2014 - AnnualReports.com independent auditor’s report ... £299.7m 2014 2013 2012 £299.7 m...

2014A NNUA L REPOR T & F IN A NCIA L S TAT EMEN TS

NICOL E K IDM A N S TA RRING IN T HE PRE-FA L L 2 014 A DV ER TISING

CONTENTS

OVERVIE W

STR ATEGIC REPORT15 HIGHLIGHTS18 CHAIRMAN’S STATEMENT21 OUR MARKE T22 BUSINESS MODEL26 STRATEGIC FRAME WORK28 CHIEF E XECUTIVE’S RE VIE W32 F INANCIAL RE VIE W35 SUSTAINABLE BUSINESS36 OUR PEOPLE38 RISK MANAGEMENT

GOVERNANCE4 4 THE BOARD OF DIRECTORS48 CORPORATE GOVERNANCE REPORT54 AUDIT AND RISK COMMIT TEE REPORT58 REMUNERATION AND NOMINATIONS COMMIT TEE REPORT74 DIRECTORS’ REPORT

FINANCIAL STATEMENTS79 INDEPENDENT AUDITOR’S REPORT 81 CONSOLIDATED INCOME STATEMENT82 CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME83 CONSOLIDATED STATEMENT OF F INANCIAL POSIT ION84 CONSOLIDATED STATEMENT OF CHANGES IN EQUIT Y85 CONSOLIDATED STATEMENT OF CASH FLOWS86 NOTES TO THE CONSOLIDATED F INANCIAL STATEMENTS118 COMPANY STATEMENT OF F INANCIAL POSIT ION119 NOTES TO THE COMPANY F INANCIAL STATEMENTS123 CORPORATE INFORMATION

A 21ST CENTURY LUXURY ACCESSORIES BRAND WITH

SHOES AT ITS HEART, OFFERING AN EMPOWERED SENSE OF LUXURY AND A PLAYFULLY

DARING SPIRIT

JIMMY CHOO

ICONIC, POWERFUL BRANDA LUXURY BRAND, WITH UNIQUE DNA,

OFFERING AN EMPOWERED SENSE OF GL AMOUR AND PL AYFULLY

DARING SPIRIT

SEE PAGE 24

LUXURY SHOES

ATTRACTIVE MARKET SEGMENT

ONE OF THE FASTEST GROWING SEGMENTS OF THE WIDER

LUXURY MARKET, WHERE SPECIALISTS ARE OUTPERFORMING

SEE PAGE 21

BUSINESS MODEL

WELL INVESTED, SCALED FOR GROW TH

JIMMY CHOO HAS THE MERCHANDISING, DESIGN, SUPPLY CHAIN, COMMUNICATION AND

RETAIL SKILLS AND HAS SIGNIFICANTLY INVESTED ACROSS THE PL ATFORM TO OUTPERFORM

BY SUPERIOR EXECUTION

SEE PAGE 2 2

K IT H A RRINGTON S TA RRING IN T HE AU T UMN W IN T ER 2 014 A DV ER TISING

FINANCIAL PERFORMANCE

A PROVEN TRACK RECORDCONSISTENTLY DELIVERING STRONG

TOP-LINE GROW TH. SUCCESSFUL BUSINESS MODEL NOW SCALED AND EMBARKING ON

THE NEX T PHASE OF GROW TH AND MARGIN EXPANSION

SEE PAGE 3 2

THE FUTURE

REVENUE GROW TH AHEAD OF THE MARKET AND

MARGIN EXPANSIONGROW TH IS BEING PURSUED WITHOUT

ANY COMPROMISE TO BRAND EXCLUSIVIT Y

SEE PAGE 2 8

LIVE THE LIFE YOU DARE

STRATEGICREPORT

JIMM Y CHOO PL C A NNUA L REPOR T & F IN A NCIA L S TAT EMEN TS 2 014S T R AT EGIC REPOR T

15

HIGHLIGHTS

• MADE TO ORDER OFFER LIFTS LUXURY EXPERIENCE

• ROLL OUT OF THE NEW STORE CONCEPT

• STRONG RESULTS OF CHOO.08° SINCE LAUNCH

• MEN’S CONTINUES TO BE OUR FASTEST GROWING CATEGORY

• MARIE CLAIRE’S PRIX D’EXCELLENCE DE LA MODE AWARD

• RATED AS “GIFTED” BY L2

• SUCCESSFUL IPO IN VOLATILE MARKETS

• REVENUE +12.2% AT CONSTANT CURRENCY1 TO £299.7M

• STRONG RETAIL GROWTH SUPPORTED BY LIKE FOR LIKE GROWTH2 OF 5.7% AND A NET NINE NEW DOS

• ADJUSTED EBITDA3 MARGIN INCREASED TO 16.8%

• ADJUSTED EBIT4 OF £35.4M AND ADJUSTED EBT5 OF £28.3M

• 92.2% EBITDA CASH CONVERSION

• CLOSING NET DEBT OF £125.6M

RE VENUE ( Y E A R TO 31 DECEMBER)

£299.7M

2 014

2 013

2 012

£ 2 9 9 .7M

£ 2 81.5 M

£ 24 3 .0 M

ADJUSTED EBITDA3 ( Y E A R TO 31 DECEMBER)

£50.2M

2 014

2 013

2 012

£ 5 0 .2 M

£4 6 .9 M

£4 6 .1M

ADJUSTED EPS 6 ( Y E A R TO 31 DECEMBER)

6.1P

2 014

2 013

2 012

6 .1P

5 .6 P

4 .0 P

1 Constant currency revenue growth is calculated by applying the exchange rates for the year ended 31 December 2014 to the year ended 31 December 2013 on a month by month basis and calculating the growth percentage by reference to the total year.

2 Like for like sales growth (“LFL”) is calculated by taking retail sales in all locations where trading occurred for a full financial year prior to the start of the period being measured and calculating sales growth for those locations at constant currency.

3 Adjusted EBITDA is defined as operating profit for the year adjusted for exceptional costs, loss on disposal of property, plant and equipment and intangible assets, depreciation and amortisation charges and realised and unrealised foreign exchange gains and losses on the revaluation of monetary items.

4 Adjusted EBIT is defined as operating profit for the year adjusted for exceptional costs, share of the result of associates and joint ventures and realised and unrealised foreign exchange gains and losses on the revaluation of monetary items.

5 Adjusted EBT is defined as loss before tax for the year adjusted for exceptional costs, interest on the shareholder credit facility, foreign exchange gains and losses on the revaluation of external bank facilities, changes in the fair value of forward foreign exchange contracts used to manage exposure to foreign currency gains and losses arising on the Euro denominated portion of its external bank facilities and the accelerated amortisation of capitalised debt costs.

6 Adjusted EPS is calculated as Adjusted consolidated net income7 divided by 377,786,469 shares.

7 Adjusted consolidated net income is defined as loss for the period adjusted for exceptional costs, deferred tax, interest on the shareholder credit facility, foreign exchange gains and losses on the revaluation of external bank facilities, changes in the fair value of forward foreign exchange contracts used to manage exposure to foreign currency gains and losses arising on the Euro denominated portion of its external bank facilities and the accelerated amortisation of capitalised debt costs.


16

RE TAIL

£192.9M£177.4 M 2 013

OTHER

£7.2M£ 6.4 M 2 013

WHOLESALE

£99.6M£ 97.7M 2 013

RE VENUE BY SEGMENT

TOTAL RE VENUE(YE AR TO 31 DECEMBER)

£299.7M£ 2 81.5 M 2 013

AT A GLANCE

RE VENUE BY DESTINATION

SHOES REMAIN AT THE HE ART OF THE BUSINESST HREE QUA R T ERS OF RE V ENUE

2014 2013

EMEA 132.4 126.4USA 99.8 99.2Japan 32.7 30.0Asia (excluding Japan) 34.8 25.9


17

36

215

AMERICAS

44

23

293EME A

2 26

13

JAPAN

19

2929

ASIA

GROWING GLOBAL DISTRIBUTION PLATFORM

E VOLUTION OF THE RE TAIL PL ATFORMNE W S TORE CONCEP T ROL LOU T

NET NEW DOS

9PLANNED OPENINGS PER YEAR

10–15DOS IN NEW STORE CONCEPT

15PLANNED REFURBISHMENTS PER YEAR

10–15

MAP LEGEND

DOS1

F R A NCHISE

MULTIBR A ND

1 Directly Operated Stores

NE W DOS GROW THIn line with recent years, Jimmy Choo plans to open 10 to 15 new stores per year. This store opening programme is weighted towards China, where we have historically been underpenetrated relative to many of our larger luxury peers. This store opening rate allows us to capture the growth potential of the white space while ensuring the quality of execution maintains the luxury positioning and brand image of Jimmy Choo.

NE W STORE CONCEP TJimmy Choo’s retail portfolio has had a similar store design approach and materials since 1996. Jimmy Choo debuted a new store concept in 2014, developed with David Collins Studio and inspired by haute couture salons and fantasy shoe closets. This refreshes the look and feel of our stores, emphasises our luxury positioning and presents the fashion driven products in more space, while retaining the higher product densities in the key Choo 24:7 collection. The new concept integrates the dual gender product portfolio, helping with penetration of the men’s collection globally.

E XISTING DOS RENOVATIONIn addition to the new store roll-out programme, Jimmy Choo plans to refurbish 10 to 15 existing stores each year in the new store concept. This renovation programme is weighted towards our earliest markets of the US and Europe. While we have only recently opened the small number of renovated stores, the initial results are very positive and indicate that renovated stores in the new store concept outperform existing stores by a noticeable margin.

FL AGSHIP PROGR AMMEIn addition to our boutiques and concessions we are planning 10 flagship stores which are designed to be a more full expression of the Jimmy Choo brand in key locations. The New Bond Street and Beverly Hills flagship stores have already reopened. Future flagship stores are envisaged for New York, Milan, London, Paris, Hong Kong, Tokyo, Shanghai and Beijing, with the programme complete by the end of 2017. The creation of these flagships will not entail increasing our number of DOS in any city, as it will be achieved by conversion and expansion of space in five existing stores and relocation to expanded space in five other locations.


18

CHAIRMAN’S STATEMENT

WE ARE PROUD TO WELCOME OUR NEW SHAREHOLDERS WITH A YEAR

OF PROFITABLE GROWTHPETER HARF

CHAIRMAN OF THE BOARD


19

2014 has been a major year in the development of Jimmy Choo. We have continued to grow the business, with revenue increasing 12.2% at constant currency through the creation of new exciting collections, opening new stores and driving like for like sales growth through our robust business. In addition to growing the business, we launched Jimmy Choo PLC on the London Stock Exchange in October 2014. We welcome our new shareholders to our first annual report as a public company and look forward to partnering with you in the years to come.

HISTORY & STRENGTHSJimmy Choo is a 21st century accessories brand with shoes at its heart, with a focus on glamour, style authority, craftsmanship, luxury positioning and a distinctive iconic brand.

Jimmy Choo’s journey started in 1996 from an entrepreneurial start-up partnership, where a combination of the shoes of Mr. Jimmy Choo, OBE and the drive and inspiration of Tamara Mellon, OBE, created a luxury footwear phenomenon. They opened the first store in 1996, in Motcomb Street in London SW1, and sold 3,000 pairs of the first ready-to-wear shoe collection, with Mr. Jimmy Choo’s niece, Sandra Choi, serving as the company’s Creative Director, a role she still holds today.

In 1998, Jimmy Choo opened its first boutique in New York City, followed by Los Angeles. Jimmy Choo became an innovator in Hollywood, being the first accessory brand to offer award nominees and presenters customised shoes for their red carpet appearances. The brand’s presence on the red carpet helped to create a global following and to make it a favoured brand among celebrities, supermodels and royalty.

Throughout its history, Jimmy Choo has been identified by the media as a key element of the fashion zeitgeist, with prominence in films and television such as “Sex and the City” in 1999, “The Devil Wears Prada” in 2006 and the Korean show “My Love from the Star” in 2013.

There followed a sustained period of strong retail expansion supported by private equity ownership. In 2011, when JAB Luxury GmbH (“JAB Luxury”) acquired Jimmy Choo, we had a vision of a long term continued growth strategy built upon the amazing brand and people in the business, underpinned by significant new investment in systems and processes.

JAB Luxury recognised Jimmy Choo as a world class brand, operating in an attractive market, with a strong design, merchandising, production and distribution platform, supported by a 360 degree communication programme.

Luxury shoes are an incredibly complex category, with a range of functions (pumps, boots, sandals, wedges, sneakers) each at various heel heights, each in a number of colours and materials and each in a range of sizes. This complexity means that in order to grow beyond a certain point, systems and processes need to be sophisticated and scalable, which requires significant investment behind the scenes. Taking Jimmy Choo out of private equity hands in 2011 provided the environment for that core investment to commence.

In order to position Jimmy Choo for the next stage of development, significant investment has been undertaken to restructure and strengthen the business, including talent management and in systems and logistics. Jimmy Choo has been able to finance this investment through inherently strong cash flow and improvements in underlying margin. Whilst these investments have resulted in an increase in operating costs and reduced reported operating margin in recent years, we believe that they have provided the business with the requisite scale and operating leverage to generate significant profit growth into the future.

This investment phase is nearing completion and we look forward to the new systems backbone not only supporting long term growth in what is a complex category, but also enabling us to move to an omnichannel model in the near term. In addition, the regional offices in New York, Tokyo, Hong Kong, Beijing, Paris and Milan provide the distribution network with the support and drive to grow the global footprint profitably.

IPOJAB Luxury have invested in the Jimmy Choo business for the long term. While JAB Luxury intend to remain majority shareholders of the business for the foreseeable future, we believe that bringing outside investors in and exposing the company to public scrutiny ensures the best governance to drive long term growth and helps to promote the brand and incentivise the team.

OPENING T HE LONDON S TOCK E XCH A NGE 2 2 OC TOBER 2 014

Continuing the journey of the company, we therefore launched Jimmy Choo PLC on the London Stock Exchange on 22 October 2014 (“Admission”). It was a time of turmoil in the markets, with the FTSE 100 falling by 9% over the marketing period. However, we were looking for long term partners in the future of Jimmy Choo, and the investors we met recognised that the fundamentals of the business behind the Jimmy Choo brand are strong. As a result, we priced the IPO within the original price range, despite the fluctuations of the wider market. We are very pleased with the calibre of the investors who have joined us in owning Jimmy Choo PLC.


20

OVERVIE W OF RESULTSWe are very pleased with the strong performance of the business in 2014. Revenue increased by 12.2% on a constant currency basis and 6.4% on a reported basis. Our well invested business demonstrated its operational gearing potential, with adjusted EBITDA growing by 7.2% to £50.2m and adjusted EBT growing by 19.8% to £28.3m.

BOARD COMPOSITIONIn order to support our CEO Pierre Denis, our CFO Jonathan Sinclair and the senior management team in running the day to day operations of the company, we have brought together an international Board of Directors with extensive experience of running public companies in a global environment. Between us, we have experience of luxury goods, retail and consumer goods from small cap to global large cap companies. We believe that by using that wealth of experience to help monitor and guide the path of the management of the company, we will ensure that the growth Jimmy Choo has produced to date will continue for the foreseeable future. On 5 March 2015, Judith Sprieser informed me that she had decided to step down from the Board for personal reasons unrelated to the Company. We are grateful to Judith for the input and support she has provided to the Company since the IPO in October. We are sad to see her leave the Board, but understand her reasons for making this decision and we fully support her. Please see page 46 for an introduction to the high calibre individuals who have joined Pierre, Jonathan and me on the Board.

CHAIRMAN’S STATEMENTCONTINUED

GOVERNANCEWe believe that good corporate governance is the key to good businesses continuing to grow profitably for the long term.

The Board is mindful of the need to protect and promote the interests of the Company’s new minority investors. We believe the Board and its Committees, with the addition of the independent Non-Executive Directors (Gianluca Brozzetti, David Poulter and Bob Singer) provide the appropriate corporate governance balance in light of the interests of both the majority shareholder and new minority shareholders. The Audit and Risk Committee consists solely of independent directors and the Board has also established a Conflicts Committee to help manage the relationship between the Company and our majority shareholder.

OUTLOOKWe continue to pursue our overall growth strategy of focussing on the design of high quality collections which resonate with our clients and growth in the retail business through like for like growth and opening additional stores with a focus on Asia ex-Japan and Japan.

We are rolling out 10 to 15 new DOS, with a focus on China, and renovating 10 to 15 of our existing portfolio of DOS in the new store concept. Japan and Asia ex-Japan continue to grow well, while EMEA remains impacted by a reduction in Russian travellers. We continue to see outperformance by stores in the new store concept.

We remain focused on executing our growth strategy and pursuing growth without compromising our brand or its luxury position, despite the more challenging macroeconomic environment.


21

OUR MARKET

LUXURY SHOE MARKE T GROW THLuxury shoes are a fast-growing segment of the luxury market with an estimated sales compound growth rate from 2008 to 2013 of 10%, compared to the luxury market excluding shoes which had a compound growth rate of 5% over the same period.

We believe that the strong historical growth experienced in the luxury shoe market is a result of a number of factors.

OP TIMAL GATE WAYShoes are available at a psychologically accessible price. This makes them an optimal gateway into the luxury market, compared to many other luxury goods.

ACCESSORISATIONOver recent years, consumers have been buying ready-to-wear apparel from high street retailers and then upgrading their wardrobe with luxury shoes, bags and other accessories.

ACCESSORISATIONJIMM Y CHOO SHOES, BAG, HIGH S T REE T OU T F IT

FOCUS OF RE TAILERS ON LUXURY SHOESLuxury brands and multibrand retailers have both increased their focus on shoes in recent years and, as a consequence, many department stores have considerably expanded their shoe floors.

MULTIBR AND FOCUS ON SHOESH A RRODS SHOE HE AV EN

INCRE ASING PARTICIPATION OF MEN IN LUXURYIt has widely been noted in the media that men are becoming more hedonistic and opinionated on fashion matters and that, over recent years, there has been an increasing trend for male clients to purchase luxury fashion goods for themselves. We believe that the male segments of the luxury goods market, in particular luxury shoes, are under-represented by leading luxury brands. Luxury fashion companies are beginning to address this opportunity, with some market participants launching men only stores as well as expanding their product offering for men, including shoes.

MEN’S LUXURY SHOESK IT H A RRINGTON IN JIMM Y CHOO MEN’S AU T UMN W IN T ER 2 014 A DV ER TISING

LUXURY SHOE SPECIALIST BR ANDSLuxury shoes have outperformed the general luxury market in recent years. Luxury shoe specialist brands have outperformed the luxury shoe market. We believe that luxury shoe specialist brands experienced compound revenue growth from 2008 to 2012 of 13% compared to 9% for the luxury shoe market as a whole. During this same period, Jimmy Choo delivered reported compound revenue growth of 22%.

The luxury shoe business is very complex, with a variety of sizes, heel heights, materials and colours. Successfully mastering this complexity requires a constant and dedicated focus. We believe luxury shoe specialist brands, like Jimmy Choo, are strongly positioned to offer this.

We believe that the increase in market share by luxury shoe specialist brands from 41% in 2008 to 44% in 2012, is a result of, amongst other things, the fragmented nature of the market. As a result of this fragmentation, there remains significant scope for luxury shoe specialist brands like Jimmy Choo to continue outperforming the luxury shoe market as a whole.

LUXURY SHOE MARKE T RESIL IENCEWe believe that the luxury shoe market is one of the more resilient segments of the luxury goods market. During the global financial crisis of 2008 and 2009, luxury shoes sales decreased 4%, compared to a total market decrease of 8%. Over this same period, Jimmy Choo revenue increased by 2%.


22

DEDICATED AND E XPERIENCEDMANAGEMENT TE AM

LUXURYPRODUC T OFFERING

BESPOKE SUPPLY CHAINFOR PRODUC T E XCELLENCE

MULTICHANNELDISTRIBUTION MODEL

LE ADING DESIGNTE AM THAT DRIVES

PRODUC T AUTHORIT Y

3 6 0 º COMMUNICATIONSTR ATEGY FUEL S

THE BR AND

MERCHANDISINGE XCELLENCE

BUSINESS MODEL


23

CONTINUATIVE SE ASONAL

CHOO 24:7 FASHION• THE “PERFECT WARDROBE” OF SHOES,

AVAILABLE CONTINUALLY• REFRESHED SEASONALLY WITH FASHION

COLOURS, MATERIALS, STYLES AND HEELS• LOW MARKDOWN• QUICKER REPLENISHMENT• STABLE BUSINESS• BETTER MARGINS

• INSTINCTIVELY SEDUCTIVE• COSMOPOLITAN

BALANCE OF STABILITY AND BRAND DEVELOPMENT

CHOO.0 8°• ROCK/EDGY• LONDON FEEL

WEEKEND• COOL• RELAXED FEEL

Jimmy Choo has the merchandising, design, supply chain, communication and retail skills and assets to outperform in this attractive and complex category by superior execution. Jimmy Choo has a strong position in the luxury shoe market, being one of a very small number of luxury shoe specialist brands with the requisite scale to compete globally.

DEDICATED AND E XPERIENCED MANAGEMENTThe Group is run by a passionate and experienced senior management team with a degree of focus on execution which we believe can only be achieved by a pure play luxury goods company.

The Group has appointed a highly experienced and dedicated management team, comprising established Jimmy Choo incumbents together with new management who have a long and successful history of working in the luxury goods sector. The management team is led by Pierre Denis, CEO, who joined Jimmy Choo in 2012 with more than 25 years of experience in the luxury industry and a deep knowledge of Asian markets.

LE ADING DESIGN TE AM THAT DRIVES PRODUC T AUTHORIT YJimmy Choo’s design team of twelve is led by Sandra Choi, who has been Creative Director for the Group since its inception. Jimmy Choo’s design team has a proven track record of developing Sandra’s conceptual visions into beautiful products multiple times each year through a structured process encompassing line plans, designs, prototypes, edits and pre-launch samples.

SANDR A CHOISOL E CRE ATIV E DIREC TOR

Jimmy Choo’s design team is at the forefront of the industry in terms of its ability to interpret fashion trends. This provides clients with a very broad product range that addresses all categories and functions of the luxury shoe offering, including evening, day, catwalk and boots, and the full spectrum of client tastes.

MERCHANDISING E XCELLENCEJimmy Choo’s merchandising model is designed to nourish the brand through innovation and drive footfall through timely delivery of fashion-forward products, underpinned by a continuative core of iconic products which are continuously reviewed and refreshed. The product calendar is managed to create a structured flow of new products into our DOS and multibrand networks which drives editorial focus, footfall and conversion into sales. The calendar is based around multiple collection drops per year, with the continuative core Choo 24:7 collection complementing the seasonal offerings.

Designing successful collections and managing the complexity of multiple collection drops each year relies upon the seamless interaction, integration and cooperation between Jimmy Choo’s merchandising, design, supply chain, brand communication and distribution teams. The success of this collaboration is shown in Jimmy Choo’s track record of offering a considerable depth and breadth in its collections, in terms of functions, heel heights, materials, sizes and colours. We have been able to leverage our expertise to replicate this model across our accessory offering.

BESPOKE SUPPLY CHAIN FOR PRODUC T E XCELLENCEJimmy Choo operates a lean and flexible supply chain outsourcing production and logistics to gain flexibility and speed in bringing products to market. Those elements which protect the brand are owned and managed by Jimmy Choo, including quality, vendor liaison and product development which are managed through Studio Luxury S.r.l., which was acquired by Jimmy Choo on 5 August 2014. Jimmy Choo produces over one million units per annum in its supply chain. Materials research and sourcing, product development, engineering, production planning and control, quality assurance, as well as customer service and after sales are all controlled by Jimmy Choo.

In order to produce luxury shoes with a high quality finish, Jimmy Choo partners with suppliers with the specific skill sets to match each particular shoe style. Accordingly, Jimmy Choo’s products are produced by specialists in the Florence and Veneto regions of Italy, with the exception of espadrilles, which are made in Spain. In addition to providing specialist skills, this multi-supplier strategy provides scalability, flexibility and speed to market, as well as diversifying risk. This model enables the Group to drive gross margin improvement through early deliveries of new collections and inventory control resulting in lower markdowns.

Jimmy Choo’s online infrastructure was re-launched in November 2013, with a new flexible and powerful platform to enable the roll out of online sites in new countries while retaining a core backbone to deliver excellent customer service. The Jimmy Choo online store represents Jimmy Choo’s largest single DOS within the retail segment.


24

OUR BUSINESS MODELCONTINUED

ICONIC POWERFUL BRAND, WITH UNIQUE DNA

CONFIDENT

F UL LY SEL F -AC T UA L ISED A ND REL ISHING T HE SUCCESS

INSTINC TIVELY SEDUC TIVE

T HE RIGH T SIDE OF SE X Y, W IT H A N INS TINC TIV E

F ER A L N AT URE

EFFORTLESSLY GL AMOUROUS

GL A MOUROUS, LUMINOUS, CH A RISM ATIC

DARING

PROVOCATIV E RISK TA K ER W HO UNDERS TA NDS T HE RUL ES BU T IS

UN A F R AID TO CH A L L ENGE

COSMOPOLITAN

A NE W LU XURY F OR T HE NE W WORL D, MULTI-CULT UR A L

A ND RE-APPROPRIAT ED

PL AYFUL

JOY F UL , E X T ROV ER T ED A ND DA RING


25

More importantly, our online presence provides a powerful route to engage with new potential clients and for clients to begin a purchase process which may be completed in one of Jimmy Choo’s boutiques. As Jimmy Choo invests in supply chain infrastructure to move towards an integrated omnichannel model, the online platform will increase the integration within the retail channel.

We expect to benefit from our systems and logistics investment, which includes: continued development of the online platform, new point of sales infrastructure, a new centralised warehouse, SAP implementation and product lifecycle management, many of which are already in place and virtually all of which have become operational with the opening of our Swiss warehouse in March 2015. These new investments will significantly enhance service and product availability, streamline inventory management and improve our operating margin.

3 6 0° COMMUNICATION STR ATEGY FUEL S THE BR ANDJimmy Choo’s status as a globally recognised luxury brand is a result of our entrepreneurial and dynamic approach to brand communication. The Group applies an all encompassing brand communication strategy which includes celebrity placement, editorial and digital influencer engagement, product advertising, launch events and store layout and display.

We adopt this approach to all our new product launches and our success has resulted in Jimmy Choo currently being the top ranked brand globally in editorial for luxury women’s shoes. We have gained 10.7 million social media followers as of 31 December 2014; and, attained recognition globally through high-profile product placements, most notably in “Sex and the City” in 1999 and more recently in the Korean series “My Love from the Star” which has elevated the brand significantly throughout Asia.

MY LOVE FROM THE STARA N T HR ACIT E GL IT T ER A BEL PUMP F E AT URED IN T HE SHOW

Jimmy Choo’s brand communication spend has significantly increased over the last three years. This has positioned the Group alongside our larger luxury brand peers and is a level of spend as a proportion of revenue which is within appropriate parameters for a leading luxury shoe brand.

DISTRIBUTIONJimmy Choo has successful and effective distribution networks with significant opportunity for expansion. In addition, Jimmy Choo benefits from having a balanced multichannel distribution network with our retail DOS network at the core.

Jimmy Choo has a particularly strong presence in EMEA, USA and Japan, with a growing footprint in the rest of Asia. The Group has experienced strong growth in recent years across all of these markets. 2014 has been a particularly transformational year for our DOS network, as we launched our new store concept, continued the store roll-out programme and began a comprehensive renovation programme of our existing portfolio. By the end of 2014, we had 125 DOS, of which 15 were in the new store concept. See page 17 for the progress we have made in our retail network.

As part of our DOS strategy, the Group has invested significantly in our online platform, which has experienced strong revenue growth in recent years. This investment, together with the broader investments in the supply chain, is expected to result in the Group being able to provide an omnichannel client offering in the medium term.

The Group continues to benefit from our strong multibrand distribution offering, which provides attractive economics and acts as a lead indicator of collection success and a benchmark against competitors. The Group’s franchise channel acts as an important entry model into new markets. These serve as a potential springboard to expanding the DOS network once the new region has become established. This has already been demonstrated by successful joint venture (“JV”) and franchise buyouts in Japan, Hong Kong and China between 2011 and 2013.

JIMMYCHOO.COMONL INE PL AT F ORM


26

STRATEGIC FRAMEWORK

Our goal is to pursue growth without compromising Jimmy Choo’s brand. This is achieved by successful product collections driving positive like for like sales, opening new DOS, and expansion in Asia and selected new markets.

Shoes are at the heart of Jimmy Choo and will remain the core offering. Shoes represent three quarters of revenue, which we do not expect to change substantially. Jimmy Choo is a specialist luxury shoe company focused on growing our relationship with our customers and clients. Growth will always be pursued within the context of protecting the Jimmy Choo brand identity and luxury positioning. We believe that Jimmy Choo’s unique brand DNA and experienced design team will enable us to continue to deliver collections that resonate strongly with our clients.

We aim to deliver earnings growth and returns through focusing on growth ahead of the market and margin expansion, together with good cash flow conversion.

RE VENUE GROW THRevenue growth is supported by the store opening programme, through which the Group plans to open 10 to 15 stores per year, as well as the rollout of the recently introduced new store concept across the estate. In addition to our DOS expansion plans, we intend to pursue growth through our multibrand, franchise and JV channels. All of these are important for Jimmy Choo’s business model as they provide access to new markets.

Our aim is to grow towards a regional mix more in line with the wider luxury market through growth in Asia and selected new markets, while maintaining our presence in EMEA and USA. Jimmy Choo’s revenue growth strategy is focused around the following key pillars:

• Market outperformance: we believe that Jimmy Choo’s client insight, design approach and systems that it has developed as a specialist will enable us to outperform the wider luxury market. Jimmy Choo has the right specialist resource, knowhow, skills and people to excel in this attractive and complex category.

• Like for like growth: through continued strong performance of our collections and investment in our DOS network, with selected openings, relocations and new store concept renovations in Jimmy Choo’s existing developed markets of Europe, USA and Japan.

• Retail led growth driven by: – door growth opportunity: expansion of DOS in Greater China,

where Jimmy Choo is currently under-represented compared to our peers, and potential franchise buyouts and JVs in incumbent fast growing markets, including the Middle East, South Korea, Singapore and Malaysia. It is expected that half to two-thirds of Jimmy Choo’s DOS development will be in China each year.

– Online: the Group will continue our investment in online which has proved to be one of the key elements of growth in the current environment. Recent investments into the supply chain and systems upgrades are expected to position the Group to participate in the growth of the global online trade, and provide an omnichannel distribution offering in the medium term.

• Wholesale entry: explore potential franchise opportunities in new markets where Jimmy Choo currently has a limited presence, particularly in Latin America and Eastern Europe, alongside continued development of our existing business.

MARGIN E XPANSIONThe revenue growth initiatives described above, together with increased control over distribution, are designed to drive margin improvement in the business. The opex impact of the investment in systems and logistics is now complete and the business is scaled for growth. Direct costs will grow broadly in line with retail revenue and indirect costs will grow slower than overall revenue. The new systems and logistics investment will help the management team to improve inventory efficiency, thereby reducing markdowns and increasing cash flow.


27

OBJEC TIVES PERFORMANCE INTENTIONS

LIKE FOR L IKE SALES GROW THMid single digit like for like growth

LIKE FOR L IKE AT CONSTANT CURRENCY

5.7% 2 014

2 013

2 012

5 .7%

7.1%

6 .1%

• Collection-led growth• New store concept• Merchandising excellence

RE VENUE GROW THConstant currency revenue growth ahead of the market

RE VENUE GROW TH AT CONSTANT CURRENCY

12.2% 2 014

2 013

2 012

12 .2 %

15 .6 %

17.1%

• Like for like growth• 10 to 15 new DOS per annum• Distribution growth in Asia, the

Middle East and Latin America

ADJUSTED EBITDA MARGINOperational gearing to provide modest Adjusted EBITDA margin growth

ADJUSTED EBITDA AS % OF RE VENUE

16.8% 2 014

2 013

2 012

16 .8 %

16 .6 %

19 .0 %

• Impact of investment in systems and processes complete

• Direct costs growth in line with retail revenue

• Brand communication broadly maintained as % of revenue

• Indirect costs growth slower than revenue

RE TAIL LED GROW THRetail revenue as percentage of total revenue to increase over time

RE TAIL AS % OF RE VENUE

64.4% 2 014

2 013

2 012

6 4 . 4%

6 3 .0 %

6 2 .6 %

• Opening 10 to 15 DOS per year• Forming JVs with franchise

partners• Renovations of existing DOS


28

CHIEF EXECUTIVE’S REVIEW

OUR UNIQUE BRAND AND PLATFORM INVESTED FOR GROWTH ARE HELPING

JIMMY CHOO TO OUTPERFORM THE MARKET FOR THE LONG TERM

PIERRE DENISJIMMY CHOO CEO


29

This has been a year of great progress for the Group from a financial, strategic and operational perspective.

In what has been a challenging year for the industry, Jimmy Choo has performed strongly in 2014, with double digit revenue growth at constant currency driven by a mix of like for like growth from strong product authority and retail excellence, new store openings with a focus on China and continued growth in partnership with our wholesale customers. Revenue grew by 12.2% on a constant currency basis (6.4% on a reported currency basis) to £299.7m in 2014, driven by strong performance in both ladies’ and men’s shoes. Adjusted EBITDA margin grew to 16.8% despite significant currency headwinds, demonstrating the operating leverage of the business.

PRODUC TSOur focus on shoes and dedication to product quality has ensured we continued to produce innovative products which resonate strongly with our clients around the world.

As a luxury accessories brand, design and quality is everything. The brand positioning is nurtured and the DNA is expressed through the products we design and produce. 2014 was a strong year for us from a design perspective. The resonance of our collections with our clients is apparent in achieving revenue growth ahead of the market. We also received external validation of this at Paris Fashion Week in 2014, where Sandra Choi and Jimmy Choo won Marie Claire’s Prix d’Excellence de la Mode Award for best shoe collection.

Shoes continue to be at the heart of the brand, representing three quarters of the business. In accessories, evening bags and small leather goods (“SLG”) continued to perform well.

