adopted a number of criteria in relation to a non-executive director s independence. A non-executive director is considered to be independent when that director is not a member of management and: is not a substantial shareholder of the company or an officer of or otherwise associated directly with a substantial shareholder of the company; within the last three years has not been employed in an executive capacity by the company or another group member, or been a director after ceasing to hold any such employment; within the last three years has not been a principal of a material professional adviser or a material consultant to the company or another group member or an employee materially associated with the service provider; 18 JUST GROUP ANNUAL REPORT 2004

is not a material supplier or customer of the company or other group member or an officer of or otherwise associated directly or indirectly with a material supplier or customer; has no material contractual relationship with the company or another group member other than as a director of the company; has not served on the board for a period which could, or could reasonably be perceived to, materially interfere with the director s ability to act in the best interests of the company; and is free from any interest and any business or other relationship which could, or could reasonably be perceived to, materially interfere with the director s ability to act in the best interests of the company. Materiality thresholds will be determined in light of the individual context. TERM OF OFFICE The company s constitution specifies that all directors (with the exception of the Managing Director) must retire from office at no later than the third annual general meeting following their last election. Where eligible, a director may stand for re-election. INDEPENDENT ADVICE Directors are free to take independent professional advice on matters pertaining to their roles and responsibilities as directors of Just Group. The company will pay the reasonable costs incurred by a director in doing so, provided that before the advice is obtained the director discusses the requirement for the advice with the Chairman. PERFORMANCE REVIEW As set out in its charter, the board, through the Chairman, shall perform an evaluation of its performance at least annually. Just Group s current board was formed in March 2004 and no formal performance appraisal was undertaken in the year ended 31 July 2004. BOARD COMMITTEES The board has established two committees of directors, the Audit and Risk Committee and the Remuneration and Nomination Committee. REMUNERATION AND NOMINATION COMMITTEE The Remuneration and Nomination Committee supports and advises the board in relation to the remuneration and nomination policies and practices of the company. Details of directors qualifications, experience and attendance at meetings are set out in the Directors Report. The Remuneration and Nomination Committee s purpose is to: discharge the board s responsibilities relating to the compensation of the company s executives and directors; establish coherent and transparent remuneration policies and practices, which will enable the company to attract, retain and motivate executives and directors who will create value for shareholders; fairly and responsibly reward executives; and establish and maintain a formal and transparent procedure for the selection and appointment of new directors to the board. The committee shall perform an evaluation of its performance at least annually to determine whether it is functioning effectively by reference to current best practice. JUST GROUP ANNUAL REPORT 2004 19

CORPORATE GOVERNANCE (CONTINUED) AUDIT AND RISK COMMITTEE The Audit and Risk Committee supports and advises the board in fulfilling its corporate governance and oversight responsibilities in relation to the company s financial reporting, internal control structure, ethical standards and risk management framework and systems, and audit function. Risk oversight management encompasses operational, financial reporting and compliance risk. All members are non-executive directors. Details of directors qualifications, experience and attendance at meetings are set out in the Directors Report. The committee shall perform an evaluation of its performance at least annually to determine whether it is functioning effectively by reference to current best practice. CONTINUOUS DISCLOSURE POLICY The board aims to ensure that shareholders are informed of all major developments affecting the company s state of affairs and share price. The company has procedures and practices to ensure compliance with the continuous disclosure requirements of ASX listing rules and to ensure that price sensitive information is publicly released through the stock exchange. All information provided to ASX is immediately posted on the company s website. Information is communicated to shareholders through: the annual report; the interim report; disclosures made to ASX; notices and explanatory memoranda of annual general meetings (AGMs); the AGM; and occasional letters from the board chair and CEO to specifically inform shareholders of key matters of interest. SHARE TRADING GUIDELINES The company has established guidelines regarding trading in Just Group Limited shares. These guidelines prohibit directors, members of senior management and other employees from dealing in the company s shares while in possession of price sensitive information. Directors and officers are permitted to buy and sell securities at all times other than: from 1 December until the half-yearly announcement; and from 1 July until the preliminary full year announcement. Outside of these periods, directors must receive clearance from the Chairman for any proposed dealing in shares and senior management must advise the Chief Executive Officer, in advance of the transaction. ETHICAL STANDARDS The company has codes of ethics governing ethical clothing practice, privacy, equal opportunity, discrimination and harassment, equal employment opportunity, work practices and occupational health and safety which can be found on the company s website. Details of the company s policies and practices, and the charters for the board and each of its committees may be found at www.justgroup.com.au. 20 JUST GROUP ANNUAL REPORT 2004

