Due to the global economic recession in 2009 resulted in a softer consumer demand, with its numerical performance was

clearly shown in the Pacific Brands Limited (PBG) annual financial report. According to the table in PartB1, the profit margin of PBG has undergone from positive 5.53(FY2008) to negative11.71% (FY2009) and to positive 3.05% (P43,FY 2010). During this special period, the Chairman and CEO have decided to implement the strategy-Pacific Brands2010partly starting from 2009. (P2,FY2009) The decision includes restructuring, refinancing, retraining, reskilling and regenerating of the company made from three dimension the companys operating, financing and investing of the business which has a signicant effects on relevant stakeholders. The details as follows, Operating and Investing Decision a)streamline portfolio of brands Noticed that about two-thirds of the company total sales came from its top brands from the data showed in FY 2008 and FY2009. The company decided to devote more resources to growing the top brands and gradually discontinuing, merging or divesting its smaller brands (FY2009)which accounted for just 2% of total sales. b) Close majority of clothing manufacturing mills and increase overseas outsourcing while PBG suffers the decreasing of the sales,the cost controlling decisions are put on important position. Reduce the workload and renegotiated with chinese suppliers about the product PBG has set up annualised target of $150 million by the end of F11 with full impact in F12 (based on current market conditions and currency rates, and before any reinvestment)(FY2009). Financing Decsions a)New Capital Structure At 30 June 2008, PBG has its net debt 742.7 million(FY2008) which was quite higher, the board has extended the maturity date of its debt and increased equity raising $256million with its net debt levels dropped down to $452.8 million.(FY2009) b) Dividend Payment Decision The EPS of PBG dropped to -39.9cents(FY2009)from 23.2cents(FY2008) , PBG Board has decided not to anounce any dividends (FY2009). while in 2008, the company has declared about 17cents per share with tax rates fully franked (P34,FY2008). It has mentioned that its future dividends decision would depend on the future companys operating performance and its prospect at each half (FY2009). The company EPS increased to5.7 cents(P28,FY2010) based on which,the board has announced a target pay ratio of at

least 50% of profit after tax.(P4,FY2010). Impacts and implications on Stakeholders Here we refer to Stakeholders as a broad view which includes not only shareholders, but also its employees,suppliers,environment,etc(P4.4,Stakeholder theory,CPA Enthic and Governance,2010) a) Employee While PBG 2010 strategy has involved many decisions, the most significant of these in terms of the impact on its employees has been the cessation of the majority of clothing manufacturing in Australia and New Zealand. This decision will result in more than 1,200 manufacturing employees being made redundant. b) Suppliers Although with over 70% products rely on importing, PBG will work more closely with its offshore suppliers because of one of its important decisions to shut down mostly of its demestic manufacter more emphasis on outsourcing(FY2009). c) the Board and Management Team The outcome of performance (as menthioned before that EPS drop dramtically in 2009 majorly because of the brand rationalization ) resulted in changes of the top level remuneration to purchase of shares in the Company and hold for a period of two years from the date of award (P29,Remuneration Report,FY2009).In 2010, the board has made more emphasis on its cash-short term incentive remuneration. As we can see the data of remuneration for cash increase from 451million (FY2009) to 1013million (FY2010) during the implementation of the decisions.

Reference: Pacific Brands Limited Annual Report,2008 Pacific Brands Limited Annual Report,2009 Pacific Brands Limited Annual Report,2010 P4.4,Stakeholder theory,CPA Enthic and Governance,2010)