Super Retail
Group
2012
ANNUAL REPORT
CONTENTS
CHAIRMAN AND MANAGING DIRECTOR’S REPORT ......... 3
CORPORATE GOVERNANCE STATEMENT ......................... 8
ANNUAL REPORT ............................................................. 14
DIRECTOR’S REPORT ........................................................ 15
COMPREHENSIVE INCOME STATEMENT .......................... 32
STATEMENT OF FINANCIAL POSITION ............................. 33
STATEMENT OF CHANGES IN EQUITY .............................. 34
STATEMENT OF CASH FLOWS .......................................... 35
NOTES TO THE FINANCIAL STATEMENTS ......................... 36
DIRECTOR’S DECLARATION .............................................. 84
INDEPENDENT AUDIT REPORT ........................................ 85
SHAREHOLDER INFORMATION ........................................ 87
NAME OF ENTITY
Super Retail Group Limited
ABN OR EQUIVALENT COMPANY REFERENCE
ABN 81 108 676 204
REGISTERED OFFICE
751 Gympie Road
LAWNTON QLD 4501
Telephone (07) 3482 7500
Facsimile (07) 3205 8522
SHARE REGISTRY
Link Market Services
Level 12, 680 George Street
SYDNEY NSW 2000
BANKERS
Australia and New Zealand Banking Group Limited
HSBC
Commonwealth Bank of Australia
National Australia Bank
AUDITORS
PricewaterhouseCoopers
SOLICITORS
Mallesons Stephen Jaques
STOCK EXCHANGE LISTING
Super Retail Group Limited shares are quoted on
the Australian Securities Exchange
WEBSITE
www.superretailgroup.com
THE ANNUAL GENERAL MEETING
The Annual General Meeting of the Shareholders
of Super Retail Group Limited will be held at the
Community Centre, Kedron Wavell Services Club,
375 Hamilton Road, Chermside South, Queensland
on Monday, 22 October 2012 at 11.30am.
Super Retail Group Limited
ANNUAL REPORT 2012
PERFORMANCE TRENDS
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*excludes goodwill impairment charge in 2010
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*historical EPS adjusted to take into account the bonus
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2
Super Retail Group Limited
ANNUAL REPORT 2012
CHAIRMAN AND MANAGING DIRECTOR’S REPORT
2012 marks the 40th anniversary of the company that
has evolved from distributing battery chargers out of the
home of our founders Reg and Hazel Rowe to the group
of leading retail businesses it is today. We are proud that
in such a milestone year, we have been able to maintain
the continued success and progress of our company
and to be able to report another strong set of financial
results.
In 2003, we started to build the foundations to expand
the Group’s operations beyond that of our business
retailing auto products. Our move into the retailing of
outdoor leisure products and most recently the retailing
of sports products was foreshadowed at an executive
team strategy planning workshop held in that year.
performance of our Auto and Leisure Retail businesses
which have again enjoyed successful years. We have
also made good progress in developing our integrated
multi-channel retail capabilities including the Group wide
launch of a customer contact centre, dynamic freight
costing, a click and collect service and mobile enabled
websites.
The foundation stone of performance across the Group
continues to be the Group’s culture and the commitment
and passion of our team members. We now employ
around 11,500 team members across the Group and
on behalf of all shareholders, we would like to thank all
members of the team for their huge efforts and their
ongoing contribution to our success.
We put in place a plan that included both the ongoing
organic development of our existing businesses but
also the acquisition of market leading retail businesses
in relevant and connected retail categories. Each of
our businesses retail products that our customers
predominantly use as part of their leisure experiences
– in many cases we are selling products to help our
customers enjoy their passion whether it’s the car that’s
their pride and joy, taking the family fishing or training to
take part in a triathlon.
We also set about building an organisation in which our
various individual retail businesses could derive synergy
benefits from the scale and capability of the Group’s
sourcing, supply chain, marketing and IT infrastructure
and operations. This has allowed each business to
develop a stronger offer for its respective group of
customers than it would have been able to do as a
standalone business.
The 2012 Financial Year has seen the Group take a major
step forward with the acquisition of the Rebel Sport and
Amart All Sports businesses at the end of October 2011.
We thank our shareholders for the support of the capital
raising to partially fund the acquisition. We are confident
that we have acquired a business that, although it is
already the clear market leader, has the potential for
significant growth over the coming years.
The focus on store development, sourcing and range
management, supply chain improvements and business
capability development has continued to drive the
GROUP RESULTS
Sales grew by 51.4% to $1.65 billion and profit after tax
grew by 50% to $83.5 million. This strong growth has
been achieved through a combination of the organic
growth of our Auto and Leisure Retail businesses
and the post-acquisition contribution of the Sports
Retailing businesses, which has been consolidated from
30 October 2011. Costs of $11.7 million associated with
the acquisition of the Sports Retailing businesses were
expensed during the year. Excluding these non-recurring
costs, underlying profit after tax of $95.0 million was 71%
higher than the prior year.
Solid like for like sales growth, continued underlying
improvement in gross margins and further reduction in
operating costs as a percentage of sales all contributed
to the strong organic growth in profit in our existing
businesses. This has been achieved through the
continued focus on new product introduction, sourcing
and supply chain initiatives, and the further development
of our integrated multi-channel customer offer.
We invested close to $60 million in capital expenditure
projects across the Group, with $13 million invested in
our multi-channel capability development projects and
$31 million in new and refurbished stores. The total
cash amount invested in acquiring the Sports Retailing
businesses was $633 million. As a result, Group net debt
stood at $341 million at 30 June 2012, an increase of
$267 million compared to the prior year.
Super Retail Group Limited
ANNUAL REPORT 2012
3
The Board has declared a fully franked final dividend
of 19.0 cents per share. As a result, the fully franked
dividends declared for the full year are 32.0 cents per
share, an increase of 3.0 cents per share (10.3%) over
the prior year. The current policy of distributing between
55% and 65% of underlying net profit after tax in the
form of dividends will enable the Group to balance
investing in growth opportunities, gradually paying down
debt and increasing dividends to shareholders.
AUTO AND CYCLE RETAILING
Divisional sales at $755.8 million were 6.7% higher than
the prior comparative period with like for like sales
growth being 3.7%. Divisional EBIT at $72.2 million was
13.5% higher than the prior comparative period.
The Supercheap Auto business has had another strong
year with like for like sales growth of 3.9% and further
expansion of EBIT margins, which are now running at
over 10.5% of sales. Gross margin improvement was
again a key contributor to the increase in profitability,
growing by 0.3% points over the prior comparative
period.
The business once again achieved like for like growth in
transaction numbers, units sold and average unit value.
The work done over the past six years to reposition the
Supercheap Auto brand through the store refurbishment
program, improved product quality and presentation and
through partnering with the world’s best automotive and
tool product brands continues to drive this performance.
Nine new stores were opened during the year while
two stores were closed and 41 stores were refurbished
including three as Superstores. At 30 June the business
had 281 stores with potential to grow to around 320
stores over the next five years. The business plans to
refurbish another 50 stores in the coming two years and
to convert another 10 stores to Superstores.
The Electrical and Power categories delivered particularly
strong growth through a number of new product and
ranging initiatives whilst the Car Care and Car Audio/
Visual categories also continued to perform extremely
well. Sales growth was relatively consistent across all
the states of Australia and in New Zealand, although the
business performed most strongly in areas with mining
activity.
Towards the end of the year, the business launched
its loyalty program Supercheap Auto Club Plus in the
New Zealand market. This exciting initiative will provide
the opportunity for the business to gain a deeper
understanding of its customers and to develop another
marketing channel to drive sales. It is expected that the
loyalty program will be launched in Australia by the final
quarter of the 2012 calendar year.
At the end of the year, the business announced the
launch of its new trade customer offer Auto Trade
Direct. This offer is targeted towards auto mechanics
and will provide a parts and accessories delivery service
operating from a small number of designated hub stores.
This offering will again be trialled in New Zealand before
being launched in Australia.
Although the Goldcross Cycles business continued
to track below expectations, many of the initiatives
introduced over the last two years have generated
positive outcomes. Gross margin improved by 6.4%
points to 41.2% while inventory per store reduced
by over 20%. This reflected the successful launch of
a number of private brand products, improvements
in range management and a number of supply chain
efficiencies.
However, like for like sales continued to decline by 3.2%
partly through continued price deflation across the Cycle
market and partly through the planned scaling back
of clearance promotions. The business EBIT loss was
$4.5 million, an improvement of $2.0 million compared
to the prior period.
The biggest impact on profitability continues to be the
weak sales per square metre being achieved in the
business, primarily as a result of the number of stores
that are oversize. Consequently, we plan to convert
the larger Goldcross Cycles stores into Amart All Sports
stores and to retain a 130m2 to 150m2 Goldcross Cycles
outlet in these stores as a store within a store concept. It
is expected that up to six stores will be converted in the
coming year, which should see the business move closer
to a break even position. The link to the Amart All Sports
business and the fact that cycling is predominantly a
sport and leisure activity will see the Goldcross Cycles
business transfer to the Sports Retailing division in the
coming year.
LEISURE RETAILING
Divisional sales at $456.3 million were 18.8% higher than
the comparative period with like for like sales growth
across the division at 6.5%.
Divisional EBIT at $32.8 million was 2.5% higher than
the prior comparative period reflecting the $2.5 million
of costs associated with developing and launching the
Super Retail Group Limited
4 ANNUAL REPORT 2012
new FCO Fishing Camping Outdoors business in New
Zealand in November 2011 and FCO’s post launch trading
losses of $1.7 million. Excluding FCO, Divisional EBIT on a
comparable basis grew by 15.6%.
BCF Boating Camping Fishing continued to perform
strongly with high single digit like for like sales growth
and an improvement in gross margin. BCF also achieved
like for like growth in transaction numbers, units sold
and average unit value. There are now close to one
million members of the BCF Club – the business’ loyalty
program.
The Fishing category performed extremely well,
benefitting from the high volume of fish stock across the
country after the last two years’ wet weather, a number
of new product initiatives and the work done to tailor
the range to local demand at a store level. The business
also performed consistently well across the country.
Thirteen new BCF stores were opened during the year
taking total store numbers to 91. Expectations for future
total store numbers have increased to around 120 as
the business expects to be able to operate a number
of smaller format stores at around 800m2 in regional
locations.
The work started last year to refresh the Ray’s Outdoors
business continued through the year. The business
achieved low single digit like for like sales growth driven
by an increase in transaction numbers and average item
value. However, gross margin was lower than the prior
period as the business introduced a higher proportion
of international branded product and cleared aged
inventory.
The 4x4 category performed well following the
introduction of extended product ranges and the
performance of the Footwear category was also
encouraging reflecting the partnership with a number of
major brands such as Merrell, Columbia and North Face.
The Apparel range has also been redesigned and sales of
the 2012 Winter range are promising.
The business opened seven and closed five stores during
the year to bring total stores trading to 52. The business
will commence a program of store refurbishments in
the next year as the current store fit-out and design
has become dated. The business expects to be able to
develop a network of 75 stores across Australia.
The division launched its new business FCO Fishing
Camping Outdoors in New Zealand in November 2011.
The business takes elements of both the BCF and
Ray’s Outdoors businesses to provide a customer offer
designed specifically for the New Zealand market.
By the end of the year, the business had opened 13
stores all in the North Island. It is management’s plan to
bed down and fine tune the performance of these stores
before committing further capital to store roll-out. It is
anticipated that there is the potential for up to 25 FCO
stores.
Early performance was encouraging as the business
traded well during the summer period but was slower
than expected in the autumn/early winter period.
Customer conversion and membership of the FCO loyalty
program were pleasing whilst gross margins tracked
ahead of expectations.
Customer numbers fell below expectations with research
indicating that customers’ understanding of the full
breadth of products available in the stores is limited so
a marketing push is underway to highlight the spread of
product categories.
SPORTS RETAILING
The Rebel Sport and Amart All Sports businesses were
acquired with effect from 30 October 2011.
The contribution from the businesses during the balance
of the year was ahead of expectations at the time of
acquisition with divisional sales of $441.9 million and
EBIT of $54.5 million.
The initial focus of management post acquisition has
been to reenergise and engage the team, clear aged
inventory, establish a focus on like for like sales growth,
rebuild relationships with trade partners, integrate the
business within the Group and to develop the strategies
to grow the businesses over the next five years.
Good progress has been made in all areas. Like for like
sales growth in the 35 weeks post acquisition was 5.8%
which compared favourably to the 3% decline in like for
like sales in the first 17 weeks of the year pre acquisition.
A major driver of the improvement in sales was the
clearance of aged inventory which was reduced to
around 5% of total inventory by the end of the year.