CHOO 24:7The iconic Choo 24:7 collection which forms the Jimmy Choo woman’s perfect wardrobe of shoes underpins our business, forming roughly half of our shoe sales. The balance between our continuative and seasonal collections is one of the key elements of our merchandising strategy. We introduced new colours and fabrics in our iconic shoe styles in line with the seasonal collections. This maintains the cohesion of our seasonal look and feel and introduces newness into the continuative collection.

CHOO.0 8°In 2014, we launched a new collection called CHOO.08°, creating a cohesive collection based around boots and sneakers with a cool London feel. While many of the product elements of CHOO.08° were already in our Fashion and Weekend collections, bringing them together into a single collection allows us to present the biker cool and daring side of the brand DNA in a cohesive way, with tailored advertising and events. The response to CHOO.08° has been very positive, especially with our Asian and European clients.

MADE TO ORDERIn order to enhance the luxury positioning of the brand and create a more bespoke offering for our clients, we launched Made To Order shoes in 2014. Clients can have a pair of shoes made, choosing from a range of designs and heel heights, fabric colour or skin and personalise them with their initials on the sole.

Made to Order was originally offered in selected stores from early in the year. Subsequently, the enhanced online platform has allowed us to roll the Made to Order service out across the retail website, providing a much wider footprint.

JIMMYCHOO.COMONL INE M A DE TO ORDER POR TA L

VICESIn addition to our usual seasonal collections, Creative Director Sandra Choi produced an exciting limited edition capsule collection with contemporary artist Mat Collishaw. The collection united Sandra Choi’s personal fascination with jewels with an exploration of themes of envy, seduction and the irrepressible yearning for objects of beauty.

MENMen’s continued to be our strongest growth category, representing 5% of revenue. We launched the first ever shoe fashion show in 2014, building upon the remarkable growth of the men’s luxury shoe market and showcasing our fashion forward credentials in the space. The event was a great success, with Kit Harrington, Tinie Tempah and Jack Guinness amongst the guests.

In addition, we launched Jimmy Choo Man, our first male fragrance, with our partners InterParfums SA. The fragrance has performed well above our expectations, further demonstrating the appeal of the brand image in the rapidly expanding men’s luxury space.


30

CHIEF EXECUTIVE’S REVIEWCONTINUED

COLLECTION INSPIRATION IN 2014THROUGHOUT THE YE AR,

WE L AUNCH SE ASONAL COLLEC TIONS IN L INE WITH THE INTERNATIONAL

FASHION CALENDAR.

KEY HIGHLIGHTS IN 2014 WERE:

CRUISE 2 015ENERGY. MOV EMEN T. S T RENGT H. POW ER. A REDEF INED A ES T HE TIC EMERGES F OR JIMM Y CHOO CRUISE 2 015 , W IT H TODAY ’S AC TIV E A ND MODERN WOM A N PL AY ING T HE ROL E AS MUSE .

PRE-FALL 2 014SPE A K ING TO T HE EDGY SPIRIT OF T HE BR A ND W IT H S T Y L ES T H AT RE V ERBER AT E W IT H ROCK CHIC INCLUDING BOOTS A ND BROGUES W IT H BUCK L E DE TAIL S A ND DIS T RESSED F INISHES.

SPRING SUMMER 2 014N AT URE UNL E ASHED, W IT H T HE MODERN JUNGL E AS T HE INSPIR ATION F OR T HE COL L EC TION.

AUTUMN WINTER 2 014A N E X PRESSION OF LUS T, DESIRE , PASSION A ND ROM A NCE , E X PERIMEN TING W IT H NE W PROPOR TIONS W HIL S T REM AINING F OCUSED ON A REF INED CU T, SH APE A ND F ORM.


31

DISTRIBUTIONWe launched a new store concept, developed with David Collins Studio and inspired by haute couture salons and fantasy shoe closets. This refreshes the look and feel of our stores, emphasises the luxury positioning of the brand and presents the fashion driven products in more space, while retaining the higher product densities in the key Choo 24:7 collection. Client response has been very positive.

NE W STORE CONCEP TNE W BOND S T REE T

We continued to drive our retail channel expansion, with a net nine new DOS opened in the period. The focus of our retail expansion remains in Asia, where we are under-represented relative to our luxury peers.

RENOVATIONS AND RELOCATIONS2 014

NE W DOS2 014

In addition, we began to renovate our existing store portfolio in the new store concept. We began with our Beverly Hills flagship, which reopened in early 2014 and completed 14 stores in the new concept by the end of the year. While it is still early days, we are greatly encouraged by the results to date, with the newly renovated stores consistently outperforming the rest of the portfolio.

The reopening of our New Bond Street global flagship was a highlight of the year. Now covering three floors, the New Bond Street Townhouse gives us the space to present the fullest expression of the Jimmy Choo brand.

We intend to continue the renovation programme, with 10 to 15 renovations per annum in addition to the new store openings, all of which will be in the new store concept.

ASIAN GROW TH OPPORTUNIT YOur growth potential in Asia was one of the opportunities which initially attracted me to Jimmy Choo. The luxury market in China has been driven by a relatively small number of global brands with broad product offerings. Women’s luxury shoes was not a large player in this initial wave of luxury consumption, focusing more on gifting items purchased by largely male clients. What we have seen in the last few years is a shift towards non-logo brands purchased by affluent women for their own consumption.

In order to capitalise upon this opportunity, we have focused our Chinese growth strategy by buying out our franchise partner in 2012, opening Jimmy Choo offices in Hong Kong and Shanghai in order to manage the operations in the region effectively and introducing focused brand communication messages tailored for the Chinese market.

As with “Sex in the City” in the nineties and the “Devil Wears Prada” in the following decade, Jimmy Choo’s style and product authority continues to catch the fashion zeitgeist. Our products were featured in a 2013 storyline of “My Love From the Star”, a popular television series in Korea. Korean media has an incredible influence on the Asian region as a whole and China in particular, and this alongside the focused brand communication in the region has transformed our Chinese brand awareness. The shoe featured in the story line has been a global best seller and continues to outstrip our expectations.

The focused strategy in the region has been successful, with very strong growth rates in our stores on the ground in China and travelling Chinese becoming our second largest travelling client group, behind Russians.

ASIAN GROW TH R ATES2 014 AT REPOR T ED CURRENCY

GLOBA L

JAPA N

ASIA E X- JAPA N

6. 4%

8 .8 %

3 4 .5 %

There is a much larger growth opportunity for Jimmy Choo in China and the wider Asian region, where we remain underpenetrated relative to much of the wider luxury market. This includes Japan, which remains one of our fastest growing regions. We plan to continue to open the majority of our new stores each year in China. We have changed franchise partners in Korea, and intend to begin the process of forming a JV there in the coming year. This, alongside further JVs in Singapore and Malaysia, will allow us to focus and drive our growth in the region as we have done in Japan and China.

INVESTMENT IN SYSTEMS AND PROCESSESDuring the year we consolidated jimmychoo.com on our new platform, increasing our flexibility and ability to leverage our online sales platform as we move towards an omnichannel model. The improvements made to the online platform and our digital communication resulted in L2Digital rating Jimmy Choo as “Gifted” in 2014, which underlines the preparations we are making for the future development of omnichannel. We also continued to implement SAP in our regional operations and began the roll out of elements of Product Lifecycle Management (“PLM”), to bring together everything from initial sketches and materials research through to prototyping, orders, production and reorders into a single system.

2015 will continue this transformation programme, with the near final stage of the SAP roll-out and moving into the central global distribution centre in Switzerland. This will represent a key stage in the development of our omnichannel capability. We plan to be initiating trials of the first stages of omnichannel delivery in 2016.

I would like to take the opportunity to thank all of our stakeholders for their contribution to this year’s strong results. I would especially like to thank our employees across the business for their hard work in this transformational year.


32

FINANCIAL REVIEW

REVENUE GROWTH AHEAD OF THE MARKET AND NET PROFIT GROWTH AHEAD OF REVENUE DEMONSTRATE THE STRONG

FUNDAMENTALS OF THE BUSINESSJONATHAN SINCL AIR

CFO & E VP BUSINESS OPER ATIONS OF JIMMY CHOO


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£M 2014 2013

Revenue 299.7 281.5Gross margin (%) 61.8% 62.3%Selling and distribution expenses (83.0) (73.4)Brand communication expenses (14.1) (16.9)Overheads (37.9) (38.2)Adjusted EBITDA 50.2 46.9Adjusted EBITDA as % of net revenues 16.8% 16.6%Adjusted EBIT 35.4 35.0Adjusted EBT 28.3 23.6Adjusted consolidated net income 22.9 21.0Adjusted EPS (pence) 6.1 5.6

Unless otherwise stated, all figures and growth rates in the following commentary exclude the impact of adjusting items. For a reconciliation of adjusted performance measures to statutory figures, please see note 28 to the financial statements.

RE VENUE

£M 2014 % 2013 %

Retail 192.9 64.4% 177.4 63.0%Wholesale 99.6 33.2% 97.7 34.7%Other 7.2 2.4% 6.4 2.3%

Total 299.7 100.0% 281.5 100.0%

Revenue increased by 6.4%, or 12.2% on a constant currency basis, with continued growth across all segments. Retail grew ahead of wholesale, in line with our previously stated strategic aim of retail led growth and for 2014 represented just over 64.4% of revenue.

In 2014 retail revenue grew by 8.8% to £192.9m as a result of like for like growth of 5.7% and the addition of a net nine new DOS, half of which were opened in China. In constant currency terms, retail revenue grew by 15.4% in 2014. Like for like sales were also positively impacted by the roll out of the new store concept, with 10 existing stores refurbished or relocated in the year and a total of 14 stores trading in the new concept at the year end. The early indications from the refurbishments undertaken in the year are that the new store concept helps to drive noticeably improved like for like sales.

Our wholesale business also performed well, although growth was held back by adverse movements in the US dollar exchange rate against sterling during the year, as a significant proportion of our wholesale accounts are denominated in US dollars. In constant currency terms, wholesale revenue grew by 6.3% during 2014, compared to 1.9% at reported rates. On an underlying basis we saw organic growth within existing key wholesale accounts as well as the opening of a further 8 franchise stores.

Asia remains our strongest growth region. Asia ex-Japan grew by 34.5%, with strong acceptance of our collections and increasing brand penetration driving like for like sales growth supported by our continued build out of new stores. Despite the extent of the devaluation of the Yen, our Japanese business grew by 8.8%, with a strong response to the launch of CHOO.08º. Growth in these was further stimulated by the interest generated in Jimmy Choo from the Korean soap “My Love from the Star”. EMEA grew by 4.7%, despite

reduced activity by travelling clients, as the marked currency shifts impacted behaviour and travel restrictions on Russians reduced foot fall offset by growth in travelling Chinese clients. Americas performed in line with expectations, up 0.6% despite currency headwind for most of the year and a number of temporary store closures as we began to roll out the new store concept.

Other revenues were positively impacted this year by the launch of Jimmy Choo Man, our first men’s fragrance, which was very well received following its launch in August 2014 and has outstripped expectations consistently since launch.

At a product level we continued to see volume growth in both shoes and accessories, with shoes representing approximately three quarters of revenue for the year. Men’s remains the fastest growing category and represents around 5% of revenue.

GROSS MARGINGross margin continued to improve on an underlying basis from increased buying volumes and the favourable shift in channel mix in the year. However this was impacted by strong currency headwinds for most of the year, especially in relation to adverse movements in the US dollar, Euro and Japanese exchange rates against sterling. As a result reported gross margin reduced from 62.3% in 2013 to 61.8% in 2014.

COSTSOverall, total costs charged in arriving at Adjusted EBITDA increased by 5.1% in 2014, compared to a 6.4% growth in total revenue in the same period.

Selling and distribution expenses increased by £9.6m (13.1%) in 2014, reflecting the impact of the addition of new stores and the variable costs incurred in connection with the operation of the Group’s website. Retail costs were also negatively impacted by £0.8m of increased costs during the refurbishments of the New Bond Street and Beverly Hills flagship locations. We also incurred £0.4m of costs in relation to stores due to open in subsequent years. Excluding these two elements costs rose by 11.4% in 2014 compared to the previous year.

Brand communication benefitted from the achievement of significant economies of scale having insourced our media production. We also grew our media presence and were ranked consistently as number 1 in global editorial ranking for luxury shoes. In addition we were ranked as “Gifted” for our digital presence by the digital agency L2 with our social presence being rated “Genius”. We launched Kit Harrington as our key male personality which coincided with our first catwalk show in London in June 2014. All of this was achieved with spend just under 4.7% of revenue and £2.8m (16.6%) lower expenditure than the previous year.

Overheads for 2014 were £37.9m, down 0.8% or £0.3m compared to the prior year, reflecting tight cost control now that the replatforming of the business is largely complete and savings due to movements in foreign exchange rates. As a percentage of revenue, overheads fell from 13.6% in 2013 to 12.6% in 2014.

Exceptional costs of £13.0m (2013: £6.0m) were incurred during the year, of which £7.8m (2013: £nil) were IPO related costs. The remaining exceptional costs included replatforming costs of £3.6m (2013: £3.4m) and acquisition and integration costs of £1.6m (2013: £2.6m). Refer to note 5 of the financial statements for additional detail.


34

FINANCIAL REVIEWCONTINUED

PROFITS AND E ARNINGSIn 2014 Adjusted EBITDA grew by £3.4m or 7.2% compared to the prior year, with Adjusted EBITDA margin increasing from 16.6% to 16.8%. This represents a strong result for the Group in a year which saw significant foreign exchange headwind and is clear evidence that one of the Group’s strategic financial goals, the widening of EBITDA margins, is already being delivered.

Depreciation and amortisation increased from £11.8m in 2013 to £14.9m in 2014, an increase of £3.1m or 26.3% as a result of the investment in new stores, refurbishment of flagship stores and improvements to the Group’s information systems. Depreciation rose from 54.0% to 54.8% of capital expenditure in 2014 compared to the previous year.

In 2014 Adjusted EBIT grew more modestly than Adjusted EBITDA, as expected, increasing by 0.9% compared to the prior year as a result of the additional depreciation and amortisation charges described above.

Adjusted EBT for the year was £28.3m (2013: £23.6m). In addition to the growth in Adjusted EBIT described above we realised a net gain on realised and unrealised foreign exchange of £1.8m (2013: net loss of £4.0m) and financing charges of £8.8m (2013: £7.5m). The increased financing charges in the year represented the fair value of the open currency swaps at the year end, excluding which financing charges fell by £4.5m or 38.4% in 2014 compared to the previous year.

Adjusted consolidated net income for the year was £22.9m compared to £21.0m in the preceding period, generating Adjusted EPS of 6.1 pence per share in 2014 (2013: 5.6 pence).

CASH FLOW

£M 2014 2013

Adjusted EBITDA 50.2 46.9Adjusted operating cash flow1 46.3 45.7Cash conversion2 92.2% 97.4%Exceptional costs (13.0) (6.0)Tax paid (5.5) –Net financing payments (5.3) (8.4)Capital expenditure (27.2) (21.7)Acquisitions 0.6 (0.8)Free operating cash flow (4.1) 8.8

1 Adjusted operating cash flow is defined as Adjusted EBITDA plus/minus non-cash charges in respect of share-based payments, realised and unrealised foreign exchange gains and losses on the revaluation of monetary items and working capital. Working capital is defined as the sum of changes in trade and other receivables, inventories, trade and other payables and provisions.

2 Cash conversion is defined as Adjusted operating cash flow (as defined above) divided by Adjusted EBITDA.

Cash conversion decreased from 97.4% of Adjusted EBITDA in 2013 to 92.2% of Adjusted EBITDA in 2014, largely as a result of the investment in working capital during the year as we have built inventory to support the expansion of the store portfolio.

Free operating cash flow decreased from an inflow of £8.8m in 2013 to an outflow of £4.1m largely due to the impact of exceptional payments associated with the IPO.

NE T DEBT

£M1 JANUARY

2014CASH

MOVEMENTSNON-CASH

MOVEMENTS31 DECEMBER

2014

Current borrowings (5.8) 0.6 (7.4) (12.6)Non-current borrowings (134.2) 2.0 7.7 (124.5)Shareholder loan (460.5) – 460.5 –Other debt (2.2) 1.6 0.1 (0.5)Gross debt (602.7) 4.2 460.9 (137.6)

Cash and cash equivalents 20.3 (8.3) – 12.0

Net debt (582.4) (125.6)

Net debt reduced from £582.4m at 31 December 2013 to £125.6m at 31 December 2014 following the conversion of the shareholder credit facility from JAB Luxury to equity in October 2014 prior to IPO.

Excluding the impact of the conversion of the shareholder credit facility, net debt increased from £121.9m to £125.6m, principally due to the timing of drawdowns on the revolving credit facility to fund IPO related costs. As at 31 December 2014 we had drawn down £5.5m on the revolving credit facility (2013: £nil). During 2014 we prepaid £13.3m in respect of our term loans, made net drawings of £5.5m on the capital expenditure facility and repaid other debt of £1.7m.

BAL ANCE SHEE TDuring the year, total assets increased by £26.1m to £759.0m at 31 December 2014. Non-current assets increased by £15.2m to £647.7m due to an increase of £11.8m in tangible fixed assets as a result of investment in new stores and the replatforming of the Group’s information systems. Additional deferred tax assets of £3.1m were recognised in the year in respect of share based payments and the sale of inventory between Group entities. Current assets increased by £10.9m to £111.3m primarily due to an increase in inventory and trade receivables, offset by a lower cash balance.

Total liabilities reduced by £443.7m to £314.8m at 31 December 2014. Non-current liabilities decreased by £458.9m to £199.5m as a result of the conversion of the £460.5m shareholder credit facility (carrying value as at 31 December 2013) to equity prior to IPO in October 2014. In addition we made prepayments of £13.3m against our non-current term loans during the year. This was partially offset by the acquisition of own shares from JAB Luxury by the Jimmy Choo PLC Employee Benefit Trust during the year. The consideration for the shares, £16.7m, will fall due for payment when awards to employees vest in accordance with the terms of the share awards. Current liabilities increased by £15.1m to £115.3m at 31 December 2014, mainly due to an increase in trade and other payables.


35

SUSTAINABLE BUSINESS

Jimmy Choo’s Board, Senior Management and employees recognise the importance of reducing our impact on the environment and increasing our positive social impact both in the regions in which we operate and in a wider global context. Sustainability has always been part of our thinking and we have implemented a wide variety of sustainability initiatives at a local level. We are always thinking about how we can create a more sustainable business and to this end we have started to create a global sustainability strategy and policy. We look forward to exploring how we can make further changes and leverage our existing sustainability initiatives across the business.

CHARITABLE AC TIVIT YJimmy Choo has a rich history of innovation, not only in design but in its collaborations with artists and charities. Jimmy Choo adopts a policy of working with local charities in markets where this is established practice and undertakes frequent charity events in which a portion of the sales are donated to a local charity. These events, particularly in the USA, allow Jimmy Choo to connect with the community and deliver on our values of contributing to the communities which it serves. Total donations in 2014 to charities amounted to £0.2m.

THE JIMMY CHOO FOUNDATIONIn 2011 we launched The Jimmy Choo Foundation (the “Foundation”), a non-profit charitable trust that empowers women through education to enhance livelihoods. The Foundation was established following the ideals of the Jimmy Choo brand which has through history striven to offer women the confidence and optimism to dream and achieve. The Foundation focuses on building confidence and independence through education and economic opportunity. To date, the Foundation has raised funds from the sale of Jimmy Choo’s Icons collection and The Jimmy Choo XV Book. The Trustees of the Foundation are Pierre Denis, Sandra Choi, Jonathan Sinclair and Hannah Merritt.

ENVIRONMENT Jimmy Choo has a commitment to meeting high environmental standards in its operations and throughout its supply chain. Jimmy Choo ensures that all of the sourcing of materials is done in a way to limit the impact on biodiversity and animal welfare. We comply with the Washington Convention on International Trade in Endangered Species of Wild Fauna and Flora (“CITES”), which aims to regulate the trade of specimens of endangered animals and plants by monitoring their exportation, re-exportation, importation, transit, transhipment or possession.

CARBON FOOTPRINT In 2014, Jimmy Choo had its carbon footprint independently measured for the first time by Deloitte. This enabled Jimmy Choo to identify areas of risk and prioritise areas on which to focus carbon reduction efforts. Over the next 12 months, Jimmy Choo will be building on the activities which today centre on 93 energy reduction initiatives already in place across its operations. In due course, we will establish a global energy management programme.

GREENHOUSE GAS EMISSION STATEMENTThe GHG Protocol categorises Greenhouse Gas (“GHG”) emissions into three broad scopes:

• Scope 1: All direct GHG emissions• Scope 2: Indirect emissions from consumption of purchased

electricity, heat or steam.• Scope 3: Other indirect emissions

Jimmy Choo has chosen to use an intensity ratio measure based upon emissions per £m of revenue in order to put the GHG intensity in context for the size of the business.

2014

(tCO2e) (tCO2e/£M)

Scope 1Fuel combustion 58 0.20

Scope 2Purchased electricity 3,069 10.26

Statutory Total (Scope 1 and 2 Emissions) 3,127 10.46

In addition to the statutorily required Scope 1&2 disclosure, Jimmy Choo has voluntarily analysed the Scope 3 emissions where it has the ability to influence them.Scope 3Upstream Scope 3 emissions 1,954 6.53

Total Emissions 5,081 16.99

Note:tCO2e is an abbreviation of ‘tonnes of carbon dioxide equivalent’ and is the internationally recognised measure of greenhouse gas emissions.

Jimmy Choo applies an operational control approach to defining its organisational boundaries. Data is reported for sites where it is considered that Jimmy Choo has the ability to influence energy management. Data is not reported for sites where Jimmy Choo has a physical presence, but does not influence the energy management for those sites, such as a concession within a department store.

We use the Greenhouse Gas Protocol (revised edition, 2004) and ISO 14064-1 (2006) to estimate emissions and apply conversion factors from Defra, UK Government conversion factors for Company Reporting (2014). All material sources of emissions are reported.

ENGAGEMENT AND REPORTING In order to challenge and enhance its sustainable operation goals, we will consider which industry sustainability working groups would be appropriate for us to join. We presently meet all mandatory reporting requirements and will enhance this disclosure in 2015 with a discussion of how we have changed over the year.

SOCIAL Jimmy Choo is committed to improving working conditions for workers both under its direct operations and across its value chain. The majority of Jimmy Choo’s products are made in Europe, and in particular Italy, where factories and tanneries are subject to mandatory legislative requirements. Jimmy Choo already expects its suppliers and sub-suppliers to include clauses combatting child labour in their contracts.

In the unlikely event that Jimmy Choo identifies working conditions which do not meet its minimum standards, the Group will work closely with suppliers to improve their performance. Over the next 12 months, Jimmy Choo expects to formalise its policy on human rights and working conditions and will continue to increase the amount of supplier engagement activities.


36

OUR PEOPLE

JIMMY CHOO IS A DYNAMIC COMMUNITY OF HIGHLY SKILLED PEOPLE

THAT HAVE BEEN BROUGHT TOGETHER AROUND A UNIQUE BRAND THAT WE

FEEL PASSIONATELY ABOUT

CRE ATING A DIVERSE COMMUNIT YWe believe that businesses thrive from the sharing of knowledge and experiences. In order to make the most of the cross fertilisation of ideas, we employ people from a diverse range of professional and cultural backgrounds not only because it is the right thing to do, but also because it enhances our work environment and strengthens our ability to nurture and grow the business.

The Group is committed to a policy of treating all of its employees and job applicants equally. No employee or potential employee will receive less favourable treatment or consideration on the grounds of race, colour, nationality, ethnic origin, religion or belief, sex, gender reassignment, sexual orientation, age, marital status, civil partnership status, or disability or will be disadvantaged by any conditions of employment or requirements of the Company that cannot be justified as necessary on operational grounds.

FROM BOARD MEMBERS, TO PEOPLE WORKING IN DESIGN, F INANCE, MERCHANDISING, COMMUNICATION, LEGAL , AF TERSALES, HR, STORE PL ANNING, REGIONAL MANAGERS TO SALES ASSOCIATES IN STORE, WE

ARE ALL WORKING TOWARDS A SHARED VISION, WHICH FORMS THE CORE OF OUR PEOPLE STR ATEGY

HERITAGEOUR PAS T

We respect our entrepreneurial heritage and never forget that our brand began in a humble shop – offering extraordinary service, design and quality.

CRE ATIVIT YOUR L IF EBLOOD

We lead through our creativity whether in designing beautiful product or improving service to our stakeholders.

CULTUREOUR PASSION

We thrive on talent and passion. We are a great place for smart people with an urgent passion to build the brand and serve the customer.

CUSTOMER FOCUSOUR JUDGE

There is one version of the truth – the customer is our judge and jury.

TE AMWORKOUR PEOPL E

No one person or team can do it alone. The brand is bigger than any individual. We challenge, align and show a united front.

INTEGRIT YOUR VA LUES

We are always proud of what we do and how we treat each other. We have high ethical standards – and give back to the communities we serve.


37

We have a comprehensive diversity policy which ensures that everyone who works at one of our workplaces, whether they are directly employed by Jimmy Choo or not, is protected from direct and indirect discrimination, harassment or victimisation, whether deliberate or accidental. In addition, we commit to ensuring that the work environment is suitable for our employees to carry out their duties, with adjustments to equipment, location and working practices where necessary.

We have put policies in place to ensure that the recruitment process is free from bias and that equal work receives equal pay.

• There should be no discrimination on account of race, colour, nationality, ethnic origin, religion or belief, sex, gender reassignment, sexual orientation, age, marital status, civil partnership status, or disability.

• The Group will appoint, train, develop and promote on the basis of merit and capability.

• All employees have personal responsibility for the practical application of the Group’s equal opportunity policy, which extends to the treatment of employees and clients.

• Special responsibility for the practical application of the company’s equal opportunity policy falls upon all managers and supervisors involved in the recruitment, selection, promotion and training of employees.

• The Group’s grievance procedure is available to any employee who believes that he/she may have been unfairly treated.

• Disciplinary action is taken against any employee who is found to have committed an act of unlawful discrimination. Discriminatory conduct will be treated as gross misconduct and may lead to summary dismissal.

INVOLVING OUR PEOPLE IN THE BUSINESSWe want all of our employees to be part of Jimmy Choo’s success. This means not only excelling in their particular role, but also taking an interest in and influencing outcomes across the business. We do this through active two way communication, training, individual recognition and variable rewards linked to corporate results.

COMMUNICATIONOur internal communication strategy is designed to ensure that the strategic framework and value creation architecture of the board is well understood by all employees. We keep employees up to date on the medium term plans for how we aim to achieve those goals, as well as on the day to day progress of the business.

The Executive Directors present the strategic plan for the year annually to all corporate employees and managers within the retail business. This is supported by regular communication in relation to organisational changes in the business and sales data relevant to each employee’s region and responsibilities. This regular update serves to introduce new colleagues as well as provide information on how we are performing against the strategic framework towards which we are all working.

Jimmy Choo is a dynamic environment and it is important to ensure that the views of our employees are taken into account as we change and grow. We therefore consult at local, regional and global levels at an early stage where any changes may impact our employees. This process is supported by a clear open door policy with our HR team and a transparent approach, where appropriate, in the business. All employees are encouraged to come forward with ideas and concerns. This consultation has positive results for the long term growth of the business, such as the introduction of new management training specifically designed to help our employees develop into the senior managers of tomorrow.

PROMOTION A ND T R AININGIn order to help our employees to grow within the business, training is offered throughout Jimmy Choo. Training and development does not stop because someone is pregnant or has childcare responsibilities. We never assume that such employees are not interested in promotion.

We offer training appropriate to each employee’s current responsibilities as well as those they need to progress within the business to achieve their potential. Training is organised by the company and with external providers at Jimmy Choo’s expense.

Overall, we employed 1,035 people as at 31 December 2014. Of those, 77% (797) were female and 23% (238) were male. Of our ten member Executive Management Team, 50% (5) are female and 50% (5) are male.

Last year, 87% of those attending our newly introduced transition to management and people management training were female. The introduction of this training was in response to extensive consultation at many levels in the company, identifying skills gaps and underlying latent demand. This demonstrates how our business is working to ensure everyone has the opportunity to be leaders of the business.

VA RIA BL E AWA RDSAll employees are incentivised with an element of variable compensation linked to metrics relevant to their role and function. At retail, this is largely linked to sales commission, whereas in the corporate side of the business, the variable component of pay is linked to a mix of metrics relating to the company’s overall performance and their particular role and function. This blended approach promotes the ethos that everyone at Jimmy Choo is responsible not only for their own role but working together to promote the whole business within the strategic framework.

VA LUES AWA RDSWe invite managers to nominate members of their teams annually to be recognised in front of their peers as people who have achieved something exceptional and acted as a role model for our Company “Values”.


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RISK MANAGEMENT

RISK DESCRIPTION MITIGATING ACTION

STR ATEGIC RISKS

GROW TH STR ATEGY Jimmy Choo’s long term growth is dependent on making strategic moves into new territories, channels, and products. The wrong strategy or poor implementation could put future growth at risk.

The Board has approved well-structured growth plans and ensured they are adequately resourced.

The Board regularly challenges the strategic plans to ensure downside risks are mitigated.

The Board closely monitors the progress against the strategic plan, redirecting strategy or implementation effort when required.

COMPE TITIVE ENVIRONMENT

Jimmy Choo competes with other luxury goods companies for end clients, talent, retail sites, wholesale customer accounts and supplier capacity. Failure to compete well in any of these areas risks future growth.

Senior Management monitors competitor movements and ensures Jimmy Choo hires and retains top staff to stay ahead of the competition in each area – including:

• Design and Merchandising staying ahead of future design and consumer trends;

• Supply Chain negotiating and building strong relationships with current and future suppliers;

• Retail acquiring top sites in new areas; and• Wholesale nurturing strong relationships with

key customers.CHANGES IN CONSUMER PREFERENCES AND TRENDS

Future success depends on Jimmy Choo’s ability to shape, predict and respond to fashion trends and consumer preferences on both products and channels. Failure to do so risks surplus inventories, missed sales opportunities and a reducing salience of the brand with clients.

Design and Merchandising teams have a structured approach to monitoring trends internally and externally and use the feedback to develop each collection to stay ahead of future design and consumer trends.

Retail teams monitor consumer channel preferences.

Marketing and Brand Image teams ensure the brand book and marketing are aligned and relevant to the market place.

OPER ATIONAL RISKS

KE Y PERSONNEL Jimmy Choo needs to attract and retain the best people in each area.

HR policies and management culture are reviewed regularly to ensure they continue to be effective in keeping Jimmy Choo as an attractive place to work.

Bonuses and incentive plans are reviewed regularly to ensure they remain competitive with the industry.

THIRD PART Y PRODUC TION

If suppliers do not produce product on time, to the right quality levels, or fail to meet local laws and regulations, this would constrain the availability of stock in stores and for delivery to our wholesale customers. If Jimmy Choo requires production beyond current capacity this risks constraining growth.

Jimmy Choo has dedicated supply chain and quality assurance offices, close to where the suppliers are located. This helps to build strong relationships with suppliers and manages those suppliers tightly to production deadlines and contracts.

To ensure supplier availability, Jimmy Choo plans volume and capacity clearly in advance.

Jimmy Choo maintains knowledge of supplier capability on an on-going basis to determine where constraints could arise in future.

The Board is responsible for identifying the nature and extent of the risks the Group has to manage in order to successfully pursue its growth strategy and generate shareholder value over the long term. The Board uses a risk framework which is designed to support the process for identifying, evaluating and managing both financial and non-financial risks.

The Group has identified the following key risks. This is not an exhaustive list but rather a list of the most material risks facing the Group. The impact of these risks, individually or collectively, could potentially affect the ability of the Group to operate profitably and generate positive cash flows in the medium to long term. As a result these risks are actively monitored and managed, as detailed below.


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IT SYSTEMS Critical data losses or delays in operations if Jimmy Choo’s IT systems are not robust against power outages; computer, network and telecommunications failures; computer viruses; security breaches and user errors could interrupt the business operations.

Senior management reviews the IT strategy and operations plan regularly to ensure IT systems continue to be appropriate for the size and complexity of Jimmy Choo’s business.

In addition, Jimmy Choo maintains a disaster recovery plan.

OUTSOURCING SERVICES TO GLOBAL BUSINESS SERVICES (“GBS”)

Logistics, IT and transactional accounting activities are outsourced to the JAB Luxury’s shared services company, LLX Global Business Services SA (“GBS”). Reductions in GBS performance risk impacting Jimmy Choo’s operations and reductions in GBS efficiency would lead to increased costs for Jimmy Choo.

Legal contracts and service catalogues have been signed between Jimmy Choo and GBS. Both parties are committed to improving the KPIs over time.

Performance is monitored on a daily basis and reported to senior managers monthly.

A clear remediation process is in place if required.PROGR AMME RISK Interruption or reduced performance during

implementation of the operational transformation programme would impact current operations. If the scope of transformation reduced, future development plans of the business would be put at risk.

Senior management have put in place a strong programme management team and structure in Jimmy Choo, linking project delivery teams (from GBS) to key staff in the Jimmy Choo business.

A clear programme structure, planning processes, reporting framework and communication plan have been put in place and are regularly monitored.

Senior management are prepared to enact decisions and actions quickly as required to ensure the programme is implemented successfully.

COMPLIANCE RISKS

COMPLIANCE WITH L AWS AND REGUL ATIONS

Changes in laws and regulations could result in Jimmy Choo being non-compliant or incurring costs to be compliant (e.g. system changes). If third parties (e.g. suppliers) are not compliant, there would be a risk to brand image or of financial penalties.

Employees in each area monitor regulatory requirements in their area (e.g. Design, Merchandising and Supply Chain on consumer product safety; Retail on health and safety in stores; Supply Chain and Logistics on import and export requirements).

The Jimmy Choo legal team liaise with these teams, provide an overall review and act swiftly should instances of non-compliance arise.

CUSTOMER CONFIDENTIALIT Y

Failure to comply with restrictions on the use of customer data could harm Jimmy Choo’s brand reputation and credibility and level of customer trust.

The new CRM system which has been implemented with the roll-out of SAP has been designed to handle customer information securely.

The Chief Information Security Officer within GBS undertakes regular PCI audits.

