Billabong International : Preliminary Final Report & Full Year Statutory Accounts

Name of entity

BILLABONG INTERNATIONAL LIMITED

ABN Financial year ended

17 084 923 946 30 JUNE 2016

Comparative Financial year ended 30 JUNE 2015

This report is based on the consolidated financial report which has been audited.

Refer to the attached full financial report for all other disclosures in respect of the Appendix 4E.

Signed: ............................................................ Date: 25 August 2016

Neil Fiske

Chief Executive Officer

Billabong International

ABN 17 084 923 946

Page

Directors' report 2

Corporate governance statement 33

Auditor's independence declaration 34

Financial report 35

Directors' declaration 87

Independent auditor's report to the members 88

Shareholder information 90

FINANCIAL REPORT

For the year ended 30 June 2016

Your Directors present their report on the consolidated entity (referred to hereafter as the Group) consisting of Billabong International Limited (the Company) and the entities it controlled at the end of, or during, the year ended 30 June 2016.

The following persons were Directors of the Company during the whole of the financial year and up to the date of this report: Ian Pollard

Neil Fiske Gordon Merchant Howard Mowlem Jason Mozingo

Sally Pitkin was a Director from the beginning of the financial period until her resignation on 15 August 2016.

Amar Doshi was an Alternate to Jason Mozingo from the beginning of the financial period until his resignation on 4 August 2016. Matthew Wilson was a Director from the beginning of the financial period until his resignation on 7 September 2015.

Thomas Casarella was an Alternate Director to Matthew Wilson from the beginning of the financial period until his resignation on 7 September 2015.

During the year the principal continuing activities of the Group consisted of the wholesaling and retailing of surf, skate, snow and sports apparel, accessories and hardware, and the licensing of the Group trademarks to specified regions of the world.

No dividends were paid to members during the financial year. The Board has not declared a final ordinary dividend for the year ended 30 June 2016. The Dividend Reinvestment Plan (DRP) remains suspended.

Operating and Financial Review

The Group's business is the wholesaling and retailing of surf, skate, snow and sports apparel, accessories and hardware currently comprising multiple brands and retail banners over three key reporting segments being Asia Pacific, Americas and Europe.

The Group's brands at year end included Billabong, Element, RVCA, Kustom, Palmers, Honolua, Xcel, Tigerlily and Von Zipper.

The Group operates 407 retail stores as at 30 June 2016 in regions/countries around the world including but not limited to: North America (55 stores), Europe (104 stores), Australia (127 stores), New Zealand (29 stores), Japan (47 stores) and South Africa (28 stores). Stores trade under a variety of banners including but not limited to: Billabong, Element, Surf Dive 'n' Ski (SDS), Rush, Amazon, Honolua, Two Seasons and Quiet Flight. The Group also operates online retail ecommerce for each of its key brands.

Significant changes in the state of affairs

The statement below should be read in conjunction with note 39 (events occurring after the balance sheet date) of the annual report for the year ended 30 June 2015 and any public announcements made by the Company during the financial year.

On 7 December 2015 the consolidation of all of the Company's shares and options on a 5:1 basis as approved by shareholders on 24 November 2015 was completed.

On 14 January 2016 the Group completed the sale of 225 Reedy Creek Road, Burleigh Heads, a property located next to the Group's head office and occupied presently by SurfStitch, for a purchase price of $6.2 million with total costs of the sale being $0.2 million.

On 29 June 2016, the Group announced the sale of Sector 9 for approximately USD$12 million ($16.1 million) to an affiliate of Bravo Sports, a portfolio company of Transom Capital Group which resulted in a $4.9 million loss including divestment costs. The results of Sector 9 did not meet the conditions under AASB 5 to be disclosed as a discontinued operation during the year ended 30 June 2016.

Other than matters dealt with in this report there were no significant changes in the state of affairs of the Group during the financial year.

Group financial performance

The Group results for the period and the prior corresponding period (pcp) include certain significant items. Refer to note 5 of the financial statements for detailed disclosure in relation to these items.

In order to provide users with additional information regarding the continuing operations excluding the aforementioned significant items and to help understand the impact of these events on the results of the Group, the segment results are presented in two separate tables.

Table A presents the segment results on a basis including all significant items and including the operations of SurfStitch and Swell in the pcp for the relevant period of ownership. See Table A Segment Results As Reported - Including significant items and discontinued operations.

FINANCIAL REPORT 30 JUNE 2016 Billabong International Limited Page 2