Premier Investments Limited: Retail Operations, Investments, and Audit Analysis

Premier Investments Limited: Retail Operations, Investments, and Audit Analysis

Retail Sector and Brands

Premier Investments Limited is an Australian firm engaged in the specialty retail fashion sector throughout Australia, New Zealand, Asia, and Europe. It is a publicly listed corporation on the Australian Securities Exchange, designated by the code PMV for its securities. It generates income from its specialty fashion retail activities, employing roughly 11,000 individuals (Ibisworld.com 2022). The corporation owns and operates the Just Group, a retail conglomerate that generates the majority of its retail sales. The Just Group has seven prominent companies that cater to various societal sectors, addressing their fashion requirements. Premier Investments (2022) identifies the brands within this group as Just Jeans, Jay Jays, Jacqui-E, Peter Alexander, Portmans, Dotti, and Smiggle. The brands' emphasis is as follows:

• Just Jeans: It caters to the youth demographic by offering trendy apparel via its 400 retail locations in Australia and New Zealand.
• Jacqui-E: It caters to ladies by offering women's apparel in nations such as Australia and New Zealand.
• Peter Alexander: The corporation runs over 100 storefronts and an online business under this name. This brand encompasses daywear, sleepwear, footwear, and giftware products.
• Portmans: This brand focuses on women's apparel, operating 110 locations.
• Dotti: This is an online company that provides accessories and women's fashion apparel, with a limited presence in physical retail locations.
• Smiggle: This brand provides stationery goods to the Australian market.

The retail sector mostly functions via physical storefronts while maintaining an online presence via its brands aimed at the digital market. The firm has 1,200 locations throughout its countries of operation, with online income being around 20% of overall revenue, amounting to almost $300.7 million. Among all brands, Peter Alexander had the highest sales, totaling $388.2 million in 2021. The income stream from the company's retail division is contingent upon transactions and the functioning of the locations. The firm derives around 81% of its income from Australia and 11% from New Zealand (Premier Investments Limited 2021).

The company's other operational area involves investments in listed securities and money market deposits. This is the company's secondary line of activity, resulting in a robust financial sheet for the firm owing to substantial asset holdings. In 2021, the dividend income from Breville Group Limited, an associated entity of the corporation, amounted to $12.2 million. The corporation has a 26.27% stake in Breville Group Limited, with a fair value of about $1,173.5 million based on the reported market price of the shares. Additionally, the corporation has stakes in Myer Holdings Limited, valued at $63.5 million as of 2021. Premier Investments controls the distribution centers in Australia and the main office facility of Premier Retail, valued at $74.2 million as of July 31, 2021 (Premier Investments Limited 2021). The company's investment division concentrates on executing strategic investments and generating dividends from them.

The company primarily concentrates on its retail segment, which faces significant competition in the Australian market from entities such as Woolworths Group, Cotton On Clothing Pty Ltd, and Mosaic Brands, all of which operate within the fashion retail sector in Australia and New Zealand.

Investment Sector and Assets

The regulatory environment consists of the relevant laws and regulations that the corporation must adhere to inside the nation. The firm is registered in Australia and, thus, must adhere to the Corporations Act 2001 for its fundamental obligations. The Corporations Act 2001 delineates the regulations governing the establishment, functioning, and disclosure of financial and non-financial information to the public. According to the same Act, the firm is required to prepare its accounts in accordance with the accounting standards established by the Australian Accounting Standards Board (AASB) (Commonwealth Consolidated Acts, 2022). The firm must produce its financial statements in accordance with these standards and adhere to the ASX Listing Rules of the Australian Securities Exchange (ASX) since it is a publicly listed entity (Australian Securities Exchange 2022). These regulations mandate the continual disclosure of information that might impact the market and investor decisions, thereby affecting share prices (Asx.com 2022). The corporation is obligated to comply with the Income Tax Assessment Act of 1936, the Income Tax Assessment Act of 1977, and the Fringe Benefits Tax Assessment Act of 1986. The corporation must comply with the stipulations of the A New Tax System (Goods and Services Tax) Act, 1999, regarding the relevant indirect taxes. Labor regulations are essential for every organization employing individuals, necessitating adherence to the Fair Work Act, 2009, to provide basic work conditions and benefits (Legislation.gov.au 2018). Modifications to these laws will affect the activities of PMV.