FINANCIAL RISKS

E XCHANGE R ATE FLUC TUATIONS

Products are purchased in euro and sold in local currencies. In addition, our DOS costs are incurred in local currencies. Adverse movements in foreign exchange rates would impact revenue growth reported in sterling, as well as gross and net margins.

The Board has approved a hedging strategy to minimise impact of exchange rate fluctuations.


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RISK MANAGEMENTCONTINUED


ECONOMIC DOWNTURN AND INTERNATIONAL MARKE T RISK

Economic downturns in countries where Jimmy Choo sells products may reduce sales and increase inventory.

Changes in international trade laws, transportation costs, or local government instability could all impact financial results.

Economic environment and international market risks are regularly reviewed by senior management, with appropriate action taken as required (e.g. reallocation of product or resources between regions and active management of inventory).

REPUTATIONAL RISK

IMAGE AND REPUTATION OF BR AND

If Jimmy Choo’s products, stores, marketing, customer service and corporate profile fail to retain the distinctive Jimmy Choo character, quality and values, brand equity could be reduced and sales impacted.

Brand quality is placed at the core of everything the business does.

This ensures close management by all areas of business concerned to retain reputation (e.g. design of products, quality of marketing, store environment and client service).

Jimmy Choo’s contracts with licensees are drafted to ensure retention of control of the brand and are rigorously enforced.

CONTROL OF WHOLESALE DISTRIBUTION CHANNEL

Third party multibrand and franchisee stores could present the brand in a manner not in keeping with Jimmy Choo’s brand positioning and DNA, damaging the brand.

Senior management review distribution partners in advance of accepting them as a Jimmy Choo partner.

Jimmy Choo’s contracts with distribution partners are drafted to ensure control of elements of the brand presentation and are rigorously enforced.

GOVERNANCE

JIMM Y CHOO PL C A NNUA L REPOR T & F IN A NCIA L S TAT EMEN TS 2 014GOV ERN A NCE

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WE BELIEVE THAT BRINGING OUTSIDE INVESTORS IN AND EXPOSING

THE COMPANY TO PUBLIC SCRUTINY ENSURES THE BEST GOVERNANCE TO

DRIVE LONG TERM GROWTHPETER HARF

CHAIRMAN OF JIMMY CHOO PLC


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BOARD OF DIRECTORS

01 0 2 0 3 0 4

01 BOB SINGER 0 2 FABIO FUSCO 0 3 BART BECHT 0 4 PIERRE DENIS 0 5 PE TER HARF 0 6 JONATHAN SINCL AIR

0 7 OLIVIER GOUDE T 0 8 DAVID POULTER 0 9 GIANLUCA BROZ ZE T TI


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0 5 0 6 0 7 0 8 0 9


46

BOARD OF DIRECTORS CONTINUED

PE TER HARF NON-E XECUTIVE CHAIRMANMr. Harf was named the Non-Executive Chairman of the Company in September 2014. Mr. Harf joined Joh. A. Benckiser SE in 1981, serving the company in a variety of capacities, including Chairman and Chief Executive Officer since 1988. Mr. Harf is a JAB Holding Partner. Mr. Harf is currently a Board member of Peet’s Coffee & Tea, Inc., a premier specialty coffee and tea company; a Board member of D.E Master Blenders 1753 B.V. (“DEMB 1753”), the world’s leading pure play coffee and tea company; the Chairman of JAB Luxury; a Director, and former Chairman, of Coty Inc., a global leader in beauty; and the Deputy Chairman of Reckitt Benckiser Group PLC, a leading global fast moving consumer goods company operating in the health, hygiene and home care categories – a position he has held since 1999. Mr. Harf has previously been the Chairman of Anheuser-Busch InBev, the world’s largest brewer, from 2002 to April 2012, and served on the Board of Burger King Holdings, Inc, the world’s second largest fast food hamburger restaurant, from 2010 through 2011. He is also a co-founder and Executive Chairman of Delete Blood Cancer DKMS, Tübingen, Germany, the largest institution of its kind.

PIERRE DENIS CHIEF E XECUTIVE OFFICERMr. Denis was named CEO of Jimmy Choo in July 2012. Mr. Denis brings extensive experience in the global luxury fashion industry and joined Jimmy Choo from John Galliano, where he also held the position of CEO. Mr. Denis began his career in perfume and cosmetics and joined LVMH, the diversified luxury goods group, in 1992. In 1999, he was appointed Managing Director, Asia Pacific for Parfums Christian Dior; in addition, he took over managing the Dior Couture Asian business in 2004. In 2006, Mr. Denis moved back to his native Paris to serve as Managing Director for Christian Dior Couture in Europe, the Middle East and India. After joining John Galliano in 2008, Mr. Denis successfully managed the business side of operations, developing the John Galliano and contemporary Galliano lines, and expanding the licensing business. Mr. Denis is a graduate of ESSEC Paris and is based in the London head office of Jimmy Choo.

JONATHAN SINCL AIR CHIEF F INANCIAL OFFICER AND E XECUTIVE VICE PRESIDENT (BUSINESS OPER ATIONSMr. Sinclair was named Chief Financial Officer and Executive Vice President (Business Operations) in June 2014, and currently leads the Finance, Legal and Merchandise Planning departments. Mr. Sinclair originally joined Jimmy Choo in 2008 as Chief Operating Officer, overseeing the company’s Finance, Legal, Merchandise Planning, IT and Store Development functions. Mr. Sinclair left Jimmy Choo in 2013 to become Chief Operating Officer at Vertu, the luxury mobile phone designer, before returning to Jimmy Choo in June 2014. Mr. Sinclair is also a Non-Executive Director of LLX Global Business Services SA, a subsidiary of JAB Luxury that provides various services to Jimmy Choo, as well as being a Non-Executive Director at Nottingham Scientific Limited. Mr. Sinclair began his career in finance working for Boots Group PLC, now an international pharmacy-led health and beauty group under the ownership of Alliance Boots, where he spent over 19 years, most recently holding the position of Finance Director of Boots Retail. He subsequently joined Pentland Brands plc, the name behind some of the world’s best sports, outdoor and fashion brands, where he spent five years in a similar capacity. Mr. Sinclair is a graduate of Loughborough University and is based in the London head office of Jimmy Choo.

BART BECHT NON-E XECUTIVE DIREC TORMr. Becht was named a Non-Executive Director of the Company in September 2014. He is currently the Chairman and interim CEO of Coty, Inc., a global leader in beauty; Chairman of DEMB 1753, the world’s leading pure play coffee and tea company; as well as a Board member of Peet’s Coffee & Tea, Inc, a premier specialty coffee and tea company. Mr. Becht is a JAB Holding Partner. Mr. Becht was formerly a Director of ICON Aircraft and Prudential Plc. He was also formerly the CEO of Reckitt Benckiser Group PLC, a leading global fast moving consumer goods company operating in the health, hygiene and home care categories. Mr. Becht was appointed CEO of privately-held Benckiser Household Products in 1995 and took the company public in 1997. Mr. Becht merged Benckiser N.V. with Reckitt & Colman plc in 1999 and became the CEO of the combined entity.


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GIANLUCA BROZ ZE T TI INDEPENDENT NON-E XECUTIVE DIREC TORMr. Brozzetti was named an Independent Non-Executive Director of the Company, with effect from Admission, in September 2014. Mr. Brozzetti started his management career in Rome, in 1980, at Procter & Gamble, one of the world’s largest consumer products companies, where he eventually became Group Marketing Director. In 1985, he became an associate at McKinsey & Co., a global management consulting firm, in Milan. Following that position, he gained over 28 years of executive experience in top luxury and fashion brands. He became the Sales & Marketing Director at Gucci Group, the high fashion, Italian luxury goods house, in Florence in 1986; Executive Director Bulgari Jewels/Watches in Rome in 1987; and then managed the start-up of the Bulgari Fragrance Division in Neuchatel in 1992. Additionally he became the President and Director General at Louis Vuitton Malletier, the French fashion house, in Paris in 1999; the CEO and a shareholder of Asprey & Garrard, the luxury jeweller, in London in 2001; the CEO of Nautor Swan Yachts, the designer and builder of luxury sailing yachts, in Finland in 2007; and the CEO at Roberto Cavalli, the luxury clothing business, in Florence/Milan in 2009, a position he held until February 2014. He was also a Non-Executive Director at William Grant & Sons, the premium spirits company, from 2001 to 2012. Most recently, Mr. Brozzetti was appointed CEO of Buccellati in September 2014.

FABIO FUSCO NON-E XECUTIVE DIREC TORMr. Fusco was named a Non-Executive Director of the Company in September 2014. Mr. Fusco is a JAB Holding Partner, a position he has held since July 2014, and has 20 years of experience in the luxury industry, 10 of which were in executive positions. He has been the JAB Luxury CFO since April 2010, overseeing the set-up and development of JAB’s investment in luxury. He was also the CFO of Bally, the luxury accessories brand, from 2005 to 2010, leading the brand turn-around and the transfer of ownership from TPG to JAB. He was also the CFO of IT Holding, a leader in the production and global distribution of clothing and total look accessories, from 2003 to 2005, overseeing the dismissal of non-strategic assets and the restructuring of the financial debt. Before that he held various positions within IT Holding SpA and Diners Club Europe SpA, a credit card issuer member of Diners Club International Network.

OLIVIER GOUDE T NON-E XECUTIVE DIREC TORMr. Goudet was named a Non-Executive Director of the Company in September 2014. Mr. Goudet is a JAB Holding Partner. He is currently the Chairman of Peet’s Coffee & Tea, Inc., a premier specialty coffee and tea company; a Board member of DEMB 1753, the world’s leading pure play coffee and tea company; a Board member of Coty, Inc., a global leader in beauty; a Board Director of the French governmental agency “Agence Française des Investissements Internationaux”; an independent advisor to the Board of Directors of Mars, Inc., one of the world’s leading food manufacturers; and an Independent Director of Anheuser-Busch InBev, the world’s largest brewer, where he is also the Chairman of the Audit Committee. Additionally, Mr. Goudet was formerly the Executive Vice President and CFO of Mars, Inc., a position he held from 2004 to April 2012.

DAVID POULTER SENIOR INDEPENDENT NON-E XECUTIVE DIREC TORMr. Poulter was named Senior Independent Non-Executive Director (“SID”) of the Company, with effect from Admission, in September 2014. He is currently a Member of the finance committee and investment and pension committee of Save the Children UK and over the last 18 months has supported the directors on the integration of Merlin, another global charity. Mr. Poulter was formerly at Reckitt Benckiser Group PLC, a leading global fast moving consumer goods company operating in the health, hygiene and home care categories, from 1999 to December 2012. His roles included the Head of Internal Audit and ten years as Senior Vice President, Finance for Developing Markets and Europe. Mr. Poulter has also been a Trustee Board Member for large pension schemes, including for Reckitt Benckiser Group PLC from 2009 to January 2013. He is a Chartered Accountant.

BOB SINGER INDEPENDENT NON-E XECUTIVE DIREC TORMr. Singer was named an Independent Non-Executive Director of the Company, with effect from Admission, in September 2014. He is currently a member of the Board of Directors and a member and the Chairman until the end of April 2015 of the Audit Committee of Mead Johnson Nutrition, a global leader in infant nutrition; as well as a member of the Board of Directors and the Chairman of the Audit Committee of Coty, Inc., a global leader in beauty, positions he has held since 2009. He is also a member of the Board of Directors and the Chairman of the Audit Committee of Tiffany and Co., a specialty retailer of jewellery and other accessories, a position he has held since 2012; and, from 2001, an Advisory Council Member of Johns Hopkins University School of Advanced International Studies – Bologna Campus. From 1995 to 2004, Mr. Singer was the CFO and Executive Vice President of Gucci Group N.V., the high fashion, Italian luxury goods house; and, from 2004 to 2005, he was the President, COO and member of the Board of Directors of Abercrombie and Fitch, a branded specialty retailer targeting the youth market. He also was the CEO of Barilla Holdings S.p.A., one of the top Italian food groups, from 2006 to 2009.


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CHAIRMAN’S INTRODUC TION TO GOVERNANCE

DE AR SHAREHOLDERI am pleased to present our first Corporate Governance Report, which describes how the main principles of the UK Corporate Governance Code (the “Code”) have been applied during the year, information about the composition of the Board and its Committees and an overview of Jimmy Choo’s system of internal controls. Jimmy Choo listed its ordinary shares on the main market of the London Stock Exchange on 22 October 2014. The Listing Rules of the Financial Conduct Authority, including the Code, have only therefore applied to the Company since that date. In the months leading up to the listing, the Board implemented a number of measures to comply with the Code which have proven robust and useful in our post-IPO Board and Committee meetings, including the budgeting process for 2015.

Since listing JAB Luxury continues to be the majority shareholder of the Jimmy Choo and the Company represents a significant investment to JAB Luxury. The Board and JAB Luxury are mindful of the need to consider the interests of the Company’s new minority shareholders. The Board believes that the Board and its Committees, with the addition of the new independent Non-Executive Directors will provide the appropriate corporate governance balance in light of the interests of both the majority shareholder and the new minority shareholders. The Audit and Risk Committee consists solely of independent Non-Executive Directors and the Board has also established a Conflicts Committee to help manage the relationship between the Company and its majority shareholder. Further details of these measures are contained within this report.

Under the Relationship Agreement between JAB Luxury and the Company, JAB Luxury is able to appoint up to one half of the Board while it continues to own 50% or more of the Company’s Shares. Further details of the Relationship Agreement can be found on page 51.

The Board believes that there are sufficient safeguards in place in the structures and processes implemented to consider and protect the interests of independent shareholders. The Company does have a number of areas in which it does not fully follow the recommendations of the UK Corporate Governance Code. These are that at least half of the Board of Directors of a UK-listed company, excluding the Chairman, does not comprise Independent Non-Executive Directors and the Board has established a joint Remuneration and Nomination Committee, rather than separate Remuneration and Nomination Committees, which is not made up solely of independent Non-Executive Directors. The Board believes that these departures from the Code are reasonable in the circumstances of Jimmy Choo’s ownership.

Since the Company only recently listed, it is not practicable to expect full compliance with the rest of the provisions of the Code. Accordingly, this report includes a description of how the Company has applied the principles of the Code since 22 October 2014 and how it intends to apply those principles throughout 2015

PE TER HARFCH AIRM A N18 March 2015

CORPORATE GOVERNANCE REPORT

UK CORPOR ATE GOVERNANCE CODE – COMPLIANCE STATEMENT

The Company adopted the UK Corporate Governance Code on 22 October 2014 on admission of its shares to the UKLA’s Official List and listing on the Main Market of the London Stock Exchange.Since that date, the Company has applied all except four of the main principles of the Code as listed below:

A.3.1 The Chairman was not independent on appointment.B.1.2 At least half of the Board, excluding the Chairman, does not

comprise Non-Executive Directors determined by the Board to be independent.

B.2.1 There is a joint Remuneration and Nominations Committee. The majority of the members of this committee are not determined by the Board to be independent.

B.6 The Board has not carried out an annual evaluation of its own performance given the Board and its Committees have been operating for less than a year. A formal evaluation process will be carried out within 2015.


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THE JIMMY CHOO BOARD

HE ADS OF DEPARTMENT

SENIOR MANAGEMENT

LE ADERSHIPSE T TING VALUES AND STANDARDS

RISK MANAGEMENTSTR ATEGY AND OVERSIGHT

FINANCIAL REPORTINGSTR ATEGIC INVESTMENT

AUDIT AND RISK COMMIT TEE1

CHAIRMANBOB SINGER

MEMBERSDAVID POULTER

KEY RESPONSIBILITIESMONITORING THE INTEGRITY OF FINANCIAL STATEMENTS, ENSURING THAT AN EFFECTIVE SYSTEM OF INTERNAL CONTROLS IS MAINTAINED AND MONITORING ACCOUNTING POLICIES.

MORE INFORMATION: AUDIT AND RISK COMMITTEE REPORT – PAGES 54 TO 57

MEMBERSEXECUTIVE DIRECTORS AND OTHER SENIOR MANAGEMENT

KEY RESPONSIBILITIESCONSIDERS MATTERS WHICH ARISE IN THE ORDINARY COURSE OF BUSINESS OF THE GROUP’S OPERATIONS. SENIOR MANAGEMENT HAVE SPECIFIC DELEGATED POWERS TO DEAL WITH MATTERS ARISING IN THE ORDINARY COURSE OF BUSINESS THAT REQUIRE CONSIDERATION PRIOR TO THE NEXT SCHEDULED BOARD MEETING. THESE POWERS OPERATE WITHIN PRESCRIBED LIMITS SET BY THE CORPORATE GOVERNANCE RULES APPROVED BY THE BOARD.

REMUNER ATION ANDNOMINATIONS COMMIT TEE1

CHAIRMANBART BECHT

MEMBERSPETER HARFGIANLUCA BROZZETTI

KEY RESPONSIBILITIESDETERMINATION OF SPECIFIC REMUNERATION PACKAGES FOR ALL EXECUTIVE DIRECTORS AND CERTAIN SENIOR EXECUTIVES OF THE GROUP.

MORE INFORMATION: REMUNERATION AND NOMINATIONS COMMITTEE REPORT – PAGES 58 TO 73

KEY RESPONSIBILITIESTO CONSIDER ANY CONTRACT, ARRANGEMENT OR TRANSACTION BETWEEN A MEMBER OF THE GROUP AND THE CONTROLLING SHAREHOLDER OR ITS ASSOCIATES.

CONFLIC TS COMMIT TEE

CHAIRMANBOB SINGER

MEMBERSPIERRE DENISJONATHAN SINCLAIRGIANLUCCA BROZZETTIDAVID POULTER

1 Terms of reference of the Audit and Risk Committee and the Remuneration and Nominations Committee are available on the Company’s website.

JIMMY CHOO LE ADERSHIP AND GOVERNANCE STRUC TURE

THE BOARD STRUC TUREThe structure and business of the Board is designed to ensure that the Board focuses its time and energy on providing entrepreneurial leadership to the Group, setting strategy and monitoring performance, and ensuring that the necessary financial and human resources are in place to enable the Company to meet its objectives. In addition, the Board ensures that the appropriate financial and business systems and controls are in place to safeguard both the majority and the minority shareholders’ interests and to maintain effective corporate governance.

The Board operates in accordance with the Company’s Articles of Association and its own written terms of reference (Schedule of Matters Reserved for Board Decision). The Board has established a number of Committees as indicated in the chart below. Each Committee has its own terms of reference which will be reviewed at least annually. A summary of the matters reserved for decision by the Board is set out below:

L E A DERSHIP, S T R AT EGY, BUDGE TS A ND M A N AGEMEN T• Providing leadership and setting values and standards• Approving, developing and monitoring the strategy and objectives

of the Group• Overseeing operations

S T RUC T URE A ND CAPITA L• Changes to the Group’s capital or corporate structure• Changes to the Group’s management and control structure

F IN A NCIA L REPOR TING • Approval of financial statements• Approval of dividend policy• Approval of material changes in accounting policies• Approval of major capital expenditure

RISK M A N AGEMEN T A ND IN T ERN A L CON T ROL S • Ensuring maintenance of effective systems of internal control

and risk management• Reviewing these systems of control and risk management

BOA RD MEMBERSHIP• Changes to the structure, size and composition of the Board• Ensuring adequate succession planning• Appointment or removal of the Chairman, CEO, SID and

Company Secretary

CORPOR AT E GOV ERN A NCE• Review of Group’s overall governance framework• Determining the independence of directors• Considering the views of shareholders• Authorising any conflicts of interest

REMUNER ATION• Determining the policy for remuneration of the Chairman,

the Executive Directors, Company Secretary and other senior executives

• Determining the remuneration of the Non-Executive Directors• Introduction of new share incentive plans or major changes to

existing plans

OT HER• Approval and monitoring of the share dealing code• Approval and monitoring of Corporate and Social Responsibility• Approving policies for political and charitable donations• Approval of the overall levels of insurance for the Group


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BOARD AND SENIOR MANAGEMENTPrior to Admission, the day to day running of the Company was overseen by Pierre Denis and Jonathan Sinclair, with an executive committee formed of ten senior managers. As part of the Admission process the Board of Directors was formed consisting of the Non-Executive Chairman, two Executive Directors and seven Non-Executive Directors and a Schedule of Matters for Board Decision was adopted. The executive committee’s power to exercise managerial decisions was transferred to the Board on its formation. At the Board meeting in March 2015 the Board approved revised delegated authorities and concluded that, with the exception of the Executive Directors, the pre-IPO executive committee members were no longer persons dispensing managerial responsibility (“PDMRs”) for the purpose of the Disclosure and Transparency Rules by virtue of the fact that all power to make managerial decisions affecting the future development and business prospects of the Company rested with the Board.

KE Y BOARD ROLES AND RESPONSIBIL ITIESThere is a clear division of responsibilities between the Chairman and CEO which has been agreed by the Board. The roles of the Chairman and CEO are held by different people and the purpose of each role is clear and distinct and set out in respective job descriptions. The Chairman is responsible for the leadership and overall effectiveness of the Board and setting the Board’s agenda; the CEO reports to the Chairman and the Board and is responsible for all executive management matters of the Group. A summary of the key areas of responsibility of the Chairman and CEO are set out below:

ROL E OF T HE CH AIRM A N• Conduct the affairs of the Group in accordance with the

highest standards of integrity, probity and corporate governance throughout the Company;

• Run the Board effectively, ensuring adequate frequency of meetings;

• Set the Board agenda and ensure that adequate time is available for discussion of the important issues facing the Group;

• Ensure the frequency and depth of evaluation of the Board and its Committees is in compliance with best practice;

• Ensure there is appropriate delegation of authority from the Board to the executive management;

• Ensure that the Board receives accurate, timely and clear information in advance of meetings;

• Promote a culture of openness and debate by facilitating the effective contribution of Non-Executive Directors;

• Ensure approval with Board approved procedures;• Hold meetings with the Non-Executive Directors without

the Executive Directors present;• Ensure training and development needs of all directors are

met, and that all new directors receive a full induction;• Ensure effective communication with shareholders

and stakeholders; and• Ensure shareholders’ views are communicated to the Board.

ROL E OF T HE CEO• Conduct the affairs of the Group in accordance with the highest

standards of integrity, probity and corporate governance throughout the Company;

• Manage the Group on a day-to-day basis within the authority delegated by the Board;

• Develop and propose strategy, annual plans and commercial objectives;

• Lead the executive team to pursue the Group’s commercial objectives and execute Group strategy;

• Identify and execute strategic opportunities whilst optimising the Group’s resources;

• Communicate to the Group’s employees the expectations of the Board in relation to the Group’s culture, values and behaviour;

• Manage the Group’s risk profile;• Keep the Chairman informed of important matters and maintain

a dialogue on important and strategic issues facing the Group;• Make recommendations on remuneration policies, Board

nominations and succession planning;• Ensure that the executive team complies with the terms on

which matters are delegated by the Board;• Support the Chairman in order to ensure that appropriate

governance standards are applied throughout the Group; and• Lead communications with shareholders and other stakeholders• Provide, together with the Chairman, coherent leadership of

the Group.

SENIOR INDEPENDEN T DIREC TORDavid Poulter is the Senior Independent Director. The SID’s role is to act as a sounding board for the Chairman and serve as an intermediary for the other directors when necessary. The SID will meet other Non-Executive Directors without the Chairman and Executive Directors present at least once a year to discuss governance issues. The SID will also provide feedback to the Board on the independent Non-Executive Directors’ collective views on the perceived quality of the relationship between the Chairman and the CEO; the degree of openness between the CEO and the Board; the visibility of checks and balances within the Executive Directors’ team; and whether all questions asked by the Non-Executive Directors of the Board have been adequately addressed.

The SID is also available to shareholders to discuss concerns where contact through the normal channels of the Chairman, CEO or CFO has failed to resolve or for which such contact is inappropriate.

BOA RD INDEPENDENCEThe Board currently consists of seven Non-Executive Directors (including the Chairman) three of whom are considered to be independent.

Non Independent Independent

Peter Harf Gianluca Brozzetti

Bart Becht David Poulter

Fabio Fusco Bob Singer

Oliver Goudet

CORPORATE GOVERNANCE REPORT CONTINUED


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As explained in the Chairman’s introduction, under the Relationship Agreement JAB Luxury is able to appoint: (i) up to one half of the Directors on the Board while it continues to hold 50% or more of the shares; (ii) up to one quarter of the Directors on the Board while it continues to hold at least 25% but less than 50% of the shares; and (iii) up to one eighth of the Directors on the Board while it continues to hold at least 10% but less than 25% of the shares. The first such appointees are Bart Becht, Fabio Fusco, Olivier Goudet and Peter Harf.

The Board has determined that each of Gianluca Brozzetti, David Poulter and Bob Singer will be regarded as independent Non-Executive Directors. In reaching this determination, the Board took into consideration the following relationships: Mr. Brozzetti has advised JAB Luxury in respect of its investment in Zagliani; from 1999 to 2012 Mr. Poulter held senior finance positions in Reckitt Benckiser Group PLC (in which JAB Luxury’s controlling shareholder is a significant investor) including a period as a trustee of its pension scheme and Mr. Singer has been a director of Coty Inc. (in which JAB Luxury’s controlling shareholder is the majority shareholder) since 2009. Each of these directors has been appointed as an independent Non-Executive Director of Bally and Belstaff, which are companies owned by JAB Luxury. The other directors have concluded that the judgement, experience and challenging approach taken by each of Gianluca Brozzetti, David Poulter and Bob Singer should ensure that they each make a significant contribution to the work of the Board and its Committees. Therefore, the Board has determined that each of them is of independent character and judgement and should be regarded as independent Directors for the purposes of the Code.

The names of the Directors and brief biographies can be found on pages 46 and 47.

COMMIT MEN TThe Board expects Non-Executive Directors to commit sufficient time to allow them to meet their obligations to the Company. The Non-Executive Directors’ letters of appointment currently anticipate that each Non-Executive Director will need to commit ten days per year to the Company but clarifies that more time may be required. Non-Executive Directors will need to attend scheduled and emergency Board and Committee meetings, at least one site visit per year and the AGM. In addition, the Non-Executive Directors are expected to commit appropriate preparation time ahead of each meeting.

REL ATIONSHIP AGREEMEN TOn 3 October 2014, the Company and JAB Luxury entered into the Relationship Agreement which regulates aspects of the ongoing relationship between the Company and JAB Luxury. The principal purpose of the Relationship Agreement is to ensure that the Company and its subsidiaries are capable of carrying on their business independently of JAB Luxury and its associates, that transactions and relationships with JAB Luxury or its associates (including any transactions and relationships with any member of the Group) are at arm’s length and on normal commercial terms, and that the goodwill, reputation and commercial interests of the Company are maintained.

The Relationship Agreement will continue for so long as (i) the shares are listed on the premium listing segment of the Official List and traded on the London Stock Exchange’s main market for listed securities and (ii) JAB Luxury, together with its associates, is entitled to exercise or control the exercise of 10% or more of the votes able to be cast on all, or substantially all, matters at general meetings of the Company.

The Directors believe that the terms of the Relationship Agreement enable the Group to carry on its business independently of JAB Luxury and ensure that all transactions and relationships between the Company and/or the members of the Group and JAB Luxury and/or its associates are, and will be, on arm’s length terms and on a normal commercial basis.

Under the Relationship Agreement, JAB Luxury is able to appoint to the Board such number of Non-Executive Directors as discussed above. JAB Luxury is entitled to receive, subject to compliance by the Company with its legal and regulatory obligations, such financial or other information in relation to the Group or any member of the Group as is necessary or reasonably required by it: (i) in its capacity as a shareholder of the Company, for the purposes of its accounting or financial control requirements or in order to comply with its legal, regulatory or tax obligations; or (ii) in order for it and other members of its group to provide certain advisory services to the Group, including but not limited to management accounts, long and short term planning documents and sales and margin reports.

CONF L IC TS COMMIT T EE The Board has constituted a Conflicts Committee that considers on behalf of the Board any contract, arrangement or transaction between any member of the Group and JAB Luxury or any of JAB Luxury’s associates, and any actual or potential conflict of interest between any member of the Group and JAB Luxury or any of JAB Luxury’s associates which involves, or would involve, significant expenditure by the Group. The Conflicts Committee will meet on an ad hoc basis as required. The Conflicts Committee is chaired by Bob Singer, and its other members are Pierre Denis, Jonathan Sinclair, Gianluca Brozzetti and David Poulter.

CONF L IC TS OF IN T ERES TThe Company’s Articles of Association set out the policy for dealing with directors’ conflicts of interest and are in line with the Companies Act 2006. The Articles permit the Board to authorise conflicts and potential conflicts, as long as the potentially conflicted Director is not counted in the quorum and does not vote on the resolution to authorise.


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In March 2015, the Board agreed a procedure for dealing with conflicts of interest in relation to matters which are scheduled for Board consideration following which each Director completed a ‘Directors List’ which sets out details of situations where each Director’s interests may conflict with those of the Company (‘situational conflicts’). These lists were subsequently considered and situational conflicts authorised. In addition, Directors are reminded at the beginning of each Board meeting to notify the Board of any further conflicts of interest in accordance with sections 175, 177 and 182 of the Companies Act 2006.

BOA RD PROCESSSince Admission the Board has met once in December 2014 to approve the annual budget for 2015 and once in March 2015, following the year end. All Directors were present at each meeting. The Board intends to meet formally at least four times a year, with ad hoc meetings called as and when circumstances require it to at short notice. There will be an annual calendar of agenda items to ensure that all matters are given due consideration and are reviewed at the appropriate point in the regulatory and financial cycle.

At least once a year, the Board will undertake a full strategic review of the business operations as part of the budget review.

All Directors are expected to attend all meetings of the Board and any Committees of which they are members, and to devote sufficient time to the Company’s affairs to fulfil their duties as Directors. Where Directors are unable to attend a meeting, they are encouraged to submit any comments on papers to be considered at the meeting to the Chairman in advance to ensure that their views are recorded and taken into account during the meeting.

The Chairman and Non-Executive Directors will meet without the Executive Directors present on a number of occasions throughout the year.

T R AINING A ND DE V ELOPMEN TIn preparation for listing, all Directors received an induction briefing from the Company’s legal advisor, Freshfields Bruckhaus Deringer, on their duties and responsibilities as directors of a publicly quoted company. During 2015, the Company Secretary will prepare a full, formal and tailored induction programme for any new directors joining the Board. The Chairman, with the support of the Company Secretary, will ensure that the development and ongoing training needs of individual directors and the Board as a whole are reviewed and agreed at least annually.

INF ORM ATION A ND SUPPOR TAn agenda and accompanying pack of detailed papers is circulated to the Board well in advance of each Board meeting. These include reports from Executive Directors and other members of senior management. All Directors have direct access to senior management should they require additional information on any of the items to be discussed. The Board and the Audit and Risk Committee also receive further regular and specific reports to allow the monitoring of the adequacy of the Company’s systems of internal controls.

The information supplied to the Board and its Committees will be kept under review and formally assessed on an annual basis as part of the Board evaluation exercise to ensure it is fit and proper for purpose and that it enables sound decision making.

The Company has adopted a formal procedure through which Directors may obtain independent professional advice at the Company’s expense.

PERF ORM A NCE E VA LUATIONGiven that the majority of the Directors were only appointed in the months immediately preceding the listing in October 2014, the Board believes that a meaningful evaluation of the Board can only take place after it has been working together for a reasonable time. An evaluation policy will be developed and implemented before the end of 2015 and annually thereafter, with such an evaluation process being externally facilitated at least every three years.

SH A RE DE A L ING CODEAt Admission, the Company adopted Share Dealing Codes which cover dealings by PDMRs and relevant employees. The codes comply with the provisions set out in the Model Code contained in Annex 1 to Listing Rule 9 of the UK Listing Authority’s Listing Rules. It restricts dealings in shares and other relevant securities by PDMRs and employees during designated prohibited periods and at any time when they are in possession of unpublished, price-sensitive information. As noted previously, the Board has concluded that the senior managers are not PDMRs however they are classed as ‘relevant employees’ and have therefore committed to full compliance of the Company’s Share Dealing Codes.

REL ATIONS WITH SHAREHOLDERS DIA LOGUE W IT H SH A REHOL DERSAs part of the IPO “roadshow” in 2014, the CEO and CFO met with a large number of investors.

As part of its ongoing investor relations programme, the Group aims to maintain an active dialogue with its stakeholders including institutional investors to discuss issues relating to the performance of the Group including strategy and new developments. The Non-Executive Directors are available to discuss any matter stakeholders might wish to raise, and the Chairman and independent Non-Executive Directors will attend meetings with investors and analysts as required.

Investor relations activity and a review of the share register are standing items on the Board’s agenda.

A NNUA L GENER A L MEE TINGThe Company’s first Annual General Meeting since Admission will take place on 27 May 2015 at the Radisson Blu Edwardian Hotel, 140 Bath Road, Hayes, Middlesex UB3 5AW. The Chairman will be present to answer questions put to him by shareholders. The Annual Report and Financial Statements and Notice of the Annual General Meeting will be sent to shareholders at least 20 working days prior to the date of the meeting.

To encourage shareholders to participate in the Annual General Meeting process, the Company proposes to offer electronic proxy voting through the CREST service and all resolutions will be proposed and voted on at the meeting on an individual basis by shareholders or their proxies. Voting results will be announced through the Regulatory News Service and made available on the Company’s website.