Underlying performance was pleasing and reflected
the more competitive pricing and promotional position
adopted since acquisition. Sales growth was achieved
primarily through growth in customer traffic and
conversion whilst average transaction value was below
the prior period reflecting the changes in pricing and
promotion.
Super Retail Group Limited
ANNUAL REPORT 2012
5
Despite these factors, gross margin at 46.8% were
in line with those achieved prior to acquisition. The
value of aged inventory at the time of acquisition was
identified during due diligence and appropriate valuation
adjustments were processed in the acquisition balance
sheet.
The Footwear and Apparel categories both performed
strongly despite the increased competition from
international websites. Performance was reasonably
strong across all regions with the important New South
Wales business improving through the period from quite
a depressed position at the time of acquisition.
The business closed the two stores trading under
the brand Performance Sports with the space being
reallocated to the Rebel Sport brand. Two Rebel Sport
stores were opened post acquisition whilst one Rebel
Sport and one Amart All Sports store were closed. At
30 June, there were 91 Rebel Sport stores and 35 Amart
All Sports stores trading across Australia. The business
expects to be able to develop a network of around 100
Rebel Sport and 85 Amart All Sports stores.
Work has been completed on the brand strategies for
both businesses and future store design work is in
progress. The business expects to refurbish a number of
stores in the coming year and will test a number of new
concepts before a wider roll-out. Management believes
there are significant opportunities to improve the
shopping experience for customers.
The synergy benefits anticipated at the time of
acquisition are on track with a number of purchasing
and supply chain benefits already realised in addition
to a reduction in executive management positions. The
business will implement Super Retail Group’s Enterprise
Resource Planning system in the coming year and will
begin to source a number of its own private brand
products through the Group’s International Operations
team rather than through third party agents.
GROUP COSTS
Group costs for the period were $18.8 million including
$11.7 million associated with the acquisition and
integration of the Sports Retailing businesses. The
balance of the costs include $1.9 million in unutilised
distribution centre, store and office space across the
Group, $0.8 million in multi-channel development costs
and $4.4 million of public company costs.
GROUP LOGISTICS AND SOURCING
The Group has continued to invest in developing its
logistics operations to provide more efficient support for
the Group’s businesses. The warehouse management
systems were successfully upgraded and towards the end
of the year, the New Zealand logistics operations were
successfully relocated into a larger distribution centre.
The Group has completed a review of its requirements
for the next 10 years and has determined that within
the next two years a new distribution centre will
be established in Sydney whilst the two Brisbane
distribution centres will be relocated into one larger
centre. This will enable the Group to fully support the
requirements of the Sports Retailing businesses, the
anticipated increase in private branded and exclusive
product and to generate freight savings for both
the Group and its Trade Partners. At the same time,
the Group will be able to reduce its requirement for
expensive off-site storage at peak times.
The Group’s International Operations team based in
China has again significantly increased their contribution
to the Group with an increase in the value of product
sourced directly to around $85 million and through
increasing the number of pre shipment inspections
managed by the team. The team has also worked
with its Australian colleagues to establish scan pack
arrangements for apparel items to go direct to store from
China. The team has also established a sport products
sourcing unit to support the Sports Retailing division.
REVIEW OF FINANCIAL POSITION
Cash flow from operations was $135.2 million, an
increase of $64.3 million over the prior period, reflecting
the growth in existing businesses plus the contribution
of the Sports Retailing businesses post acquisition.
Cash flow from operations pre investment in new store
inventory and set up costs was $179.7 million which was
$84.4 million higher than the prior period.
Despite this pleasing performance, there remains
significant opportunity to generate working capital
efficiencies particularly in the Leisure Retailing division.
Group capital expenditure was $60.2 million which
included $30.6 million in new and refurbished store
fitout, $13.1 million in multi-channel development
projects, $7.3 million in information technology projects,
$2.4 million in supply chain development projects,
$1.3 million in the Sports Retailing SAP project and
$5.5 million in general capital projects.
Super Retail Group Limited
6 ANNUAL REPORT 2012
The Group extended its debt facilities to $500 million
at the time of the Sport Retailing acquisition and
utilised $296 million to partly fund the acquisition. The
revised facilities include a number of tranches which
are renewable at various intervals over the next two
to five years. At the end of June, Group Net Debt was
$341 million, comfortably within the Group’s facility
limits and associated banking covenants.
CORPORATE SOCIAL RESPONSIBILITY
The Group has maintained its support for a variety
of charities raising funds for research into childhood
diseases in particular selling product in store to support
BrAshA-T Ataxia Telangiectasia Limited, Sids and
Kids, Canteen and @Heart. The Group is particularly
passionate about the support it provides to BrAshA-T
which raises funds for research into Ataxia Telangiectasia
an extremely rare but very serious degenerative
condition.
Supercheap Auto provides support to a range of safe
driving campaigns and is supporting an education
program aimed at school age drivers. BCF and Ray’s
Outdoors raised funds for the Coastguard and Cancer
Council respectively through encouraging their
customers to round up for charity. Rebel and Amart All
Sports supported a range of national and local charities
with Rebel running its annual fund raising dinner.
The Group has continued to work on its sustainability
initiatives including the reduction and recycling of
packaging material, power consumption and plastic
bag usage and through the rollout of car battery and
engine oil recycling arrangements in its Supercheap Auto
business. The Group achieved a 10% improvement in
the amount of packaging material recycled and collected
nearly over 10,000 car batteries during the year.
The Group and its businesses are signatories to the
Australian Packaging Covenant (APC) and have developed
a series of initiatives to ensure we meet targets
committed to under our APC action plan. In 2012, we
received a 3.7 star rating from the APC indicating that the
Group has made solid progress in meeting its targets.
TEAM MEMBERS
The Group now employs around 11,500 team members
operating from nearly 600 sites across Australia, New
Zealand and China. We are very pleased that team
retention levels continue to improve and now sit at
71.5% - a big step forward from the 59% achieved in
2006.
We conducted a Group wide engagement survey for
the first time in 2011 and achieved an engagement
score of 60%, which compared to the Retail industry
average of 55%. Whilst this is a pleasing result, there is
room to improve and areas such as Recognition, Change
Management, Career Opportunities and Line Manager
capability were identified as areas for focus.
The Group’s safety performance has improved through
the year benefitting from the increased focus on safe
working practices across the Group’s retail teams
introduced towards the end of last year.
The Group’s five key performance indicators in the
area of team members cover the areas of Attraction,
Engagement, Retention, Succession and Safety and good
progress was made in all areas.
We would like to recognise all members of our team for
their commitment and contribution to their part of the
Group each and every day.
LOOKING FORWARD
Our focus over the coming year will be to continue
the growth in sales and the improvement in margins
and working capital efficiency of each of our existing
businesses. At the same time, we will continue to
work on developing our multi-channel capabilities to
enable our businesses to provide our customers with an
engaging offer that inspires them to continue to shop
with us in store or on line at whatever time of day or at
whatever location suits them.
We are confident that we can continue to deliver solid
like for like sales growth even if retail conditions remain
subdued and we expect to be able to open around 10
new stores across all of our divisions.
We will continue to develop our loyalty programs across
the Group and increasingly use data analytics to develop
relevant targeted marketing campaigns. We will plan to
launch a new offer for the trade mechanic customer in
our Auto Retailing division.
We have many initiatives underway to drive the
performance of our businesses and to build our
capabilities and we look forward to reporting on our
progress in the coming years.
R J Wright
Chairman
P A Birtles
Managing Director and
Chief Executive Officer
Super Retail Group Limited
ANNUAL REPORT 2012
7
CORPORATE GOVERNANCE STATEMENT
The Board of Super Retail Group Limited (the Company)
are accountable to shareholders for the proper
management of the business of the Company in a
manner consistent with the Company’s responsibility to
meet its obligations to all stakeholders.
The Board is therefore committed to ensuring that the
Company’s business is conducted in accordance with
the highest standards of corporate governance. In this
statement, the Company and its controlled entities
together are referred to as the Group.
The Board has adopted a corporate governance
framework comprising principles and policies which
comply in all material respects with the ASX Corporate
Governance Council’s Principles and Recommendations
(2nd Edition) with 2010 Amendments (ASX Principles)
and the Corporations Act 2001 (Cth). All these practices
unless otherwise stated were in place for the reported
period.
The policies and charters referred to in this statement
are available from the Corporate Governance page in
the Investor Centre section of the Company’s website
(www.superretailgroup.com.au/investor-centre). The
Board continually reviews developments in corporate
governance to ensure its policies and charters remain
consistent with current laws and best practice.
As at 30 June 2012, and to the date of the signing of
this report, the Company’s main corporate governance
practices are as follows:
PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR
MANAGEMENT AND OVERSIGHT
The Board of Directors
The Board of Directors, working with senior
management, is responsible to shareholders for the
overall management of the Company’s business and
affairs. The Directors’ overriding objective is to increase
shareholder value within an appropriate framework
which protects the rights and interests of company
shareholders and ensures the Group is properly
managed.
The responsibilities of the Board include:
• approving the Company’s goals and strategic direction;
• monitoring financial performance, including adopting
annual budgets and approving the Group’s financial
statements;
• ensuring that adequate systems of internal control exist
and are appropriately monitored for compliance;
• selecting the Managing Director and reviewing the
performance of senior management; and
• ensuring significant business risks are identified and
appropriately managed.
The Board delegates responsibility for day-to-day
management of the Company to the Managing Director.
EVALUATION OF SENIOR EXECUTIVES
All senior executives complete a performance and
development review every six months. The review
process is conducted by the Managing Director and
includes the following:
• assessment against a set of key performance criteria,
including both financial and non-financial performance
measures;
• feedback on their performance over the review period
and a rating based on that performance; and
• monitoring and revision as appropriate of the
executive’s development plan which is tailored to
support the executive’s ongoing contribution to the
Company.
The Managing Director provides a summary of the
performance evaluation of senior executives to the
Human Resources and Remuneration Committee.
The performance evaluation in accordance with the
abovementioned process has taken place during this
reporting period.
8
Super Retail Group Limited
ANNUAL REPORT 2012
PRINCIPLE 2: STRUCTURE THE BOARD TO
ADD VALUE
with the benefit of a diverse range of experience,
qualifications and professional skills.
Composition of the Board
The constitution of the Company provides that the
number of Directors is to be not less than three nor more
than eight. The Board is currently comprised of five
directors, four of whom (including the Chairman) hold
their positions in a non-executive capacity.
The Board operates in accordance with the broad
principles set out in its charter which is available on the
Company’s website.
The Chairman is responsible for leading the Board,
ensuring Directors are properly briefed in all matters
relevant to their role and responsibilities, facilitating
board discussions and managing the Board’s relationship
with the Company’s senior executives.
The Managing Director is responsible for implementing
Group strategies and policies.
The composition of the Board is reviewed annually by
the Board Nomination Committee to ensure that it has
available an appropriate mix of skills and experience
to ensure the interests of shareholders are served. The
Board Nomination Committee charter, which is available
on the Company’s website, includes the Company’s
policy and procedure for selection and appointment of
new directors.
Details of the members of the Board, their experience,
expertise, qualifications and independent status are
profiled in the Directors’ Report on pages 15 to 29.
Directors’ Independence
As stated there are five Directors, three of whom are
Independent Non-Executive Directors (including the
Chairman). The predominance of Independent Non-
Executive Directors clearly separates the Board from the
Company’s executive management and enshrines board
independence. The structure also provides the Company
The Board has adopted the independence definition
suggested by the ASX Corporate Governance Council and
as such three of the Company’s Directors (namely Mr
Robert Wright, Ms Sally Pitkin and Mr R John Skippen)
are considered to be independent by reference to that
definition.
Independent Professional Advice
The Board (and each individual Director) is entitled to
seek independent professional advice consistent with
Corporate Governance Practices at the Company’s
expense (subject to the reasonableness of the costs
and Board consent) in the conduct of its duties for the
Company.
Performance Assessment
The Board undertakes an annual performance evaluation
of itself that compares the performance of the Board
with the requirements of the Board Charter, sets the
goals and objectives of the Board for the upcoming year
and effects any improvements to the Board Charter that
are necessary or desirable. This evaluation is conducted
by the Board and includes consideration of the annual
assessment of the effectiveness of the Board. This
assessment commenced in June 2012 and was concluded
in August 2012.
The evaluation of individual Board Committees is carried
out as and when needed.
Financial Reporting
The Board is provided with monthly reports from
management on the financial performance of the
Company. The monthly reports include details of all key
financial measures reported against budgets approved by
the Board. The Company’s financial report preparation
and approval process for each financial year involves
both the Managing Director / Chief Executive Officer
Super Retail Group Limited
ANNUAL REPORT 2012
9
and the Chief Financial Officer making the following
certifications to the Board that:
necessary to maintain confidence in the Company’s
integrity.