JUST GROUP LIMITED (PREVIOUSLY JUST JJS PTY LIMITED) ABN 97 096 090 158 FINANCIAL REPORT FOR THE PERIOD COMMENCING 27 JULY 2003 TO 31 JULY 2004 CONTENTS DIRECTORS REPORT 22 STATEMENTS OF FINANCIAL PERFORMANCE 29 STATEMENTS OF FINANCIAL POSITION 30 STATEMENTS OF CASH FLOWS 31 NOTES TO THE FINANCIAL STATEMENTS 32 DIRECTORS DECLARATION 66 INDEPENDENT AUDIT REPORT TO MEMBERS OF JUST GROUP LIMITED 67 JUST GROUP ANNUAL REPORT 2004 21

DIRECTORS REPORT The directors present their report together with the financial report of Just Group Limited (previously Just JJS Pty Limited) (the company ), and the consolidated financial report of the consolidated entity, being the company and its controlled entities, for the 53 weeks commencing 27 July 2003 to 31 July 2004, together with the independent audit report to the members thereon. DIRECTORS The names and details of the company s directors in office during the financial year and until the date of the report are as follows. JONATHAN PINSHAW CHAIRMAN AND NON-EXECUTIVE DIRECTOR Jonathan Pinshaw has held the position of Chairman of the company since August 2003. Jonathan has 14 years experience in retailing, having previously held the positions of Chief Executive Officer of OPSM Group Limited, Managing Director of Freedom Furniture Limited and Vice President/Regional Director of McDonald s Australia Limited. Jonathan has held a number of non-executive director roles for Australian public companies, including John Fairfax Holdings Limited, where he was Deputy Chairman, James Hardie Industries Limited, Australian Consolidated Investments Limited, where he was Chairman, and Rabbit Photo Limited. Jonathan holds a Bachelor of Business Science (Hons) from the University of Cape Town and a Bachelor of Commerce (Hons) from the University of South Africa. HOWARD MCDONALD MANAGING DIRECTOR Howard McDonald has held the position of Managing Director of the company since December 1997. Howard has over 15 years experience in the clothing and textile industry, having previously held the position of Managing Director of Pacific Brands Clothing Group. Howard held a number of senior positions with Pacific Dunlop Limited, and previously at Hoechst Australia and ACI in the area of marketing and sales. Howard holds a Bachelor of Economics from Monash University. LAURA ANDERSON NON-EXECUTIVE DIRECTOR Laura Anderson became a Non-Executive Director of the compaby in September 2004. Laura was the National Partner in charge of Strategy and Development for KPMG Australia. She is a governor and on the Victorian Board of the American Chamber of Commerce. She is also a Member of the Board of the Australian Grand Prix Corporation and on the Victorian Advisory Board of the Starlight Children's Foundation. Laura is a fellow of the Chartered Institute of Logistics and Transport and is a selected member of the Women Chiefs of Enterprise International, the American Institute of Company Directors and the National Association of Corporate Directors in Washington D.C.. Educated in the United States, Laura holds Advanced Degrees in Applied Mathematics and English from Southern Methodist University. 22 JUST GROUP ANNUAL REPORT 2004