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THE REMUNER ATION AND NOMINATIONS COMMIT TEE KE Y RESPONSIBIL ITIES

REMUNER ATION POLICY

• DETERMINE THE FRAMEWORK FOR THE REMUNERATION POLICY FOR THE CHAIRMAN, EXECUTIVE DIRECTORS, COMPANY SECRETARY AND OTHER SENIOR EXECUTIVES

• WHEN SETTING THE POLICY HAVE REGARD FOR PAY AND EMPLOYMENT CONDITIONS ACROSS THE GROUP

• FORMULATE SUITABLE PERFORMANCE CRITERIA FOR THE PERFORMANCE RELATED ELEMENTS OF REMUNERATION

• ENSURE THAT CONTRACTUAL TERMS ON TERMINATION, AND ANY PAYMENTS MADE, ARE FAIR TO THE INDIVIDUAL AND THE COMPANY

• ENSURE THAT FAILURE IS NOT REWARDED

APPOINTMENTS

• PREPARE ROLE DESCRIPTION FOR BOARD APPOINTMENTS FOLLOWING AN EVALUATION OF THE BALANCE OF SKILLS, KNOWLEDGE AND EXPERIENCE ON THE BOARD

• IDENTIFY AND NOMINATE TO THE BOARD CANDIDATES TO FILL BOARD VACANCIES

• MAKE RECOMMENDATIONS TO THE BOARD REGARDING THE RE-APPOINTMENT OF NON-EXECUTIVE DIRECTORS AT THE END OF THEIR TERM OF OFFICE

• MAKE RECOMMENDATIONS TO THE BOARD REGARDING THE ANNUAL RE-ELECTION OF DIRECTORS BY SHAREHOLDERS

BOARD COMPOSITION ANDSUCCESSION PL ANNING

• REGULARLY REVIEW STRUCTURE, SIZE AND COMPOSITION OF THE BOARD

• KEEP UNDER REVIEW THE LEADERSHIP NEEDS OF THE ORGANISATION

• GIVE FULL CONSIDERATION TO SUCCESSION PLANNING FOR DIRECTORS AND OTHER SENIOR EXECUTIVES

EFFEC TIVENESS

• REVIEW THE RESULTS OF THE BOARD PERFORMANCE EVALUATION PROCESS THAT RELATE TO THE COMPOSITION OF THE BOARD

• REVIEW ANNUALLY THE TIME REQUIRED FROM NON-EXECUTIVE DIRECTORS

REMUNER ATION AND NOMINATIONS COMMIT TEE

MEMBERSHIP AND MEE TINGSThe Remuneration and Nominations Committee is chaired by Bart Becht and its other members are Peter Harf and Gianluca Brozzetti.

The Committee will meet at least three times a year and at such other times during the year as is necessary to discharge its duties. Only members of the Committee have the right to attend meetings. However, other individuals, such as the CEO and external advisers, may be invited to attend for all or part of any meeting.

The Remuneration and Nominations Committee met once in 2014 and once in 2015 to date. All members of the Committee were present for each meeting.

The Remuneration and Nominations Committee’s responsibilities are set out in its Terms of Reference which are available on the Company’s website. Its role includes:

• setting the remuneration policy for all Executive Directors of the Company and the Chairman of the Board, the Company Secretary and other senior employees of the Company as the Board may determine;

• within the terms of the remuneration policy determining the total individual remuneration package of the Executive Directors, Company Secretary and other designated senior executives including base salary, bonuses and performance related payments, discretionary payments, pension contributions, benefits in kind and share options;

• in respect of any performance related element of remuneration, formulating suitable performance related criteria and monitor their operation;

• ensuring that contractual terms on termination, and any payments made, are fair to the individual and the Company, that failure is not rewarded and that the duty to mitigate loss is fully recognised; and

• leading the process for appointments to the Board and ensuring that the Board, its Committees, and the boards of the Company’s subsidiaries, are appropriately balanced in terms of skills, experience, independence and knowledge of the Company.

In carrying out its duties, the Remuneration and Nominations Committee takes into account any legal requirements, the UK Corporate Governance Code and UK Listing Rules. Determining the fees of the Non-Executive Directors is a matter reserved for the Chairman of the Board and the Executive Directors.

The key responsibilities of the Committee are shown below.

DIV ERSIT YThe Board recognises the benefits of diversity, including gender diversity, on the Board, although it believes that all appointments should be made on merit, whilst ensuring that there is an appropriate balance of skills and experience within the Board. As at 31 December 2014, the board consisted of 10% (1) female and 90% (9) male board members.


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THE AUDIT AND RISK COMMIT TEE KE Y RESPONSIBIL ITIES

E X TERNAL AUDIT

• RECOMMEND THE APPOINTMENT, RE-APPOINTMENT OR REMOVAL OF THE EXTERNAL AUDITOR

• ENSURE THE AUDIT CONTRACT IS PUT OUT TO TENDER AT LEAST EVERY TEN YEARS

• OVERSEE THE RELATIONSHIP, APPROVE TERMS OF ENGAGEMENT AND REVIEW INDEPENDENCE AND OBJECTIVITY OF THE EXTERNAL AUDITOR

• REVIEW AND APPROVE THE ANNUAL AUDIT PLAN AND REVIEW THE FINDINGS OF THE AUDIT WITH THE EXTERNAL AUDITOR

• MEET REGULARLY WITH THE EXTERNAL AUDITOR WITHOUT MANAGEMENT PRESENT

• DEVELOP POLICY ON THE SUPPLY OF NON-AUDIT SERVICES

INTERNAL AUDIT

• APPROVE APPOINTMENT OR REMOVAL OF THE OF INTERNAL AUDIT MANAGER

• MONITOR AND REVIEW EFFECTIVENESS OF INTERNAL AUDIT

• REVIEW AND ASSESS THE INTERNAL AUDIT PLAN

• CONSIDER AND APPROVE THE REMIT OF THE INTERNAL AUDIT FUNCTION

• ENSURE ACCESS OF INTERNAL AUDIT TO THE BOARD AND COMMITTEE CHAIRMEN

• REVIEW MANAGEMENT’S RESPONSIVENESS TO INTERNAL AUDIT FINDINGS

• MEET WITH INTERNAL AUDIT WITHOUT MANAGEMENT PRESENT AT LEAST ONCE A YEAR

FINANCIAL ANDNARR ATIVE REPORTING

• MONITOR THE FINANCIAL REPORTING PROCESS AND THE INTEGRITY OF THE FINANCIAL STATEMENTS

• REVIEW AND REPORT TO THE BOARD ON SIGNIFICANT FINANCIAL ISSUES AND JUDGEMENTS

• REVIEW AND CHALLENGE ACCOUNTING POLICIES, METHODS USED TO ACCOUNT FOR SIGNIFICANT OR UNUSUAL TRANSACTIONS, ENSURE CLARITY AND COMPLETENESS OF DISCLOSURE

• ASSESS THE EFFECTIVENESS OF THE GROUP’S FINANCIAL REPORTING PROCEDURES

• WHERE REQUESTED BY THE BOARD, ADVISE WHETHER THE ANNUAL REPORT IS FAIR, BALANCED AND UNDERSTANDABLE

INTERNALCONTROL S AND

RISK MANAGEMENTSYSTEMS

• KEEP UNDER REVIEW THE ADEQUACY AND EFFECTIVENESS OF THE GROUP’S INTERNAL FINANCIAL CONTROLS AND INTERNAL CONTROL AND RISK MANAGEMENT SYSTEMS

• KEEP UNDER REVIEW THE POLICIES AND OVERALL PROCESS FOR IDENTIFYING AND ASSESSING BUSINESS RISKS AND MANAGING THEIR IMPACT

• CONSIDER AND REVIEW AREAS OF SPECIFIC RISK

• REVIEW AND APPROVE THE STATEMENTS IN THE ANNUAL REPORT CONCERNING INTERNAL CONTROLS AND RISK MANAGEMENT SYSTEMS

• OVERSEE AND ADVISE THE BOARD ON THE CURRENT RISK EXPOSURES OF THE COMPANY AND FUTURE RISK STRATEGY

WHISTLEBLOWING,FR AUD AND BRIBERY

• REVIEW THE ADEQUACY AND SECURITY OF WHISTLEBLOWING ARRANGEMENTS

• REVIEW POLICIES AND PROCEDURES FOR DETECTING FRAUD AND ITS SYSTEMS AND CONTROLS FOR PREVENTING BRIBERY AND MONEY LAUNDERING, ITS CODE OF CORPORATE CONDUCT AND BUSINESS ETHICS

AUDIT AND RISK COMMIT TEE REPORT

DE AR SHAREHOLDER,On behalf of the Board, I am pleased to present the Company’s first Audit and Risk Committee report. Following the announcement that Judith Sprieser was stepping down from the Board for personal reasons, I have been asked to fulfil the role of Chairman of the Audit and Risk Committee, having been a member of the committee since the IPO and having been closely involved in all aspects of the Committee’s work to date. The Audit and Risk Committee is responsible for establishing, monitoring and regularly reviewing the Company’s internal controls and risk management framework, as well as overseeing the work of the external auditor. The Audit and Risk Committee has met three times so far since the IPO, focused primarily on setting the internal audit plan for 2015, establishing key policies and procedures in support of the control environment and the audit and approval of the 2014 Annual Report and Financial Statements. I would like to thank Judith for the support she has given to the Committee since IPO and look forward to reporting back to you next year with the progress of the Committee. Further details on the activities of the Committee during the year and how it discharged its responsibilities are provided in the report below.

BOB SINGERAUDIT A ND RISK COMMIT T EE CH AIRM A N


MEMBERSHIP AND MEE TINGSThe Audit and Risk Committee currently comprises two independent Non-Executive Directors: Bob Singer (Chairman) and David Poulter.

All members of the Committee have recent and relevant financial experience. Bob Singer is currently Chairman of the Audit Committee of Mead Johnson Nutrition, Coty Inc., and Tiffany and Co., having previously been CFO of Gucci Group. David Poulter has held previous roles as Head of Internal Audit and Senior Vice President, Finance at Reckitt Benckiser Group PLC and is a Chartered Accountant and member of the finance committee of Save the Children UK.

The Audit and Risk Committee will meet as often as it deems necessary but in any case at least four times a year, with meetings scheduled at appropriate intervals in the financial reporting cycle. Additional meetings are held as required. The Audit and Risk Committee met once between Admission in October and the year end. A further two meetings have been held since year end. All members of the Committee were present at all meetings.

Only members of the Committee have the right to attend meetings. However, standing invitations are extended to the CFO and Internal Audit Manager. Other non-members may be invited to attend all or part of any meeting as and when appropriate. Fabio Fusco (Non-Executive Director) acts as secretary to the Committee. The external auditor attends all meetings and also meets in private with the Committee on each occasion. In addition the Chairman of the Audit Committee will have regular contact with the external and internal auditors throughout the year.

ROLE OF THE AUDIT AND RISK COMMIT TEEThe Board has delegated to the Committee responsibility for overseeing the internal financial controls and financial reporting of the Company and its subsidiaries, reviewing the Group’s internal control and risk management systems and for maintaining a proper relationship with the external auditor. The Committee’s specific responsibilities are set out in its terms of reference which were adopted in October 2014. These are available on the Company’s website, and are summarised below.


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INTERNAL AUDITInternal audit services are provided by JAB Luxury under an Advisory Services Agreement dated 13 August 2014. The role of these internal audit services is to determine whether the Group’s network of risk management, control and governance processes are adequate and functioning appropriately.

At its meeting in December 2014 the Committee also approved the annual internal audit plan for 2015 which identified areas of focus for the year. Outcomes of the work of internal audit will be reported to the Audit and Risk Committee and the Group’s management with responsibility for any improvement or remedial action allocated appropriately. The internal audit function will carry out follow up reviews to ensure that any control weaknesses are addressed.

The Audit and Risk Committee will receive regular reports from the internal audit function during 2015 which will include progress updates against the approved internal audit plan. The Committee will use these reports as the basis for its assessment of the effectiveness of the internal audit function during 2015, as well as monitoring the relationship between the internal audit function and the Group’s management.

E X T ERN A L AUDITORThe Committee is responsible for overseeing the Group’s relationship with its external auditor, KPMG LLP. This includes the ongoing assessment of the auditor’s independence and the effectiveness of the external audit process, the results of which inform the Committee’s recommendation to the Board as to the auditor’s appointment (subject to shareholder approval) or otherwise.

APPOIN T MEN T A ND T ENUREKPMG LLP was first appointed as the external auditor of the Group in 2011. The current audit partner, Wayne Cox, has been in place since the appointment of KPMG LLP.

The audit partner is required to rotate every five years. As Wayne Cox is retiring from KPMG LLP this year, a new audit partner will be selected for the 2015 audit. In accordance with the Code, the Committee intends to put the external audit out to tender at least every ten years. There are no contractual obligations that act to restrict the Audit and Risk Committee’s choice of external auditor.

NON-AUDIT SER V ICESThe engagement of the external audit firm to provide non-audit services to the Group can impact on the independence assessment. The Group has therefore established a policy governing the provision of any such non-audit services. The policy specifies services which cannot be carried out by the external auditor (generally activities that would involve the external auditor taking on management responsibility) and sets the framework within which non-audit services may be provided. All requests to utilise the external auditors for non-audit services must be reviewed by the CFO and above a certain limit must be subject to competitive tender and be approved by the Audit and Risk Committee.

During 2014, KPMG LLP were engaged to provide non-audit services to the Group. These included acting as Reporting Accountant to the Group in connection with the IPO and the provision of tax advisory services. KPMG LLP were appointed as Reporting Accountants following a competitive tender process. In approving the use of KPMG LLP to provide these services, the Board took the view that KPMG LLP’s knowledge of the Company and its operations meant that it was best placed to provide the services, and was comfortable that KPMG LLP’s independence would not be compromised. The fees paid to KPMG LLP in respect of non-audit services during the year totalled £1.7m which is in excess of the total audit fee of £0.2m. The majority of the non-audit fees incurred during the year, £1.3m, were in connection with the IPO and are therefore inherently one-off in nature. In addition, the Group incurred £0.2m of tax advisory fees in connection with the redesign of the Group’s supply chain which is also considered to be one-off in nature.

The Committee assesses the independence of the external auditor and the effectiveness of the external audit process before making recommendations to the Board in respect of their appointment or re-appointment.

In assessing independence and objectivity, the Committee considers the level and nature of services provided by the external auditor as well as the confirmation from the external auditor that it has remained independent within the meaning of the APB Ethical Standards for Auditors. The Committee’s assessment of the external auditor’s independence took into account the non-audit services provided during the year. The Committee concluded that the nature and extent of the non-audit fees did not compromise the independence of the auditor, given the one-off nature of the majority of services provided.

Having reviewed the auditor’s independence and performance the Audit and Risk Committee recommends that KPMG LLP be re-appointed as the Company’s auditor at the next annual general meeting.


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SIGNIF ICA N T ISSUESSignificant issues and accounting judgements are identified by the finance team and through the external audit process and are reviewed by the Audit and Risk Committee. The significant issues considered by the Committee in respect of the year ended 31 December 2014 are set out below:

Risk area Significant issues and judgements How the issues were addressed

Revenue recognition

Revenue is a key performance indicator of the Group. Whilst the Group’s revenue recognition policies are not complex, the Group’s revenue is comprised of a high volume of transactions. The maintenance of an effective control environment, particularly within our retail channel which accounts for 64.4% of total revenue, is therefore fundamental to ensuring appropriate revenue recognition.

Controls relevant to the retail channel are formally documented within the retail excellence manual that was implemented within each store throughout the year. The accounting policies for revenue are set out in note 1 to the financial statements and are unchanged from previous periods.

The Audit and Risk Committee considered reports prepared by Internal Audit during the year, particularly where there has been a change in the control environment following the transition to SAP and noted no significant issues with respect to the operation of the controls around revenue recognition.

The Audit and Risk Committee also considered a report from the external auditor, which commented, inter alia, on revenue recognition.

Identification and disclosure of exceptional items

The Group is undergoing a significant transformation programme in connection with which the Group has incurred a significant degree of costs that are considered to be exceptional in nature as they are unrepresentative of the underlying operating performance of the Group. Further details of these costs are provided in note 5 to the financial statements.

The Audit and Risk Committee has discussed the nature of these costs with management and the external auditor. The Audit and Risk Committee are of the view that these costs warrant separate disclosure on the face of the consolidated income statement by virtue of the fact they are not representative of the underlying performance of the Group. The Audit and Risk Committee consider that separate disclosure of exceptional costs will aid investors in evaluating the performance of the business in the year.

Residual value of key money

Judgement is required in estimating the residual value of key money paid to outgoing tenants to secure a leasehold property. In certain locations, the residual value of key money is considered to be equal to cost; either due to legal protection offered to tenants in that jurisdiction or because it is common practice to at least recover the amounts paid at the end of the lease due to the existence of an active market for operating leases in premium luxury retail locations.

The Audit and Risk Committee has reviewed and challenged the key assumptions used in assessing the residual value of key money. The Audit and Risk Committee requested management to provide an in depth analysis of the valuation assumptions applied by location in order to consider the application of the agreed approach. Following review, the Audit and Risk Committee concluded that the judgements applied were appropriate in preparing the financial statements for the year.

When considering the financial statements, the Committee also considered the issues included in the Group’s critical accounting policies, which are set out in note 2 to the financial statements. Having discussed these matters with management and the external auditor the Committee has satisfied itself that such risks are being appropriately managed, the judgements made are reasonable and they are being accounted for in accordance with the relevant accounting standards and principles.


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FAIR , BA L A NCED A ND UNDERS TA NDA BL EAt the request of the Board, the Audit and Risk Committee has conducted a review of the Annual Report and Financial Statements to assess whether it presents a fair, balanced and understandable view of the Company’s position and prospects. The Committee’s review took account of the process by which the Annual Report and Financial Statements is prepared which includes detailed project planning, analysis of changes to applicable reporting requirements and standards, and a robust programme of review and verification at various levels of the business and by external advisers to ensure accurate reporting.

The Committee is satisfied that the Annual Report and Financial Statements is fair, balanced and understandable, and provides the information necessary for shareholders to assess the Company’s position and performance, and has advised the Board accordingly.

SYS T EMS OF IN T ERN A L CON T ROL A ND RISK M A N AGEMEN TThe Group has in place a comprehensive financial review cycle, which includes a detailed annual budgeting and forecasting process. The budget is prepared annually for approval by the Board and is regularly reviewed and updated during the year at key points of the business calendar. Performance is monitored against the budget through weekly and monthly reporting cycles. During the financial year under review regular reports on performance, including income statements, balance sheets, cash flow statements and key ratios, were provided to the Board. In respect of external financial reporting, the Group finance team is responsible for preparing the Group financial statements and there are well established controls over the financial reporting process.

The Group has defined and formally documented the core elements of the system of internal control at a store, channel and Group level. Policies and procedures and clearly defined levels of delegated authority have been communicated across the Group. Management has identified the key operational and financial processes which exist within the business and implemented internal controls over these processes in addition to the higher level review and authorisation based controls. The control environment is communicated to staff through three key documents:

• the Group’s internal governance rules, which set out policies for delegation of authority within the business, including contract approval and signing limits for all types of expenditure;

• the retail excellence manual detailing controls at store level; and • the internal control system documentation which describes

controls over key processes such as financial reporting, receivables and payables management.

The Group has continued to develop its governance arrangements since Admission which has included the enhancement of various policies and procedures to support the systems of internal control and risk management. The Audit and Risk Committee has been central to this process, in particular in the drafting and review of a number of updated or new policies, which have subsequently been approved by the Board, covering:

• anti-bribery and corruption policy;• whistleblowing policy;• risk framework and risk register; and• disaster recovery arrangements.

These policies will be subject to periodic review.

The Board retains ultimate responsibility for setting the Group’s risk appetite, identification of key risks and ensuring that there is an effective risk management framework to maintain levels of risk within the risk appetite. The Board has however delegated responsibility for oversight of the Group’s risk appetite, risk monitoring and reviewing areas of specific risk to the Audit and Risk Committee as well as ensuring sufficient mitigating actions are taken. The Committee will provide oversight and advice to the Board on current risk exposures and future risk strategy. Further details of the Group’s risk management approach, structure and principal risks are set out in the Strategic Report on pages 15 to 40.

FINANCIAL AND BUSINESS REPORTINGThe Board is committed to ensuring that all external financial reporting presents a fair, balanced and understandable assessment of the Group’s position and prospects. Under the Schedule of Reserved Matters, the Board has responsibility for the approval of all externally published information including, but not limited to, annual and half-yearly financial statements, regulatory news announcements and publications required by regulators or to satisfy statutory requirements.

RE VIE W OF EFFEC TIVENESS OF INTERNAL F INANCIAL CONTROL SAs part of preparing for operating in a listed environment, a review of the existing controls in place was performed and additional controls were implemented to ensure compliance with the UK Corporate Governance Code. The directors confirm that these processes have been in place since the date of Admission and up to the date of approval of the Annual Report and Financial Statements. As such the directors confirm that they have reviewed the effectiveness of the system of internal controls for the period under review and to the date of approval of the Annual Report and Financial Statements. The Board receives regular reports from the Audit and Risk Committee on its activities, including the Audit and Risk Committee’s review of reports prepared by internal audit on the operation and efficacy of internal controls systems. However, such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can provide only reasonable and not absolute assurance against material misstatement or loss.

TRE ASURY OPER ATIONSThe Company adopted a treasury policy prior to Admission which sets the Group’s approach to the management of risks from treasury operations. This policy will be reviewed annually by the Board.

WHISTLEBLOWINGThe Company has implemented a whistleblowing policy following Admission. The Audit and Risk Committee is responsible for monitoring the Group’s whistleblowing arrangements and the policy will be reviewed periodically by the Board. The Group is confident that these arrangements will be effective, facilitate the proportionate and independent investigation of reported matters, and allow appropriate follow up action to be taken.


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DE AR SHAREHOLDER

On behalf of the Board, I am pleased to present our first remuneration report for the financial year ended 31 December 2014. This has been prepared in accordance with the provisions of the Companies Act 2006 and Schedule 8 of the Large and Medium sized Company and Groups (Accounts and Reports) (Amendment) Regulations 2013.

In line with the regulations, this Directors’ Remuneration Report has been split into three parts:

• This Annual Statement;• The Remuneration Policy Report – which sets out the Directors’

Remuneration Policy of Jimmy Choo PLC. This will be subject to a binding vote at our 2015 Annual General Meeting (“AGM”); and

• The Annual Remuneration Report – which sets out details on how the Directors’ were remunerated in the period to 31 December 2014, and how the policy will be implemented in 2015. This will be subject to an advisory vote at our 2015 AGM.

REMUNER ATION PHILOSOPHYAs set out in the Company’s prospectus, the remuneration package for our Executive Directors has been designed based on the following key principles:

• Fixed remuneration should be set at a suitable level to attract and retain executives with the required calibre to run a company with the size and growth profile of the Company. Base salaries are generally targeted around market median of a suitable peer group.

• Variable remuneration, in particular long-term incentives, should form a significant part of the remuneration package to encourage a high-performance culture and to ensure that the interests of executives are strongly aligned with those of the Company’s shareholders.

• In line with the above, the total target cash remuneration opportunity for Executive Directors (fixed remuneration and target annual bonus) is set at around the market median of a suitable peer group. The total remuneration opportunity for Executive Directors (fixed remuneration, annual bonus and long-term incentives) is targeted at around the upper quartile of a suitable peer group.

In recognition of our remuneration philosophy, the variable remuneration arrangements for our Executive Directors are made up of an appropriate balance of both short and long-term incentives to ensure that our Executive Directors are focused on delivering both annual as well as long-term returns for shareholders.

• The annual bonus is based predominantly on financial performance conditions designed to reward the delivery of the Group’s strategy of pursuing growth without compromising the brand. For 2015, the annual bonus will be subject to three key performance metrics:

(1) A revenue growth metric – to support the long-term growth strategy of the business and the sustainability of the brand;

(2 A profit growth metric – to ensure that any growth delivers appropriate returns to shareholders; and

(3) A cash conversion metric – to ensure that the business is delivering sufficient cash returns to cover its operating costs.

• A long-term incentive, which is the primary tool to be used to drive the long-term business strategy and align the interests of the management team with those of the Company’s shareholders.

To ensure that the long-term incentive plan achieves its primary objectives and to ensure that it acts as a strong motivation and retention tool, we have considered it appropriate for awards under the plan to be subject to an extended vesting period (whereby no value is received unless the participant remains in employment for a period of at least five years from the date of grant) only. We believe that management continuity, in particular in an industry where the management team is synonymous with the products developed and the brand vision, is key to delivering long-term returns for shareholders.

We appreciate that operating a long-term incentive plan that is not subject to forward looking performance conditions is not common practice compared to other FTSE listed companies, however, we strongly believe that granting awards subject to an extended vesting period rather than granting awards which are subject to performance over a shorter period (i.e. three years from the date of grant), is more likely to drive behaviours that are in the interests of long-term value creation for shareholders.

To emphasise the link between the management team and shareholders, the Committee also encourages the Executive Directors to build up significant shareholdings in the Company. Executive Directors are therefore expected to build up a significant shareholding in the Company over the seven years following Admission. The shareholding guideline for Pierre Denis is 500% of base salary and for Jonathan Sinclair is 200% of base salary.

Following the grants that were made to the Executive Directors shortly after Admission of the Company, there is currently no intention for them to participate in the long-term incentive plan in 2015.

REMUNERATION AND NOMINATIONS COMMITTEE CHAIRMAN’S STATEMENT


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2 014 PERFORMANCE AND REMUNER ATION OUTCOMES2014 represented a strong year of performance for Jimmy Choo PLC, its first year as a publicly listed company. Particular highlights for 2014 include:

• revenue of £299.7m, which were up 6.4% on 2013;• 7.2% growth in Adjusted EBITDA to £50.2m; • opening a net nine new stores and extension of our new store

concept to 15 stores;• continuing rollout of SAP and shared services around

Jimmy Choo;• consolidation of Choo 24:7 and successful launch of CHOO.08°;

and• important development of our online and men’s businesses.

In light of the level of performance achieved in 2014 against objectives that were set prior to the IPO, the Remuneration and Nominations Committee approved bonus payments of c.43% of salary to the CEO and c.30% of salary to the CFO, pro-rated for time based on his period of employment during the year. Further details on performance against the targets are set out on page 69.

As noted above, the long-term incentive plan for the Executive Directors are not subject to forward looking performance conditions. As required under the regulations, the single figure table therefore includes the face value of shares awarded shorty following Admission. The Executive Directors have not received any value from these awards at this stage, as they are subject to extended continued employment requirements. Should an Executive Director leave the Company prior to vesting, unless otherwise determined by the Committee, these awards would be forfeit.

I hope that you find the Remuneration Report helpful, clear and informative and I hope you will support the resolutions to approve the Directors remuneration policy and the Remuneration Report at the 2015 AGM.

BART BECHTCH AIRM A N OF T HE REMUNER ATION A ND NOMIN ATIONS COMMIT T EE18 March 2015


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REMUNER ATION POLICY REPORT

The following sets out the Remuneration Policy (the “Policy”) for Directors of the Company. This Policy will be put forward for shareholder approval at the 2015 AGM in accordance with section 439A of the Companies Act 2006. Subject to shareholder approval, this Policy will apply to payments made on or after the date of the 2015 AGM (27 May 2015) and will be effective for three years.

E XECUTIVE DIREC TORSThe remuneration of the Executive Directors is set by the Remuneration and Nominations Committee (the Committee) under delegated powers from the Board.

POL ICY TA BL E

Element Purpose and link to strategy Operation Maximum opportunity Performance measures

Base salary To recognise the responsibilities, experience and ability of our talent in a competitive global environment, keeping our people focused on, and passionate about, the brand.

The Committee sets base salaries within the same framework as those for all other employees taking into account a range of factors, including:

• the individual’s skills, performance and experience;

• their overall contribution to the business during the year;

• the cost to the Company;• salary increases

awarded across the Group as a whole;

• the external economic climate; and

• external benchmark data at other global companies of similar size and/or global reach within relevant sectors and/or companies with a high growth profile.

Base salaries are normally reviewed, although not necessarily increased, annually. Base salaries may be reviewed more frequently at the discretion of the Committee.

The Committee considers the impact of any base salary increase on the total remuneration package.

Salaries for Executive Directors are targeted at around the median for competitors.

Whilst there is no maximum salary, any increases will normally be in line with the range of increase for all employees across the Group.

The Committee retains the flexibility to award increases above this level in certain circumstances, for example:

• to reflect the individual’s development and performance in the role;

• to reflect a significant increase in the individual’s role or responsibility; and

• where a new recruit or promoted employee’s salary has been set lower than the market level for such a role and larger increases are justified in the Committee’s opinion as the individual becomes established in the role.

N/A

Pension To offer market competitive retirement benefits, to recruit and retain appropriate talent to lead the business.

Executive directors may receive contributions into a defined contribution arrangement, as a cash allowance or as a combination thereof.

Base salary is the only element of remuneration that is pensionable.

Maximum Company contribution: up to 25% of salary per annum.The company pension contribution for the executive directors for 2015 is:

• CEO – €50,000 to the Caisse des Français de L’Etranger (or as a cash allowance)

• CFO – up to 10% of salary.

N/A


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Other benefits and allowances

To promote the well-being of employees, allowing them to focus on the business.

Benefit levels are normally reviewed on an annual basis and the cost to the Company of providing benefits can vary due to a number of factors.

Benefits for Executive Directors may include, but are not limited to:

• private medical insurance (including for their spouse and for dependant children);

• life assurance;• long-term disability

insurance;• car or car allowance;• an allowance for school

fees for dependant children;

• clothing allowance;• employee discount;• other benefits provided

to all employees across the Group; and

• the Company paying any tax or social security contributions due on any of the benefits.

Other benefits may be provided, where the Committee considers this appropriate.

Reasonably incurred expenses will also be reimbursed.

The Committee may agree that the Company will pay additional allowances linked to relocation or international assignment where required.

The aggregate maximum value of all other benefits and allowances is not normally anticipated to exceed £200,000 per individual per annum.

The Committee retains the discretion to approve a higher cost in exceptional circumstances (e.g. recruitment or relocation) or in circumstances where factors outside the Company’s control have changed materially (e.g. increases in private medical insurance premiums).

N/A


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Annual Bonus To reward Executive Directors for achieving annual financial targets or other short-term objectives linked to the strategic plan agreed by the Board.

Awards are based on an appropriate balance of financial and non-financial performance metrics.

Performance targets are set annually by the Committee.

At the end of the year, the Committee determines the extent to which the performance targets have been achieved. In doing so, the Committee exercises its judgement to ensure that the outcomes are fair in the context of the underlying performance of the Group as a whole.Bonus pay-outs are in cash.

Bonus awards are subject to clawback (details set out later in this report).

The maximum opportunity under the annual bonus plan is 200% of salary in respect of a financial year.

The maximum bonus opportunities for 2015 are:

• CEO – 120% of salary.• CFO – 50% of salary.

Performance is measured against a range of key performance metrics, determined on an annual basis to ensure they remain appropriate and are aligned with the Group’s strategy.

The weighting between the measures is determined on an annual basis, however at least 75% will be based on measures relating to financial performance.

Performance is measured over 12 months.

For performance below threshold, the bonus payout is nil. For threshold performance, the bonus payout is 25% of maximum. For target performance, the bonus payout is up to 75% of maximum.

For 2015, 100% of the annual bonus opportunity will be based on financial performance metrics.


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63


Long-Term Incentive Plan

To incentivise and reward participants for the delivery of long-term performance, and align the interests of Executive Directors with our shareholders.

Under the long-term incentive plan, awards of shares may be granted, which normally vest subject to the continued employment of the participant for a five-year period from the date of grant.

Long-term incentive awards are normally granted in the form of conditional shares or options with a total exercise price of £1 (or such higher amount as determined by the Committee at grant). They may however be awarded in other forms if it is considered appropriate.

Unvested awards are subject to malus (details set out later in this report).

Dividend equivalents may accrue over the five-year vesting period. These will normally be paid in shares on a cumulative reinvestment basis.

The Committee may adjust and amend awards in accordance with the plan rules.

The Committee calibrates long-term incentive share awards for participants as a fixed number of shares.

The Committee will determine annual award levels for each of the Executive Directors taking into account its philosophy that the total compensation opportunity for Executive Directors should be positioned at around the upper quartile of an appropriate peer group (as determined by the Committee).

The maximum award to any individual in respect of any one financial year will be over no more than 2,500,000 shares. Details of the awards in respect of each financial year will be disclosed in the Annual Report on Remuneration.

Vesting of awards is subject to continued employment.

NOT ES TO T HE POL ICY TA BL EDISCRE TION TO HONOUR A L L PRIOR COMMIT MEN TSThe Committee reserves the right to make any remuneration payments and payments for loss of office where the terms were agreed before this Policy came into effect or prior to an individual being appointed a director of the Company and the payment was not in consideration for the individual becoming a director of the Company.

For these purposes ‘payments’ include the Committee satisfying awards of variable remuneration and, in relation to an award over shares (including awards granted prior to and shortly after Admission of the Company (including the JC PLC Share Award and the One-Off Share Award as detailed below)), in line with the terms of the payment that were agreed at the time the award was granted.

JC PL C SH A RE AWA RD Prior to Admission, a co-investment plan was operated which required executives to invest in shares of Choo Luxury Holdings Limited. In return for the participant’s investment in these shares, they were granted matching phantom (i.e. cash settled) options which participated in the growth in the value of the company from the date of the investment to the end of the vesting period.

On Admission of the Company, participants exercised a portion of their phantom options. The remaining phantom options were surrendered by participants. Following Admission of the Company, participants were granted awards in the form of an option with a nominal total exercise price of £1 or conditional share awards. The number of shares awarded was linked to the Black-Scholes value of the phantom options surrendered. These awards will normally become exercisable (or will vest) in equal tranches in July 2016, July 2017 and July 2018 subject to the participant’s continued employment with the Group. Details of the outstanding awards made to the CEO under the plan are set out in the Annual Remuneration Report.


64

ONE-OF F SH A RE AWA RDFollowing Admission of the Company, selected senior management and the Executive Directors of the Company were granted a one-off award in the form of an option with a nominal total exercise price of £1 or conditional shares, which normally vest 50% on the fifth and 50% on the sixth anniversary of the date of grant subject to the participant’s continued employment with the Group. The CFO’s award vests in equal tranches on the fourth, fifth and sixth anniversary of the date of grant, subject to his continued employment with the Group. Details of the outstanding awards made to Executive Directors under the plan are set out in the Annual Remuneration Report.

REMUNER ATION A ND NOMIN ATIONS COMMIT T EE DISCRE TION IN REL ATION TO F U T URE OPER ATION OF T HE REMUNER ATION POL ICYIn the event of a variation of share capital, demerger, dividend in specie, special dividend or similar event, the Committee may adjust or amend awards in accordance with the rules of the relevant plan.

If the Company has been or will be affected by a demerger, dividend in specie, special dividend or other transaction which will affect the current or future value of the Company’s shares, awards may vest to the extent the Committee determines, which may include awards being time pro-rated if the Committee considers it appropriate.