• the Company’s financial reports and accompanying
notes represent a true and fair view in all material
respects of the Company’s financial condition and
operational results and are in accordance with relevant
accounting standards;
• the above statement is founded on a sound system of
risk management and internal compliance and control
which implements the policies adopted by the Board;
and
• the Company’s risk management and internal
compliance and control system is operating efficiently
and effectively in all material respects.
Board Committees
The Board has established three committees to assist it
in carrying out its responsibilities, the Board Nomination
Committee, the Human Resources and Remuneration
Committee and the Audit and Risk Committee.
Each Committee has its own written charter setting out
its role and responsibilities, composition, structure,
membership requirements and the manner in which
the Committee is to operate. All matters determined
by Committees are submitted to the full Board as
recommendations for Board decision.
Minutes of committee meetings are tabled at the
subsequent Board meeting. Additional requirements for
specific reporting by the committees to the Board are
addressed in the charter of the individual committees.
PRINCIPLE 3: PROMOTE ETHICAL AND
RESPONSIBLE DECISION MAKING
Code of Conduct
In summary, the Code requires that at all times all
company personnel act with the utmost integrity,
objectivity and in compliance with the letter and the
spirit of the law and company policies. This is supported
by the Company’s integrity policy and system of
reporting activity suspected of breaching the Code to the
Company Secretary.
A copy of the Code is available on the Company’s
website.
Dealing in Shares
The Company has a formal written policy for Directors
and officers with respect to trading in the Company’s
securities (“Trading Policy”). Directors and senior
management (and their associates) are prohibited from
engaging in short-term trading of Company securities.
The policy also restricts the trading of Company
securities to three “window” periods (between 24 hours
and 30 working days following the release of the annual
results, the release of the half-yearly results and the
close of the annual general meeting) and such other
times as the Board permits. In addition, Directors must
notify the Chairman before they buy or sell Company
securities and confirm once the transaction is complete.
In all instances, buying or selling Company shares is not
permitted at any time by any person who possesses price
sensitive information not available to the market.
A copy of the Trading Policy is available on the
Company’s website.
Ethical Sourcing Policy
The Company has developed a statement of values and
a Code of Conduct (“the Code”) which has been fully
endorsed by the Board and applies to all Directors and
team members. The Code is reviewed and updated as
necessary to ensure it reflects the highest standards
of behaviour and professionalism and the practices
The Company has developed an Ethical Sourcing Policy
that applies to all its businesses and brands.
The policy incorporates both environmental and
socioeconomic criteria for all imported products sourced
directly or through agents. The policy encourages
trade partners and agents to improve their social and
Super Retail Group Limited
10 ANNUAL REPORT 2012
environmental practices, and protect our corporate
reputation and that of our individual businesses and
brands.
with a charter and in a manner compliant with ASX
Listing Rule 12.7. The charter is available on the
Company’s website.
Diversity Policy
The Board recognises the many benefits that may be
derived by companies that successfully foster a culture of
diversity and is committed to creating a fair and inclusive
environment.
Information on diversity, including gender diversity
is set out in the Directors’ Report under the heading
‘Remuneration and Diversity report’.
A copy of the Diversity Policy is available on the
Company’s website.
PRINCIPLE 4: SAFEGUARD INTEGRITY IN
FINANCIAL REPORTING
Audit and Risk Committee
The existence of the Audit and Risk Committee is
considered by the Company to be a key element of
its corporate governance program and part of the
Company’s commitment to best practice in the area of
corporate governance.
The Audit and Risk Committee consists of the following
Independent Non-Executive Directors:
R J Skippen (Chairman)
R J Wright
S A Pitkin
All members of the Audit and Risk Committee are
financially literate and have the requisite financial
expertise. Some members have an in-depth
understanding of the industry in which the Company
operates.
Details of these Directors’ qualifications and attendance
at Audit and Risk Committee meetings are set out in the
Director’s Report on pages 15 to 29.
The Audit and Risk Committee operates in accordance
The Audit and Risk Committee supports the full Board
and essentially acts in a review and advisory capacity.
The Committee is considered to be a more efficient
forum than the full Board for focusing on particular
issues relevant to:
• verifying and safeguarding the integrity of the
Company’s financial reporting including the review,
assessment and approval of the half-year financial
report, the annual report and all other financial
information published by the Company or released to
the market;
• establishing a sound system of risk oversight and
management, and internal control; and
• establishing a sound system of compliance with laws
and regulations, internal compliance guidelines,
policies, procedures and control systems and
prescribed internal standards of behaviour.
This Committee provides ongoing assurance in the areas
of:
• financial administration and reporting;
• audit control and independence; and
• accounting policies and standards.
External Auditors
The Company’s Audit and Risk Committee’s policy is to
appoint external auditors who demonstrate quality and
independence.
The Audit and Risk Committee:
• recommends to the Board the appointment of External
Auditors and their fee;
• reviews the performance of the External Auditors;
• establishes processes to ensure the independence and
competence of the External Auditors’ Audit Managers;
• oversees and appraises the quality of audits conducted
by the External Auditors;
• approves External Audit yearly audit plans for the
Super Retail Group Limited
ANNUAL REPORT 2012
11
Company and its subsidiaries and oversees the scope of
audits to be conducted; and
• ensures that no management restrictions are placed
upon access to relevant information or personnel by
External Auditors.
The performance of the External Auditor is reviewed
annually. In 2012 the Group undertook a tender in
relation to external audit services to ensure audit
services provided to the Group are in line with
market benchmarks in terms of scope, quality and
cost effectiveness. Based on this process PWC, the
incumbent auditor had its contract extended for three
more years.
An analysis of fees paid to the External Auditors,
including a break-down of fees for non-audit services
is provided in Note 28 to the financial statements. It is
the policy of the External Auditors to provide an annual
declaration of their independence to the Audit and Risk
Committee.
The External Auditor is requested to attend the annual
general meeting and be available to answer shareholder
questions about the conduct of the audit and the
preparation and content of the audit report.
PRINCIPLE 5 AND 6: MAKE TIMELY AND
BALANCED DISCLOSURES AND RESPECTS
THE RIGHTS OF SHAREHOLDERS
Continuous Disclosure and Shareholder Communication
The Company has written policies and procedures
on information disclosure that focus on continuous
disclosure of any information concerning the Company
and its controlled entities that a reasonable person
would expect to have a material effect on the price of
the Company’s securities. These policies and procedures
also include the arrangements the Company has in
place to promote communication with shareholders and
encourage effective participation at general meetings. A
summary of these policies and procedures is available on
the Company’s website.
The Company Secretary is the person responsible for
communications with the Australian Securities Exchange
(ASX).
PRINCIPLE 7: RECOGNISE AND MANAGE
RISK
The Audit and Risk Committee provides oversight
and direction to the Company’s risk management,
compliance and internal control systems, including:
• legal compliance;
• internal controls; and
• risk oversight and management.
Risk Management
The Managing Director and senior executives are
instructed and empowered by the Board to implement
risk management strategies, report to the Board and the
Audit and Risk Committee on developments related to
risk, and suggest to the Board new and revised strategies
for mitigating risk.
The Group Risk Manager is responsible for providing
counsel and direction in risk management across
the Group. This includes counsel on the refinement,
implementation and monitoring of a comprehensive and
integrated risk management framework based on unit
manager ownership of risk with independent monitoring.
The Group Risk Manager reports directly to the Group’s
Chief Financial Officer with an indirect reporting line to
the Chairman of the Audit and Risk Committee.
Internal Audit
The role of Internal Audit as part of the Group’s risk
management framework is to understand the key
risks of the organisation and to examine and evaluate
the adequacy and effectiveness of the system of risk
management and internal controls used by management.
Internal Audit carries out regular systematic monitoring
of control activities and reports to both relevant business
unit management and the Audit and Risk Committee.
Super Retail Group Limited
12 ANNUAL REPORT 2012
Further information on directors’ and executives’
remuneration is set out in the Directors’ Report under
the heading ‘Remuneration and Diversity report’. In
accordance with Company policy, participants in equity-
based remuneration plans are not permitted to enter
into any transactions that would limit the economic risk
of options or other unvested entitlements. Details of this
policy can be found on the Company’s website.
Employee Share Plans
The Company considers share plans to be an effective
ownership, long-term performance and team retention
vehicle. It encourages all Team Members to participate
in its schemes, which offer the ability to acquire shares
via:
• an externally administered tax exempt plan which
makes on market purchases; and
• an internally administered rights (including options)
plan offered to select executives.
At the time of this report, approximately 684 team
members participated in one or both plans.
Typically, the audit methodology includes performing
risk assessments of the area under review, undertaking
audit tests, including selecting and testing audit samples,
reviewing progress made on previously reported audit
findings and discussing internal control or compliance
issues with line management, and reaching agreement
on the actions to be taken.
Health and Safety
The Company aims to provide and maintain a safe and
healthy work environment. The Company acts to meet
this commitment by implementing work practices and
procedures throughout the Group that comply with the
relevant regulations governing the workplace. Team
Members are expected to take all practical measures
to ensure a safe and healthy working environment in
keeping with their defined responsibilities and applicable
law.
PRINCIPLE 8: REMUNERATE FAIRLY AND
RESPONSIBLY
Human Resources and Remuneration Committee
The Human Resources and Remuneration Committee is
comprised of the non-executive directors.
The Committee operates in accordance with its charter
which is available on the Company’s website, and
described in the Remuneration and Diversity report.
The Board has charged the Human Resources and
Remuneration Committee with corporate governance
and oversight responsibilities in relation to the
Company’s people strategy including remuneration
components, performance measurements and
accountability frameworks, recruitment, retention, talent
management and succession planning.
Each member of the senior executive team signs a formal
employment contract at the time of their appointment
covering a range of matters including their duties, rights,
responsibilities and any entitlements on termination.
The standard contract refers to a specific formal job
description.
Super Retail Group Limited
ANNUAL REPORT 2012
13
ANNUAL REPORT
Super Retail Group Limited
for the period ended 30 June 2012
Super Retail Group Limited
14 ANNUAL REPORT 2012
Super Retail Group Limited
Directors' report
for the period ended 30 June 2012
Directors’ Report
Your Directors present their report on the consolidated entity consisting of Super Retail Group Limited and the entities it
controlled at the end of, or during, the period ended 30 June 2012.
Directors
The following persons were Directors of Super Retail Group Limited during the period and up to the date of this report.
R A Rowe
R J Wright
P A Birtles
R J Skippen
S A M Pitkin
Information on qualifications and experience of Directors is included on pages 16 to 17.
Principal activities
During the period, the principal continuing activities of the Group consisted of:
•
•
•
•
retailing of auto parts and accessories, tools and equipment
retailing of boating, camping, outdoor entertainment and fishing equipment and apparel
wholesale, retail and distribution of bicycles and bicycle accessories
retailing of sporting equipment and apparel
Dividends – Super Retail Group Limited
The Directors declared a fully franked dividend of 19.0 cents per share be paid on 3 October 2012 (total dividend, fully
franked - $37,269,064). This will take the total dividends paid and payable to 32.0 cents for the 2012 year which is a 3.0
cent per share increase on 2011. The following fully franked dividends of the parent entity have also been paid, declared or
recommended since the end of the preceding period:
Dividend
Payment Date
$
2011 final fully franked dividend (17.5¢ per share)
2012 interim fully franked dividend (13¢ per share)
19 September 2011
3 April 2012
22,833,786
25,331,097
48,164,883
Review of operations
Revenue from trading operations for the year was $1,655,474,000 (2011: $1,093,398,000). During the year, the
consolidated entity opened nine new Supercheap Auto stores and closed two stores in Australia, this resulted in Supercheap
Auto trading with 281 stores at the end of the period. BCF opened 13 stores during the period taking total trading stores to
91; Goldcross Cycles closed one store during the period taking total trading stores to 19 at the end of the period and Ray’s
Outdoors opened seven stores and closed five stores taking Ray’s Outdoors total trading stores to 52. In addition, the
Group launched the FCO Fishing Camping Outdoors business in New Zealand with 13 stores trading by 30 June 2012. At
the end of the financial year, the Group was trading from 582 stores.
Rebel Group Limited was acquired with an effective date of 30 October 2011 for a net cash outlay of $620.4 million. The
acquisition comprised 90 Rebel stores, 36 A-Mart All Sports stores and two Performance Sports stores. The acquisition was
funded through a $334 million entitlement offer and an increase in the Group’s debt facilities of $310 million. Acquisition
costs of $11.1 million were expensed in the current period and transaction costs of $7.8 million relating to capital raising
were booked against equity.
