Billabong International : AGM Chair and Managing Director & CEO Addresses

My name is Ian Pollard and I am the chair of your company, Billabong International Limited.

On behalf of my fellow Directors, I welcome you all to the 2016 Annual General Meeting

- to those here at the meeting and to those listening in via the audio webcast on our corporate website, billabongbiz.com.

2016 was a challenging year for our global action sports industry.

Even with the continued sales growth of our big 3 brands, operational progress and significant reductions in our costs of doing business, we reported a net loss of $23.7m. The year-on-year decline was principally due to reduced gross margins and a higher accounting tax expense. That accounting tax expense is not particularly representative of the Group's income tax payments, which increased by less than $1m to $3.1m.

Chief executive Neil Fiske will speak further to the Company's FY16 trading performance and gross margins.

It has been three years since our then newly-appointed CEO announced our seven-part strategy to transform the company. The board continues to believe it is the right strategy, and provides us all with clarity of purpose and direction.

As you will remember, the company's big 3 brands - Billabong, RVCA and Element - are central to the strategy. Today, Neil will report on the encouraging performance of these brands as well as the progress on our major projects that underpin the company's future long-term growth and return to sound levels of profitability. We will also hear by video from RVCA global general manager Bill Bettencourt on the impressive growth being achieved by this quite unique lifestyle brand that brings together action

sports, fashion and art.

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The simplification of our brand portfolio plays an important role in implementing our strategy.

As part of an ongoing portfolio review, at the end of the 2016 financial year we sold the skate hardware brand Sector 9 for approximately US$12m. We are currently reviewing a number of our smaller brands, including Tigerlily, VonZipper and Xcel, with a view to possible sales that will pay down debt and continue to simplify our portfolio. Shareholders can be assured that unless we get full value for these high-quality brands we will hold them and look to grow them.

We continue to consider the refinancing of our debt. We believe that if we are to obtain a better financing package than we currently have, we need to see improvements to our profit and cashflow. We expect to see the beginnings of these improvements in the second half. There are no non-market contractual impediments to refinancing and our focus on earnings and simplification of the portfolio should start to put the Company in a position where, assuming credit market conditions are reasonable, refinancing on more favourable terms becomes a possibility.

As previously advised, the shareholder class action proceedings relating to historical market disclosures that occurred in 2011 have been settled. The basis of settlement has had no material impact on the Company's financial results at any time, nor will it impact our immediate or future cash flows or earnings reports. Resolution of this distracting matter is a positive development.

Since our last Annual General Meeting, Dr Sally Pitkin has resigned as a Director and Amar Doshi resigned as Alternate Director to Jason Mozingo. On behalf of the Company, I would like to acknowledge both their contributions, especially Sally's as a Director, as Chair of the Human Resources and Remuneration Committee and as Chair of the Class Action Committee.

We are currently conducting a search for a new female independent Director as a replacement for Sally.

As Neil will explain, we have had a soft start to the first half of this fiscal year but with encouraging signs coming from the US and the emerging benefits of our project agenda, and assuming a reasonably stable trading and currency environment we expect full year EBITDA before significant items and assuming no divestments to be in the range of AU$60 to $65 million.

As previously advised, we do not anticipate there being a dividend in respect of the 2016- 17 financial year.

In conclusion, Billabong International has begun the new financial year with a lower cost base and a focused way forward. By its nature, transformation of this magnitude takes time. But every step of the way we strengthen the core of the business and position ourselves to excel in those areas where we can direct our future. It is a process that requires long-term commitment and vision.

Given the progress we're making on our strategy, the quality and resilience of our brands and the commitment and hard work of our employees, your company today is

stronger operationally than it was twelve months ago.

I thank our dedicated worldwide workforce of over 4,000 people for their continued commitment to the business and its customers, both wholesale and retail.

I thank shareholders for their ongoing interest in the company and I look forward to reporting back on our continued progress.

To give you some further insight to Billabong's underlying performance and the path ahead, please welcome chief executive Neil Fiske.

Thank you, Ian. Good morning to everyone here and to those listening in on the webcast.

It has been three years since I first spoke at a Billabong Annual General Meeting and outlined the comprehensive seven-part strategy that we believed then, and believe now, is the key to rebuilding Billabong's profitability.

Turnaround st rat egy

1. | BRAND

2. | PRODUCT

3. | MARKETING

4. | OMNI-CHANNEL

5. | SUPPLY CHAIN

6. | ORGANISATION

7. | FINANCIAL DISCIPLINE

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Accordingly, it is worth pausing a moment to take stock and reflect on what has occurred to the business and the market in that time.

The vision we laid out three years ago called for a bold, far reaching transformation of the company.

Our mantra was to do fewer things, bigger and better, and we narrowed our focus to building global brands on global platforms. We knew it would take time, hard work and resolve. We knew there would be ups and downs along the way… and reminded everyone that progress would not necessarily be linear. But our belief from the start is that ours can be a business with double digit EBITDA margins and sustained growth from expanding global reach.

Today the company is well on its way in that transformation - from a complex, regional, fragmented business three years ago to a much simplified, brand-led, truly global company. We have brought in and promoted the right talent to drive this change and today we have one of the most capable management teams in the industry. We have adopted the Fewer/Bigger/Better approach. And the company is now organizationally stronger and far better positioned to compete and grow in a rapidly evolving retail environment.