The Committee retains the discretion to amend performance targets in exceptional business or regulatory circumstances or to vary such targets if acting fairly and reasonably if it considers it appropriate to do so. If discretion is exercised in this way the Committee may consult with major shareholders as appropriate.

The Committee may make minor amendments to the Policy (for example for regulatory, exchange control, tax or administrative purposes or to take account of a change in legislation) without obtaining shareholder approval for that amendment.

M A LUS Under the malus provision, the Committee can reduce awards that have not yet vested. Malus may apply where stated in the Policy table above.

The circumstances in which malus would apply are set out below:

• where there has been a material misstatement of the Company’s Annual Report and Financial Statements for the financial year during which the award was granted and/or for any subsequent financial year ending before either the last date when the award becomes exercisable or the final vesting date;

• where there has been serious reputational damage to the Company as a result of the participant’s actions or the actions of a member of the team for which the participant is directly responsible;

• where the participant has deliberately misled the Company, the Company’s shareholders or the market regarding the Company’s financial performance; or

• gross misconduct.

CL AW BACKThe Committee can reclaim bonus payments made from 2016 onwards, for a period of up to two years post the payment date in the following circumstances:

• where there has been a material misstatement of the Company’s Annual Report and Financial Statements for the financial year to which the bonus payment relates; or

• gross misconduct.

PERF ORM A NCE ME ASURES A ND APPROACH TO TA RGE T SE T TINGThe performance measures for the annual bonus are set by the Remuneration and Nominations Committee on an annual basis to reflect the Group’s financial objectives for any given year.

The performance targets applied to the annual bonus are reviewed annually, based on a number of internal reference points (including the budget for the financial year and prior year performance) and external reference points (including consensus forecasts, forecasts for the wider luxury industry as well as the wider economic environment).

The Committee believes that the pay-outs under the bonus plan should only be received for out-performance. Given the level of stretch in the performance targets for the annual bonus at all levels, the Committee considers it appropriate to set pay-outs for “target” performance at up to 75% of the maximum. Maximum awards will only be earned where the performance of the Group has significantly exceeded expectations.

The following sets out the performance measures that will be used for the annual bonus for 2015:

ME ASURES • revenue growth;• net income growth; and• reduction in net working capital as a percentage of revenue.

WHYThe measures were chosen to support the Company’s key financial objectives for 2015 of:

• growth;• margin expansion; and • strong cash flow generation.

LONG-T ERM INCEN TIV E AWA RDS A ND SH A REHOL DER A L IGNMEN TThe Committee believes that the long-term incentive plan should primarily be used as a tool to align the interests of the management team with those of the Company’s shareholders.

In order to achieve this primary objective and to ensure that the long-term incentive plan acts as a strong motivation and retention tool, encouraging individuals to remain in long-term employment with the Company, the Committee considers it appropriate to grant long-term incentive awards that are subject to an extended vesting period (i.e. five years from the date of grant) rather than granting awards which are subject to performance over a shorter period (i.e. three years from the date of grant), which the Committee considers may drive shorter-term behaviours.

To emphasise the link between the management team and shareholders, the Committee also encourages the Executive Directors to build up significant shareholdings in the Company. Executive Directors are therefore expected to build up a significant shareholding in the Company over the seven years following Admission. The shareholding guideline for the CEO is 500% of base salary and for the CFO is 200% of base salary.


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SCEN A RIO CH A R TSThe regulations require the inclusion of a scenario chart which sets out what each of the Executive Directors could receive for varying levels of performance in respect of the first year in which the Policy is to be effective.

As set out in the Company’s Prospectus, the Committee does not currently intend to grant a long-term incentive award in respect of 2015 and as such no determination has yet been made on the number of shares that would be granted to each of the Executive Directors under the long-term incentive plan. The following chart therefore only includes the value of base salary, pension, other benefits and allowances and the annual bonus.

T HRESHOL D

F I X ED PAY

M A X IMUM

£ 0.8 9 M

£ 1. 47M TA RGE T

£ 1.6 7M

10 0 %

6 0 %

5 3 %

4 0 %

47%

CEO SCENARIO CHART

A NNUA L RE WA RD

T HRESHOL D

F I X ED PAY

M A X IMUM

£ 0.5 9 M

£ 0 .72 M TA RGE T

£ 0 .76 M

10 0 %

8 2 %

7 7%

18 %

2 3 %

CFO SCENARIO CHART

A NNUA L RE WA RD

The above charts are based on the following assumptions:

• Below threshold is based on fixed pay only, which includes 2015 base salary, pension (assuming both of the Executive Directors participate in the pension) and other benefits and allowances. For simplicity the normal maximum other benefit and allowances cap of £200,000 has been used. It is noted that the actual level of benefits will vary by year.

• Target includes fixed pay (as noted above) and target bonus opportunity (75% of the maximum).• Maximum includes fixed pay (as noted above) and the maximum bonus opportunity. • The Committee does not currently intend to grant a long-term incentive award in respect of 2015. The value of long-term incentives

has therefore been excluded from the above.• Awards granted shortly after Admission have also been excluded as these were one-off in nature.

REMUNER ATION POLICY FOR NON-E XECUTIVE DIREC TORS

Purpose Approach to fees

Chairman and Non-Executive Director – feesTo attract and retain high-calibre Non-Executive Directors.

Fees are set at a market appropriate rate with reference to fees paid to other Non-Executive Directors at companies of a similar size to the Company and to reflect the time commitment and the personal contribution expected from Non-Executive Directors. Fees are normally reviewed annually.

The remuneration of the Chairman is set by the Board based on a recommendation from the Remuneration and Nominations Committee. The Chairman is paid a single fee for all responsibilities.

The remuneration of the Non-Executive Directors is set by the Board based on a recommendation from the Chairman. Non-Executive Directors are paid a basic fee for their role. Additional fees may be paid for additional board duties such as chairmanship of a committee and the Senior Independent Director role.

Fees are paid in cash. Non-Executive Directors and the Chairman are expected to invest 50% of their net of tax fees in the Company’s shares. Any investment at Admission is recognised as a prepayment of such investment of fees.

Fees paid are subject to a maximum cap which is stated in the Company’s Articles of Association. Any changes in this would be subject to shareholder approval.

Chairman and Non-Executive Directors – other benefitsTo enable the Chairman and Non-Executive Directors to undertake their roles.

Reasonably incurred expenses will be reimbursed. Additional fees or benefits may be provided, where appropriate, at the discretion of the Board.

The Chairman and Non-Executive Directors are not eligible to participate in any incentive arrangements operated by the Company.


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REMUNER ATION POL ICY F OR NE W HIRESThe Committee aims to attract, motivate and retain an Executive Director with the required expertise to develop and deliver the business strategy, while at the same time ensuring that the remuneration arrangements offered are in the best interests of both the Company and its shareholders.

In determining the appropriate remuneration arrangements for a new recruit, the Committee will take into account all relevant factors, including but not limited to, the individual’s skills and expertise, local market practice, appropriate market data, and the individual’s existing remuneration package.

In cases of hiring a new recruit to the Board (including an internal promote), the Committee will ensure that the remuneration arrangements are in line with the approved remuneration policy and all its elements as set out in the table above. The ongoing annual remuneration arrangements for new Executive Directors will therefore comprise:

• base salary;• suitable pension and other benefits and allowances (which may

include a relocation allowance where the Committee considers it appropriate);

• an annual bonus opportunity; and• a long-term incentive award.

The maximum ongoing level of annual variable remuneration which may be awarded to a new executive shall therefore be limited to the levels set out in the Policy table (i.e. 200% of salary for the annual bonus and 2,500,000 shares under the long-term incentive plan) for Executive Directors, excluding buy-out awards.

The Committee retains the flexibility to undertake the following actions, as appropriate, in the best interests of the Company and therefore shareholders:

• For external appointments, the Committee may offer additional cash and/or share awards (‘buy-out’ awards) to take account of remuneration relinquished when leaving a former employer. As far as possible and appropriate, such payments would reflect the nature, time horizons and performance requirements attaching to the relinquished remuneration. Where appropriate, the Committee retains the discretion to utilise Listing Rule 9.4.2 for the purpose of making such an award.

• For an internal appointment, the Committee would honour any contractual commitments made prior to their promotion to the Executive Director level, even in instances where they would not otherwise be consistent with the prevailing Policy at the time of appointment.

• If necessary, the Committee may offer additional cash and/or share based elements to secure an appointment, for which the Committee has not set a maximum. The Committee would determine the performance conditions and time horizons that would apply to such awards at the time. The Committee would provide full disclosure of the rationale for such an award in the Directors’ Remuneration Report in the year following such an award.

NON-E X ECU TIV E DIREC TORSIf a new Chairman or Non-Executive Director is appointed, remuneration arrangements will normally be in line with those detailed in the remuneration policy for Non-Executive Directors above.

SER V ICE CON T R AC T A ND E X IT PAY MEN T POL ICY E X ECU TIV E DIREC TORSExecutive Director service agreements, including for early termination, are carefully reviewed by the Committee. The Committee does not believe that there should be any element of reward for failure.

The Committee’s approach to termination payments is to consider each case on an individual basis taking into account any pre-established contractual agreements (including the provisions of any incentive plans), the performance and conduct of the individual and the commercial justification for any payments.

The key terms and conditions of the current Executive Directors, as stipulated in their service agreements are set out below:

NOTICE PERIOD • Each Executive Director’s service agreement is terminable by

the Executive Director on six months’ written notice.• The Company may terminate Pierre Denis’ service agreement

on twelve months’ written notice.• The Company may terminate Jonathan Sinclair’s service

agreement on six months’ written notice.• For new appointments the Committee’s policy is that Executive

Director service agreements will provide up to twelve months’ notice by the Company and up to twelve months’ notice by the Executive Director.

TERMINATION PAYMENTS • The Company is entitled to terminate each Executive Director’s

employment immediately and make a payment in lieu of notice comprising the executive’s base salary in respect of the notice period (or the remaining part of it) and a sum equal to the value of other benefits during the notice period (or the remaining part of it).

• Alternatively, the Company may continue to provide Jonathan Sinclair with his contractual benefits for the duration of what would have been his notice period (or the remaining part of it).

• The Company may elect at its discretion to make the payment in lieu as a lump sum or to pay half the payment in lieu as a lump sum and to pay the second half subsequently in equal instalments.

• A duty to mitigate may apply to the payment in instalments.

ANNUAL BONUS • Where an Executive Director leaves office during the performance

period (or after the end of the performance year but before payment is made) any bonus will be at the discretion of the Committee. Any payment will typically be on a pro-rata basis up to the termination date, taking into account the extent to which any performance targets have been met.

• Under his service contract, other than in certain “bad-leaver” circumstances, where the Company gives notice to Pierre Denis, he is entitled to a pro-rata annual bonus taking into account time in employment during the financial year and the extent to which any performance targets have been met.

• Upon voluntary resignation or termination for cause no bonus payment would be made.


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LONG-TERM INCENTIVES • The treatment of long-term incentive awards is governed by the

relevant incentive plan. JC PLC SHARE AWARD• If a participant ceases employment with the Group by reason

of disability, death or dismissal without cause (including mutual agreement) the Committee will determine the number of unvested awards that will vest taking into account the proportion of time elapsed since the original investment was made under the co-investment plan and a pre-agreed pro-rating approach for each tranche of the award.

• In other circumstances, unless the Committee determines otherwise, unvested awards will lapse on cessation of employment.

• Awards to the extent that they have vested on cessation of employment (or for any reason) or that are allowed to vest as referred to above will be exercisable for a period of up to twelve months from the date of cessation (or if earlier until the end of the option exercise period).

ONE-OFF SHARE AWARD AND FUTURE AWARDS UNDER THE LONG-TERM INCENTIVE PL AN• Unless the Committee in its sole discretion determines otherwise

(in which case it will determine the terms on which awards vest and may be exercised), if a participant ceases to be employed by the Group for any reason, any awards will lapse on cessation of employment.

OTHER • Legal fees and outplacement costs may be paid if the Committee

considers this commercially appropriate.

CHANGE OF CONTROL• In the event of a change of control, Executive Directors may

receive a bonus in respect of the year in which the change of control occurs, which, unless the Committee determines otherwise, will be pro-rated by reference to the time elapsed in the bonus year and performance achieved.

• Long-term incentive awards will normally vest, taking into account the time elapsed between grant and vest, unless the Committee determines otherwise. Awards may alternatively be exchanged for an equivalent award in the acquirer, where appropriate.

CH AIRM A N A ND NON-E X ECU TIV E DIREC TORSThe Non-Executive Directors and Chairman of the Board have letters of appointment which set out their duties and responsibilities. They do not have service contracts.

The Chairman’s letter of appointment states that his appointment is expected to last for at least six years, subject to annual re-election in general meeting. His appointment is terminable at any time upon written notice, in accordance with the Articles of Association, his resignation or in accordance with the relationship agreement entered into between the Company and JAB Luxury.

The appointments of each Non-Executive Director are for a fixed term of six years, subject to annual re-election in general meeting. The appointments of all the Non-Executive Directors may be terminated at any time upon written notice, in accordance with the Articles of Association or upon their resignations. In addition, the appointment of the Non-Executive Directors appointed pursuant to the relationship agreement entered into between the Company and JAB Luxury may be terminated in accordance with that agreement.

REMUNER ATION POL ICY IN T HE RES T OF T HE COMPA N YThe remuneration arrangements for Executive Directors outlined above are consistent with those for the other employees in the Group, although quantum and award opportunities vary by Executive level. Only the senior most executives in the Group participate in the long-term incentive plan.

During its deliberations on executive remuneration, the Committee considers the reward framework for all employees worldwide, ensuring that the principles applied are consistent with the Executive remuneration policy. Merit increases awarded to executives are determined within the broader context of employee remuneration.

Due to the size and geographical spread of the Group’s operations, it does not invite employees to comment on the Directors’ Remuneration Policy.

CONSIDER ATION OF SH A REHOL DER V IE WSAlthough the Company only recently became a public listed company, the Committee recognises the importance of understanding the views of their new shareholders. The Committee is therefore open to listening to the views of our new shareholders through the year and at the annual general meeting.

The Committee Chairman speaks with the Company’s largest shareholder on the subject of remuneration as and when appropriate. The Company’s largest shareholder is very supportive of the Company’s philosophy and policy on remuneration. The Committee will continue to keep its remuneration policy under review to ensure that it remains aligned with the Company’s strategic objectives and provides strong alignment with shareholder interests.


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ANNUAL REMUNER ATION REPORT

E XECUTIVE DIREC TORSS TAT EMEN T OF IMPL EMEN TATION OF REMUNER ATION POL ICY F OR 2 015BASE SA L A RYNo changes have been made to base salaries since Admission of the Company. The table below shows base salaries for 2015.

Pierre Denis £650,000

Jonathan Sinclair £350,000

PENSIONIn respect of Pierre Denis, the Company will contribute up to €50,000 to the Caisse des Français de l’Etranger. In respect of Jonathan Sinclair, the Company will contribute 10% of base salary to the Company’s Group Personal Pension Scheme if he contributes at least 5% of base salary.

BENEF ITSThe Committee sets benefits in line with the policy set out on pages 60 to 63. For 2015, both of the Executive Directors will receive private medical insurance for himself, his spouse and dependent children and life assurance. As agreed as part of his relocation arrangements on joining the Group, Pierre Denis will also be reimbursed for annual school fees in respect of his children (up to a maximum of £18,000 per child) and receive a company car.

A NNUA L BONUSThe maximum bonus opportunity for the Executive Directors in respect of 2015 will be as follows:

Pierre Denis 120% of base salary

Jonathan Sinclair 50% of base salary

For 2015, the annual bonus opportunity will be based solely on the following financial performance metrics: revenue growth (measured on a constant exchange rate basis), net income growth and a reduction in net working capital as a percentage of revenue.

Annual bonus awards will be paid in cash.

The Committee considers the exact performance targets to be commercially sensitive and as such these have not been disclosed ahead of the financial year. However, in next year’s Annual Report and Financial Statements, the Committee will provide shareholders with appropriate context on performance against the performance targets and the rationale for any bonus pay-outs, within commercial constraints.

LONG-T ERM INCEN TIV E PL A NThere is currently no intention for Executive Directors to participate in the long-term incentive plan in 2015, given the awards received shortly after Admission.

NON-E X ECU TIV E DIREC TORSThe following table sets out the Non-Executive Director fee structure for 2015:

Chairman £150,000

Basic fee for Non-Executive Directors £50,000

Board Committee Chairman £15,000

Senior Independent Director £5,000

Fees will be paid in cash. Non-Executive Directors and the Chairman are expected to invest 50% of their net of tax fees in the Company’s shares, taking into account any investment prepaid at Admission.

SINGL E TOTA L F IGURE OF REMUNER ATION F OR E X ECU TIV E DIREC TORS F OR T HE Y E A R ENDED 31 DECEMBER 2 014 (AUDIT ED)The following table sets out the total remuneration for Executive Directors for the year ended 31 December 2014. Given that Jimmy Choo PLC only listed as a public company on 22 October 2014, the figures shown represent the remuneration received over the period 22 October 2014 to 31 December 2014 and therefore do not include a prior year comparison figure.

The Executive Directors did not provide any qualifying services between 1 September 2014 (the date of appointment as Directors of Jimmy Choo PLC) and 22 October 2014.


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69

Base salary £’000

Pension £’000

Other benefits and allowances

£’000

Annual Bonus £’000

Total pre long-term incentives

£’000

Long-termincentives1

£’000Total

£’000

Pierre Denis 128 8 15 55 206 5,147 5,353

Jonathan Sinclair 68 – 2 20 90 1,500 1,590

1 The amounts shown in this column reflect the value on grant of the awards made shortly after Admission of the Company to Pierre Denis and Jonathan Sinclair. Although the regulations require the disclosure of the full grant value of the awards in this table, these awards are subject to continued employment requirements. Further details of the vesting schedule for these awards are set out on pages 63 and 64.

EL EMEN TS OF T HE SINGL E F IGURE OF REMUNER ATION BASE SAL ARYThe values shown in the table represent the amount received since Admission of the Company. Annualised base salaries for the Executive Directors following Admission were:

Pierre Denis £650,000

Jonathan Sinclair £350,000

PENSIONFor Pierre Denis, this represents the Company’s contribution to the Caisse des Français de l’Etranger.

Jonathan Sinclair did not participate in the pension arrangements in 2014.

OTHER BENEFITS AND ALLOWANCESThe values shown in the table represents the taxable value of benefits received during the financial year since Admission of the Company.

For Pierre Denis this includes: company car, school fees (which is only drawn in respect of one of his three dependant children), private healthcare and product allowances.

For Jonathan Sinclair this includes: private healthcare and product allowances.

ANNUAL BONUSThe value shown in the table reflects the annual bonus earned in respect of performance in the year ended 31 December 2014, pro-rated over the period since Admission of the Company. The bonus was paid in cash.

The Executive Directors’ annual bonus awards in relation to performance during 2014 were measured against a basket of metrics and objectives. For Pierre Denis and Jonathan Sinclair, they were weighted 70% on Group financial objectives and 30% on strategic objectives.

The table below shows the overall outcome against each of the financial measures. The Board considered the financial performance of the Group to be strong in the year, and in particular, the Group made strong progress against the revenue target set at the beginning of the year. Although absolute Adjusted EBITDA performance was resilient during the year, the stretching targets set at the beginning of the year were not met and nor were the net working capital targets.

Weighting (as a total of annual bonus opportunity)

Performance achieved as a percentage of maximum

Performance measurePierre Denis

Jonathan Sinclair Threshold Target Maximum

Payout % maximum

Adjusted EBITDA 25% 25% 0%

Revenue at constant exchange rates 25% 25% 85.2%

Net working capital (as a percentage of revenue) 20% 20% 0%


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Actual targets have not been disclosed as they were set at a time prior to the Company becoming a listed Company and as such the Board considers the underlying targets to be commercially sensitive and any disclosure of such targets could be seriously prejudicial to the Group’s business.

A portion of Pierre Denis bonus was subject to performance against strategic objectives set at the beginning of the year. Pierre demonstrated strong performance against these objectives during the year, his key achievements in the year include development of the distribution network, leadership of the IPO and the transformation programme.

A portion of Jonathan Sinclair’s bonus was also subject to performance against strategic objectives set at the beginning of the year. Jonathan demonstrated strong performance against these objectives during the year, his key achievements in the year include a number of aspects of the successful IPO and the transformation programme.

As a result of the above performance, the Committee considered it appropriate to pay Pierre Denis a bonus of c.43% of salary and Jonathan Sinclair a bonus of c.30% of salary, pro-rated for time based on his period of employment during the year

LONG-TERM INCENTIVESAs required under the regulations, the values shown in the table represents the face value of shares (based on a share price of £1.40) awarded following Admission which are subject to the Executive Directors continued employment with the Company only. Although the regulations require the disclosure of the full grant value of the awards in the single figure table, these awards are subject to continued employment requirements as set out below. The individuals have not yet received any value from these awards at this stage.

For Pierre Denis, this includes the face value of shares granted to him under the JC PLC Share Award, which as set out in the Remuneration Policy were granted to replace awards under a phantom share option plan that was operated by the Group prior to Admission. The value of the shares granted were linked to the Black-Scholes value of the phantom options that were surrendered by Mr. Denis before Admission of Company. These awards will only become exercisable in equal tranches in July 2016, July 2017 and July 2018 subject to Mr. Denis’ continued employment with the Company.

It also includes the face value of the shares granted to him under the one-off award which was made shortly after Admission, which will vest 50% on the fifth anniversary of the date of grant and 50% on the sixth anniversary of the date of grant subject to Mr. Denis’ continued employment with the Company.

For Jonathan Sinclair, this includes the face value of shares granted to him under the one-off award which was made shortly after Admission, which will vest in equal tranches on the fourth, fifth and sixth anniversary of the date of grant subject to Mr Sinclair’s continued employment with the Company.

SCHEME IN T ERES TS GR A N T ED DURING T HE F IN A NCIA L Y E A R (AUDIT ED)The table below sets out the details on the awards made to Executive Directors during the financial year, namely the JC PLC Share Award and the One-Off Share Award.

Award Individual Type of awardFace value of award at grant1 Vesting period for awards

Performance measures Threshold and maximum vesting

JC PLC Share Award

Pierre Denis

Nominal cost option2

£1,847,167 Awards become exercisable in equal tranches in July 2016, July 2017 and July 2018

Subject to continued employment only

100% of the awards become exercisable on the dates set out in the column “vesting period for awards”One-Off

Share Award

Pierre Denis

Nominal cost option2

£3,300,000 Awards become exercisable in equal tranches in October 2019 and October 2020

Jonathan Sinclair

£1,500,001 Awards become exercisable in equal tranches in October 2018, October 2019 and October 2020

1 Based on the share price used for the grant of awards of £1.40. These shares were granted on 30 October 2014.2 Total exercise price of option on exercise – £1.


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71

E X ECU TIV E DIREC TOR SH A REHOL DINGS (AUDIT ED)The Committee recognises the importance of aligning Executive Directors’ and shareholder interests through the executives building up significant shareholdings in the Company. Executive Directors are therefore expected to build up a significant shareholding in the Company over the seven years following Admission. The shareholding guideline for Pierre Denis is 500% of base salary and for Jonathan Sinclair is 200% of base salary.

The table below shows the shareholding of each Executive Director against their respective shareholding guideline as at 31 December 2014:

Individual

Total number of shares owned as at

22 October 2014

Shares acquired/sold by the Director

during the period

Total number of shares owned at

31 December 20141

Total value of shares owned at

31 December (as apercentage of salary)2

Shares acquiredby the Director

during the period 31 December 2014 and 18 March 2015

Pierre Denis3 2,771,429 – 2,771,429 746% –

Jonathan Sinclair 35,714 – 35,714 18% –

1 Includes shares held by the Director and by their connected persons.2 Based on a closing share price on 31 December 2014 of 175p.3 As disclosed in the Prospectus, following Pierre Denis’s exercise of awards under the previous phantom share option plan, he agreed to make an investment in Jimmy Choo PLC shares. Pursuant to

this agreement, Pierre Denis purchased 771,429 shares immediately following Admission of the Company. In order to fund his investment, Pierre Denis has entered into a loan agreement with HSBC, pursuant to which he agreed to grant a pledge over 2,771,429 shares to HSBC. Pierre Denis has agreed that he will hold these shares in line with and in the same proportions as the vesting schedule for the JC PLC Share Awards.

As shown in the table above Pierre Denis has met his shareholding guideline. Jonathan Sinclair is on-target to meet his shareholding requirement.

The below shows in relation to each Executive Director the total number of share options with and without performance conditions held at 31 December 2014.

Individual

Options with performance

measures

Options without

performance measures

Vested but unexercised

Exercised during the

year

Pierre Denis3 – 3,676,548 – –

Jonathan Sinclair – 1,071,429 – –

PAY MEN TS TO PAS T DIREC TORS (AUDIT ED)There were no payments to past directors during the financial year.

PAY MEN TS F OR LOSS OF OF F ICE (AUDIT ED)There were no payments for loss of office during the financial year.

TSR PERF ORM A NCE CH A R T The graph below shows the TSR of the Company and the UK FTSE 250 Index since Admission of the Company to 31 December 2014. The FTSE 250 index was selected on the basis that the Company is a member of the FTSE 250 in the UK.

£ VALUE OF £100 INVESTED AT ADMISSION14 0

12 0

10 0

8 0OC TOBER 2 014— JIMM Y CHOO — F TSE 2 5 0

DECEMBER 2 014NOV EMBER 2 014


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HIS TORICA L CEO PAYGiven that the Company has only been publicly listed since 22 October 2014, the following sets out information regarding the CEO’s historical pay since Admission.

CEO 2010 2011 2012 2013 2014

Single figure of remuneration n/a n/a n/a n/a 5,3531

Annual bonus payout (as a % of maximum opportunity) n/a n/a n/a n/a 36%

Long-term incentive payout (as a % of maximum opportunity) n/a n/a n/a n/a 100%1

1 The regulations require the value of long-term incentives granted to the Executive Directors to be included at the date of grant as they are subject to continued employment with the Company only. Further details of the vesting schedule for these awards are set out on pages 63 and 64.

PERCEN TAGE CH A NGE IN CEO REMUNER ATION This section is not applicable as the Company only listed in October 2014 and as such there is no prior year comparator which can be shown.

REL ATIV E IMPOR TA NCE OF SPEND ON PAYThe following table illustrates total remuneration for all employees in the Group compared to distributions to shareholders and any other significant distributions and payments or other uses of profit or cashflow deemed by the directors to assist in understanding the relative importance of spend on pay since Admission of the Company to 31 December 2014. As the Company only listed in October 2014, there is no comparative information for the prior year. The following is based on the period following Admission of the Company to 31 December 2014.

2014 £m

Shareholder distributions (dividends and share buybacks) –

Total employee expenditure 10.8

E X T ERN A L APPOIN T MEN TSSubject to the Board’s approval, Executive Directors are able to accept a limited number of external appointments outside the Company and can retain any fees paid for these services. Details of such external appointments held between Admission and 31 December 2014 are set out below: Individual Roles and organisation Fees

Pierre Denis –

Jonathan Sinclair LLX Global Business Services SA1 –

Nottingham Scientific Limited £3,000 per annum pro rata

1 A subsidiary of JAB Luxury that provides various services to Jimmy Choo.

SINGL E TOTA L F IGURE OF REMUNER ATION F OR NON-E X ECU TIV E DIREC TORS F OR T HE Y E A R ENDED 31 DECEMBER 2 014 (AUDIT ED)The following table sets out the total remuneration for Non-Executive Directors and the Chairman for the year ended 31 December 2014. Given that Jimmy Choo PLC only listed as a public company on 22 October 2014, the figures shown represent the remuneration received over the period 22 October 2014 to 31 December 2014 and therefore do not include a prior year comparison figure.

Basic fee £

Board Committee

Chairmanship fee

£

Senior Independent Director fee

£Total

£

Peter Harf 30 – – 30

Bart Becht 10 3 – 13

Gianluca Brozzetti 10 – – 10

Fabio Fusco 10 – – 10

Olivier Goudet 10 – – 10

David Poulter 10 – 1 11

Bob Singer 10 – – 10

Judith Sprieser 10 3 – 13

Fees are paid in cash. Non-Executive Directors and the Chairman are expected to invest 50% of their net of tax fees in the Company’s shares.


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NON-E X ECU TIV E DIREC TOR SH A REHOL DINGS (AUDIT ED)The following table shows the shareholding of each of the Non-Executive Directors and their connected persons as at 31 December 2014.

Total number of shares owned as at

22 October 2014

Total number of shares owned at

31 December 2014

Shares acquired by the Director

during the period 31 December 2014 and 18 March 2015

Peter Harf 928,571 928,571 –

Bart Becht 928,571 928,571 –

Gianluca Brozzetti – – –

Fabio Fusco 107,143 107,143 –

Olivier Goudet 928,571 928,571 –

David Poulter 142,857 142,857 –

Bob Singer 285,714 285,714 –

Judith Sprieser 35,714 35,714 –

T HE REMUNER ATION A ND NOMIN ATIONS COMMIT T EEAs of 31 December 2014, the Committee comprised of three Non-Executive Directors:

• Bart Becht (Chairman)• Peter Harf• Gianluca Brozzetti

The Committee determines and recommends to the Board the Group’s policy on executive remuneration, determines the level of remuneration for Executive Directors and the Chairman and other senior executives and prepares the annual remuneration report for approval by shareholders at the annual general meeting. The Committee also assists the Board in reviewing the structure, size and composition of the Board. It is also responsible for reviewing succession plans for the Directors, including the Chairman, the CEO and other senior executives.

The Committee did not hold any scheduled meetings in the period following Admission of the Company to 31 December 2014. The Committee did however hold one scheduled meeting between the 31 December 2014 and the publication of this report.

During the year, the Committee received independent advice on executive remuneration matters from Deloitte LLP (“Deloitte”). Deloitte is a member of the Remuneration Consultants Group and as such, voluntarily operates under the code of conduct in relation to executive remuneration consulting in the UK. The Committee has reviewed the advice provided by Deloitte during the year and is comfortable that it has been objective and independent. Total fees received by Deloitte in relation to the remuneration advice provided to the Committee during 2014 amounted to £34,350 (excluding VAT) based on the required time commitment.

SHAREHOLDER VOTINGThe Company has yet to hold a shareholder vote on the Remuneration Report.

On behalf of the Board,

BART BECHTCH AIRM A N OF T HE REMUNER ATION A ND NOMIN ATIONS COMMIT T EE 18 March 2015


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DIRECTORS’ REPORT

The directors present their annual report on the affairs of the Group, together with the financial statements and auditor’s report, for the year ended 31 December 2014. The Corporate Governance Statement set out on pages 48 to 57 forms part of this report.

Details of significant events since the balance sheet date are contained in note 29 to the financial statements. An indication of likely future developments in the business of the Group are included in the Strategic Report. The Directors’ Report should be read in conjunction with the Strategic Report, which contains details of the principal activities of the Group during the year.

Information about the use of financial instruments by the Group and its subsidiaries is given in note 23 to the financial statements.

DIVIDENDSThe directors do not recommend the payment of a dividend (2013: £nil).

CAPITAL STRUC TUREDetails of the authorised and issued share capital, together with details of the movements in the Company’s issued share capital during the year are shown in note 21 to the financial statements. The Company has one class of ordinary shares which carry no right to fixed income. Each share carries the right to one vote at general meetings of the company. The percentage of the issued nominal value of the ordinary shares is equal to the total issued nominal value of all share capital.

There are no specific restrictions on the size of a holding nor on the transfer of shares, which are both governed by the general provisions of the Articles of Association and prevailing legislation. The directors are not aware of any agreements between holders of the Company’s shares that may result in restrictions on the transfer of securities or on voting rights.

Details of employee share schemes are set out in note 22 to the financial statements. Shares held by the Jimmy Choo PLC Employee Benefit Trust abstain from voting.

With regard to the appointment and replacement of directors, the company is governed by its Articles of Association, the UK Corporate Governance Code, the Companies Acts and related legislation. The Articles themselves may be amended by special resolution of the shareholders. The powers of directors are described in the Main Board Terms of Reference, copies of which are available on request, and the Corporate Governance Statement on page 48.

SUBSTANTIAL SHAREHOLDINGSOn 31 December 2014, the Company had been notified, in accordance with chapter 5 of the Disclosure and Transparency Rules, of the following voting rights as a shareholder of the Company.

Name

Percentage of voting rights

and issued share capital

Number of ordinary shares

JAB Luxury GmbH 67.68% 263,767,190

GIC Private Limited 4.62% 18,000,000

ETHNA AKTIV E Luxembourg registered investment fund (“FCP”) and ETHNA-GLOBAL DYNAMISCH Luxembourg registered investment fund (“FCP”) 3.03% 11,800,000

During the period between 31 December 2014 and 18 March 2015 the company did not receive any notifications under chapter 5 of the Disclosure and Transparency Rules.

REL ATIONSHIP AGREEMENT WITH CONTROLLING SHAREHOLDERPrior to the IPO, the Company and JAB Luxury entered into a relationship agreement to regulate the ongoing relationship between them (‘the Relationship Agreement’). The principal purpose of the Relationship Agreement is to ensure that the Group is capable of carrying on its business for the benefit of the shareholders of the Company as a whole, and that transactions and relationships with JAB Luxury and any of their respective associates are at arm’s length and on normal commercial terms. Further details of the Relationship Agreement with regard to the conduct of the major shareholder are set out in the Corporate Governance report on page 51 and, with regard to the right to appoint directors, are set out on page 51.

DIREC TORSThe directors of the Company as at 31 December 2014 and their interests in the shares of the Company are shown on pages 71 and 73.

On 5 March 2015, Judith Sprieser informed the Company that she intended to step down from the board of the Company with immediate effect for personal reasons unrelated to the Company. The Board has commenced a process to identify a new independent Non-Executive Director to replace Judith Sprieser as soon as practicable.

As detailed in the Articles of Association, at every Annual General Meeting, all directors at the date of any subsequent notice of Annual General Meeting shall retire from office. Consequently, the directors currently holding office will all be required and all intend to seek re-election at the forthcoming Annual General Meeting to be held in May 2015.