The net profit of the Group (consisting of Super Retail Group Limited and the entities it controlled at the end of, or during, the
period) for the period ended 30 June 2012, after providing for income tax, amounted to $83,521,000 (2011: $55,599,000).
A review of the operations for the 52 weeks to 30 June 2012 is set out in pages 3 to 7 of this report.
Significant changes in the state of affairs
Contributed equity increased by $326,421,067 for capital raising relating to the Rebel acquisition and $18,872,410 as the
result of dividend reinvestment plan and share options plan. Details of the changes in contributed equity are disclosed in
note 24 to the financial statements.
Page 15
Super Retail Group Limited
Directors' report
for the period ended 30 June 2012
Matters subsequent to the end of the financial year
Since 30 June 2012 Super Retail Group Limited does not have any matters subsequent to the end of the financial year to be
disclosed.
Likely developments and expected results of operations
Information on likely developments in the operations of the Group and the expected results of operations have not been
included in this annual financial report because the directors believe it would be likely to result in unreasonable prejudice to
the Group.
Environmental regulation
The Group’s environmental obligations are regulated under State, Territory and Federal Law. The Group has a policy of
complying with its environmental performance obligations. All environmental performance obligations are monitored by the
Board. No environmental breaches have been notified to the consolidated entity during the period ended 30 June 2012.
Directors and Directors’ interests
The Directors of Super Retail Group Limited in office at the date of this report are listed below together with details of their
relevant interest in the securities of the Company at that date.
R J Wright, BCom, FCPA, MAICD. Independent Chairman Non-Executive. Age 63
Experience and expertise
Appointed Chairman on 28 October 2009 and has been an Independent Non-Executive Director for 8 years 3 months.
Director of a number of major Retail companies over the last 20 years.
Other current directorships
Chairman and Non-executive director of SAI Global Limited (director since 2003). Chairman and Non–executive director of
APA Ethane Limited (director since 2008) which is the responsible entity of the registered investment schemes that comprise
Ethane Pipeline Income Fund, the securities in which are quoted on the ASX. Non–executive director of Australian Pipeline
Limited since 2000.
Former directorships in the last 3 years
Chairman and non-executive director of Dexion Limited (March 2005 – August 2010) and RCL Group (formerly Babcock &
Brown Residential Land Partners Group) (May 2006 – February 2012).
Special responsibilities
Chairman of the Board
Chairman of the Board Nomination Committee
Member of the Audit and Risk Committee
Member of the Human Resources and Remuneration Committee
Interest in shares and options
71,149 ordinary shares in Super Retail Group Limited
P A Birtles. BSc, ACA Managing Director and Chief Executive Officer. Age 48
Experience and expertise
Managing Director and Chief Executive Officer for 6 years and 8 months. Previously Chief Financial Officer for 4 years 8
months and Company Secretary for 1 year 5 months.
Other current directorships
Non-executive director of GWA Group Limited
Former directorships in the last 3 years
None
Special responsibilities
Managing Director and Chief Executive Officer
Member of the Board Nomination Committee
Interests in shares and options
1,892,596 ordinary shares in Super Retail Group Limited
300,000 performance rights over ordinary shares in Super Retail Group Limited
Page 16
Super Retail Group Limited
Directors' report
for the period ended 30 June 2012
R A Rowe. Non-Executive Director. Age 68
Experience and expertise
Founder of the business in 1972. Non-executive director for 8 years 4 months. Previously 8 years as Chairman and 24
years as Managing Director.
Other current directorships
Director of a number of private family companies.
Former directorships in the last 3 years
None.
Special responsibilities
Member of the Board Nomination Committee
Member of the Human Resources and Remuneration Committee
Interests in shares and options
56,954,670 ordinary shares in Super Retail Group Limited.
R J Skippen, ACA Independent Non-Executive Director. Age 64
Experience and expertise
Independent Non-Executive Director for 3 years 9 months. John was the former Finance Director of Harvey Norman
Holdings Ltd for 12 years and has over 30 years' experience as a chartered accountant.
Other current directorships
Non-Executive Director of Flexigroup Limited and Emerging Leaders Investment Limited. Chairman and Non-Executive
Director of Slater & Gordon Limited.
Former directorships in the last 3 years
Non-Executive Director of Mint Wireless Limited (November 2007 – September 2008) and Briscoe Group Limited (NZ)
(March 2004 – September 2011).
Special responsibilities
Chairman of the Audit and Risk Committee
Member of the Board Nomination Committee
Member of the Human Resources and Remuneration Committee
Interest in shares and options
Nil.
S A Pitkin, LLM, LLB FAICD Independent Non-Executive Director. Age 53
Experience and expertise
Independent Non-Executive Director for 2 years. Sally is an experienced Non-Executive Director and lawyer and a former
partner of Clayton Utz.
Other current directorships
Non-Executive Director of Billabong International Limited
Former directorships in the last 3 years
Aristocrat Limited (June 2005 – May 2011)
Special responsibilities
Chair of the Human Resources and Remuneration Committee
Member of the Audit and Risk Committee
Member of the Board Nomination Committee
Interest in shares and options
25,053 ordinary shares in Super Retail Group Limited
Company Secretary
The Company Secretary is Mr R W Dawkins, B.Bus (Acct), Grad. Dip. AppCorpGov, ACIS, ACSA. Mr Dawkins commenced
with Super Retail Group Limited as the Property Services Manager in July 2001 and was appointed Company Secretary in
December 2010.
Page 17
Super Retail Group Limited
Directors' report
for the period ended 30 June 2012
Meetings of directors
The number of meetings of the Company’s Board of Directors and each Board Committee held during the period ended
30 June 2012 is set out below:
Full meetings
directors
B
11
11
11
11
11
A
11
11
11
11
11
Audit & Risk
A
3
n/a
n/a
3
3
B
3
n/a
n/a
3
3
Meetings of Committees
Board Nomination
Human Resource &
Remuneration
A
1
1
1
1
1
B
1
1
1
1
1
A
2
2
2
2
2
B
2
2
2
2
2
R J Wright
P A Birtles
R A Rowe
R J Skippen
S A Pitkin
A
= Number of meetings attended
B = Number of meetings held during the time the Director held office
or was a member of the Committee during the year
Proceedings on behalf of the Company
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of
the Corporations Act 2001.
Non-Audit Services
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s
expertise and experience with the Company and/or the Group are important.
Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers) for audit and non-audit services provided
during the year are set out below.
The Board of Directors has considered the position and, in accordance with the advice received from the Audit and Risk
Committee is satisfied that the provision of the non-audit services is compatible with the general standard of independence
for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by
the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for
the following reasons:
• all non-audit services have been reviewed by the Audit and Risk Committee to ensure they do not impact the impartiality
and objectivity of the auditor
• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of
Ethics for Professional Accountants, including reviewing or auditing the auditor’s own work, acting in a management or a
decision-making capacity for the Company, acting as advocate for the Company or jointly sharing economic risk and
rewards.
During the period the following fees were paid or payable for services provided by the auditor of the parent entity, its related
practices and non-related audit firms:
Assurance Services
PricewaterhouseCoopers Australian firm
Remuneration for audit services
Total remuneration for assurance services
Taxation Services
Total remuneration for taxation services
Advisory Services
Total remuneration for advisory services
Auditors Independence Declaration
Consolidated Entity
2011
2012
$
$
568,314
568,314
424,468
424,468
236,005
269,749
0
144,157
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on
page 30.
Loans to directors and executives
There are no loans to directors or executives as at 30 June 2012 and no loans were made during the period.
Page 18
Super Retail Group Limited
Directors' report
for the period ended 30 June 2012
Remuneration and Diversity report
Introduction
One of Super Retail Group’s core principles is that the attraction, development and retention of loyal and passionate team
members provide a competitive advantage which is fundamental to the long term success of the Group. The maintenance of
a workplace culture and the development of people practices that support this principle are strategic priorities for the Group.
The development of people practices covers a number of areas including attraction, diversity, learning and development,
engagement, workplace health and safety, talent and succession management and remuneration and benefits.
Remuneration and benefits practices are set in the context of an overall policy to provide market competitive remuneration
arrangements which support the attraction, development and retention of loyal and passionate team members and that are
aligned with the interests of shareholders.
Remuneration Policy
Super Retail Group is committed to creating a high performance culture. Our philosophy is to provide flexible and
competitive market based total remuneration arrangements that are linked to the performance of the Group and its
businesses and support services.
The key elements of the policy are:
•
•
•
•
•
•
To provide competitive total remuneration arrangements that enables the Group to attract and retain high performing
team members and to reward them for their contribution to the success of the Group.
To align remuneration arrangements with the delivery of sustainable value to the Group’s shareholders.
To maintain a pay for performance environment through linking incentive pay opportunities to the achievement of
specific, measurable business goals.
To position our base salaries at or around the median and our performance incentives in the 2nd quartile of relevant
market remuneration levels.
To provide arrangements with the flexibility to recognise individuals based on performance, experience and
qualifications.
To provide equitable, fair and consistent pay arrangements across the Group through a systematic methodology
involving job value and market positioning.
Remuneration can include a number of different elements such as base pay, superannuation, short term incentives, long
term incentives, tools of trade, study and relocation assistance, share plans and novated lease arrangements. The elements
of the total remuneration package may vary according to the job role, team members experience and performance and
market practice.
Role of the Human Resources and Remuneration Committee
The primary objective of the Committee is to assist the Board to fulfil its corporate governance and oversight responsibilities
in relation to the Group’s people strategy including remuneration components, performance measurements and
accountability frameworks, recruitment, retention, talent management and succession planning.
The Committee undertakes an annual review of the Group’s remuneration strategy and remuneration policy to facilitate
understanding of the overall approach to remuneration and to confirm alignment with the Group’s business strategy and
compliance with regulatory standards.
The Committee reviews and recommends to the Board for approval remuneration arrangements for the Chief Executive
Officer and other senior Executives. The Committee will review the arrangements on an annual basis, obtaining independent
external remuneration advice where appropriate.
The Committee undertakes an annual review of the Group’s performance management system to confirm the integrity of
systems and processes in making incentive based payments. The Committee will also verify compliance with vesting or
exercise requirements for equity based rewards.
The Committee establishes the policy for the remuneration arrangements for Non Executive Directors, reviewing
remuneration arrangements annually, obtaining independent external remuneration advice where appropriate.
The Committee reviews and recommends to the Board for approval the Remuneration Report and any other report required
to be produced for shareholders to meet regulatory requirements.
Page 19
Super Retail Group Limited
Directors' report
for the period ended 30 June 2012
Remuneration and Diversity report (continued)
Non Executive Directors Remuneration Structure
Fees to Non Executive Directors reflect the demands which are made on, and the responsibilities of, the Directors. The level
of fees are reviewed annually by the Human Resources and Remuneration Committee and are based on the median of fees
paid for comparative Non Executive Director roles in similarly sized publicly listed companies operating in the retail and
consumer goods industry.
The Human Resources and Remuneration Committee engaged the services of Deloittes as an independent remuneration
consultant to prepare comparative information for review to ensure that fees are market based and fairly represent the
responsibilities and time spent by the Directors on Company matters.
Additional fees are paid to the Chairs of the Audit and Risk and the Human Resources and Remuneration Committees. This
reflects the additional time commitment required by the Chairs of these committees.
Non Executive Director Fees are determined within an aggregate Directors’ fee pool approved by shareholders. The current
pool of $800,000 was approved on 26 October 2011.
Non Executive Directors’ fees are inclusive of superannuation contributions. Non Executive Directors do not receive shares,
performance rights or share options as part of their remuneration. Non Executive Directors may opt each year to receive a
proportion of their remuneration in Super Retail Group Limited shares, which would be acquired on market.
Directors Fees
The Directors’ fees are inclusive of Committee fees. Fees for year to 29 June 2013 were approved on 26 July 2012, while
fees for the year to 30 June 2012 were approved on 17 August 2011.
The following fees apply:
Chairman
Other Non Executive Directors
Committee Chair
Senior Executive Remuneration Structure
2012
$
160,000
90,500
10,000
2013
$
200,000
105,000
10,000
The Senior Executive Remuneration Structure is reviewed annually by the Human Resources and Remuneration
Committee. The Committee ensure that the Remuneration Structure is consistent with market practice.
Senior Executive Remuneration consists of 3 elements:
• Base Salary Package (inclusive of superannuation contributions, car allowance and other benefits)
• Short Term Incentive (STI)
•
Long Term Incentive (LTI)
The mix of remuneration between fixed and variable components is varied in line with the seniority of the role and the
relative responsibilities of the role for driving business performance and for developing and implementing business strategy.