IAN POLLARD NON-EXECUTIVE DIRECTOR Ian Pollard became a non-executive director of Just Group Limited (previously Just JJS Pty Limited) in March 2004 and is Chairman of the Audit and Risk Committee. He has extensive experience in corporate finance and strategic investment, and was previously Managing Director of Development Finance Corporation Limited and Development Capital of Australia Limited. Ian is also a director of Australian Business Limited, Corporate Express Australia Limited, DCA Group Limited, Milton Corporation Limited, RGA Reinsurance Limited and InTech Pty Limited. Previously, Ian held the role of non-executive director of OPSM Group Limited. He is an executive coach with Global Coaching Partnership. Ian, an actuary and Rhodes Scholar, holds a Bachelor of Arts from Macquarie University, a Master of Arts (First Class Honours) from Oxford University and a Doctor of Philosophy from the International Management Centre. ALISON WATKINS NON-EXECUTIVE DIRECTOR Alison Watkins became a non-executive director of Just Group Limited (previously Just JJS Pty Limited) in March 2004 and is Chairman of the Remuneration and Nomination Committee. Alison is currently Chief Executive Officer of Berri Limited, a position she has held since 2002. Previously, Alison was Managing Director, Regional Banking, ANZ Banking Group Limited and has over 10 years experience as a management consultant with McKinsey and Company, where retailing was an area of focus. Alison has also represented ANZ Banking Group Limited on the board of ETRADE Australia Securities Limited. Alison holds a Bachelor of Commerce from the University of Tasmania, and is a member of the Institute of Chartered Accountants of Australia. GORDON WINDEYER DIRECTOR Since 9 August 2001, Gordon Windeyer held office as director of the company until his resignation on 22 March 2004. Gordon is Managing Director of Catalyst Investment Managers Pty Limited, has over 17 years of experience in private equity industry and holds an Economics Degree from the University of Sydney. TRENT PETERSON DIRECTOR Since 9 August 2001, Trent Peterson held office as director of the company until his resignation on 22 March 2004. Trent is an Investment Director of Catalyst Investment Managers Pty Limited and holds a Bachelor of Commerce from the University of Melbourne and is a member of the Institute of Chartered Accountants of Australia. JACQUELINE NAYLOR DIRECTOR Jacqueline Naylor was a member of the board until her resignation on 22 March 2004. She holds the position of Merchandising Director (an executive role), as she has done since November 2001, having been General Manager of Merchandising since 1998. GLENYS SHEARER DIRECTOR Glenys Shearer was a member of the board until her resignation on 22 March 2004. She holds the position of Commercial Director (an executive role), as she has done since November 2001, having been General Manager of Commercial since 1998. JUST GROUP ANNUAL REPORT 2004 23

DIRECTORS REPORT (CONTINUED) WAI TANG DIRECTOR Wai Tang was a member of the board until her resignation on 22 March 2004. She holds the position of Operations Director (an executive role), as she has done since 2001, having been General Manager of Operations since 1999. Wai holds a Bachelor and Master of Science from the Royal Melbourne Institute of Technology and Master of Business Administration from the University of Melbourne. COMPANY SECRETARY JANICE PAYNE Janice Payne has been with the company since June 1998 and has held the position of General Manager of Finance and Company Secretary since April 2000. Janice previously spent ten years with Evans Partners (now Horwath Chartered Accountants). Janice holds a Bachelor of Economics from the University of Melbourne and is a member of the Institute of Chartered Accountants of Australia. COMMITTEE MEMBERSHIP The board of Just Group Limited (previously Just JJS Pty Limited) reconstituted the Audit and Risk Committee and established a Remuneration and Nomination Committee of the board of directors on 24 March 2004 in preparation for the company s listing in May 2004. Members acting on the committees of the board during the year were: AUDIT AND RISK REMUNERATION AND NOMINATION Ian Pollard (Chairman) Alison Watkins (Chairman) Jonathan Pinshaw Howard McDonald Alison Watkins Jonthan Pinshaw Ian Pollard Laura Anderson was appointed to the Audit and Risk Committee and the Remuneration and Nomination Committee on 14 September 2004. Prior to the company s change in status from private to public, an Audit Committee was in operation for the company. The members were Howard McDonald, Gordon Windeyer, Trent Peterson and Jonathan Pinshaw. 24 JUST GROUP ANNUAL REPORT 2004