DIREC TORS’ INDEMNITIESThe Company has made qualifying third party indemnity provisions for the benefit of its directors which were made during the year and which remain in force at the date of this report.

POLITICAL CONTRIBUTIONSThe Group has not made any political donations during the year (2013: £nil).

ACQUISITION OF THE COMPANY’S OWN SHARESFurther to the shareholders’ resolutions of 16 October 2014, the Company purchased 11,951,119 ordinary shares with a nominal value of £1, and representing 4.3% of the Company’s called up ordinary share capital, for a consideration of £16,731,567. The shares were purchased from JAB Luxury prior to the IPO of the Group in order to satisfy future awards to be made under the terms of the Group’s share based payment schemes, as described in note 22 to the financial statements.

At 31 December 2014 the directors did not have the authority to purchase any further shares.

SUSTAINABLE BUSINESSA summary of how the Group recognises its responsibility to colleagues, customers, environment (including greenhouse gas emissions) and community is contained within the Corporate and Social Responsibility Report on pages 35 to 37 which forms part of this report.

GOING CONCERNThe Board is of the opinion that there is a reasonable expectation that the Company and the Group has adequate resources to continue in operational existence for the foreseeable future. In arriving at this conclusion the Board has taken account of current and anticipated trading performance, current and anticipated levels of borrowings


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and the availability of borrowing facilities and exposures to and management of the financial risks detailed on pages 38 to 40. Consequently, the going concern basis has been used in the preparation of the Company and Group financial statements.

ANNUAL GENER AL MEE TINGThe Annual General Meeting will be held at the Radisson Blu Edwardian Hotel, 140 Bath Road, Hayes, Middlesex UB3 5AW, on Wednesday 27 May 2015 at 1pm. The Notice of Annual General Meeting is contained in a separate letter from the Chairman accompanying this report.

DISCLOSURE OF INFORMATION TO THE AUDITOREach of the persons who is a director at the date of approval of this Annual Report confirms that:

• so far as the director is aware, there is no relevant audit information of which the Company’s auditor is unaware; and

• the director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the Company’s auditor is aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006.

KPMG LLP have expressed their willingness to continue in office as auditor and a resolution to reappoint them will be proposed at the forthcoming Annual General Meeting.

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS This Annual Report and Financial Statements includes forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties, many of which are beyond the Company’s control and all of which are based on the directors’ current beliefs and expectations about future events. Forward-looking statements are sometimes identified by the use of forward-looking terminology such as “believe”, “expects”, “may”, “will”, “could”, “should”, “shall”, “risk”, “intends”, “estimates”, “aims”, “plans”, “predicts”, “continues”, “assumes”, “positioned” or “anticipates” or the negative thereof, other variations thereon or comparable terminology.

These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this Annual Report and Financial Statements and includes statements regarding the intentions, beliefs or current expectations of the directors or the Company concerning, among other things, the results of operations, financial condition, prospects, growth, strategies (including continued store roll out plans), and dividend policy of the Company and the industry in which it operates. In particular, the statements regarding the Company’s strategy and other future events or prospects are forward-looking statements.

STATEMENT OF DIREC TORS’ RESPONSIBIL ITIES IN RESPEC T OF THE ANNUAL REPORT AND THE F INANCIAL STATEMENTS The directors are responsible for preparing the Annual Report and the Group and parent company financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare Group and parent company financial statements for each financial year. Under that law they are required to prepare the Group financial statements in accordance with IFRSs as adopted by the EU and applicable law and have elected to prepare the parent company financial statements in accordance with UK Accounting Standards.

Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and parent company and of their profit or loss for that period. In preparing each of the Group and parent company financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent; • for the Group financial statements, state whether they have been

prepared in accordance with IFRSs as adopted by the EU; • for the parent company financial statements, state whether

applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the parent company financial statements; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the parent company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent company’s transactions and disclose with reasonable accuracy at any time the financial position of the parent company and enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the directors are also responsible for preparing a Strategic Report, Directors’ Report, Directors’ Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

We confirm that to the best of our knowledge:

• the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and loss of the company and the undertakings included in the consolidation taken as a whole; and

• the Strategic Report includes a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

We consider the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group’s position and performance, business model and strategy.

By order of the Board,

HANNAH MERRIT TCOMPA N Y SECRE TA RY18 March 2015


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FINANCIALSTATEMENTS

JIMM Y CHOO PL C A NNUA L REPOR T & F IN A NCIA L S TAT EMEN TS 2 014F IN A NCIA L S TAT EMEN TS

79

OPINIONS AND CONCLUSIONS ARISING FROM OUR AUDIT1. OUR OPINION ON T HE F IN A NCIA L S TAT EMEN TS IS UNMODIF IEDWe have audited the financial statements of Jimmy Choo PLC for the year ended 31 December 2014 set out on pages 81 to 122. In our opinion:

• the financial statements give a true and fair view of the state of the Group’s and of the parent Company’s affairs as at 31 December 2014 and of the loss of the Group for the year then ended;

• the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards as adopted by the European Union;

• the parent company financial statements have been properly prepared in accordance with UK Accounting Standards; and

• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006; and, as regards the Group financial statements, Article 4 of the IAS Regulation.

2 . OUR ASSESSMEN T OF RISKS OF M AT ERIA L MISS TAT EMEN TIn arriving at our audit opinion above on the financial statements the risks of material misstatement that had the greatest effect on our audit were as follows:

RE V ENUE RECOGNITION (RE V ENUE £ 2 9 9 .7M)Refer to page 54 (Audit and Risk Committee Report), note 1.15 (accounting policy) and note 3 (financial disclosures).

THE RISKRevenue is a key performance measure for the Group and a key driver for gross margin which is a further key indicator of Group performance. There are different revenue streams within the Group including for example, retail (including concessions), wholesale and online that have differing revenue recognition criteria and accounting processes handling a high volume of transactions. Due to its materiality in the context of the financial statements as a whole revenue is considered to be one of the areas which had the greatest effect on our overall audit strategy and allocation of resources in planning and completing our audit.

OUR RESPONSEOur audit procedures in this area included:

• we tested the design and operating effectiveness of key controls around the recognition of revenue, including those related to the reconciliation of cash receipts to sales records;

• we used a statistical sampling tool to select manual journals posted to revenue to critically assess whether these journals were appropriate and supported by documentation where relevant;

• we selected samples of sale transactions from either side of the financial year end and, to assess the appropriateness of the timing of revenue recognition compared those sales to supporting documentation; and

• we challenged the adequacy of the group’s provision for returns in the light of the historical pattern of credits given for returns.

We also assessed the adequacy of the Group’s disclosures in respect of revenue recognition.

PRESEN TATION OF E XCEP TION A L IT EMS (E XCEP TION A L IT EMS – £ 13 .0M)Refer to page 54 (Audit and Risk Committee Report), note 1.17 (accounting policy) and note 5 (financial disclosures).

THE RISKOperating profit before exceptional items is a key performance measure for the Group. Exceptional items are defined by the Group in an accounting policy set out in the financial statements. The identification of items as exceptional, and their quantification, requires the application of significant judgement.

OUR RESPONSEOur audit procedures in this area included:

• we obtained a listing of the items identified as exceptional by the Group, discussed with the Group the rationale for classifying them as exceptional and critically assessed whether the items meet the definition of exceptional items as set out in the Group’s accounting policies;

• we selected a sample of the underlying items which are aggregated and classified as exceptional and agreed these items back to supporting documentation; and

• we considered whether any other items we became aware of in the course of our audit work might be considered to be exceptional under the definition set out in the Group’s accounting policies.

We also assessed the adequacy of the Group’s disclosures in respect of exceptional items.

3 . OUR APPL ICATION OF M AT ERIA L IT Y A ND A N OV ER V IE W OF T HE SCOPE OF OUR AUDITThe materiality for the Group financial statements as a whole was set at £2.0m, determined with reference to a benchmark of Group loss before tax normalised for interest and exceptional costs (£35.7m of which it represents 5.6%).

We report to the Audit and Risk Committee any corrected or uncorrected identified misstatements exceeding £0.1m, in addition to other identified misstatements that warranted reporting on qualitative grounds.

Of the group’s seventeen reporting components, we subjected six to audits for group reporting purposes and two to specified risk-focused audit procedures. The latter were not individually financially significant enough to require an audit for group reporting purposes, but did present specific individual risks, principally around revenue recognition, that needed to be addressed. These Group procedures covered 91% of total Group revenue; 97% of Group profit before taxation; and 96% of total Group assets.

The remaining 9% of total Group revenue, 3% of Group profit before taxation and 4% of total Group assets is represented by nine reporting components, none of which individually represented more than 10% of any of total Group revenue, Group profit before tax, or total Group assets. For these remaining components, we performed analysis at an aggregated group level to re-examine our assessment that there were no significant risks of material misstatement within these.

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF JIMMY CHOO PLC ONLY


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The Group audit team instructed component auditors as to the significant areas to be covered, including the relevant risks detailed above and the information to be reported back. The Group audit team approved the component materiality of £1.5m, having regard to the mix of size and risk profile of the Group across the components. The Group audit team visited three component locations in UK and USA to perform the audit work. The work on all of the remaining in scope components was performed by component auditors.

Telephone conference meetings were held with these component auditors. At these meetings, the findings reported to the Group audit team were discussed in more detail, and any further work required by the Group audit team was then performed by the component auditor.

4 . OUR OPINION ON OT HER M AT T ERS PRESCRIBED BY T HE COMPA NIES AC T 2 0 0 6 IS UNMODIF IEDIn our opinion:

• the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and

• the information given in the Strategic Report and Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

5 . W E H AV E NOT HING TO REPOR T IN RESPEC T OF T HE M AT T ERS ON W HICH W E A RE REQUIRED TO REPOR T BY E XCEP TIONUnder ISAs (UK and Ireland) we are required to report to you if, based on the knowledge we acquired during our audit, we have identified other information in the annual report that contains a material inconsistency with either that knowledge or the financial statements, a material misstatement of fact, or that is otherwise misleading. In particular, we are required to report to you if:

• we have identified material inconsistencies between the knowledge we acquired during our audit and the Directors’ statement that they consider that the annual report and financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group’s performance, business model and strategy; or

• the Report of the Audit and Risk Committee does not appropriately address matters communicated by us to the Audit and Risk Committee.

Under the Companies Act 2006 we are required to report to you if, in our opinion:

• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

• the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns; or

• certain disclosures of directors’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

Under the Listing Rules we are required to review:

• the directors’ statement, set out on page 74, in relation to going concern; and

• the part of the Corporate Governance Statement on page 48 relating to the Company’s compliance with the ten provisions of the 2012 UK Corporate Governance Code specified for our review.

We have nothing to report in respect of the above responsibilities.

SCOPE OF REPORT AND RESPONSIBIL ITIESAs explained more fully in the directors’ responsibilities statement set out on page 75, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. A description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website at www.frc.org.uk/auditscopeukprivate. This report is made solely to the Company’s members as a body and is subject to important explanations and disclaimers regarding our responsibilities, published on our website at www.kpmg.com/uk/auditscopeukco2014a, which are incorporated into this report as if set out in full and should be read to provide an understanding of the purpose of this report, the work we have undertaken and the basis of our opinions.

WAYNE COXSENIOR S TAT U TORY AUDITORfor and on behalf of KPMG LLPStatutory AuditorChartered AccountantsSt Nicholas HousePark RowNottingham NG1 6FQ

18 March 2015

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF JIMMY CHOO PLC ONLY

CONTINUED


81

Note2014 £000

2013 £000

Revenue 3 299,670 281,544

Cost of sales (114,357) (106,188)

Gross profit 185,313 175,356

Selling and distribution expenses (93,750) (81,911)

Administrative expenses (54,436) (62,287)

Operating profit before exceptional costs 37,127 31,158

Exceptional costs 5 (13,047) (6,009)

Operating profit 4 24,080 25,149

Financial income 9 1,480 68

Financial expenses 9 (30,963) (50,909)

(Loss)/gain on financial instruments 9 (2,908) 4,374

Loss after financing expense (8,311) (21,318)

Share of profit/(loss) of associates 14 12 (85)

Loss before tax (8,299) (21,403)

Taxation 10 (2,543) 3,735

Loss for the year (10,842) (17,668)

Note £ £

Earnings per share – basic and diluted 6 (0.12) (176,680)

Non-GAAP measures

Adjusted EBITDA 28 50,230 46,877

Adjusted EBIT 28 35,353 35,039

Adjusted EBT 28 28,291 23,612

Adjusted consolidated net income 28 22,888 21,004

Adjusted earnings per share (pence) 6 6.1 5.6

CONSOLIDATED INCOME STATEMENTFOR THE YE AR ENDED 31 DECEMBER


82

2014 £000

2013 £000


Other comprehensive income

Items that are or may be recycled subsequently to profit or loss:

Gain on non-controlling interest – 128

Foreign currency translation differences (425) 407

Income tax credit on items that are or may be recycled subsequently to profit or loss – 184

Other comprehensive (loss)/income for the year, net of tax (425) 719

Total comprehensive loss for the year (11,267) (16,949)

CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME


83

Note2014 £000

2013 £000

Non-current assets

Intangible assets and goodwill 11 585,244 584,958

Property, plant and equipment 12 50,908 39,094

Investments in equity-accounted investees 14 191 179

Deferred tax asset 15 11,370 8,320

Total non-current assets 647,713 632,551

Current assets

Inventories 16 58,068 42,864

Trade and other receivables 17 41,087 35,520

Other financial assets 23 – 1,450

Current tax assets 59 146

Cash and cash equivalents 12,045 20,334

Total current assets 111,259 100,314

Total assets 758,972 732,865

Current liabilities

Borrowings 18 (12,604) (7,588)

Trade and other payables 19 (94,494) (86,640)

Current tax liabilities (5,287) (5,503)

Other financial liabilities 23 (2,903) (419)

Total current liabilities (115,288) (100,150)

Non-current liabilities

Borrowings 18 (124,982) (595,140)

Trade and other payables 19 (5,165) (3,552)

Other non-current liabilities 20 (15,374) –

Deferred tax liabilities 15 (54,010) (53,824)

Share based payments liability 22 – (5,872)

Total non-current liabilities (199,531) (658,388)

Total liabilities (314,819) (758,538)

Net assets/(liabilities) 444,153 (25,673)

Equity attributable to equity holders of the parent

Share capital 21 389,738 –

Share premium 21 99,480 –

Own shares reserve 21 (16,732) –

Translation reserve 21 (2,864) (2,439)

Retained deficit 21 (25,469) (23,234)

Total equity 444,153 (25,673)

The accompanying notes are an integral part of this consolidated statement of financial position.

These consolidated financial statements of Jimmy Choo PLC, registered number 09198021, have been approved and authorised for issue by the Board of Directors on 18 March 2015 and were signed on behalf by:

JONATHAN SINCL AIRDIREC TOR

CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAS AT 31 DECEMBER 2014


84

Note

Share capital £000

Share premium

£000

Own shares reserve

£000

Translation reserve

£000

Retained earnings

£000

Total equity £000

Balance at 1 January 2013 – – – (2,846) (5,878) (8,724)

Loss for the year – – – – (17,668) (17,668)

Other comprehensive income – – – 407 312 719

Total comprehensive income/(loss) for the year – – – 407 (17,356) (16,949)

Balance at 31 December 2013 21 – – – (2,439) (23,234) (25,673)

Loss for the year – – – – (10,842) (10,842)

Other comprehensive loss – – – (425) – (425)

Total comprehensive loss for the year – – – (425) (10,842) (11,267)

Issue of shares in consideration for shareholder credit facility 389,738 99,480 – – – 489,218

Acquisition of own shares – – (16,732) – – (16,732)

Capital contribution from controlling shareholder – – – – 1,358 1,358

Effect of cancellation of cash-settled share based payments – – – – 6,690 6,690

Charge for the year under equity-settled share based payments – – – – 526 526

Deferred tax on share based payments – – – – 33 33

Total transactions with owners 389,738 99,480 (16,732) – 8,607 481,093

Balance at 31 December 2014 21 389,738 99,480 (16,732) (2,864) (25,469) 444,153

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


85

2014 £000

2013 £000

Cash flows from operating activities

Operating profit 24,080 25,149

Adjustments for:

Depreciation of property, plant and equipment 14,225 11,001

Amortisation of intangible assets 793 752

Gain on disposal of property, plant and equipment and intangibles (129) –

Effects of foreign exchange 1,339 3,158

Share based payment expense 1,344 1,999

Increase in trade and other receivables (5,880) (8,031)

Increase in inventories (16,418) (4,020)

Increase in trade and other payables 13,917 9,647

Cash generated from operating activities 33,271 39,655

Income taxes paid (5,542) (33)

Interest paid (6,251) (9,321)

Interest received 23 67

Settlement of derivatives 1,007 939

Net cash inflow from operating activities 22,508 31,307

Cash flows from investing activities

Dividends received from associates – 65

Proceeds from sale of property, plant and equipment and intangibles 530 –

Acquisition of subsidiary, net of cash acquired 570 (786)

Acquisition of property, plant and equipment (27,228) (17,530)

Acquisition of other intangible assets (489) (4,266)

Net cash outflow from investing activities (26,617) (22,517)

Cash flows from financing activities

Proceeds from borrowings 15,062 1,760

Repayment of borrowings (19,256) (13,740)

Capital contribution from joint venture partner – 305

Net cash outflow from financing activities (4,194) (11,675)

Net decrease in cash and cash equivalents (8,303) (2,885)

Cash and cash equivalents at start of year 20,334 23,360

Effect of exchange rate fluctuations on cash held 14 (141)

Cash and cash equivalents at end of year 12,045 20,334

CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE YE AR ENDED 31 DECEMBER 2014


86

1. BASIS OF PREPAR ATION AND SIGNIFICANT ACCOUNTING POLICIESJimmy Choo PLC (the “Company”) and its subsidiaries (together referred to as the “Group”) is a global luxury shoes and accessories brand owner, wholesaler and retailer incorporated and domiciled in the United Kingdom.

The consolidated financial statements of the Group have been prepared and approved by the directors in accordance with International Financial Reporting Standards as adopted by the EU (“Adopted IFRS”).

The accounting policies set out below have, unless otherwise stated, been applied consistently to all years presented in these Group financial statements.

Judgements made by the directors in the application of these accounting policies, that have a significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are discussed in note 2.

1.1 ME ASUREMEN T CON V EN TIONThe financial statements have been prepared on the historical cost basis, except for financial instruments that are measured at revalued amounts or fair values at the end of each reporting year, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. The principal accounting policies adopted are set out below.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for share based payment transactions that are within the scope of IFRS 2, leasing transactions that are within the scope of IAS 17, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in IAS 2 or value in use in IAS 36.

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

• Level 3 inputs are unobservable inputs for the asset or liability.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.2 GOING CONCERNThe Group’s consolidated financial statements are prepared on a going concern basis as the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group has considerable financial resources, together with a strong ongoing trading performance. Details of the Group’s liquidity position and borrowing facilities are described in note 18. Financial risk management objectives, details of financial instruments and hedging activities, and exposures to credit risk and liquidity risk are described in note 23.

The directors have reviewed the Group’s forecasts and projections. These include the assumptions around the Group’s products and markets, expenditure commitments, expected cash flows and borrowing facilities.

Taking into account reasonably possible changes in trading performance, and after making enquiries, the directors have a reasonable expectation that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future. Accordingly the directors consider it appropriate to continue to adopt the going concern basis in preparing the financial statements.

1. 3 BASIS OF CONSOL IDATIONOn 16 October 2014 the Company obtained control of the entire share capital of Choo Luxury Group Limited by way of a share for share exchange with one share in the Company being exchanged for each share in Choo Luxury Group Limited. There were no changes in rights or proportion of control exercised as a result of this transaction.

Although the share for share exchange resulted in a change in legal ownership, in substance these financial statements reflect the continuation of the pre-existing Group, headed by Choo Luxury Group Limited.

As a result the comparatives presented in these financial statements are the consolidated results of Choo Luxury Group Limited. The prior year statement of financial position reflects the share capital structure of Choo Luxury Group Limited. The current year statement of financial position presents the legal change in the ownership of the Group, as well as the issue of shares in satisfaction of the shareholder credit facility. The consolidated statement of changes in equity explains the impact of these transactions in more detail.

SUBSIDIA RIESSubsidiaries are entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. In assessing control, the Group takes into consideration potential voting rights that are currently exercisable. The acquisition date is the date on which control is transferred to the acquirer. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Intra-group transactions, balances and unrealised profits on transactions between Group companies are eliminated in preparing the Group’s consolidated financial statements.

Employee benefit trusts that are controlled by the Group are consolidated on the same basis as subsidiaries as set out above.


87

1. BASIS OF PREPAR ATION AND SIGNIFICANT ACCOUNTING POLICIES CON TINUED1. 4 ASSOCIAT ES A ND JOIN T V EN T URESAssociates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting power of another entity. Joint ventures are those entities over whose activities the Group has joint control.

Associates and joint ventures are accounted for using the equity method (equity accounted investees) and are initially recognised at cost. The Group’s investment includes goodwill identified on acquisition, net of any accumulated impairment losses. The consolidated financial statements include the Group’s share of the total comprehensive income and equity movements of equity accounted investees, from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. When the Group’s share of losses exceeds its interest in an equity accounted investee, the Group’s carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of an investee.

1.5 F OREIGN CURRENCYF UNC TION A L A ND PRESEN TATION A L CURRENCIESItems included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in pounds sterling which is the Company’s functional and the Group’s presentational currency.

T R A NSAC TIONS IN F OREIGN CURRENCIES Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated to the functional currency at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are retranslated to the functional currency at foreign exchange rates ruling at the dates the fair value was determined.

T R A NSL ATION OF T HE RESULTS OF OV ERSE AS BUSINESSESThe assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to the Group’s presentational currency at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated at an average rate for the year where this rate approximates to the foreign exchange rates ruling at the dates of the transactions. Exchange differences arising from this translation of foreign operations are reported as an item of other comprehensive income and accumulated in the translation reserve.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognised in other comprehensive income.

1.6 F IN A NCIA L INS T RUMEN TSClassification of financial instruments issued by the Group

Financial instruments issued by the Group are treated as equity only to the extent that they meet the following two conditions:

(a) they include no contractual obligations upon the Group to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the Group; and

(b) where the instrument will or may be settled in the Group’s own equity instruments, it is either a non-derivative that includes no obligation to deliver a variable number of the Group’s own equity instruments or is a derivative that will be settled by the Group’s exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.

To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes the legal form of the company’s own shares, the amounts presented in these financial statements for called up share capital exclude amounts in relation to those shares.

F IN A NCIA L ASSE TSFinancial assets are initially recognised at fair value on the consolidated balance sheet when the entity becomes a party to the contractual provisions of the instrument. A financial asset is derecognised when the contractual rights to the cash flow expire or substantially all risks and rewards of the asset are transferred.

i . TRADE RECEIVABLESTrade and other receivables are included in current assets, except for maturities greater than 12 months after the balance sheet date. Receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment.

A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is determined as the difference between the asset’s carrying amount and the present value of estimated future cash flows, and is recognised in the consolidated income statement in administrative expenses.

ii . CASH AND CASH EQUIVALENTSCash and cash equivalents include cash in hand and deposits held at call with banks with an original maturity of three months or less. For the purpose of the consolidated cash flow statement, cash and cash equivalents includes bank overdrafts in addition to the definition above.

F IN A NCIA L L IA BIL IT IES Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.


88

1. BASIS OF PREPAR ATION AND SIGNIFICANT ACCOUNTING POLICIES CON TINUEDThe Group’s financial liabilities comprise trade and other payables, borrowings and other non-current liabilities. All financial liabilities are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method except for derivatives, which are classified as held for trading, except where they qualify for hedge accounting, and are held at fair value. The fair value of the Group’s liabilities held at amortised cost are approximately equal to their carrying amount. A financial liability is derecognised when the obligation specified in the contract is discharged, cancelled or expires.

i . BANK BORROWINGSAll loans and borrowings are initially recognised at the fair value of the consideration received net of issue costs associated with the borrowing. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the consolidated income statement over the period of the borrowings using the effective interest method.

Financial expenses comprise interest expense on borrowings and the cost of foreign currency forward contracts.

ii . TRADE PAYABLESTrade and other payables are included in current liabilities, except for maturities greater than 12 months after the balance sheet date. Payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

iii. PUT OP TION L IABIL IT IES OVER NON-CONTROLLING INTERESTPut options over shares in subsidiaries or joint ventures held by non-controlling interests are recognised initially at fair value through equity when granted. They are subsequently remeasured at fair value at each reporting period with the change in fair value recorded in the consolidated income statement as other finance expenses and income.

iv. DERIVATIVE F INANCIAL INSTRUMENTS AND HEDGE ACCOUNTINGThe Group uses derivative financial instruments to hedge its exposure to fluctuations in foreign exchange rates arising on certain trading transactions. The principal derivative instruments used are forward foreign exchange contracts taken out to hedge highly probable cash flows in relation to future sales and product purchases.

Derivative financial instruments are recognised at fair value. The gain or loss on remeasurement to fair value is recognised in the consolidated income statement.

1.7 PROPER T Y, PL A N T A ND EQUIPMEN TProperty, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.

Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.

Leases in which the Group assumes substantially all the risks and rewards of ownership of the leased asset are classified as finance leases. Operating lease payments are accounted for as described at 1.16 Operating leases below.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSCONTINUED

Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. The estimated useful lives are as follows:

Leasehold improvements between 4 and 10 years

Fixtures and fittings, plant and machinery between 3 and 10 years

Depreciation methods, useful lives and residual values are reviewed at each balance sheet date or if events or changes in circumstances indicate the carrying value may not be recoverable.

1.8 BUSINESS COMBIN ATIONSAcquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition date fair values of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interest issued by the Group in exchange for control of the acquiree. Acquisition related costs are recognised in profit or loss as incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.

When the consideration transferred by the Group in a business combination includes asset or liability resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition date fair value and included as part of the consideration transferred in a business combination. Changes in fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with IAS 39 or IAS 37 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding gain or loss being recognised in profit or loss.


89

1. BASIS OF PREPAR ATION AND SIGNIFICANT ACCOUNTING POLICIES CON TINUEDWhen a business combination is achieved in stages, the Group’s previously held interests in the acquired entity is remeasured to its acquisition date fair value and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.

1.9 ACQUISIT IONS A ND DISPOSA L S OF NON-CON T ROL L ING IN T ERES TSAcquisitions and disposals of non-controlling interests that do not result in a change of control are accounted for as transactions with owners in their capacity as owners and therefore no goodwill is recognised as a result of such transactions. The adjustments to non-controlling interests are based on a proportionate amount of the net assets of the subsidiary. Any difference between the price paid or received and the amount by which non-controlling interests are adjusted is recognised directly in equity and attributed to the owners of the parent.

1.10 IN TA NGIBL E ASSE TS A ND GOODW IL LGOODW IL LGoodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is not amortised but tested annually for impairment or more frequently if events or changes in circumstances indicate that the carrying value may not be recoverable.

For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from synergies of the combination. If the recoverable amount of the cash-generating unit is less that the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of goodwill and then to the other assets of the unit on a pro rata basis. Impairment losses relating to goodwill are not reversed in subsequent years.

For further details see 1.12 Impairment excluding inventories and deferred tax assets.

BR A NDBrands acquired in a business combination are recognised at fair value at the acquisition date and are carried at cost less accumulated impairment.

The Jimmy Choo brand is the only intangible asset that is considered to have an indefinite useful life on the basis that:

• the brand is central to the business strategy, differentiating the products in the market through building a reputation for excellence and it is not considered realistic to abandon the brand given its importance to the business;

• the brand does not face technological obsolescence and the luxury market is not a sector with a definite life;

• the Group is able to protect the brand and associated products from counterfeiters or other infringements through securing protection of its intellectual property and enforcing this through litigation where necessary; and

• the Group dedicates sufficient resources to support the brand and plans to continue to do so for the foreseeable future. This includes investment across all forms of media to convey the fundamental tenets of the brand.

The brand value is not amortised but subject to an impairment test which is performed annually or more frequently if events or changes in circumstances indicate that the carrying value may not be recoverable.

For further details see 1.12 Impairment excluding inventories and deferred tax assets.

K E Y MONE YKey money paid to the outgoing tenant to enter a leasehold property is stated within intangible assets at cost, net of amortisation and any provision for impairment. Amortisation is charged on key money at rates calculated to write-off the cost, less estimated residual value (which in some locations and geographies equates to cost) on a straight-line basis over the lease term.

OT HER IN TA NGIBL E ASSE TSThe cost of securing and renewing design patents, trademarks and other intangible assets is capitalised at purchase price and amortised by equal annual instalments over the period in which benefits are expected to accrue. The useful economic life of these assets is determined on a case-by-case basis, in accordance with the terms of the underlying agreement and the nature of the asset.

A MOR TISATIONAmortisation is charged to the statement of profit and loss on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Intangible assets with an indefinite useful life including the Jimmy Choo brand and goodwill are systematically tested for impairment at each balance sheet date. Other intangible assets are amortised from the date they are available for use. The estimated useful lives are as follows:

Trademarks 5-10 years

Software 3-7 years

1.11 IN V EN TORIESInventories are stated at the lower of cost and net realisable value. Cost is based on the weighted average principle and includes expenditure incurred in acquiring the inventories and other costs in bringing them to their existing location and condition.

Where necessary, provision is made to reduce the cost to no more than net realisable value having regard to the nature and condition of inventory, as well as anticipated utilisation and saleability.

1.12 IMPAIRMEN T E XCLUDING IN V EN TORIES A ND DEF ERRED TA X ASSE TSF IN A NCIA L ASSE TS (INCLUDING RECEIVA BL ES)A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event has a negative effect on the estimated future cash flows of that asset that can be estimated reliably.


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1. BASIS OF PREPAR ATION AND SIGNIFICANT ACCOUNTING POLICIES CON TINUEDAn impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Interest on the impaired asset continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

NON-F IN A NCIA L ASSE TSThe carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill, and intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each year at the same time.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units, (“CGU”). CGUs to which goodwill has been allocated are aggregated so that the level at which impairment is tested reflects the lowest level at which goodwill is monitored for internal reporting purposes which does not exceed the level of individual operating segments. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination.

An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in the consolidated income statement. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the units on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior years are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount, only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

1.13 EMPLOY EE BENEF ITSDEF INED CON T RIBU TION PL A NSA defined contribution plan is a post-employment benefit plan under which the Group pays fixed contributions into a separate entity and has no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an expense in the consolidated income statement in the periods during which services are rendered by employees.


SHOR T-T ERM BENEF ITSShort-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

1.14 PROV ISIONSA provision is recognised in the consolidated balance sheet when the Group has a present legal or constructive obligation as a result of a past event, that can be reliably measured and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are discounted if the effect of the time value of money is material using a pre-tax market rate adjusted for risks specific to the liability.

1.15 RE V ENUE RECOGNITIONRevenue, which is stated excluding Value Added Tax and other sales related taxes, is the amount receivable for goods supplied (less returns, trade discounts and allowances) and royalties receivable.

Wholesale sales are recognised when the significant risks and rewards of ownership have transferred to the customer, with provisions made for expected returns and allowances. Retail sales, returns and allowances are reflected at the dates of transactions with customers. Provisions for returns on retail and wholesale sales are calculated based on historical return levels.

Royalty revenue from licensing agreements is recognised on an accruals basis in accordance with the substance of the relevant agreement (provided that it is probable that the economic benefits will flow to the Group and the amount of revenue can be measured reliably).

1.16 OPER ATING L E ASESRentals payable under operating leases are charged to the income statement on a straight-line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the year in which they are incurred.

In the event that lease incentives are received to enter into an operating lease such incentives are recognised as a liability. Lease incentives are recognised as a reduction of rental expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the lease are consumed.

Premiums paid to landlords to secure operating leases are recognised as assets and depreciated to residual value over the lease term.

1.17 E XCEP TION A L COS TSExceptional items are non-recurring items which are outside the normal scope of the Group’s ordinary activities such as costs arising from a fundamental restructuring of the Group’s operations or are considered to be one-off in nature. Such items are disclosed separately within the consolidated income statement.


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1. BASIS OF PREPAR ATION AND SIGNIFICANT ACCOUNTING POLICIES CON TINUED1.18 F IN A NCIA L INCOME A ND E X PENSESFinancial expenses comprise interest payable and changes in the fair value of financial liabilities that are recognised in the income statement. Financial income comprises interest receivable on funds invested and changes in the fair value of financial assets recognised in the income statement.

Interest income and interest payable is recognised in profit or loss as it accrues, using the effective interest method.

1.19 TA X ATIONTax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the consolidated income statement and consolidated statement of other comprehensive income except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future profits will be available against which the temporary difference can be utilised.

Current and deferred tax assets and liabilities are only offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entities or different taxable entities where there is an intention to settle the balances on a net basis.

1.2 0 SH A RE BASED PAY MEN T T R A NSAC TIONSCASH-SE T T L ED SH A RE BASED PAY MEN T SCHEMESShare based payment transactions in which the Group receives goods or services by incurring a liability to transfer cash or other assets that is based on the price of the Group’s equity instruments are accounted for as cash-settled share based payments. The fair value of the amount payable to employees is recognised as an expense, with a corresponding increase in liabilities, over the period in which the employees become unconditionally entitled to payment. The liability is remeasured at each balance sheet date and at settlement date. Any changes in the fair value of the liability are recognised as personnel expense in the consolidated income statement.

EQUIT Y-SE T T L ED SH A RE BASED PAY MEN T SCHEMESShare based payment transactions in which the Group receives goods or services by incurring a liability to transfer its own equity instruments are accounted for as equity-settled share based payments. The payments are assessed at their fair value on the grant date. The cost of the share based incentives is recognised as an expense over the vesting period of the awards, with a corresponding increase in equity. The estimate of the number of options expected to vest is revised at each balance sheet date.

When options and awards are exercised, they are settled through awards of shares held in the Employee Benefit Trust. The proceeds received from the exercises, net of any directly attributable transaction costs, are credited to equity.

1.21 OW N SH A RES RESER V E Where the Company or its subsidiaries (including the Jimmy Choo PLC Employee Benefit Trust) purchase the Company’s own equity shares, the cost of those shares, including any attributable transaction costs, is presented within the own shares reserve as a deduction in shareholders’ equity in the consolidated financial statements.