For the years to 30 June 2012 and 29 June 2013, the following mix of remuneration applies.
Fixed
STI
LTI
Chief Executive Officer
Divisional Managing Directors
Chief Financial Officer
General Manager Group Logistics
40%
45%
50%
55%
28%
27%
25%
22%
32%
28%
25%
23%
Page 20
Super Retail Group Limited
Directors' report
for the period ended 30 June 2012
Remuneration and Diversity report (continued)
Senior Executive Remuneration Structure (continued)
The tables assume that a full STI is received and that the LTI fully vests – the actual reward is dependant on the
achievement of performance targets.
The LTI component is based on the notional monetary value at the time of grant. This notional valuation may differ from the
accounting valuation which considers probability of vesting and other factors.
Base Salary Package
The Group’s intent is to offer senior executives a base salary package that reflects the median market base salary package
for a comparable role in a similarly sized publicly listed company operating in the retail and consumer goods industry. The
senior executive’s performance and experience are also considered in determining the base salary package.
The base salary package consists of base pay and superannuation and may include prescribed non-financial benefits at the
executives’ discretion on a salary sacrifice basis.
Base salary packages are reviewed annually. There is no guaranteed base salary increase in any senior executive’s service
contract.
Market information is sourced from market remuneration surveys and from a review of the annual reports of benchmark
listed companies.
All senior executive base salary proposals are reviewed and assessed by the Human Resources and Remuneration
Committee. Using this information the Human Resources and Remuneration Committee then make recommendations to the
Board.
Short Term Incentive (STI)
Senior executives are invited to participate in a short term incentive scheme that rewards executives for the achievement of
performance targets that are consistent with the Group’s approved business plan and that are aligned to delivering
sustainable value to shareholders.
The Human Resources and Remuneration Committee recommends to the Board an annual profit before tax target. In setting
this target, the Committee considers the profit projections set out in the Group’s approved business plan and investor
expectations.
For the year to 30 June 2012, the profit before tax target of $112.5 million was 45% higher than the profit before tax
achieved in the period to 2 July 2011. This target reflected the budgeted contribution of the Rebel Group which was acquired
on 30 October 2011. The target reflected an underlying increase in Group profit of circa 10%, which was determined to be
an appropriately demanding target in the context of the existing retail environment.
Should profit before tax exceed the profit target, an STI bonus pool is created to a value of 20% of the amount that company
profit exceeds the target.
Senior executives have the opportunity to share in the STI bonus pool up to the maximum value of between 40% and 70% of
their base salary in accordance with the Senior Executive Remuneration Structure outlined above.
The level of participation is dependant on the achievement of 12 Key Performance Indicators (KPIs) relevant to their area of
responsibility. The 12 KPIs cover the achievement of financial and operational results and the successful implementation of
strategic and people development initiatives. The KPIs are consistent with the overall performance targets set out in the
Group’s business plan.
The Human Resources and Remuneration Committee is responsible for assessing whether the KPIs are achieved and for
approving short term incentive payments. The Committee receives reports from management to assist in the assessment.
Page 21
Super Retail Group Limited
Directors' report
for the period ended 30 June 2012
Remuneration and Diversity report (continued)
Long Term Incentive (LTI)
The Group’s remuneration structure aims to align long term incentives for senior executives with the delivery of sustainable
value to shareholders. The alignment of interests is important in ensuring that senior executives are focused on delivering
sustainable returns to shareholders, whilst allowing the Group to attract and retain senior executives of a high calibre.
In October 2009, the Group’s shareholders approved the establishment of the Super Retail Group Limited Performance
Rights Plan (PRP).
The PRP links the long term remuneration of senior executives with the economic benefit derived by shareholders over a
three to five year period.
Participation in the PRP is by invitation only and only those senior executives invited by the Board are able to participate.
The PRP allows for the annual grant of Performance Rights to senior executives. The grant of Performance Rights entitles
the senior executive to be granted an equivalent number of shares upon vesting of those Performance Rights. The vesting of
Performance Rights is subject to the satisfaction of performance conditions.
The performance conditions will be satisfied if the Group achieves both certain earnings per share increases and return on
capital hurdles over a three year period as determined by the Board or its nominee.
The Board consider that the combination of earnings per share growth and maintenance of return on capital ensure that
executives maintain a focus on value creating growth which will deliver sustainable returns for shareholders.
The issues of Performance Rights are subject to the following performance conditions over a three year period ending 30
June:
a) 10% cumulative earnings per share growth; and
b) Return on capital of more than 15%
If a Performance Right has not lapsed and the performance conditions have been satisfied, Performance Rights will vest in
accordance with the following schedule:
Time after grant of Performance Right % of Performance Rights that vest
3 years
4 years
5 years
50%
25%
25%
The notional value of Performance Rights granted to each senior executive is based on the share price of the Group at the
time of grant. The number of Performance Rights granted to each senior executive is determined in accordance with the
Executive Remuneration Structure outlined above and have a value of between 42% and 80% of their base salary. This
value of Performance Rights for grant purposes may differ from the accounting valuation which considers probability of
vesting and other factors.
Page 22
Super Retail Group Limited
Directors' report
for the period ended 30 June 2012
Remuneration and Diversity report (continued)
Relationship of Remuneration to Company Performance
The performance of the Group and remuneration paid to key management personnel over the last 6 years is summarised in
the following table:
Company Performance
2007
2008
2009
2010
2011
2012
Sales ($m)
624.8
715.4
828.8
938.0
1,092.3
1,654.1
Profit before tax ($m)
Post Tax ROC (%)
Earnings Per Share (¢)
Dividends Per Share (¢)
30 June Share Price ($)
31.3
13.9
19.5
10.5
4.20
36.8
14.1
22.6
13.0
2.33
Remuneration Paid to Key Management Personnel
Base Salary Package
Short Term Incentive
Long Term Incentive
Total
1.8
0.8
0.2
2.8
1.9
0.2
0.2
2.3
41.9
15.6
28.1
18.0
3.61
2.1
0.8
0.2
3.1
53.9
16.8
32.1
21.5
5.27
2.2
1.1
0.4
3.7
77.7
17.5
40.6
29.0
7.00
2.5
1.0
0.7
4.2
120.1
18.8
46.1
32.0
7.19
3.0
1.0
1.1
5.1
Since 2007 earnings per share have increased by 136%, dividends per share have increased by 205% and the share price
has increased by 71%.
During the same period, total remuneration paid to key management personnel has increased by 82% whilst Base Salary
has increased by 67%. The major driver of increase in total remuneration has been incentive pay reflecting the strong
performance of the Group over the last five years.
Total remuneration paid to key management personnel as a proportion of profit before tax was 10% in 2006 and had
reduced to 4.3% in 2012.
Details of remuneration of the Group
Amounts of remuneration
Details of the remuneration of the directors and key management personnel of the Group (as defined in AASB 124 Related
Party Disclosures) and the six highest paid executives of Super Retail Group Limited are set out in the following tables.
The key management personnel of the Group includes the directors and the following executive officers, (being those who
are responsible for developing and implementing the Group’s strategy):
•
•
•
•
•
•
P A Birtles, Managing Director
D F Ajala, Managing Director - Auto & Cycle Retailing
S J Doyle, Managing Director - Leisure Retailing
E A Berchtold, Managing Director – Sports Retailing
G G Carroll, Chief Financial Officer
G L Chad, General Manager, Group Logistics
The highest paid executives for the period ended 30 June 2012 were as follows:
•
•
•
•
•
•
P A Birtles
D F Ajala
S J Doyle
E A Berchtold
G G Carroll
G L Chad
Page 23
Super Retail Group Limited
Directors' report
for the period ended 30 June 2012
Remuneration and Diversity report (continued)
2012
Name
Non-executive directors
R J Wright Chairman
R A Rowe
R J Skippen
S A Pitkin
Sub-total non-executive
directors
Executive directors
P A Birtles
Other key management
personnel
D F Ajala
S J Doyle
E A Berchtold
G G Carroll
G L Chad
Totals
2011
Name
Non-executive directors
R J Wright Chairman
R A Rowe
D D McDonough (resigned
31 August 2010)
R J Skippen
S A Pitkin
Sub-total non-executive
directors
Executive directors
P A Birtles
Other key management
personnel
D F Ajala
S J Doyle
E A Berchtold
G G Carroll
G L Chad
Totals
Short-term benefits
Post-
employment
benefits
Share-based payment
Cash
bonus
$
Non-
monetary
benefits
$
Super-
annuation
$
Options
$
Performance
Rights
$
Cash
salary and
fees
$
146,789
35,881
91,743
91,743
366,156
0
0
0
0
0
0
0
0
0
0
13,211
54,119
8,257
8,257
83,844
856,810
367,500
2,415
15,775
425,100
387,492
219,901
359,225
309,128
2,923,812
184,500
128,650
118,663
116,250
100,100
1,015,663
0
11,733
19,615
0
27,132
60,895
24,900
15,775
17,508
15,775
48,740
222,317
Total
$
160,000
90,000
100,000
100,000
450,000
0
0
0
0
0
477,180
1,719,680
193,354
177,500
0
129,260
128,730
1,103,024
827,854
721,150
375,687
617,510
613,830
5,325,711
0
0
0
0
0
0
0
0
0
0
0
0
Short-term benefits
Post-
employment
benefits
Share-based payment
Cash
salary and
fees
$
Cash
bonus
$
Non-
monetary
benefits
$
Super-
annuation
$
Options
$
Performance
Rights
$
127,659
31,932
5,208
71,000
75,688
311,487
0
0
0
0
0
0
0
0
0
0
0
0
12,341
50,568
9,396
20,000
6,812
99,117
0
0
0
0
0
0
0
0
0
0
0
0
Total
$
140,000
82,500
14,604
91,000
82,500
410,604
794,886
416,625
2,415
27,699
21,532
307,167
1,570,324
392,947
359,846
0
307,801
292,007
2,458,974
195,500
179,400
0
119,510
135,975
1,047,010
5,104
14,954
0
0
27,893
50,366
26,949
15,199
0
15,199
47,600
231,763
3,992
3,992
0
8,096
3,010
40,622
115,187
105,413
0
73,917
83,784
685,468
739,679
678,804
0
524,523
590,269
4,514,203
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
Name
P A Birtles
D F Ajala
S J Doyle
E A Berchtold
G G Carroll
G L Chad
Fixed Remuneration
2012
2011
52.54%
50.88%
57.46%
54.36%
57.45%
57.55%
-
68.41%
61.58%
60.73%
62.26%
62.72%
At Risk – STI
At Risk – LTI
2012
21.37%
22.29%
17.84%
31.59%
18.83%
16.31%
2011
26.53%
26.43%
26.43%
-
22.78%
23.04%
2012
27.75%
23.35%
24.61%
-
20.44%
20.97%
2011
20.93%
16.11%
16.12%
-
15.64%
14.70%
Page 24
Super Retail Group Limited
Directors' report
for the period ended 30 June 2012
Remuneration and Diversity report (continued)
Service Agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements. Each
of these agreements provide for the provision of performance related cash bonuses, other benefits and when eligible,
participation in the Executive Performance Rights and Option Plans.
All contracts with executives may be terminated early by either party with three months notice, subject to termination
payments as detailed below:-
P A Birtles, Managing Director
Term of Agreement – 2 years and 11 months commencing 27 January 2011
Base salary, inclusive of superannuation, for the period ended 30 June 2012 of $875,000 to be reviewed annually by the
Human Resource and Remuneration Committee.
Payment of a termination benefit on early termination by the Company, other than for cause, equal to 12 months base salary
if the termination is effective more than 12 months before the expiry date or 9 months base salary if the termination is
effective within 12 months before the expiry date.
D F Ajala, Managing Director - Auto & Cycle Retailing
Term of Agreement - 3 years and 8 months commencing 27 January 2011
Base salary, inclusive of superannuation, for the period ended 30 June 2012 of $450,000 to be reviewed annually by the
Human Resource and Remuneration Committee.
Payment of a termination benefit on early termination by the Company, other than for cause, equal to 6 months base salary
if the termination is effective more than 12 months before the expiry date or 3 months base salary if the termination is
effective within 12 months before the expiry date.
S J Doyle, Managing Director - Leisure Retailing
Term of Agreement - 4 years and 8 months commencing 27 January 2011
Base salary, inclusive of superannuation, for the period ended 30 June 2012 of $415,000 to be reviewed annually by the
Human Resource and Remuneration Committee.
Payment of a termination benefit on early termination by the Company, other than for cause, equal to 6 months base salary
if the termination is effective more than 12 months before the expiry date or 3 months base salary if the termination is
effective within 12 months before the expiry date.