MEETINGS OF DIRECTORS The number of directors meetings (including meetings of committees of directors) and the number of meetings attended by each of the directors of the company during the financial year are: BOARD MEETINGS AUDIT AND RISK COMMITTEE REMUNERATION AND NOMINATION COMMITTEE DIRECTOR NUMBER ATTENDED MEETINGS HELD WHILE A DIRECTOR NUMBER ATTENDED MEETINGS HELD WHILE A DIRECTOR NUMBER ATTENDED MEETINGS HELD WHILE A DIRECTOR Mr Jonathan Pinshaw 10 10 3 3 2 2 Mr Howard McDonald 10 10 1 1 2 2 Mr Ian Pollard 5 5 2 2 2 2 Ms Alison Watkins 5 5 2 2 2 2 Ms Jacquie Naylor 4 5 Ms Glenys Shearer 4 5 Ms Wai Tang 5 5 Mr Gordon Windeyer 5 5 1 1 Mr Trent Peterson 5 5 0 1 Ms Laura Anderson* * Appointed 1 September 2004 INTERESTS IN THE SHARES AND PERFORMANCE RIGHTS OF THE COMPANY AND RELATED BODIES CORPORATE As at the date of this report, the interests of the directors in the shares and performance rights of Just Group Limited (previously Just JJS Pty Limited) were: ORDINARY SHARES PERFORMANCE RIGHTS Jonathan Pinshaw Alison Watkins 123,809 Ian Pollard 74,285 Laura Anderson Howard McDonald 6,011,347 102,381 EARNINGS PER SHARE 2004 CENTS Basic earnings per share 18.19 Diluted earnings per share 18.19 DIVIDENDS Two fully franked dividends were paid during the financial year, $20,000,000 on 28 January 2004 and $6,400,000 on 23 March 2004. CORPORATE INFORMATION CORPORATE STRUCTURE Just Group Limited (previously Just JJS Pty Limited) is a company limited by its shares that is incorporated and domiciled in Australia. On 20 February 2004, the company became a public company and changed its name to Just Group Limited. JUST GROUP ANNUAL REPORT 2004 25