1.2 2 A DOP TION OF NE W A ND RE V ISED S TA NDA RDSA DOP TION OF NE W S TA NDA RDSWith effect from 1 January 2014, the Group has adopted the following standards and amendments endorsed by the IASB in December 2012:

IFRS 10 Consolidated Financial Statements

IFRS 11 Joint Arrangements

IFRS 12 Disclosure of Interests in Other Entities

IAS 27 Separate Financial Statements

IAS 28 Investments in Associates and Joint Ventures

The following new standards, amendments to standards or interpretations must be applied for the first time by the Group for the year ending 31 December 2014 but are not currently relevant:

IAS 32 (Amendments) Financial Instruments: Presentation

IAS 36 (Amendments) Impairment of Assets

IAS 39 (Amendments) Financial Instruments: Recognition and Measurement

IFRIC 21 Levies


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1. BASIS OF PREPAR ATION AND SIGNIFICANT ACCOUNTING POLICIES CON TINUEDF U T URE A DOP TION OF NE W S TA NDA RDSAt the date of authorisation of these financial statements, the following standards and interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU):

IAS 19 (Amendments) Defined Benefit Plans: Employee Contributions

IFRS 14 Regulatory Deferral Accounts

IFRS 11 (Amendments) Accounting for Acquisitions of Interests in Joint Operations

IAS 16 and 36 Classification of Acceptable Methods of Depreciation and Amortisation

IAS 27 (Amendments) Equity Method in Separate Financial Statements

IFRS 15 Revenue from Contracts with Customers

IFRS 9 Financial Instruments

The Group chose not to adopt any of the above standards and interpretations early. No significant net impact from the adoption of these new standards is expected.

Beyond the information above, it is not practicable to provide a reasonable estimate of the effect of these standards until a detailed review has been completed.

2 . CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTSThe preparation of the consolidated financial statements requires the directors to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to accounting estimates are recognised in the year in which the estimate is revised and in any future year impacted. The key judgements and estimates employed in the financial statements are considered below.


IMPAIRMEN T OF GOODW IL L A ND OT HER INDEF INIT E L IF E IN TA NGIBL E ASSE TSOn an annual basis, the Group is required to perform an impairment review to assess whether the carrying value of goodwill and other indefinite life intangible assets is less than its recoverable amount. Recoverable amount is based on a calculation of expected future cash flows, which include estimates of future performance. Details of assumptions used in the impairment tests are detailed in note 11.

K E Y MONE Y VA LUATIONJudgement is required in estimating the residual value of key money paid to outgoing tenants to secure a leasehold property. In certain locations, the residual value of key money is considered to be equal to cost; either due to legal protection offered to tenants in that jurisdiction or because it is common practice to at least recover the amounts paid at the end of the lease due to the existence of an active market for operating leases of prime luxury real estate.

VA LUATION OF OT HER IN TA NGIBL E ASSE TSThe assessment of fair value in a business combination requires the recognition and measurement of the identifiable assets, liabilities and contingent liabilities in the acquired business. The key judgements required are the identification of intangible assets meeting the recognition criteria of IAS 38 and their attributable fair values. The key assumptions in relation to the brand valuation are the directors’ best estimate of its life and the royalty and discount rate used in its valuation.

SH A RE BASED PAY MEN TSThe vesting of awards granted under the Group’s share based payments scheme is dependent upon continued employment within the Group over the vesting period. Judgement is required in determining the number of shares that will ultimately vest.

TA X ATIONThe Group recognises deferred tax assets and liabilities based upon future taxable income and the expected recoverability of the balance. The estimate will include assumptions regarding future income streams of the Group and the future movement in corporation tax rates in the respective jurisdictions. The estimation of liabilities in respect of current taxation depends on estimates and judgements in respect of whether or not, and the extent to which items of income and expenditure will be taxable.


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3 . OPER ATING SEGMENTSThe Chief Operating Decision Maker (“CODM”) is the Board of Directors. Internal management reports are reviewed by the CODM. Key measures used to evaluate segment performance are revenue and segment contribution to EBITDA. Management believes that these measures are the most relevant in evaluating the performance of the segment and for making resource allocation decisions as central costs are not allocated across the segments.

The CODM considers the Group’s segments to be its three channels to market, being retail (including online), wholesale and other.

Retail revenue is generated through the sale of luxury goods to end consumers via Jimmy Choo directly operated stores in Europe, USA, Hong Kong, China and Japan and via the Group’s website.

Wholesale revenue is generated through the sale of luxury goods to distribution partners, multi-brand department stores and speciality stores worldwide.

Other revenue is predominantly generated through receipt of royalties from the Group’s global licensees of Jimmy Choo branded fragrance, sunglasses and eyewear products.

There are no material inter-segment transactions.

An analysis of net assets by segment is not reviewed by the CODM and accordingly is not presented below.

The following is an analysis of the Group’s revenue and results by reportable segment for the year ended 31 December 2014.

Retail 2014 £000

Wholesale 2014 £000

Other 2014 £000

Total 2014 £000

Revenue 192,896 99,583 7,191 299,670

Segment result 45,049 45,260 1,254 91,563

Administrative expenses (54,436)

Exceptional costs (13,047)

Finance income 1,480

Finance expense (30,963)

Loss on financial instruments (2,908)

Share of profit of associates 12

Loss before tax (8,299)

The following is an analysis of the Group’s revenue and results by reportable segment for the year ended 31 December 2013.

Retail 2013 £000

Wholesale 2013 £000

Other 2013 £000

Total 2013 £000

Revenue 177,362 97,707 6,475 281,544

Segment result 49,394 43,195 856 93,445

Administrative expenses (62,287)

Exceptional costs (6,009)

Finance income 68

Finance expense (50,909)

Gain on financial instruments 4,374

Share of loss of associates (85)

Loss before tax (21,403)


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3 . OPER ATING SEGMENTS CON TINUEDSEGMENT ASSE TSThe following table provides an analysis of the Group’s total assets by reportable segment:

2014 £000

2013 £000

Retail 119,261 94,623

Wholesale 21,122 18,747

Other 24,430 20,650

Total segment assets 164,813 134,020

Goodwill and brand 570,494 568,416


Investments in joint venture 191 179

Other financial instruments – 1,450

Taxation 11,429 8,466

Total assets 758,972 732,865

ENTIT Y-WIDE DISCLOSURESThe following table provides an analysis of the Group’s revenue by geographical destination, irrespective of the origin of the goods:

2014 £000

2013 £000

UK 38,174 37,164

EMEA excluding UK 94,176 89,256

Americas 99,845 99,209

Asia excluding Japan 34,805 25,883

Japan 32,670 30,032

Total 299,670 281,544

The total of non-current assets other than deferred tax assets located in the UK and foreign countries is as follows:

2014 £000

2013 £000

UK 585,013 576,813

EMEA excluding UK 21,788 24,328

USA 19,700 14,195

Asia excluding Japan 8,779 7,815

Japan 1,063 1,080

Total 636,343 624,231

The Group did not have a single customer that accounted for more than 10% of the Group’s consolidated revenue in either of the years presented.



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4 . OPER ATING PROFITOperating profit is stated after (charging)/crediting:

2014 £000

2013 £000

Depreciation of fixed assets (14,225) (11,001)

Gain on disposal of operating lease 402 –

Loss on disposal of fixed assets (273) –

Amortisation of other intangible fixed assets (793) (752)

Operating lease rentals for land and buildings (23,705) (20,197)

Net gain/(loss) on foreign currency translation 1,786 (3,966)

5 . E XCEP TIONAL COSTSThe Group incurred the following costs during the years presented that are considered to be exceptional:

2014 £000

2013 £000

Acquisition and integration costs 1,644 2,584

Replatforming costs 3,559 3,425

IPO costs 7,844 –

Total 13,047 6,009

Acquisition and integration costs relate to initiatives put in place following the acquisition of Passion Holdings Limited on 1 July 2011 and the subsequent costs incurred integrating the operations of the business into the wider JAB Luxury GmbH group. These costs include legal and other professional fees associated with the refinancing and integration of the Group and the restructuring of the senior management team, including severance, recruitment costs and retention bonuses. These initiatives came to an end on the IPO of the Group in October 2014.

Replatforming costs represent costs associated with strengthening product development (in the Florence facility), reinforcing the team in key functions, undertaking regional buyouts in Asia and scaling up the information systems capability and office infrastructure to support the growth strategy.

IPO costs represent costs directly associated with the listing of the Group on the London Stock Exchange in October 2014. IPO costs includes an exceptional charge of £1.6m in respect of the accelerated vesting of the Group’s cash settled share based payment scheme at IPO (note 22).

6 . E ARNINGS PER SHAREBasic earnings per share are calculated by dividing the profit attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year. There are no dilutive shares.

The weighted average number of shares for the year was:

Shares issued No of shares

Own shares No of shares

Shares outstanding No of shares

1 January 2014 100 – 100

3 October 2014 389,737,488 (11,951,119) 377,786,369

31 December 2014 389,737,588 (11,951,119) 377,786,469

Weighted average number of shares 93,152,879


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6 . E ARNINGS PER SHARE CON TINUED In order to provide a measure of underlying performance, the Group has chosen to present an additional illustrative measure of Adjusted earnings per share. Adjusted earnings per share has been calculated using adjusted consolidated net income (see note 28) and dividing by the number of ordinary shares outstanding as at 31 December 2014 for both years to eliminate the impact of shares issued during the year.

2014 No of shares

2013 No of shares

Basic weighted average shares 93,152,879 100

Outstanding shares as at 31 December 2014 377,786,469 377,786,469

2014 £000

2013 £000


Adjusted consolidated net income for the year 22,888 21,004

Earnings per share is calculated as follows:

2014 2013

Basic and diluted earnings per ordinary share (£) (0.12) (176,680)

Adjusted earnings per ordinary share (pence) 6.1 5.6

7. AUDITOR’S REMUNER ATION

2014 £000

2013 £000

Fees payable for the audit of the Company’s financial statements 213 69

Amounts receivable by the Company’s auditor and its associates in respect of:

Audit of financial statements of subsidiaries of the Company 57 24

Other audit related services 160 –

Taxation compliance services 121 95

Taxation advisory services 540 377

Other non-audit services 874 –

Total auditor remuneration 1,965 565

Included within the other non-audit services for the year ended 31 December 2014 are corporate finance transaction services fees of £0.9m (2013: £nil) that were incurred as part of the IPO process. Tax advisory services includes £0.2m (2013: £nil) of IPO related services. Included within other audit related services are fees of £0.2m (2013: £nil) in relation to the six month period audit undertaken as part of the IPO process. These are disclosed within exceptional costs (see note 5).



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8 . STAFF NUMBERS AND COSTSThe average number of persons employed by the Group (including directors) during the year, analysed by category, was as follows:

2014 2013

Administration 320 266

Selling and distribution 659 564

Total staff numbers 979 830

The aggregate payroll costs incurred were as follows:

2014 £000

2013 £000

Wages and salaries 40,914 37,804

Social security costs 5,042 5,094

Share based payments 3,541 1,999

Contributions to defined contribution plans 1,354 282

Total staff costs 50,851 45,179

Full details of directors’ remuneration and interests are set out in the Directors Remuneration Report.

Included within share based payments expenses for the year ended 31 December 2014 is an expense of £1.6m (2013: £nil) that relates to the accelerated vesting of the Group’s cash settled share based payment scheme and is disclosed within exceptional costs (see note 5).

9. F INANCIAL INCOME AND E XPENSE

2014 £000

2013 £000

Bank interest income 24 68

Foreign exchange gain on external borrowings 1,456 –

Total financial income 1,480 68

Interest expense on bank loans and overdrafts (5,955) (7,386)

Interest expense on shareholder credit facility (23,646) (29,496)

Finance charges (1,362) (12,962)

Foreign exchange loss on external borrowings – (1,065)

Total finance expense (30,963) (50,909)

Net result on financial instruments (2,908) 4,374

Net financing expense (32,391) (46,467)

Interest incurred on the shareholder credit facility ceased on 3 October 2014 when the Group entered into a debt for equity swap agreement, which discharged the shareholder credit facility in exchange for the issue of ordinary shares in Choo Luxury Group Limited (see note 21).


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10. TA X ATIONTA X ATION RECOGNISED IN THE CONSOLIDATED INCOME STATEMENT:

2014 £000

2013 £000

Corporation tax charge for the year (4,455) (3,803)

Adjustments for prior year (911) 320

Double taxation relief 130 1,000

Foreign tax for current year (167) (125)

Current taxation (5,403) (2,608)

Origination and reversal of temporary differences 2,860 6,343

Deferred tax credit 2,860 6,343

Total tax (charge)/credit for the year (2,543) 3,735

The tax (charge)/credit is reconciled with the standard rates of UK corporation tax as follows:

2014 £000

2013 £000


UK corporation tax at standard rate of 21.25% (2013: 23.25%) 1,763 4,976

Factors affecting the charge for the year:

Expenses not deductible for tax purposes (2,196) (8,681)

Utilisation of losses brought forward (327) 393

Impact of change in tax rate – 7,011

Adjustments in respect of prior year (911) 320

Group relief claimed and paid for 242 318

Difference of overseas rate (1,114) (602)

Total tax (charge)/credit for the year (2,543) 3,735

FAC TORS AFFEC TING THE FUTURE, CURRENT AND TOTAL TA X CHARGES:Reductions in the UK corporation tax rate from 21% to 20% (effective from 1 April 2015) were substantively enacted on 2 July 2014. This will reduce the Company’s future current tax charge accordingly.

The deferred tax asset at 31 December 2014 has been calculated based on the rates substantively enacted at the balance sheet date in each jurisdiction which was 20% in the UK.



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11. INTANGIBLE ASSE TS

Goodwill £000

Brand £000

Key money £000

Trademarks and designs and patents

£000Total £000

Cost

Balance at 1 January 2013 304,332 263,816 12,367 1,693 582,208

Additions through business combinations (note 13) 323 – – – 323

Additions – – 3,789 648 4,437

Disposals – – (109) (11) (120)

Exchange differences (55) – 251 (12) 184

Balance at 31 December 2013 304,600 263,816 16,298 2,318 587,032

Additions through business combinations (note 13) 1,787 – – – 1,787

Additions – – – 413 413

Disposals – – (638) – (638)

Exchange differences 291 – (975) (3) (687)

Balance at 31 December 2014 306,678 263,816 14,685 2,728 587,907

Amortisation

Balance at 1 January 2013 – – 1,047 281 1,328

Amortisation for the year – – 548 204 752

Disposals – – – (10) (10)

Exchange differences – – 16 (12) 4

Balance at 31 December 2013 – – 1,611 463 2,074

Amortisation for the year – – 558 235 793

Disposals – – (73) – (73)

Exchange differences – – (128) (3) (131)

Balance at 31 December 2014 – – 1,968 695 2,663

Net book value

At 31 December 2014 306,678 263,816 12,717 2,033 585,244

At 31 December 2013 304,600 263,816 14,687 1,855 584,958

Amortisation of key money is recognised in selling and distribution expenses in the income statement. All other amortisation is recognised in administrative expenses.


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11 INTANGIBLE ASSE TS CON TINUEDALLOCATION OF INDEFINITE L IFE INTANGIBLE ASSE TSThe carrying value of goodwill is allocated as follows:

2014 £000

2013 £000

Retail 187,856 187,565

Wholesale 114,172 114,172

Other 4,650 2,863

306,678 304,600

Goodwill and indefinite life intangible assets are not amortised, but are tested for impairment annually or where there is an indication that goodwill might be impaired. The recoverable amount of all cash generating units has been determined on a value-in-use basis.

Goodwill of £294.2m arising on the acquisition of Passion Holdings Limited on 1 July 2011 is allocated to the groups of cash generating units acquired that represent the lowest level within the Group at which goodwill is monitored for internal management purposes. This is consistent with the determination of operating segments. For the purpose of impairment testing, the value-in-use of each operating segment is calculated as described below.

Goodwill arising on the acquisitions of J. Choo Hong Kong JV Limited, the business line of Jimmy Choo in Shanghai Kutu Trading Co., Ltd. and J. Choo Russia JV Limited described in note 13 is allocated to the retail segment for impairment testing.

Goodwill arising on the acquisition of Studio Luxury S.r.l. on 5 August 2014 described in note 13 is allocated to the other segment for impairment testing.

The Jimmy Choo brand, which was valued at £263.8m on the acquisition of Passion Holdings Limited on 1 July 2011 is considered to have an indefinite useful life and accordingly is tested for impairment on an annual basis, or where an indicator of impairment is identified. The brand is fundamental to the operations of the Group as a whole and is therefore not allocated to cash-generating units but tested for impairment at the Group level.

IMPAIRMENT TESTINGThe value-in-use is represented by the discounted value of future cash flows that are expected from continuous use of the assets associated with the cash generating units and by the terminal value attributable to them. In assessing the value-in-use, the cash flow projections were taken from the Group’s five year business plan, approved by the Board of Directors. The cash flow projections are subject to key assumptions in respect of discount rates, future net revenue, margin and EBITDA growth. The directors have reviewed and approved the assumptions inherent in the model as part of the annual budget process using historical experience and considering economic and business risks facing the Group.

The terminal value was determined using a perpetuity long-term growth rate in line with macro-economic estimates of 3%.

In assessing the Group’s value-in-use a discount rate of 9.9% (2013: 11.3%) has been applied to the groups of cash generating units.

A sensitivity analysis has been performed on the value-in-use calculations by assuming a reasonable change in the discount rate, revenue growth rates, EBITDA margins and terminal growth rates. The sensitivity analysis indicated significant headroom between the recoverable amount under these scenarios and the carrying value of goodwill and intangibles.

No impairment has been recognised in respect of the carrying value of the goodwill or the brand in any of the years presented as, for each cash generating unit and the Group as a whole, the recoverable amount exceeds its carrying value.



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12 . PROPERT Y, PL ANT AND EQUIPMENT

Leasehold land and buildings

£000

Fixtures and Fittings, plant

and machinery £000

Total £000

Cost

Balance at 1 January 2013 22,185 19,522 41,707

Additions 7,780 11,601 19,381

Disposals (1,313) (1,255) (2,568)

Transfers 1,211 (1,211) –

Exchange differences (827) (459) (1,286)

Balance at 31 December 2013 29,036 28,198 57,234

Additions through business combinations (note 13) 24 87 111

Additions 7,423 18,486 25,909

Disposals (992) (1,768) (2,760)

Transfers 2,517 (2,517) –

Exchange differences 138 131 269


Depreciation and impairment

Balance at 1 January 2013 4,914 5,236 10,150

Depreciation charge for the year 5,323 5,678 11,001

Disposals (1,313) (1,255) (2,568)

Transfers 472 (472) –

Exchange differences (226) (217) (443)


Depreciation charge for the year 6,271 7,954 14,225

Disposals (880) (1,607) (2,487)

Transfers 475 (475) –

Exchange differences (215) 192 (23)


Net book value

At 31 December 2014 23,325 27,583 50,908

At 31 December 2013 19,866 19,228 39,094


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13 . ACQUISITIONS OF SUBSIDIARIESACQUISIT IONS IN T HE Y E A R ENDED 31 DECEMBER 2 014On 10 February 2014, J. Choo Limited, a wholly owned subsidiary undertaking of the Group, subscribed for 100% of the share capital of J. Choo Canada Inc for consideration of CAD 1,000 (£545).

On 15 October 2014, Jimmy Choo PLC subscribed for 100% of the share capital of Jimmy Choo (Holdings) Limited for consideration of £389,737,588 satisfied by way of share-for-share exchange (note 21).

On 5 August 2014, Itachoo S.r.l., a wholly owned subsidiary undertaking of the Group, purchased 100% of Studio Luxury S.r.l. for consideration of EUR 1,935,000 (£1,531,460) from Luxury Italia Holding S.r.l, a wholly owned subsidiary of JAB Luxury GmbH. The consideration is payable in four tranches between 1 January 2015 and 31 December 2018.

The following table sets out the book values of the identifiable assets and liabilities acquired and their fair value to the Group on the Studio Luxury S.r.l. acquisition.

Book value £000

Fair value adjustments

£000

Fair value £000

Non-current assets

Property, plant and equipment 111 – 111

Current assets

Trade and other receivables 19 – 19

Cash and cash equivalents 570 – 570

Total assets 700 – 700

Trade and other payables (956) – (956)

Net liabilities (256) – (256)

Goodwill 1,787

Total consideration 1,531

Satisfied by:

Deferred consideration 1,531

Net cash inflow arising on acquisition:

Cash acquired 570

The book value of the acquired assets was equal to fair value.

Goodwill has arisen on the acquisition because of the growth potential of the business, the future income generating potential of the assets acquired, the workforce and the value of other immaterial intangible assets acquired. None of the goodwill recognised is expected to be deductible for income tax purposes.

ACQUISITIONS IN THE YE AR ENDED 31 DECEMBER 2 013On 29 May 2013 J. Choo Limited, a wholly owned subsidiary undertaking of the Group, entered into a joint venture agreement with Rubinse Trading LLC to form J. Choo Russia JV Limited. The Directors have concluded that the Group has control over the joint venture because it has the ability to appoint the majority of Directors to the Board of the company and accordingly has consolidated the results of J. Choo Russia JV Limited and its immediate subsidiary undertaking, J. Choo RUS LLC, in the Group’s consolidated financial statements from 13 March 2013, the date of the incorporation of J. Choo Russia JV Limited.

The joint venture agreement includes a put and call option which requires the Group to purchase the share capital of the joint venture partner on expiry of the joint venture agreement in 2018 which has been accounted for under the anticipated acquisition method, resulting in the recognition of goodwill of £0.3m.



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14 . INVESTMENTS IN SUBSIDIARIES AND ASSOCIATESThe principal undertakings in which the Group’s interest at the year end is more than 20% are as follows:

Ordinary shares held %

Company Country of incorporation Nature of Business 2014 2013

Jimmy Choo (Holdings) Limited Great Britain Holding Co. 100 –

Choo Luxury Group Limited Great Britain Holding Co. 100 100

Choo Luxury Holdings Limited Great Britain Holding Co. 100 100

Choo Luxury Finance Limited Great Britain Holding Co. 100 100

Passion Holdings Limited Great Britain In liquidation 100 100

Bag and Choos Limited Great Britain In liquidation 100 100

Choo Management Limited Great Britain In liquidation 100 100

J. Choo Group Holding Limited Great Britain In liquidation 100 100

The J. Choo Group Ltd Great Britain In liquidation 100 100

Choo Group Holdings Ltd Great Britain In liquidation 100 100

Choo Group Finance Ltd Great Britain In liquidation 100 100

Yearnoxe Limited Great Britain In liquidation 100 100

Choo Holdings UK Limited Great Britain In liquidation 100 100

J. Choo Limited Great Britain Retail and wholesale 100 100

J. Choo (OS) Limited Great Britain Retail 100 100

Franchoo SAS France Retail 100 100

Itachoo S.r.l. Italy Retail 100 100

J Choo Florida Inc USA Property 100 100

J Choo Germany GmbH Germany Retail 100 100

J. Choo (Jersey) Limited Jersey Brand Co. 100 100

J Choo USA Inc USA Retail 100 100

Jimmy Choo Spain SL Spain Retail 100 100

J Choo (Switzerland) AG Switzerland Retail 100 100

J. Choo (Belgium) BVBA Belgium Retail 100 100

J. Choo (Asia) Limited Hong Kong Regional office 100 100

J. Choo Japan JV Ltd. Great Britain Dormant 100 100

Jimmy Choo (Shanghai) Trading Co. Ltd China Retail 100 100

Jimmy Choo Tokyo K.K. Japan Retail and wholesale 100 100

J. Choo Netherlands B.V. The Netherlands Retail 100 100

J. Choo Czech s.r.o. Czech Republic Retail 100 100

J. Choo Hong Kong JV Limited Great Britain Dormant 100 100

Jimmy Choo Hong Kong Limited Hong Kong Retail and wholesale 100 100

J. Choo Supply SA Switzerland Procurement 100 100

J. Choo (Austria) GmbH Austria Retail 100 100

J. Choo Canada Inc Canada Retail 100 –

Studio Luxury S.r.l. Italy Production control 100 –

J. Choo Russia JV Limited Great Britain Holding Co. 50 50

J. Choo RUS LLC Russian Federation Retail 50 50

JC Industry S.r.l. Italy Production 33 33


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14 . INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES CON TINUEDAs at 31 December 2014, all subsidiary undertakings are wholly owned, except where indicated differently above, and operate in the country in which they are incorporated. All subsidiaries have financial years ending 31 December.

The Group’s share of the results of its immaterial associates, all of which are unlisted, and their aggregated assets and liabilities, are as follows:

2014 £000

2013 £000

Total assets 2,061 2,521

Total liabilities (1,481) (1,978)

Net assets 580 543

Group’s share of net assets 191 179

Revenue 142 5,566

Profit 37 (259)

Group’s share of associate profit/(loss) 12 (85)

15 . DEFERRED TA X ASSE TS AND L IABILITIES RECOGNISED DEFERRED TA X ASSE TS AND L IABILITIES Deferred tax assets and liabilities are attributable to the following:

ASSE TS

2014 £000

2013 £000

Inventories 7,725 5,118

Tax value of loss carry-forwards – 68

Other assets 3,645 3,134

Deferred tax assets 11,370 8,320

L IA BIL IT IES

2014 £000

2013 £000

Property, plant and equipment (1,247) (1,061)

Intangible assets (52,763) (52,763)

Deferred tax liabilities (54,010) (53,824)

Less deferred tax assets 11,370 8,320

Net deferred tax liabilities (42,640) (45,504)

Movement in deferred tax during the year:

1 January 2014 £000

Recognised in profit and loss (credit)/

charge £000

Recognised in other

comprehensive income

(credit)/charge £000

Recognised directly in

equity £000

31 December 2014 £000

Property, plant and equipment (1,061) (186) – – (1,247)

Intangible assets (52,763) – – – (52,763)

Inventories 5,118 2,607 – – 7,725

Other financial assets (including foreign exchange adjustment) 3,134 507 (29) 33 3,645

Tax value of losses carried forward 68 (68) – – –

(45,504) 2,860 (29) 33 (42,640)



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15 . DEFERRED TA X ASSE TS AND L IABILITIES CON TINUED

1 January 2013 £000

Recognised in profit and loss (credit)/charge

£000

Recognised in other

comprehensive income

(credit)/charge £000

Recognised directly

in equity £000

31 December 2013 £000

Property, plant and equipment (558) (503) – – (1,061)

Intangible assets (60,678) 7,915 – – (52,763)

Inventories 6,097 (979) – – 5,118

Other financial assets (including foreign exchange adjustment) 2,627 507 – – 3,134

Tax value of losses carried forward 1,367 (597) (702) – 68

(51,145) 6,343 (702) – (45,504)

16 . INVENTORIES

2014 £000

2013 £000

Finished goods 57,820 42,354

Raw materials 248 510

58,068 42,864

The cost of inventories recognised as an expense and included in cost of sales for the year was £108.3m (2013: £99.3m). There is no material difference between the balance sheet value of stocks and their replacement cost.

17. TR ADE AND OTHER RECEIVABLES

2014 £000

2013 £000

Trade receivables 26,700 20,962

Allowance for doubtful debts (302) (291)

26,398 20,671

Amounts owed by related parties (note 26) 2,120 2,517

Other receivables 8,254 6,891

Restricted cash 311 2,663

Prepayments and accrued income 3,168 2,071

Other tax receivable 836 707

Total current receivables 41,087 35,520

Invoices to customers are generally due for payment within 30 days of the end of the month of issue. The Group’s experience is that the majority of customers will pay within that timeframe. Trade receivables disclosed above include amounts which are past due at the reporting date (see below for aged analysis). In determining the recoverability of a trade receivable the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The Group has recognised an allowance for doubtful receivables at each reporting date by considering the recoverability of each receivable. The average age of receivables is 32 days (2013: 27 days).

AGEING OF PAST DUE BUT NOT IMPAIRED RECEIVABLES

2014 £000

2013 £000

31–60 days 1,759 1,450

60–120 days 355 222

121+ days 648 699

Total 2,762 2,371


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17. TR ADE AND OTHER RECEIVABLES CON TINUEDMOVEMENT IN ALLOWANCE FOR DOUBTFUL DEBTS

2014 £000

2013 £000

Balance at beginning of the year (290) (199)

Movement in allowance for doubtful debts (12) (92)

Balance at the end of the year (302) (291)

The allowance account for trade receivables is used to record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible; at that point the amounts considered irrecoverable are written off against the trade receivables directly.

18 . INTEREST-BE ARING LOANS AND BORROWINGSThe contractual terms of the Group’s interest-bearing loans and borrowings, which are measured at amortised cost are described below. For more information about the Group’s exposure to interest rate and foreign currency risk, see note 23.

2014 £000

2013 £000


Secured bank loan 113,217 123,177

Secured bank facility 11,221 11,007

Shareholder credit facility – 460,494

Loan from related party 544 462

Total non-current liabilities 124,982 595,140

Current liabilities

Current portion of secured bank loan – 3,199

Current portion of secured bank facility 12,604 2,610

Unsecured bank facility – 1,779

Total current liabilities 12,604 7,588

SECURED BANK LOAN AND FACIL ITIESThe principal amounts, interest margins and expiry dates for the main bank facilities as at 31 December 2014 are:

Principal £000

Principal $/€000 Interest margin Expiry date

Facility B1 53,204 €68,106 EURIBOR + 3.0% 27 June 2018

Facility B2 60,013 $93,602 LIBOR + 3.0% 27 June 2018

Capex/acquisition facility (EUR) 13,283 €17,003 EURIBOR + 2.5% 27 June 2017

Capex/acquisition facility (USD) 5,074 $7,913 LIBOR + 2.5% 27 June 2017

The Group’s current bank facility came into effect on 1 July 2011. It consists of two term loans, a working capital facility and a revolving credit facility, held by one of the Company’s subsidiary undertakings, Choo Luxury Finance Limited.

During the year the Group made repayments of £11.9m against Facility B1 (year ended 31 December 2013: £13.7m).

During the year the Group made repayments of £1.5m against Facility B2 (year ended 31 December 2013: £nil).

During the year the Group made repayments of £4.2m against the Capex/acquisition facility (year ended 31 December 2013: £nil). The Capex/acquisition is repayable in equal instalments between 31 December 2015 and 27 June 2017.

In addition to the above, the Group has access to a 6 year revolving cash flow facility which expires on 27 June 2017 of up to €91.6m (£71.6m), of which £59.9m was available to be drawn at 31 December 2014.

The Group’s external bank facilities are secured by way of a pledge of certain assets of the Group.



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18 . INTEREST-BE ARING LOANS AND BORROWINGS CON TINUEDSH A REHOL DER CREDIT FACIL IT YThe shareholder credit facility permitted drawings up to a maximum of £510.0m and incurs a fixed interest rate of 7.35% on 50% of the amounts drawn under the facility and a variable interest rate of LIBOR +5.15% on the other 50% of amounts drawn down under the facility. The unsecured facility was converted to equity on 3 October 2014 (see note 21).

ANALYSIS OF BORROWINGS BY CURRENCY

Pounds sterling

£000Euro

£000US dollars

£000Other £000

Total £000

31 December 2014

Bank loans – 53,204 60,013 – 113,217

Bank facilities – 18,751 5,074 – 23,825

Loans from joint venture partner – 544 – – 544

– 72,499 65,087 – 137,586

Pounds sterling

£000Euro

£000US dollars

£000Other £000

Total £000

31 December 2013

Bank loans – 68,637 57,739 – 126,376

Bank facilities – 8,694 4,923 1,779 15,396

Shareholder credit facility 460,494 – – – 460,494

Loans from joint venture partner – 462 – – 462

460,494 77,793 62,662 1,779 602,728

19. TR ADE AND OTHER PAYABLES

2014 £000

2013 £000

Current

Trade payables 54,654 41,548

Accruals and deferred income 23,539 26,069

Accrued interest on bank facilities 2,199 2,350

Accrued interest on shareholder credit facility – 5,077

Amounts owed to related parties (note 26) 6,638 5,756

Amounts owed to associate (note 26) 1,657 2,688

Deferred consideration owed to related parties (note 13) 312 –

Other creditors 5,495 3,152

Total current trade and other payables 94,494 86,640

Non-current

Put option over non-controlling interest 500 500

Deferred consideration owed to related parties (note 13) 1,199 –

Other creditors 3,466 3,052

Total non-current trade and other payables 5,165 3,552

The Directors consider that the carrying amount of trade payables is approximate to their fair value. Trade creditor days as at 31 December 2014 were on average 137 days (31 December 2013: 152 days).


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2 0. OTHER NON-CURRENT L IABIL ITIES

2014 £000

2013 £000

Employee Benefit Trust liability 15,374 –

The liability has been discounted applying a pre-tax discount rate that has been adjusted for risks specific to the liability.

The Jimmy Choo PLC Employee Benefit Trust acquired the Company’s own shares during the year from JAB Luxury GmbH, the Group’s majority shareholder. The consideration for the shares has been left outstanding and will fall due for payment when shares are awarded to employees in accordance with the terms of the Group’s long term incentive plan (see note 22). Shares will be returned to JAB Luxury GmbH in the event that an employee leaves the scheme.

21. CAPITAL AND RESERVES

2014 £000

2013 £000

Share capital 389,738 –

Share premium 99,480 –

Own shares reserve (16,732) –

Translation reserve (2,864) (2,439)

Retained earnings (25,469) (23,234)

Total equity 444,153 (25,673)

SHARE CAPITALShare capital is comprised of:

2014 £000

2013 £000

Allotted and called up

100 ordinary shares of £1 each – –

389,737,588 ordinary shares of £1 each 389,738 –

The comparative share capital represents that of Choo Luxury Group Limited.

The table below summarises the movements in share capital during the year ended 31 December 2014:

No of shares

Balance at 31 December 2013 100

Issue of ordinary shares – Jimmy Choo PLC 1

Issue of preference shares – Jimmy Choo PLC 50,000

Redemption of preference shares – Jimmy Choo PLC (50,000)

Issue of ordinary shares – Jimmy Choo PLC 389,737,487

Balance prior to capital transaction 389,737,588

Jimmy Choo PLC was incorporated on 1 September 2014 and issued one ordinary share of £1 at par and £50,000 preference shares of £1 each at par. The preference shares were subsequently redeemed as part of the share for share exchanges described below.