E A Berchtold, Managing Director – Sports Retailing
Term of Agreement – 4 years and 11 months commencing 5 November 2011
Base salary, inclusive of superannuation, for the period ended 30 June 2012 of $430,000 to be reviewed annually by the
Human Resource and Remuneration Committee.
G G Carroll, Chief Financial Officer
Term of Agreement - 5 years and 5 months commencing 17 April 2011
Base salary, inclusive of superannuation, for the period ended 30 June 2012 of $375,000 to be reviewed annually by the
Human Resource and Remuneration Committee.
Payment of a termination benefit on early termination by the Company, other than for cause, equal to 6 months base salary
if the termination is effective more than 12 months before the expiry date or 3 months base salary if the termination is
effective within 12 months before the expiry date.
G L Chad, General Manager Group Logistics
Base salary, inclusive of superannuation, for the period ended 30 June 2012 of $385,000 to be reviewed annually by the
Human Resource and Remuneration Committee.
Payment of a termination benefit on early termination by the Company, other than for cause, equal to 3 months base salary.
Page 25
Super Retail Group Limited
Directors' report
for the period ended 30 June 2012
Remuneration and Diversity report (continued)
Details of remuneration: Short Term Incentives
Cash bonuses are dependent on the satisfaction of performance conditions as set out in the section headed “short term
incentives” above. For each cash bonus included in the above tables, the percentage of the available bonus that was paid
and the percentage that was forfeited because the person did not meet the performance criteria are set out below. No part
of the bonuses are payable in future years.
Name
P A Birtles
D F Ajala
S J Doyle
E A Berchtold
G G Carroll
G L Chad
Share based compensation
Short Term Incentives
Forfeited
%
40
32
48
32
38
35
Paid
%
60
68
52
68
62
65
Performance Rights
Performance rights vest progressively from 3 to 5 years after the date of grant. The issues of Performance Rights are
subject to achieving two performance conditions over a three year period ending 30 June (i) 10% cumulative earnings per
share growth and (ii) return on capital of more than 15%.
The performance rights do not give the right to participate in any other share issue of the Company or any other entity.
The table below lists the performance rights provided as remuneration to each Director of Super Retail Group Limited and
each of the key management personnel of the Group. There were no lapsed performance rights in the period.
Name
Directors of Super
Retail Group Limited
R J Wright
R A Rowe
R J Skippen
S A Pitkin
P A Birtles
Other Key
Management
Personnel
D F Ajala
S J Doyle
E A Berchtold
G G Carroll
G L Chad
Number of Performance
Rights granted during the
period
2012
0
0
0
0
100,000
45,977
42,401
0
30,788
26,437
Value of Performance
Rights at Grant Date
2012
0
0
0
0
609,000
280,000
258,222
0
187,499
161,001
Number of Performance
Rights vested during the
period
2012
0
0
0
0
0
0
0
0
0
0
The above performance rights are valued using the share price at time of granting. The performance rights granted in the
current reporting period were valued using a share price of $6.09. The performance rights are expensed over a 5-year
period in-line with the vesting conditions of the rights. Plan participants may not enter into any transaction designed to
remove the “at risk” aspect of the performance rights before they vest.
Shares under option
No options were granted or vested during the period.
Page 26
Super Retail Group Limited
Directors' report
for the period ended 30 June 2012
Remuneration and Diversity report (continued)
Shares provided on exercise of remuneration options
The table below lists the ordinary shares in the Company issued during the year as a result of the exercise of remuneration
options. No performance rights were exercisable during the year.
Name
P A Birtles
S J Doyle
G G Carroll
G L Chad
Date of Exercise of Options
27/09/2011
5/3/12-12/3/2012
11/08/2011
16/08/2011
Number of Ordinary Shares
Issued on Exercise of
Options During the Year
200,000
200,000
100,000
50,000
Market Value at Exercise
Date*
722,800
930,400
395,000
197,600
* The value at exercise date of options exercised during the period was determined using the 5-day average Group share
price.
Unissued shares under performance rights and options plans
Unissued ordinary shares of Super Retail Group Limited under the performance rights plan at the date of this report are as
follows:
Grant date
Vesting Date*
Value per Performance
Right at Grant Date
Number of Performance
Rights
1 September 2009
1 September 2010
1 September 2011
*
*
*
$5.15
$5.85
$6.09
339,683
347,758
453,151
1,140,592
* Performance rights vest progressively 3 to 5 years after grant date and have no expiry date.
Plan participants may not enter into any transaction designed to remove the “at risk” aspect of performance rights on share
options.
Unissued ordinary shares of Super Retail Group Limited under option at the date of this report are as follows:
Grant date
Exercise date
Exercise Price
Value per option at
grant date
Number under
option
27 January 2006
23 August 2007
1 August 2008
5 January 2011
24 July 2010
1 August 2011
$2.44
$4.37
$2.49
$0.38
$0.93
$0.65
50,000
60,000
40,000
150,000
Shares issued on the exercise of options
The following ordinary shares of Super Retail Group Limited were issued during the year ended 30 June 2012 on the
exercise of options granted under the Super Retail Group Employee Option Plan. No further shares have been issued since
that date. No amounts are unpaid on any of the shares.
Date options granted
27 January 2006
17 April 2006
1 July 2006
26 October 2006
23 August 2007
1 August 2008
Issue price of shares
Number of shares issued
$2.44
$2.25
$2.25
$2.44
$4.37
$2.49
200,000
100,000
300,000
200,000
40,000
140,000
The exercise of the options is subject to the satisfaction of a qualifying hurdle. For the options granted prior to 23 August
2007, the qualifying hurdle requires cumulative annual growth of 10% in Earnings Per Share (pre amortisation) from the IPO
Prospectus forecast Earnings Per Share (pre amortisation) for the year ending 30 June 2005 (being 17.2 cents) through to
each of the years prior to the options being exercised. For the options granted in August 2007 and August 2008, the
relevant start dates for measurement of the 10% cumulative annual growth in Earnings Per Share are 30 June 2007 and 28
June 2008 respectively. Exercise of options is subject to being employed by the Group.
No option holder has any right under the options to participate in any other share issue of the Company or of any other
entity.
Page 27
Super Retail Group Limited
Directors' report
for the period ended 30 June 2012
Insurance of officers
During the financial year, Super Retail Group Limited paid a premium of $75,735 to insure the directors and secretaries of
the Company and its controlled entities, and the general managers of each of the divisions of the Group.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought
against the officers in their capacity as officers of entities in the Group, and any other payments arising from liabilities
incurred by the officers in connection with such proceedings, other than where such liabilities arise out of conduct involving a
wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for
themselves or someone else or to cause detriment to the Company. It is not possible to apportion the premium between
amounts relating to the insurance against legal costs and those relating to other liabilities.
Diversity
Super Retail Group recognises its talented and diverse workforce as a key competitive advantage. Our business
performance is a reflection of the quality and skill of our people and behaviours that are aligned to our Group Values. We
are firmly committed to developing policies, practices and ways of working that support diversity. We strive to ensure strong
business growth and performance whilst providing an environment that makes the Super Retail Group a great place to work.
Central to achieving this goal is an inclusive work environment and culture that allows Team Members to contribute their full
potential, through recognising and supporting their diverse strengths and needs. We want to be known as a diversity
conscious employer recognising, appreciating, valuing and utilising the unique talents and contributions of all individuals.
The company has developed a diversity policy that links directly to the company’s corporate vision and strategies. The
objectives of the policy are:
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
For our workforce to be representative of our customer base
To recognise, value and engage the diverse skills, cultural values and backgrounds of our Team Members
To enhance the opportunities for Team Members to participate and contribute to the work of the Super Retail Group
To maintain a focus on workplace health and safety by providing appropriate employment arrangements
To proactively prevent and eliminate harassment and unlawful discrimination in the workplace
To ensure that workplace structures, conditions, systems and procedures, foster diversity and allow Team Members to
manage work and personal life
To promote awareness of the value of diversity in the workplace
To enhance attraction, development and retention of Team Members
To be recognised as a great place to work and a preferred employer in the specialty retail sector and;
To provide suitable employment opportunities for disabled and disadvantaged Team Members
Gender Diversity
The nature of the products that are sold through the Group’s stores attracts a customer base that is significantly skewed
towards male customers. Across the Group around 80% of customers are males.
The company is proud that its culture and inclusive policies have created a workforce in which females represent 38% of the
workforce at 30 June 2012. 35% of middle and senior management positions and 22% of senior management positions are
held by females at 30 June 2012.
The company has set targets of 33% of middle and senior management positions and 30% of senior management and
Board positions to be held by females by June 2015.
To promote diversity, the company has implemented the following initiatives:
• Paid maternity leave
• Parental leave information packs
• Part time work opportunities
• Monitoring of remuneration for gender differences
• Appointment of females into senior non traditional roles – e.g., General Manager Retail Operations, Retail Operations
Manager, Distribution Centre Manager.
The following initiatives are being implemented in the coming year:
• Shortlisting of candidates for middle and senior management vacancies in line with 2015 diversity targets
• Participation in leadership development programs to be in line with 2015 diversity targets
•
• Development of childcare and aged-care information packs
• Quarterly reporting and review of diversity performance
•
Inclusion of diversity in induction and management development programs
Further development of flexible work practices
Page 28
Super Retail Group Limited
Directors' report
for the period ended 30 June 2012
Rounding of amounts
The Company is of a kind referred to in Class Order 98/0100, issued by the Australian Securities and Investments
Commission, relating to the “rounding off” of amounts in the Directors’ Report. Amounts in the Directors’ Report have been
rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.
This report is made in accordance with a resolution of the Directors.
R J Wright
Chairman
Brisbane
21 August 2012
P A Birtles
Director
Page 29
Super Retail Group Limited
for the period ended 30 June 2012
Auditor’s Independence Declaration
As lead auditor for the audit of Super Retail Group Limited for the year ended 30 June 2012, I declare
that to the best of my knowledge and belief, there have been:
a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Super Retail Group Limited and the entities it controlled during the
period.
Cameron Henry
Partner
PricewaterhouseCoopers
21 August 2012
PricewaterhouseCoopers, ABN 52 780 433 757
Riverside Centre, 123 Eagle Street, BRISBANE QLD 4000, GPO BOX 150, BRISBANE QLD 4001
T: +61 7 3257 5000, F: +61 7 3257 5999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation
Page 30
Super Retail Group Limited ABN 81 108 676 204
Annual financial report – 30 June 2012
Contents
Financial report
Consolidated comprehensive income statement
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors' declaration
Independent auditor’s report to the members
Page
32
33
34
35
36
84
85
These financial statements are the consolidated financial statements of the consolidated entity consisting of Super Retail Group
Limited and its subsidiaries. The financial report is presented in the Australian currency.
Super Retail Group Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office and
principal place of business is:
751 Gympie Road, Lawnton, Queensland, 4501
A description of the nature of the consolidated entity's operations and its principal activities is included in the directors’ report on
pages 15 to 29, which is not part of this financial report.
The financial report was authorised for issue by the directors on 21 August 2012. The company has the power to amend and
reissue the financial report.
Through the use of the internet, we have ensured that our corporate reporting is timely, complete, and available globally at
minimum cost to the company. All press releases, financial reports and other information are available at our Shareholders’
Centre on our website: www.superretailgroup.com.au.
Page 31
CONSOLIDATED COMPREHENSIVE INCOME STATEMENT
Super Retail Group Limited
For the period ended 30 June 2012
Revenue from continuing operations
Other income
Total revenues and other income
Cost of sales of goods
Other expenses from ordinary activities
- selling and distribution
- marketing
- occupancy
- administration
Finance costs expense
Total expenses
Profit before income tax
Income tax (expense)/benefit
Profit attributable to Members of Super Retail Group Limited
Other comprehensive income
Cash flow hedges
Exchange differences on translation of foreign operations
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Total comprehensive income for the year is attributable to:
Owners of Super Retail Group Limited
Consolidated
Notes
5
6
2012
$'000
1,655,474
916
1,656,390
2011
$'000
1,093,398
1,359
1,094,757
(927,679)
(598,067)
(208,154)
(76,891)
(124,584)
(176,982)
(21,995)
(1,536,285)
120,105
(36,584)
83,521
360
301
661
84,182
8
25
25
(138,415)
(51,188)
(90,307)
(128,155)
(10,973)
(1,017,105)
77,652
(22,053)
55,599
(3,414)
(1,200)
(4,614)
50,985
84,182
50,985
Cents
Cents
Earnings per share for profit attributable to the ordinary equity
holders of the company:
Basic earnings per share
Diluted earnings per share
37
37
46.1
45.8
40.6
40.1
The above consolidated comprehensive income statement should be read in conjunction with the accompanying notes.