DIRECTORS REPORT (CONTINUED) NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES The consolidated entity operates a number of specialty retail apparel chains within the retail apparel markets in Australia and New Zealand. There have been no significant changes in the nature of those activities during the year. EMPLOYEES The consolidated entity employed 5,023 employees as at 31 July 2004 (2003: 4,754 employees). REVIEW AND RESULTS OF OPERATIONS During the year, the company listed on ASX on 7 May 2004 raising $427,869,248 and issuing 203,747,261 ordinary shares. The proceeds were applied to buy back 203,747,261 shares. Net profit after income tax for the year ended 31 July 2004 was $40 million, which reflects a 76.7% increase compared to last year. In the 12 months to 31 July 2004 EBITA (earnings before interest, tax and amortisation) increased by 53% to $75.3 million. The company has a sound capital structure. Net debt as at 31 July 2004 is less than the company s EBITDA for the year ended 31 July 2004 and all debt covenants have been satisfied throughout the year. The Group has sufficient funds to finance its operations and maintains a working capital facility primarily to allow the Group to manage the inter-month and intra-month fluctuations in cash flow inherent in the business. Including bank guarantees, the company s working capital facility is $34,500,000, of which $32,910,916 was unused at 31 July 2004. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS Just Group Limited (previously Just JJS Pty Limited) was listed on Australian Stock Exchange on 7 May 2004. Refer Note 15 for details of funds raised through the public offer. There were no other material significant changes in the state of affairs of the Group that occurred during the year. SIGNIFICANT EVENTS AFTER THE BALANCE DATE On 11 August 2004, Just Group Limited (previously Just JJS Pty Limited) entered into a conditional agreement to acquire the trading assets of the Dotti Fashion business. Dotti is a retailer of women s fashion apparel, targeting the teenage market. In October 2004, 10 stores will be acquired for a total consideration of approximately $5 million, and will be entirely funded from operating cash flows. On 15 September 2004, the board of directors declared a fully franked dividend of 3.5 cents per share to be paid on 17 November 2004. LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS Certain likely developments in the operations of the consolidated entity and the expected results of those operations in financial years subsequent to the period ended 31 July 2004 are referred to in the preceding Review of Operations. No additional information is included on the likely developments in the operations of the economic entity and the expected results of those operations as the directors reasonably believe that the disclosure of such information would be likely to result in unreasonable prejudice to the economic entity if included in this report, and it has therefore been excluded in accordance with Section 299(3) of the Corporations Act. INDEMNIFICATION AND INSURANCE OF DIRECTORS, OFFICERS AND AUDITORS To the extent permitted by law: (a) the company indemnifies every person who is or has been an officer of the company or of a wholly-owned subsidiary of the company against any liability for costs and expenses incurred by that person in defending any proceedings in which judgement is given in that person s favour, or in which the person is acquitted, or in 26 JUST GROUP ANNUAL REPORT 2004

connection with an application in relation to any proceedings in which the Court grants relief to the person under the Corporations Act; and (b) the company indemnifies every person who is or has been an officer of the company or of a wholly-owned subsidiary of the company against any liability incurred by the person, as an officer of the company or of a wholly-owned subsidiary of the company, to another person (other than the company or a related body corporate of the company) unless the liability arises out of conduct involving a lack of good faith. The officers include the directors as named earlier in this report, the Company Secretary Ms J Payne and other officers, being the executive senior management team. The company has paid premiums for directors and officers liability insurance. Details of the nature of the liabilities covered or the amount of the premium paid in respect of the directors and officers liability insurance contracts are not disclosed as such disclosure is prohibited under the terms of the contracts. The company has also entered into deeds of access insurance and indemnity with all the directors of the company. DIRECTORS AND EXECUTIVES EMOLUMENTS REMUNERATION POLICY The Remuneration and Nomination Committee is responsible for making recommendations to the board on remuneration policies and packages applicable to board members and the executive team. The Remuneration and Nomination Committee assesses the appropriateness of the nature and amount of emoluments of such officers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality board and executive team. Such officers are given the opportunity to receive their base emolument in a variety of forms including cash and fringe benefits such as motor vehicles. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the company. Executive directors and senior executives may receive bonuses based on achievement of specific goals related to performance of the consolidated entity and longer term incentives such as performance rights through the long-term incentive plan as detailed in Note 22 to the financial statements. Details of the nature and amount of each element of the emolument of each director of the company and each of the five executive officers of the company and the consolidated entity receiving the highest emoluments for the financial year are as follows: EMOLUMENTS OF DIRECTORS LONG-TERM EMOLUMENTS LONG-TERM EMOLUMENTS PERFORMANCE RIGHTS SALARY $ BONUS $ SUPER $ OTHER $ NUMBER GRANTED $ Howard McDonald 722,227 888,550 65,000 68,365 102,381 3,344 Jonathan Pinshaw 114,763 10,329 Ian Pollard 43,467 3,912 Alison Watkins 29,636 2,667 Laura Anderson* Gordon Windeyer 22,957 Trent Peterson 22,957 * Appointed 1September 2004 Refer Note 22 (c) for details of the performance rights plan. JUST GROUP ANNUAL REPORT 2004 27