On 1 September 2014 Jimmy Choo (Holdings) Limited was incorporated and issued one ordinary share of £1 at par.

On 3 October 2014 JAB Luxury GmbH and Choo Luxury Group Limited entered into a debt for equity swap agreement pursuant to which JAB Luxury GmbH agreed to discharge Choo Luxury Group Limited from the Shareholder Credit Facility in exchange for the issue of 389,737,488 new ordinary £1 shares in Choo Luxury Group Limited.

On 15 October 2014 Jimmy Choo (Holdings) Limited issued 389,737,587 ordinary £1 shares in exchange for all classes of shares of Choo Luxury Group Limited.

On 16 October 2014 Jimmy Choo PLC issued 389,737,587 ordinary £1 shares in exchange for all classes of shares of Jimmy Choo (Holdings) Limited.



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21. CAPITAL AND RESERVES CON TINUEDSHARE PREMIUMShare premium of £99.5m arose on the debt for equity swap transaction between JAB Luxury GmbH and Choo Luxury Group Limited on 3 October 2014. The carrying value of the Shareholder Credit Facility (including accrued interest) at the date of the debt for equity swap was £489.2m.

OWN SHARES RESERVEThe cost of the Company’s ordinary shares held by the Jimmy Choo PLC Employee Benefit Trust is treated as a deduction in arriving at total shareholder’s equity. The movement in the own shares reserve was as follows:


Average price paid per share £000

1 January 2014 – – –

Shares purchased by the EBT during the year 11,951,119 £1.40 16,732

At 31 December 2014 11,951,119 £1.40 16,732

Shares held by the Jimmy Choo PLC Employee Benefit Trust will be used to satisfy options awarded under the Group’s long term incentive plan (see note 22).

2 2 . SHARE BASED PAYMENTSDuring the year the Group operated two equity-settled share based compensation schemes and one cash-settled share based payment scheme for its Directors and employees. Details of each of these schemes are set out in this note.

CASH-SE T TLED SHARE OP TION SCHEMEPH A N TOM OP TION SCHEMEThe Group operated a long term incentive plan open to invited employees of the Group (“the Participants”), which was accounted for as a cash-settled share based payment scheme. The Participants in the scheme were required to purchase equity in Choo Luxury Holdings Limited, a wholly owned subsidiary of the Group (“the Subsidiary”) in order to receive matching phantom options over the shares of the Subsidiary.

A put and call agreement existed between the Participants and the Subsidiary which enabled the Participant to put their equity shares back to the Subsidiary at fair value. The Subsidiary could call the shares in the event of a change in control or if the Participant left employment with the Group. The put and call agreement was accounted for as a cash settled share based payment scheme as the Participants were required to remain employed by the Group in order to participate in any increase in the fair value of the underlying equity shares.

The IPO of the Group in October 2014 triggered the vesting conditions of the all the options. Of these, 5,387,877 options were exercised at a fair value of £1.40, calculated with reference to the IPO price. The remaining 3,571,713 were cancelled and replaced by the equity-settled JC PLC Scheme detailed below.

At IPO the Participants also exchanged their shares in Choo Luxury Holdings Limited for shares in Jimmy Choo PLC via a series of share-for-share exchanges. The put and call agreement over the Participants’ shares in Choo Luxury Holdings Limited lapsed at IPO. The liability of £3.5m that had previously been recognised in respect of the put and call agreement was therefore reclassified to equity.

The total liability recognised in respect of the cash settled share based payment scheme at 31 December 2014 was £nil (2013: £5.9m).

Details of the movements during the year are as follows:

2014 2013

Number of share options

Weighted average

exercise priceNumber of

share options

Weighted average exercise

price

Outstanding at the beginning of the year 8,959,590 1.00 4,679,620 1.00

Granted during the year – 1.00 6,000,000 1.00

Cancelled during the year (3,571,713) 1.00 (1,720,030) 1.00

Exercised during the year (5,387,877) – – –

Expired during the year – – – –

Outstanding at the end of the year – – 8,959,590 –

Exercisable at the end of the year – – – –

There were no phantom options outstanding at 31 December 2014. At 31 December 2013, the phantom options had a weighted average exercise price of £1.00 and a maximum weighted average remaining contractual life of 7.5 years.


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2 2 . SHARE BASED PAYMENTS CON TINUEDEQUIT Y-SE T TLED SHARE OP TION SCHEMESJC PL C SH A RE AWA RDFollowing the partial vesting of the Phantom Option Scheme at IPO in October 2014, 3,571,713 options were cancelled and a new equity-settled share based payment scheme implemented (the “JC PLC Share Award”). The number of shares awarded under the JC PLC Share Award was calculated by reference to the value attributed to the proportion of previously held phantom options. For each phantom option forfeited, Participants received 0.55 share awards, with a nominal exercise price of £1 in total for each exercise.

The options are due to vest in three stages: one third are exercisable on 1 July 2016; one third are exercisable 1 July 2017; and the remaining third are exercisable on 1 July 2018. The vesting of these options is dependent upon continued employment over the vesting period.

Any vested but unexercised options will automatically lapse on 21 October 2024.

Movements in the number of share awards outstanding are as follows:

2014 2013

Outstanding at the beginning of the year – –

Granted during the year 2,801,120 –

Outstanding at 31 December 2,801,120 –

Exercisable at 31 December – –

The weighted average exercise price of the options is £nil.

ONE-OF F AWA RDOn 30 October 2014, share awards of 10,192,858 ordinary shares in Jimmy Choo PLC were granted as a one-off award at IPO to members of the Group’s senior management team, with a nominal exercise price of £1 in total for each exercise.

The options were awarded in three tranches each with different vesting conditions:

1. M AIN AWA RD50% of the options granted are exercisable on the fifth anniversary of the grant date and 50% are exercisable on the sixth anniversary of the grant date. The total number of shares granted under this award was 8,271,429.

2 . A LT ERN AT E GR A N T 133% of the options granted are exercisable on the fourth anniversary of the grant date; 33% are exercisable on the fifth anniversary of the grant date and 33% are exercisable on the sixth anniversary of the grant date. The total number of shares granted under this award was 1,071,429.

3 . A LT ERN AT E GR A N T 2850,000 options were granted with vesting conditions that are the same as the JC PLC Share Awards described above.

The vesting of these options is dependent upon continued employment over the vesting period. Any vested but unexercised options will automatically lapse on 21 October 2024. The fair value of the award was determined as £1.40 based on the market value of ordinary shares at the grant date.

Movements in the number of share awards outstanding are as follows:

2014 2013

Outstanding at the beginning of the year – –

Granted during the year 10,192,858 –

Outstanding at 31 December 10,192,858 –

Exercisable at 31 December – –

The weighted average exercise price of the options is £nil.



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2 3 . F INANCIAL INSTRUMENTS AND REL ATED DISCLOSURESFINANCIAL RISK MANAGEMENTThe Directors have overall responsibility for the oversight of the Group’s risk management framework. A formal process for reviewing and managing risk in the business has been developed. A register of strategic and operational risk is maintained and reviewed by the Directors, who also monitor the status of agreed actions to mitigate key risks.

CREDIT RISKCredit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from wholesale customers and the Group’s foreign exchange forward contracts.

The Group has no significant concentrations of credit risk. The trade receivables balance is spread across a large number of different customers. The Group has policies in place to ensure that wholesale sales are made to customers with an appropriate credit history. The Group only sells to wholesale customers who are creditworthy and mitigates risk in certain markets by trading on terms with accelerated payments, bank guarantees and letters of credit, as well as adopting credit insurance when appropriate. The Group monitors the creditworthiness of counterparties using publicly available information. As a result the Group’s exposure to bad debts is not significant and default rates have historically been very low. Sales to retail customers are made in cash or via major credit cards. An ageing of overdue receivables is included in note 17.

The Group is also exposed to credit risk arising from other financial assets, which comprise cash and short-term deposits and certain derivative instruments. The Group’s exposure to credit risk arises from the default of the counterparty with a maximum exposure equal to the carrying value of these instruments if a counterparty to a financial instrument fails to meet its contractual obligation. The Group’s policy is that surplus funds are placed on deposit with counterparties, who are either party to the Group’s banking syndicate, or who are credit worthy counterparties.

LIQUIDIT Y RISKLiquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group ensures that it has sufficient cash or loan facilities to meet all its commitments when they fall due by ensuring that there is sufficient cash or working capital facilities to meet the Group’s cash requirements.

The risk is measured by review of forecast liquidity each month to determine whether there are sufficient credit facilities to meet forecast requirements and by monitoring covenants on a regular basis to ensure there are no expected significant breaches, which would lead to an “Event of Default”. Cash flow forecasts are submitted monthly to the Directors. These continue to demonstrate the strong cash generating ability of the business and its ability to operate within existing agreed banking facilities. There have been no breaches of covenants during the reported years. For further details of the Group’s borrowings see note 18.

All short-term trade and other payables, accruals, bank overdrafts and borrowings mature within one year or less. The carrying value of all financial liabilities due in less than one year is equal to their contractual undiscounted cash flows.

The maturity profile of the contractual undiscounted cash flows of the Group’s non-current financial liabilities, excluding derivatives used for hedging, is as follows:

2014 £000

2013 £000

In more than one year, but not more than two years (12,299) (470,914)

In more than two years, but not more than three years (5,862) (8,021)

In more than three years, but not more than four years (116,408) (6,268)

In more than four years, but not more than five years (6,115) (125,225)

In more than five years (6,195) –

Total non-current financial liabilities (146,879) (610,428)

MARKE T RISKMarket risk is the risk that changes in the market prices, such as foreign exchange rates and interest rates, will affect the Group’s income. The Group’s exposure to market risk predominantly relates to interest and currency risk.

INTEREST R ATE RISKThe Group is exposed to the risk of interest rate fluctuations mainly with regard to the interest expense on the debt carried by Choo Luxury Finance Limited. The Group’s bank borrowings incur variable interest rate charges linked to EURIBOR/LIBOR plus a margin. The Group’s policy aims to manage the interest cost of the Group within the constraints of its financial covenants and business plan.

The Group has historically held interest rate swaps in connection with the financing put in place at the time of the acquisition of the Group by JAB Luxury GmbH. The original swap agreements expired in 2014.

Sensitivity analysis of the effect of a change in interest rates of ±1% is included below.


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2 3 . F INANCIAL INSTRUMENTS AND REL ATED DISCLOSURES CON TINUEDFOREIGN CURRENCY RISKThe Group operates internationally and is, therefore, exposed to the foreign exchange risk which can negatively impact revenue, costs, margins and profit.

The Group transacts with its suppliers of finished goods, based in continental Europe, in euro. In addition to this, the Group is exposed to transaction risk on the translation and conversion of surplus US dollar, Hong Kong dollar, Japanese yen and Chinese yuan balances, generated by its directly owned stores globally into euro and pounds sterling. The Group’s policy allows these exposures to be hedged for up to 12 months forward in order to create sufficient certainty to price different collections and assure the business cash flows.

Hedging is performed through the use of foreign currency bank accounts and forward foreign exchange contracts and nil cost options. These contracts are put in place as part of the Group’s treasury management strategy. It enables merchandisers to be given targeted exchange rates for products, which are set aligned with the hedge rates for future collections, typically 9–12 months before cash flows crystallise. In addition, the Group uses forward foreign exchange contracts in order to hedge its exposure to foreign currency gains and losses arising on the Euro denominated portion of its external bank facilities.

The following table shows the extent to which the Group has monetary assets and liabilities at the balance sheet date in currencies other than the local currency of operation. Monetary assets and liabilities refer to cash, deposits, borrowings and other amounts to be received or paid in cash. Amounts exclude intercompany balances which eliminate on consolidation.

31 December 2014 31 December 2013

Monetary assets

£000

Monetary liabilities

£000

Monetary assets

£000

Monetary liabilities

£000

Euro 14,459 (68,062) 15,931 (64,760)

US dollar 9,635 (115,424) 12,589 (115,742)

Japanese yen 578 – 649 –

Hong Kong dollar 554 (113) 2,276 (77)

Chinese yuan 84 (802) 662 (2,187)

Other currencies 1,309 (800) 653 (2,942)

26,619 (185,201) 32,760 (185,708)

PENSION L IABILIT Y RISKThe Group has no association with any defined benefit pension scheme and therefore carries no deferred, current or future liabilities in respect of such a scheme.

CAPITAL RISK The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to optimise returns to its shareholders. The Board’s policy is to retain a strong capital base so as to maintain investor, creditor, and market confidence and to sustain future growth. The Directors regularly monitor the Group’s level of capital to ensure that this can be achieved.

Cash is used to fund the Group’s continued investment and growth of the global brand. It is also used to make routine outflows of capital expenditure, tax and dividends. The Group has access to a revolving cash flow facility of €91.6m (£71.6m) of which €14.9m (£11.7m) was utilised at 31 December 2014 (2013: €25.1m available (£20.1m) and €nil utilised (£nil)).

The Group is in compliance with the financial and other covenants within its committed bank credit facilities, and has been in compliance throughout the reported years.

FAIR VALUE DISCLOSURESThe carrying amount of financial assets and liabilities approximate their fair values. The majority of the financial assets are current. The majority of the current interest-bearing liabilities are at variable interest rate. The fair values of the non-current fixed rate interest-bearing liabilities are not materially different from their carrying amounts.

The fair value of non-current fixed rate interest-bearing liabilities is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date.

The fair value of derivative instruments (currency forwards and options) is determined based on current and available market data. Pricing models commonly used in the market are used, taking into account relevant parameters such as forward rates, spot rates, discount rates, yield curves and volatility.



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2 3 . F INANCIAL INSTRUMENTS AND REL ATED DISCLOSURES CON TINUEDFAIR VALUE HIER ARCHYFinancial instruments carried at fair value are categorised into the below levels, reflecting the significance of the inputs used in estimating the fair values:

Level 1: Quoted prices (unadjusted) in active markets for identical instruments;

Level 2: Valuation techniques based on observable inputs, other than quoted prices included within level 1, that are observable either directly or indirectly from market data;

Level 3: Valuation techniques using significant unobservable inputs, this category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument’s valuation.

The Group recognises derivative financial instruments at fair value. No other financial instruments are carried at fair value. The derivative financial instruments have been measured using a level 2 valuation method.

The fair value of financial assets and liabilities are as follows:

2014 £000

2013 £000


Trade and other receivables 41,087 35,520

Other financial assets – 1,450

Total financial assets 53,132 57,304

Trade and other payables (99,659) (90,192)

Borrowings (137,586) (602,728)

Other non-current liabilities (note 20) (15,374) –

Other financial liabilities (2,903) (419)

Total financial liabilities (255,522) (693,339)

FINANCIAL INSTRUMENTS SENSITIVIT Y ANALYSISIn managing interest rate and currency risks the Group aims to reduce the impact of short term fluctuations on its earnings. At the end of each reporting year, the effect of hypothetical changes in interest and currency rates are as follows:

INTEREST R ATE SENSITIVIT Y ANALYSISThe table below shows the Group’s sensitivity to interest rates on floating rate borrowings (i.e. cash and cash equivalents and bank borrowings which attract interest at floating rates) if interest rates were to change by ±1%. The impact on the results in the consolidated income statement and consolidated statement of other comprehensive income and equity would be:

2014 Increase/

(decrease) in equity

£000

2013 Increase/


£000

+1% movement in interest rates (1,370) (3,720)

-1% movement in interest rates 1,370 3,720

FOREIGN E XCHANGE R ATE SENSITIVIT Y ANALYSISThe table below shows the Group’s sensitivity to pounds sterling strengthening/weakening by 10%:

2014 Increase/


£000

2013 Increase/


£000

10% appreciation of pounds sterling 14,378 13,904

10% depreciation of pounds sterling (17,667) (16,994)

This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the end of the reporting year. The analysis assumes that all other variables, in particular interest rates, remain constant.


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2 3 . F INANCIAL INSTRUMENTS AND REL ATED DISCLOSURES CON TINUEDOTHER FINANCIAL ASSE TS AND L IABILITIESOther financial assets and liabilities are the result of derivative contracts entered into by the Group to hedge against interest and exchange rate risk.

2014 £000

2013 £000

Other financial assets

Forward foreign exchange contracts – 1,450

Other financial liabilities

Forward foreign exchange contracts (2,903) –

Interest rate swap contracts – (419)

Total financial liabilities (2,903) (419)

Net derivative financial instruments

Notional principal amounts of the outstanding forward foreign exchange contracts 117,285 41,773

Notional principal amounts of the outstanding interest rate swap contracts – 151,140

24 . OPER ATING LE ASESNon-cancellable operating lease rentals are payable as follows:

Land and Buildings

2014 £000

2013 £000

Less than one year 26,560 22,141

Between one and five years 79,297 67,345

More than five years 37,300 35,760

Total operating leases 143,157 125,246

In addition the Group had annual commitments under concession agreements totalling £1.2m (2013: £0.7m) per annum at 31 December 2014.

The Group leases a number of stores under operating leases of varying lengths.

2 5 . COMMITMENTSJ. Choo Limited, a subsidiary undertaking, holds a put option to purchase the remaining 50% share capital of J. Choo Russia JV Limited at the end of the joint venture agreement in 2018. The fair value of the future consideration payable is estimated to be £0.5m at 31 December 2014 (2013: £0.5m).

In 2012 the Company entered into a joint and several money only guarantee of up to £15.0m for a UK lease for the benefit of Belstaff International Limited, a fellow subsidiary of JAB Luxury GmbH. The Company is counter-indemnified in respect of this guarantee by JAB Luxury GmbH.

There was no unprovided capital or other financial commitments at 31 December 2014 (2013: £nil).



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2 6 . REL ATED PARTIESTR ANSAC TIONS WITH KE Y MANAGEMENT PERSONNELThe compensation of key management personnel (including the directors) is as follows:

2014 £000

2013 £000

Key management personnel emoluments

Emoluments (of which directors £1.9m (2013: £1.4m)) 5,709 4,554

Termination payments – 1,731

Share based payments (of which directors £1.5m (2013: £0.9m)) 3,410 2,021

Other emoluments 1,371 250

Total emoluments 10,490 8,637

Company contributions to money purchase pension schemes 221 81

Total 10,711 8,718

Share based payments includes an expense of £1.6m (2013: £nil) recognised within exceptional items (see note 22). The costs associated with other emoluments are also recognised within exceptional items.

OTHER REL ATED PART Y TR ANSAC TIONS Balances between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. The Group has related party relationships with its shareholder, JAB Luxury GmbH, other subsidiary undertakings of JAB Luxury GmbH, and its associates and joint ventures and the other shareholder of J. Choo Russia JV Limited. The Group entered into the following transactions during the year:

2014 2013

Income £000

Expense £000

Income £000

Expense £000

Parent company

JAB Luxury GmbH – (73) – (31,085)

Other related parties

LLX Global Business Services UK Ltd – (1,282) – (34)

Bally Group (U.K.) Limited – – – (640)

Bally (Shanghai) Commercial Co., Ltd. – (123) – –

Bally Americas Inc. – (112) – (78)

Bally GC Retail Co. Limited – (66) – –

Belstaff International Limited – – – (315)

Zagliani UK Limited – – – (23)

Studio Luxury S.r.l. – – – (3,712)

Bally Schuhfabriken AG – – – (173)

LLX Global Business Services Americas Inc. – (764) – –

LLX Global Business Services Hong Kong Limited – (274) – –

LLX Global Business Services Shanghai Co., Ltd. – (106) – –

JC Industry S.r.l. (associated company) – (4,261) – (4,802)

Rubinse LLC – – 183 (323)

Oxana Bondarenko – (249) – –

Total – (7,310) 183 (41,185)


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2 6 . REL ATED PARTIES CON TINUEDThe following amounts were outstanding at the balance sheet date:

2014 2013

Receivable £000

Payable £000

Receivable £000

Payable £000

Parent company

JAB Luxury GmbH 9 (18,305) – (467,161)

Other related parties

LLX Global Business Services UK Ltd 736 (3,330) 505 (34)

Bally Group (U.K.) Limited 1,322 (296) 1,464 (640)

Bally (Shanghai) Commercial Co., Ltd. – – – (64)

Bally Americas Inc. 15 (175) – (89)

Bally GC Retail Co. Limited – (2) – –

Belstaff International Limited 7 (571) 19 (315)

Zagliani UK Limited – (4) – (23)

Studio Luxury S.r.l. – – – (300)

Bally Schuhfabriken AG – (11) – (2,701)

Luxury Italia Holding S.r.l. – (1,511) – –

LLX Global Business Services Americas Inc. 31 (469) 440 –

LLX Global Business Services Hong Kong Limited – (19) – –

LLX Global Business Services (Shanghai) Co., Ltd. – (96) – –

JC Industry S.r.l. (associated company) – (1,657) – (1,727)

Rubinse LLC – – 89 (961)

Oxana Bondarenko – (1,136) – –

Total 2,120 (27,582) 2,517 (474,015)

Until 3 October 2014, JAB Luxury GmbH provided a credit facility to the Group (see note 18). The total amount drawn at 31 December 2014 was £nil (2013: £460.5m). Interest of £nil (2013: £5.1m) had accrued on the outstanding facility at the balance sheet date. The total interest expense for the year was £23.6m (2013: £29.5m).

The Group also incurred expenses on behalf of or payable to JAB Luxury GmbH of £0.1m (2013: £1.6m) during the year to 31 December 2014 which remain unpaid at the balance sheet date. No management fee was incurred in the year (2013: £1.5m).

Included in the payable to Bally Group (UK) Limited is £0.3m (2013: £0.6m) in relation to surrender of tax losses.

27. ULTIMATE PARENT COMPANY The majority shareholder is JAB Luxury GmbH and the ultimate controlling party is Agnaten SE, a company incorporated in Austria.



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2 8 . RECONCILIATION TO NON-GA AP PERFORMANCE ME ASURES ADJUSTED EBITDA

2014 £000

2013 £000


Adjusted for:

Exceptional costs (note 5) 13,047 6,009

Depreciation 14,225 11,001

Amortisation 793 752

Gain on disposal property, plant and equipment and intangibles (129) –

Realised and unrealised foreign exchange (gain)/loss (1,786) 3,966

Adjusted EBITDA 50,230 46,877

ADJUSTED EBIT

2014 £000

2013 £000


Adjusted for:


Share of associates and jointly controlled entities 12 (85)

Realised and unrealised foreign exchange (gain)/loss (1,786) 3,966

Adjusted EBIT 35,353 35,039

ADJUSTED PROFIT BEFORE TA X

2014 £000

2013 £000


Adjusted for:


Interest on shareholder credit facility 23,646 29,496

Foreign exchange (gain)/loss on external loan (1,456) 1,065

Loss on financial instruments on external loan 1,353 –

Accelerated amortisation of capitalised debt costs – 8,445

Adjusted EBT 28,291 23,612

ADJUSTED CONSOLIDATED NE T INCOME

2014 £000

2013 £000


Adjusted for:


Deferred tax (2,860) (6,343)

Interest on shareholder credit facility 23,646 29,496

Foreign exchange (gain)/loss on external loan (1,456) 1,065

Loss on financial instruments on external loan 1,353 –

Accelerated amortisation of capitalised debt costs – 8,445

Adjusted consolidated net income 22,888 21,004


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Note2014 £000

Non-current assets

Investments in equity-accounted investees 4 489,449

Deferred tax asset 5 131

Total non-current assets 489,580

Current assets

Trade and other receivables 6 5

Total assets 489,585

Current liabilities

Trade and other payables 7 (1,317)


Other non-current liabilities 8 (15,374)

Total liabilities (16,691)

Net assets 472,894

Capital and reserves

Called up share capital 9 389,738

Share premium 9 99,480

Own share reserve 9 (16,732)

Capital contribution 9 1,358

Retained deficit 9 (950)

Shareholder equity 10 472,894

The accompanying notes are an integral part of this company only statement of financial position.

These company only financial statements of Jimmy Choo PLC, registered number 09198021, have been approved and authorised for issue by the Board of Directors on 18 March 2015 and were signed on behalf by:

JONATHAN SINCL AIRDIREC TOR

COMPANY STATEMENT OF FINANCIAL POSITIONAS AT 31 DECEMBER 2014


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1. ACCOUNTING POLICIESThe principal accounting policies are summarised below. They have all been applied consistently throughout the current year.

The Company was incorporated on 1 September 2014 and, therefore, no comparative information is presented. On 29 September 2014, the Company was registered as a public limited company. On 22 October 2014, its shares were listed on the London Stock Exchange.

BASIS OF PREPAR ATIONThese financial statements are prepared on the going concern basis under the historical cost convention and in accordance with applicable United Kingdom law and UK Generally Accepted Accounting Practice. The principal accounting policies are set out below and have been applied consistently throughout the period.

The Company has control over the assets and liabilities of the Jimmy Choo PLC Employee Benefit Trust and accordingly the assets and liabilities of the Jimmy Choo PLC Employee Benefit Trust are recognised in the Company financial statements. No profit or loss account is presented for the Company as permitted by Section 408 of the Companies Act 2006. The Company’s loss for the period was £1.5m, mainly related to exceptional costs incurred in respect of the IPO.

GOING CONCERNAt the balance sheet date, the Company had net assets. The Directors have reviewed the financial projection of the Company for a period of 12 months from the date of this report, which shows that the Company will be able to generate sufficient cash flows in order the meet its liabilities as they fall due. Accordingly, the Directors are satisfied that the gong concern basis remains appropriate for the preparation of the financial statements.

REL ATED PARTIESThe Company has taken advantage of the exemption contained in Financial Reporting Standard 8 Related party disclosure and has not reported transactions with related parties.

SHARE BASED PAYMENTSWhere the Company grants options over its own shares to the employees of its subsidiaries, it recognises, in its individual financial statements, an increase in the cost of investment in its subsidiaries equivalent to the equity-settled share based payment charge recognised in its subsidiary’s financial statements. The corresponding credit is recognised directly in equity.

INVESTMENTSShares in subsidiary undertakings are stated at cost less any provision for impairment where in the opinion of the Directors there has been a diminution in the value of the investment.

CASH FLOWUnder FRS 1 (revised 1996) the Company is exempt from the requirement to prepare a cash flow statement as a consolidated cash flow has been included in the Jimmy Choo PLC consolidated financial statements.

2 . FEES PAYABLE TO THE AUDITORSAuditor’s remuneration is detailed in note 7 to the consolidated financial statements.

3 . STAFF NUMBERS AND COSTSThe Company has no employees other than the Directors. Full details of the Directors’ remuneration and interests are set out in the Directors’ Remuneration Report.

4 . INVESTMENTS IN EQUIT Y-ACCOUNTED INVESTEES

2014 £000

On incorporation –

Additions 489,449

At 31 December 2014 489,449

NOTES TO THE COMPANY ONLY FINANCIAL STATEMENTS(FORMING PART OF THE FINANCIAL STATEMENTS)


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4 . INVESTMENTS IN EQUIT Y-ACCOUNTED INVESTEES CON TINUEDThe principal undertakings in which the Company’s interest at the period end is more than 20% are as follows:

Ordinary shares held %

Company Country of incorporation Nature of Business 2014 2013

Jimmy Choo (Holdings) Limited Great Britain Holding Co. 100 –

Choo Luxury Group Limited Great Britain Holding Co. 100 100

Choo Luxury Holdings Limited Great Britain Holding Co. 100 100

Choo Luxury Finance Limited Great Britain Holding Co. 100 100

Passion Holdings Limited Great Britain In liquidation 100 100

Bag and Choos Limited Great Britain In liquidation 100 100

Choo Management Limited Great Britain In liquidation 100 100

J. Choo Group Holding Limited Great Britain In liquidation 100 100

The J. Choo Group Ltd Great Britain In liquidation 100 100

Choo Group Holdings Ltd Great Britain In liquidation 100 100

Choo Group Finance Ltd Great Britain In liquidation 100 100

Yearnoxe Limited Great Britain In liquidation 100 100

Choo Holdings UK Limited Great Britain In liquidation 100 100

J. Choo Limited Great Britain Retail and wholesale 100 100

J. Choo (OS) Limited Great Britain Retail 100 100

Franchoo SAS France Retail 100 100

Itachoo S.r.l. Italy Retail 100 100

J Choo Florida Inc USA Property 100 100

J Choo Germany GmbH Germany Retail 100 100

J. Choo (Jersey) Limited Jersey Brand Co. 100 100

J Choo USA Inc USA Retail 100 100

Jimmy Choo Spain SL Spain Retail 100 100

J Choo (Switzerland) AG Switzerland Retail 100 100

J. Choo (Belgium) BVBA Belgium Retail 100 100

J. Choo (Asia) Limited Hong Kong Regional office 100 100

J. Choo Japan JV Ltd. Great Britain Dormant 100 100

Jimmy Choo (Shanghai) Trading Co. Ltd China Retail 100 100

Jimmy Choo Tokyo K.K. Japan Retail and wholesale 100 100

J. Choo Netherlands B.V. The Netherlands Retail 100 100

J. Choo Czech s.r.o. Czech Republic Retail 100 100

J. Choo Hong Kong JV Limited Great Britain Dormant 100 100

Jimmy Choo Hong Kong Limited Hong Kong Retail and wholesale 100 100

J. Choo Supply SA Switzerland Procurement 100 100

J. Choo (Austria) GmbH Austria Retail 100 100

J. Choo Canada Inc Canada Retail 100 –

Studio Luxury S.r.l. Italy Production control 100 –

J. Choo Russia JV Limited Great Britain Holding Co. 50 50

J. Choo RUS LLC Russian Federation Retail 50 50

JC Industry S.r.l. Italy Production 33 33

NOTES TO THE COMPANY ONLY FINANCIAL STATEMENTS CONTINUED

(FORMING PART OF THE FINANCIAL STATEMENTS)


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4 . INVESTMENTS IN EQUIT Y-ACCOUNTED INVESTEES CON TINUEDAs at 31 December 2014, all subsidiary undertakings are wholly owned, except where indicated differently above, and operate in the country in which they are incorporated. All subsidiaries have financial years ending 31 December.

The Company indirectly owns all subsidiaries through Jimmy Choo (Holdings) Limited.

5 . DEFERRED TA X

2014 £000

Deferred tax assets 131

6 . TR ADE AND OTHER RECEIVABLES

2014 £000

Amounts owed by group undertakings 4

VAT receivable 1

Total trade and other receivables 5

7. TR ADE AND OTHER PAYABLES

2014 £000

Current

Trade payables 505

Amounts due to group undertakings 465

Accruals 347

Total current trade and other payables 1,317

8 . OTHER NON-CURRENT L IABIL ITIES

2014 £000

Jimmy Choo PLC Employee Benefit Trust liability 15,374

The Jimmy Choo PLC Employee Benefit Trust acquired the Company’s own shares during the year from JAB Luxury GmbH, the Group’s majority shareholder. The consideration for the shares has been left outstanding to JAB Luxury GmbH. The payable will fall due for payment when shares are awarded to employees in accordance with the terms of the Group’s equity settled share based payment schemes (see note 22 in the consolidated financial statements). Shares will be returned to JAB Luxury GmbH on the event of an employee leaving the scheme.

9. CAPITAL AND RESERVESSHARE CAPITAL

2014 £000

Allotted, called up, issued and not paid:

389,737,588 ordinary share of £1 389,738

SHARE PREMIUMShare premium of £99.5m arose on the debt for equity swap transaction between JAB Luxury GmbH and Choo Luxury Group Limited on 3 October 2014. The carrying value of the shareholder credit facility (including accrued interest) at the date of the debt for equity swap was £489.2m.


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9. CAPITAL AND RESERVES CON TINUEDOWN SHARE RESERVEThe cost of the Company’s ordinary shares held by the Jimmy Choo PLC Employee Benefit Trust is treated as a deduction in arriving at total shareholder’s equity. The movement in the own shares reserve was as follows:


Average price paid per share £000

On incorporation – – –

Shares purchased by the EBT during the year 11,951,119 £1.40 16,732

At 31 December 2014 11,951,119 £1.40 16,732

Shares held by the Jimmy Choo PLC Employee Benefit Trust will be used to satisfy options awarded under the Group’s share option schemes (see note 22 in consolidated financial statements).

CAPITAL CONTRIBUTION

2014 £000

Capital contribution from controlling shareholder 1,358

The Company has recorded a capital contribution in the year reflecting the accounting for the fair value of the Employee Benefit Trust liability (see note 8).

RE TAINED DEFICIT

2014 £000


Loss for the year (1,490)

Equity settled share based payments charge 526

Deferred tax on share based payments taken directly to reserves 14

At 31 December 2014 (950)

10. RECONCILIATION OF MOVEMENT IN SHAREHOLDERS’ FUNDS2014 £000


Loss for the period (1,490)

Issue of shares 489,218

Own shares reserve (16,732)

Equity settled share based payments 526

Deferred tax on share based payments taken directly to reserves 14

Capital contribution from controlling shareholder 1,358

Closing shareholders’ equity 472,894

11. ULTIMATE PARENT COMPANY AND CONTROLLING PART YThe Company’s immediate parent undertaking party is JAB Luxury GmbH. The ultimate undertaking and controlling party is Agnaten SE, a company incorporated in Austria.

NOTES TO THE COMPANY ONLY FINANCIAL STATEMENTS CONTINUED

(FORMING PART OF THE FINANCIAL STATEMENTS)

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JIMM Y CHOO PL C A NNUA L REPOR T & F IN A NCIA L S TAT EMEN TS 2 014

CORPORATE INFORMATION

REGISTERED OFFICE:Jimmy Choo PLC10 Howick PlaceLondonSW1P 1GW +44 (0) 20 7368 5000

www.jimmychooplc.com REGISTERED NUMBER09198021 COMPANY SECRE TARYHannah Merritt AUDITORK PMG L L PSt Nicholas House31 Park RowNottinghamNG1 6FQ REGISTR ARSEQUINIT I LT DAspect HouseSpencer RoadLancingWest SussexBN99 6DA

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JIMM Y CHOO PL C A NNUA L REPOR T & F IN A NCIA L S TAT EMEN TS 2 014

JIMM Y CHOO PL C10 HOW ICK PL ACE

LONDON S W1P 1GW

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