Page 32
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Super Retail Group Limited
As at 30 June 2012
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Total current assets
Non-current assets
Property, plant and equipment
Deferred tax assets
Intangible assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Borrowings
Current tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Trade and other payables
Borrowings
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained profits
Total equity attributable to equity holders of Super Retail Group Limited
Consolidated
Notes
2012
$'000
2011
$'000
9
10
11
12
13
14
15
16
17
18
19
20
22
23
24
25
25
47,043
28,532
416,719
492,294
170,863
0
722,350
893,213
25,697
22,160
292,874
340,731
109,277
10,789
111,251
231,317
1,385,507
572,048
197,888
8
9,199
19,832
226,927
17,527
388,009
54,718
9,463
469,717
122,373
32
11,013
12,286
145,704
15,538
99,143
0
7,983
122,664
696,644
268,368
688,863
303,680
541,835
(706)
147,734
688,863
194,541
(3,239)
112,378
303,680
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Page 33
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Super Retail Group Limited
For the period ended 30 June 2012
Contributed
Equity
Reserves
Notes
$’000
$’000
Retained
Earnings
$’000
Total
$’000
Balance at 3 July 2010
182,158
158
88,241
270,557
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as
owners
Contributions of equity, net of transaction costs
Dividends provided for or paid
Employee share options and performance rights
Balance at 2 July 2011
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as
owners
Contributions of equity, net of transaction costs
Dividends provided for or paid
Employee share options and performance rights
24
26
25
24
26
25
0
0
0
0
(4,614)
(4,614)
55,599
0
55,599
55,599
(4,614)
50,985
12,383
0
0
12,383
0
0
1,217
1,217
0
(31,462)
0
(31,462)
12,383
(31,462)
1,217
(17,862)
194,541
(3,239)
112,378
303,680
0
0
0
0
661
661
83,521
0
83,521
83,521
661
84,182
347,294
0
0
347,294
0
0
1,872
1,872
0
(48,165)
0
(48,165)
347,294
(48,165)
1,872
301,001
Balance at 30 June 2012
541,835
(706)
147,734
688,863
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Page 34
CONSOLIDATED STATEMENT OF CASH FLOWS
Super Retail Group Limited
For the period ended 30 June 2012
Consolidated
Notes
2012
$'000
2011
$'000
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax)
Payments to suppliers and employees (inclusive of goods and services
tax)
1,825,528
1,207,864
(1,506,423)
(1,023,148)
Rental payments
- external
- related parties
Income taxes paid
Net cash (outflow) inflow from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Payments for purchase of subsidiary, net of cash acquired
Net cash (outflow) inflow from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Interest paid
Dividends paid to company’s shareholders
Proceeds from issue of shares
Net cash inflow (outflow) from financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of year
(140,200)
(9,350)
(34,308)
135,247
(60,380)
171
(621,704)
(681,913)
998,405
(710,860)
(16,720)
(31,692)
328,820
567,953
21,287
25,697
59
47,043
36
26
9
(82,519)
(10,384)
(20,911)
70,902
(37,647)
1,129
0
(36,518)
241,591
(251,667)
(9,894)
(20,797)
1,966
(38,801)
(4,417)
30,200
(86)
25,697
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Page 35
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
SUPER RETAIL GROUP LIMITED
FOR THE PERIOD ENDED
30 JUNE 2012
Page 36
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Super Retail Group Limited
For the period ended 30 June 2012
Contents of the notes to the consolidated financial statements
Summary of significant accounting policies .............................................................................................................................. 38
1
Financial risk management ....................................................................................................................................................... 47
2
Critical accounting estimates and judgements .......................................................................................................................... 51
3
Segment information ................................................................................................................................................................. 52
4
Revenue ................................................................................................................................................................................... 54
5
Other Income ............................................................................................................................................................................ 54
6
Expenses .................................................................................................................................................................................. 54
7
Income tax expense .................................................................................................................................................................. 55
8
Current assets - Cash and cash equivalents ............................................................................................................................ 56
9
10 Current assets - Trade and other receivables ........................................................................................................................... 56
11 Current assets – Inventories ..................................................................................................................................................... 57
12 Non-current assets – Property, plant and equipment ................................................................................................................ 57
13 Non-current assets - Deferred tax assets ................................................................................................................................. 58
14 Non-current assets – Intangible assets ..................................................................................................................................... 59
15 Current liabilities - Trade and other payables ........................................................................................................................... 61
16 Current liabilities – Borrowings ................................................................................................................................................. 61
17 Current liabilities – Current tax liabilities ................................................................................................................................... 61
18 Current liabilities – Provisions ................................................................................................................................................... 62
19 Non-current liabilities – Trade and Other Payables .................................................................................................................. 62
20 Non-current liabilities – Borrowings .......................................................................................................................................... 62
21 Derivative Financial instruments ............................................................................................................................................... 63
22 Non-current liabilities - Deferred tax liabilities ........................................................................................................................... 66
23 Non-current liabilities – Provisions ............................................................................................................................................ 66
24 Contributed equity ..................................................................................................................................................................... 67
25 Reserves and retained profits ................................................................................................................................................... 69
26 Dividends .................................................................................................................................................................................. 70
27 Key management personnel disclosures .................................................................................................................................. 71
28 Remuneration of auditors.......................................................................................................................................................... 74
29 Contingencies ........................................................................................................................................................................... 74
30 Commitments ............................................................................................................................................................................ 75
31 Related party transactions ........................................................................................................................................................ 76
32
Investments in controlled entities .............................................................................................................................................. 76
33 Business Combinations ............................................................................................................................................................ 77
34 Net tangible asset backing ........................................................................................................................................................ 77
35 Deed of cross guarantee........................................................................................................................................................... 78
36 Reconciliation of profit from ordinary activities after income tax to net cash inflow from operating activities ............................ 80
37 Earnings per share ................................................................................................................................................................... 80
38 Share-based payments ............................................................................................................................................................. 81
39 Events occurring after balance date ......................................................................................................................................... 83
40 Parent entity financial information ............................................................................................................................................. 83
Page 37
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
1 Summary of significant accounting policies
The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the
consolidated entity consisting of Super Retail Group Limited and its subsidiaries.
(a)
Basis of preparation
This general purpose financial report has been prepared in accordance with Australian Accounting Standards, other authoritative
pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act
2001.
Compliance with IFRS
Consolidated financial statements and notes of Super Retail Group Limited comply with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board.
Historical cost convention
These financial statements have been prepared under the historical cost convention, unless otherwise stated.
(b)
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all entities controlled by Super Retail Group Limited
(the “Company” or “parent entity”) as at 30 June 2012 and the results of its controlled entities for the period then ended. Super
Retail Group Limited and its controlled entities comprise the “consolidated entity”. The effects of all transactions between entities in
the consolidated entity are fully eliminated.
Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the financial
and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect
of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls
another entity.
Where control of an entity is acquired during a financial period its results are included in the consolidated statement of financial
performance from the date on which control commences. Where control of an entity ceases during a financial year its results are
included for that part of the period during which control existed.
(c)
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Divisional Managing Directors,
who are responsible for allocating resources and assessing performance of the operating segments.
(d)
Income tax
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the national
income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences
between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are
recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The
relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred
tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a
liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arise in a transaction, other
than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of
investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences
and it is probable that the differences will not reverse in the foreseeable future.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and
when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the
entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability
simultaneously.
Page 38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
A deferred tax liability is recognised in relation to some of the Group’s indefinite life intangibles. The tax base assumed in
determining the amount of the deferred tax liability is the capital cost base of the assets. As the assets are indefinite life in nature it
was determined the assets would not be recovered through use but rather through sale.
Tax Consolidation Legislation
Super Retail Group Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation as
of 1 July 2003.
The head entity, Super Retail Group Limited and the controlled entities in the tax consolidated group continue to account for their
own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues
to be a stand alone taxpayer in its own right.
Investment allowances
Companies within the Group may be entitled to claim special tax deductions for investments in qualifying assets (investment
allowances). The Group accounts for such allowances as tax credits, which means that the allowance reduces income tax payable
and current tax expense. A deferred tax asset is recognised for unclaimed tax credits that are carried forward.
(e)
Foreign currency translation
(i)
Functional and presentation currency
Items 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
Australian dollars, which is Super Retail Group Limited’s functional and presentation currency.
(ii)
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income
statement, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges.
Translation differences on non-monetary items such as equities held at fair value through profit or loss, are reported as part of the
fair value gain or loss. Translation differences on non-monetary items, such as equities classified as available-for-sale financial
assets, are included in the fair value reserve in equity.
(iii) Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have
a functional currency different from the presentation currency are translated into the presentation currency as follows:
•
•
•
assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that
statement of financial position;
income and expenses for each income statement are translated at average exchange rates (unless this is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses
are translated at the dates of the transactions); and
all resulting exchange differences are recognised as a separate component of equity.
(f)
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of
returns, trade allowances, duties and taxes paid. The Group recognises revenue when the amount of revenue can be reliably
measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the
Group’s activities as described below. The Group bases its estimates on historical results, taking into consideration the type of
customer, the type of transaction and the specifics of each arrangement.
Revenue is recognised for the major business activities as follows:
(i)
Sale of goods – retail
Revenue from the sale of goods is recognised when a Group entity sells a product to the customer pursuant to sales orders and
when the associated risk and rewards have passed to the customer. Retail sales are usually by credit card or in cash.
Page 39
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
(ii)
Interest income
Interest income is recognised using the effective interest method. When a receivable is impaired, the Group reduces the carrying
amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the
instrument. Interest income on impaired loans is recognised using the original effective interest rate.
(g)
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for doubtful
debts. Trade receivables are due for settlement 30 days from the end of the month after sale. Collectibility of trade receivables is
reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for doubtful receivables is
established when there is objective evidence that the Group will not be able to collect all amounts due. The amount of any
impairment loss is included within “Administration” in the income statement.
(h)
Inventories
Inventories are measured at the lower of cost and net realisable value. Costs comprise direct purchase costs and an appropriate
proportion of supply chain variable and fixed overhead expenditure. Costs are assigned to individual items of stock on the basis of
weighted average costs. Net realisable value is the estimated selling price in the ordinary course of business less the estimated
cost of completion and the estimated costs necessary to make the sale.
(i) Provisions
Provisions for legal claims, service warranties and make good obligations are recognised when the Group has a present legal or
constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation
and the amount has been reliably estimated. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by
considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any
one item included in the same class of obligations may be small.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present
obligation at the statement of financial position date. The discount rate used to determine the present value reflects current market
assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of
time is recognised as interest expense.
(j)
Financial assets
Classification
The Group classifies its financial assets in the following categories: financial assets at fair value through profit or loss and loans
and receivables. The classification depends on the purpose for which the investments were acquired. Management determines the
classification of its investments at initial recognition and re-evaluates this designation at each reporting date.
Financial assets at fair value through profit or loss
(i)
This category has two sub-categories: financial assets held for trading, and those designated at fair value through profit or loss on
initial recognition. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if
so designated by management. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets
in this category are classified as current assets if they are either held for trading or are expected to be realised within 12 months of
the statement of financial position date.
Loans and receivables
(ii)
Loans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an active
market. They arise when the Group provides money, goods or services directly to a debtor with no intention of selling the
receivable. They are included in current assets, except for those with maturities greater than 12 months after the statement of
financial position date which are classified as non-current assets. Loans and receivables are included in receivables in the
statement of financial position.
Recognition and derecognition
(iii)
Regular purchases and sales of financial assets are recognised on trade date – the date on which the Group commits to purchase
or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair
value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value and
transaction costs are expensed in the income statement. Financial assets are derecognised when the rights to receive cash flows
from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and
rewards of ownership.
Subsequent measurement
(iv)
Loans and receivables are carried at amortised cost using the effective interest method.
Page 40
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
Financial assets at fair value through profit and loss are subsequently carried at fair value. Gains or losses arising from changes in
the fair value of the ‘financial assets at fair value through profit or loss’ category are presented in the income statement within other
income or “Administration” in the period in which they arise.
(k)
Derivatives
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to
their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging
instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as either; (1) hedges of the fair
value of recognised assets or liabilities or a firm commitment (fair value hedge); or (2) hedges of highly probable forecast
transactions (cash flow hedges).
The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items as well as
its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its assessment,
both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and
will continue to be highly effective in offsetting changes in cash flows of hedged items.
Cash flow hedge
(i)
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in
equity in the hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in the income statement.