Ernst & Young audited the financial information of Premier Investments Limited and its 45 subsidiaries for the year ending 31st July 2021, as reflected in the consolidated financial statements of the group (Premier Investments Limited 2021). The company's auditors confirm that the financial report of the group complies with the Corporations Act 2001 and meets the criteria necessary for an unqualified audit opinion. The auditors assert that the financial statements accurately reflect the consolidated financial status and performance of the group as of 31 July 2021. The statements adhere to the stipulations of the Australian Accounting Standards and the provisions of the Corporations Regulation 2001. ASA 700 stipulates that the auditor's opinion provides reasonable assurance regarding the absence of material misstatements in the company's consolidated financial statements (Auditing and Assurance Standards Board 2021). The auditor's assessment is based on the audit evidence gathered during the examination of the firm and its subsidiaries. The gathered evidence instills trust in the auditor about the correctness, completeness, existence, value, and occurrence of the financial transactions and information shown in the financial statements (Accaglobal.com 2022). The auditor assesses the following elements of the firm to formulate a judgment on the financial statements:

• The company has adhered to the relevant accounting standards in the preparation of its financial statements and provides necessary disclosures in the report.
• The firm consistently applies its accounting principles, estimates, and measures.
• The management's projections are fair for the firm.

Competitive and Regulatory Landscape

The auditor must adhere to the stipulations of the Corporations Act 2001 and the Code of Ethics outlined in APES 110 for accounting professionals (Accounting Professional & Ethical Standards Board 2018). The auditor must additionally fulfill other obligations related to auditing the company and articulate his judgment.

According to ASA 706: Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor's Report, the auditor must include a paragraph in the audit report that highlights any matter deemed significant and necessitating separate representation for the report's users (Auditing and Assurance Standards Board 2020). The emphasis of matter paragraph does not necessitate a modification of the auditor's view. The audit report of Premier Investments Limited lacks an emphasis of topic paragraph, since the auditor deems no issue significant enough to warrant separate presentation.

The elements contributing to the creation of the audit report include the important audit issues that were crucial for the company's audit. Key audit matters are addressed in ASA 701: Communicating Key Audit Matters in the Independent Auditor’s Report, which mandates that the auditor document and present issues that were significant to the audit, along with the auditor's response, in the key audit matters section of the audit report (Auditing and Assurance Standards Board 2021). In Premier Investments Limited, the principal audit concerns are the carrying value of intangible assets, the presence and valuation of inventories, and leases. The audit report details the company's strategy for addressing important audit concerns and describes how the auditor adjusted his methods to verify the information in response to these issues.

The auditor has determined that Premier Investments Limited's financial report for 2021 has no serious misstatements, resulting in an unmodified or unqualified audit opinion.

References

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Accounting Professional & Ethical Standards Board, 2018. APES 110 Code of Ethics for Professional Accountants (including Independence Standards). [ebook] Available at: <https://apesb.org.au/uploads/home/02112018000152_APES_110_Restructured_Code_Nov_2018.pdf> [Accessed 25 April 2022].

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Auditing and Assurance Standards Board, 2020. Auditing Standard ASA 706 Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor's Report. [ebook] Available at: <https://www.auasb.gov.au/admin/file/content102/c3/ASA_706_Compiled_2020.pdf> [Accessed 25 April 2022].

Auditing and Assurance Standards Board, 2021. Auditing Standard ASA 700 Forming an Opinion and Reporting on a Financial Report. [ebook] Available at: <https://auasb.gov.au/media/da0clvbr/asa_700_12_21.pdf> [Accessed 19 April 2022].

Auditing and Assurance Standards Board, 2021. Auditing Standard ASA 701 Communicating Key Audit Matters in the Independent Auditor’s Report. [ebook] Available at: <https://www.auasb.gov.au/media/mrrj5uuh/asa_701_12_21.pdf> [Accessed 25 April 2022].

Australian Securities Exchange, 2022. ASX Listing Rules. [online] Australian Securities Exchange. Available at: <https://www2.asx.com.au/about/regulation/rules-guidance-notes-and-waivers/asx-listing-rules-guidance-notes-and-waivers> [Accessed 25 April 2022].

Commonwealth Consolidated Acts, 2022. CORPORATIONS ACT 2001. [online] Commonwealth Consolidated Acts. Available at: <https://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/> [Accessed 25 April 2022].

Ibisworld.com, 2022. IBISWorld - Industry Market Research, Reports, and Statistics. [online] Ibisworld.com. Available at: <https://www.ibisworld.com/au/company/premier-investments-limited/28172/#:~:text=Premier%20Investments%20Limited%20is%20a,head%20office%20in%20Melbourne%2C%20Victoria.> [Accessed 25 April 2022].

Legislation.gov.au, 2018. Fair Work Act 2009. [online] Legislation.gov.au. Available at: <https://www.legislation.gov.au/Details/C2018C00512> [Accessed 25 April 2022].

Premier Investments Limited, 2021. Annual Report 2021. [ebook] Available at: <https://www.premierinvestments.com.au/wp-content/uploads/2021/10/Premier-Investments-Limited-Annual-Report-July-2021.pdf> [Accessed 25 April 2022].

Premier Investments, 2022. Our Company - Premier Investments. [online] Premier Investments. Available at: <https://www.premierinvestments.com.au/about-us/> [Accessed 25 April 2022].