DIRECTORS REPORT (CONTINUED) EMOLUMENTS* OF THE FIVE MOST HIGHLY PAID EXECUTIVE OFFICERS # OF THE COMPANY AND THE CONSOLIDATED ENTITY ANNUAL EMOLUMENTS LONG-TERM EMOLUMENTS PERFORMANCE RIGHTS SALARY $ BONUS $ SUPER $ OTHER $ NUMBER GRANTED $ Jason Murray 293,446 277,204 11,349 28,571 933 Jacqueline Naylor 292,059 341,885 89,285 52,907 35,238 1,151 Janice Payne 160,672 184,803 14,460 24,868 19,048 622 Glenys Shearer 244,000 295,685 34,065 41,000 30,476 995 Wai Tang 207,045 212,523 22,902 21,905 715 The terms director and officer have been treated as mutually exclusive for the purposes of this disclosure. * The elements of emoluments have been determined on the basis of the cost to the company and the consolidated entity. # Executives are those directly accountable and responsible for the operational management of the company and the consolidated entity. Refer Note 22(c) for details of the performance rights plan. ROUNDING The amounts contained in this report and financial statements have been rounded off to the nearest thousand dollars under the option available to the company under ASIC Class Order 98/0100. The company is an entity to which the Class Order applies. TAX CONSOLIDATION Effective 27 July 2003, for the purposes of income taxation, Just Group Limited (previously Just JJS Pty Limited) and its 100% Australian-owned subsidiaries have formed a tax consolidated group. Members of the group have entered into a tax sharing arrangement in order to allocate income tax expense to the wholly-owned subsidiaries on a pro-rata basis. In addition the agreement provides for the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. Jonathan Pinshaw Chairman 15 September 2004 28 JUST GROUP ANNUAL REPORT 2004

STATEMENTS OF FINANCIAL PERFORMANCE FOR THE FINANCIAL PERIOD ENDING 31 JULY 2004 CONSOLIDATED THE COMPANY NOTES 53 WEEKS ENDED 31 JULY 2004 52 WEEKS ENDED 26 JULY 2003 53 WEEKS ENDED 31 JULY 2004 52 WEEKS ENDED 26 JULY 2003 Revenue from ordinary activities 2 622,479 564,941 51,838 45,300 Changes in inventories of finished goods and work in progress and raw materials used (260,655) (249,901) Employee expenses (111,774) (104,396) (11,560) (10,653) Operating lease rental expense (95,365) (89,252) (2,641) (2,376) Depreciation and amortisation 3 (24,837) (24,777) (630) (180) Borrowing costs 3 (9,643) (8,926) (9,621) (8,884) Auditor s remuneration (audit and other services) 24 (460) (277) (460) (277) Insurance (1,533) (1,491) (1,533) (1,491) Communications (3,107) (2,705) (919) (885) Other expenses from ordinary activities (55,438) (48,304) (4,474) (3,003) Profit from ordinary activities before income tax expense 59,667 34,912 20,000 17,551 Income tax expense relating to ordinary activities 4 (19,706) (12,299) 293 360 Profit from ordinary activities after income tax expense 17 39,961 22,613 20,293 17,911 Net exchange difference on translation of financial report of foreign controlled entity 16 267 581 TOTAL REVENUES, EXPENSES AND VALUATION ADJUSTMENTS ATTRIBUTABLE TO MEMBERS AND RECOGNISED DIRECTLY IN EQUITY 267 581 TOTAL CHANGES IN EQUITY OTHER THAN THOSE RESULTING FROM TRANSACTIONS WITH OWNERS AS OWNERS 40,228 23,194 20,293 17,911 Basic earnings per share (cents per share) 29 18.19 Diluted earnings per share (cents per share) 29 18.19 The above statements of financial performance should be read in conjunction with the accompanying notes. JUST GROUP ANNUAL REPORT 2004 29