Amounts accumulated in equity are recycled in the income statement in the income periods when the hedged item will affect profit
or loss (for instance when the forecast sale that is hedged takes place). However, when the forecast transaction that is hedged
results in the recognition of a non-financial asset (for example, inventory) or a non-financial liability, the gains and losses previously
deferred in equity are transferred from equity and included in the measurement of the initial cost or carrying amount of the asset or
liability.
When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting,
any cumulative gain or loss existing in equity at the time remains in equity and is recognised when the forecast transaction is
ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or
loss that was reported in equity is immediately transferred to the income statement.
Net investment hedges
(ii)
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges.
Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in equity. The gain or loss
relating to the ineffective portion is recognised immediately in the income statement within other income or other expenses.
Gains and losses accumulated in equity are included in the income statement when the foreign operation is partially disposed of or
sold.
Derivatives that do not qualify for hedge accounting
(iii)
Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instrument that does
not qualify for hedge accounting are recognised immediately in the income statement.
(l)
Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure
purposes.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is
determined using valuation techniques. The fair value of interest rate swaps is calculated as the present value of the estimated
future cash flows. The fair value of forward exchange contracts is determined using forward exchange market rates at the
statement of financial position date.
The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair
values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at
the current market interest rate that is available to the Group for similar financial instruments.
(m) Property, plant & equipment
Each class of property, plant and equipment is carried at historical cost, less any accumulated depreciation or amortisation.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are
incurred.
Page 41
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
Depreciation and amortisation of property, plant and equipment
Depreciation and amortisation are calculated on a straight line basis for accounting and on a diminishing value basis for tax.
Depreciation and amortisation allocates the cost of an item of property, plant and equipment net of residual values over the
expected useful life of each asset to the consolidated entity. Estimates of remaining useful lives and residual values are reviewed
and adjusted, if appropriate, at each statement of financial position date. The depreciation rates used for each class of assets are:
Plant and equipment
Capitalised leased plant and equipment
Motor vehicles
Computer systems
Depreciation rate
10% - 37.5%
10% – 37.5%
25%
25% – 37.5%
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income
statement. When revalued assets are sold, it is Group policy to transfer the amounts included in other reserves in respect of those
assets to retained earnings.
(n)
Business combinations
The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or
other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair value of the assets
transferred, the liabilities incurred and the equity interests issued by the group. The consideration transferred also includes the fair
value of any contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary.
Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in
a business combination are, with limited exceptions, measured initially at their fair values as at the acquisition date. On an
acquisition-by-acquisition basis, the group recognises any non-controlling interest in the acquiree either at fair value or at the non-
controlling interest’s proportionate share of the acquiree’s net identifiable assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair
value of any previous equity interest in the acquiree over the fair value of the group’s share of the net identifiable assets acquired is
recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the
measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present
value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar
borrowing could be obtained from an independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or debt. Contingent payments classified as debt are subsequently
remeasured through profit or loss.
Acquisition-related costs are expensed as incurred.
(o)
Impairment of assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are
subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the
purposes of goodwill, this is the cash generating unit level.
(p)
Leases
Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as
finance leases. Finance leases are capitalised at the lease’s inception at the lower of the fair value of the leased property and the
present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other
long term payables. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on
the finance balance outstanding. The interest element of the finance cost is charged to the income statement over the lease period
so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant
and equipment acquired under finance leases is depreciated over the shorter of the asset’s useful life and the lease term.
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income
statement on a straight-line basis over the period of the lease term.
Page 42
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
(q)
Intangible assets
Goodwill
(i)
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of
the acquired subsidiary or business at the date of the acquisition. Goodwill on acquisitions of subsidiaries is included in intangible
assets. Goodwill and intangibles acquired in business combinations are not amortised. Instead, they are tested for impairment
annually, or more frequently if events or changes in circumstances indicated that it might be impaired, and is carried at cost less
accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to
the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-
generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill
arose, identified according to operating segments.
Trademarks and licences
(ii)
Trademarks and licences have an indefinite useful life and are carried at cost less impairment losses.
Computer software
(iii)
Costs incurred in developing products or systems and costs incurred in acquiring software and licenses that will contribute to future
period financial benefits through revenue generation and/or cost reduction are capitalised to software and systems. Costs
capitalised include external direct costs of materials and service and direct payroll and payroll related costs of employees’ time
spent on the project. Amortisation is calculated on a straight-line basis over periods generally ranging from 3 to 5 years.
Brand names
(iv)
Brand names that are acquired as part of a business combination are recognised separately from goodwill. These assets are
carried at their fair value at the date of acquisition less impairment losses. Brand names are valued using the relief from royalty
method. Amortisation is calculated based on the timing of projected cash flows of the assets over their estimated useful lives, which
is 20 years or indefinite.
Supplier Agreements
(v)
Supplier agreements are acquired as part of a business combination and are recognised separately from goodwill. These assets
are carried at their fair value at the date of acquisition less accumulated amortisation and impairment losses. Supplier agreements
have been valued using the multi-period excess earnings method. Amortisation is calculated based on timing of projected cash
flows of the assets over their estimated useful lives which is 20 years.
(vi) Other items of expenditure
Significant items of expenditure, such as costs incurred in store set-ups, are expensed in the financial period in which these costs
are incurred.
(r)
Trade and other payables
Trade and other creditors are payables for goods and services provided to the consolidated entity prior to the end of the financial
period and which are unpaid at that date. The amounts are unsecured and are normally paid within sixty days of recognition. Trade
and other payables are presented as current liabilities unless payment is not due within 12 months from the reporting date.
(s)
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the
income statement over the period of the borrowings using the effective interest method.
(t)
Contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the
proceeds. Incremental costs directly attributable to the issue of new shares or options, or for the acquisition of a business, are
included in the cost of the acquisition as part of the purchase consideration.
(u)
Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the
entity, on or before the end of the financial period but not distributed at balance date.
Page 43
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
(v)
Employee benefits
Wages and salaries, annual leave and sick leave
(i)
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of the
reporting date are recognised and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for
non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable.
Long service leave
(ii)
The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of
expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit
credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of
service. Expected future payments are discounted using market yields at the reporting date on national government bonds with
terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
(iii) Retirement benefit obligations
Contributions are made by the economic entity to an employee superannuation fund and are charged as expenses when incurred.
(iv) Share-based payments
Share-based compensation benefits are provided to certain employees via the Super Retail Group Executive Option Plan and
Super Retail Group Performance Rights Plan.
The fair value of options and performance rights granted under these plans are recognised as an employee benefit expense with a
corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the
employees become unconditionally entitled to the options.
For share options, the fair value at grant date is determined using a Binomial option pricing model that takes into account the
exercise price, the term of the option, the vesting and performance criteria, the impact of dilution, the non-tradeable nature of the
option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-
free interest rate for the term of the option.
The fair value of the options granted excludes the impact of any non-market vesting conditions (for example, profitability and sales
growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to
become exercisable. At each statement of financial position date, the entity revises its estimate of the number of options that are
expected to become exercisable. The employee benefit expense recognised each period takes into account the most recent
estimate.
Performance rights are valued using the 3 month weighted average share price as at the grant date.
Upon exercise of the options and performance rights, the balance of the share-based payments reserve relating to those options
remains in the share based reserve.
Profit-sharing and bonus plans
(v)
The Group recognises a liability and an expense for bonuses and profit-sharing based on a formula that takes into consideration the
profit attributable to the company’s shareholders after certain adjustments. The Group recognises a provision where contractually
obliged or where there is a past practice that has created a constructive obligation.
(w)
Finance costs
Finance costs are recognised in the period in which these are incurred and are expensed in the period to which the costs relate.
Generally costs such as discounts and premiums incurred in raising borrowings are amortised on an effective yield basis over the
period of the borrowing. Finance costs include:
- interest on bank overdrafts and short-term and long-term borrowings;
- amortisation of discounts or premiums relating to borrowings;
- amortisation of ancillary costs incurred in connection with the arrangement of borrowings; and
- finance lease charges;
(x)
Cash and cash equivalents
For the purposes of the cash flow statement, cash includes cash on hand, cash at bank and at call deposits with banks or financial
institutions, other short term, highly liquid investments with original maturities of three months or less that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.
(y)
Goods and Services Tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax, except where the amount of goods
and services tax incurred is not recoverable from the Australian Tax Office. In these circumstances the goods and services tax is
Page 44
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
recognised as part of the cost of acquisition of the asset or as part of the item of expense. Receivables and payables in the
consolidated statement of financial position are shown inclusive of goods and services tax.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which
are recoverable from, or payable to, the taxation authority, are presented as operating cash flow.
(z)
Make good requirements in relation to leased premises.
Make good costs arising from contractual obligations in lease agreements are recognised as provisions at the inception of the
agreement. A corresponding asset is taken up in property, plant and equipment at that time. Expected future payments are
discounted using appropriate market yields at reporting date.
(aa) Earnings per share
Basic earnings per share
(i)
Basic earnings per share is calculated by dividing:-
•
•
the profit attributable to equity holders of the company, excluding any costs of servicing equity other than ordinary shares;
by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in
ordinary shares issued during the year and excluding treasury shares (note 37).
Diluted earnings per share
(ii)
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after
income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average
number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
(ab) Rounding of amounts
The economic entity is of a kind referred to in Class Order 98/0100, issued by the Australian Securities and Investments
Commission, relating to the “rounding off” of amounts in the financial report. Amounts in the financial report have been rounded off
in accordance with that Class Order to the nearest thousand dollars.
(ac) Financial year
As allowed under Section 323D(2) of the Corporations Act 2001, the Directors have determined the financial year to be a fixed
period of 52 calendar or 53 calendar weeks. For the period to 30 June 2012, the Group is reporting on the 52 week period that
began 3 July 2011 and ended 30 June 2012. For the period to 2 July 2011, the Group is reporting on the period commencing 4 July
2010 and ended 2 July 2011.
(ad) New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for the 30 June 2012 reporting
period. The Group’s assessment of the impact of these new standards and interpretations is set out below.
AASB 9 Financial Instruments, AASB 2009‑11 Amendments to Australian Accounting Standards arising from AASB 9 and AASB
2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) (effective from 1 January 2013)
AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets and financial
liabilities. The standard is not applicable until 1 January 2013 but is available for early adoption. When adopted, the standard will
affect in particular the group’s accounting for its available-for-sale financial assets, since AASB 9 only permits the recognition of
fair value gains and losses in other comprehensive income if they relate to equity investments that are not held for trading.
There will be no impact on the Group’s accounting for financial liabilities, as the new requirements only affect the accounting for
financial liabilities that are designated at fair value through profit or loss and the Group does not have any such liabilities. The
derecognition rules have been transferred from AASB 139 Financial Instruments: Recognition and Measurement and have not
been changed. The Group has not yet decided when to adopt AASB 9.
AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements, AASB 12 Disclosure of Interests in other Entities,
revised AASB 127 Separate Financial Statements and AASB 128 Investments in Associates and Joint Ventures and AASB 2011-
7 Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards (effective 1
January 2013)
AASB 10 replaces all of the guidance on control and consolidation in AASB 127 Consolidated and Separate Financial
Statements, and Interpretation 12 Consolidation – Special Purpose Entities. The core principle that a consolidated entity presents
a parent and its subsidiaries as if they are a single economic entity remains unchanged, as do the mechanics of consolidation.
However, the standard introduces a single definition of control that applies to all entities. It focuses on the need to have both
power and rights or exposure to variable returns. Power is the current ability to direct the activities that significantly influence
returns. Returns must vary and can be positive, negative or both. Control exists when the investor can use its power to affect the
amount of its returns. There is also new guidance on participating and protective rights and on agent/principal relationships. While
Page 45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
the Group does not expect the new standard to have a significant impact on its composition, it has yet to perform a detailed
analysis of the new guidance in the context of its various investees that may or may not be controlled under the new rules.
AASB 12 sets out the required disclosures for entities reporting under the two new standards, AASB 10 and AASB 11, and
replaces the disclosure requirements currently found in AASB 127 and AASB 128. Application of this standard by the Group will
not affect any of the amounts recognised in the financial statements, but will impact the type of information disclosed in relation to
the Group’s investments.
The Group does not expect to adopt the new standards before their operative date. They would therefore be first applied in the
financial statements for the annual reporting period ending 30 June 2014.
AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13
(effective 1 January 2013)
AASB 13 explains how to measure fair value and aims to enhance fair value disclosures. The Group has yet to determine which,
if any, of its current measurement techniques will have to change as a result of the new guidance. It is therefore not possible to
state the impact, if any, of the new rules on any of the amounts recognised in the financial statements. However, application of
the new standard will impact the type of information disclosed in the notes to the financial statements. The Group does not intend
to adopt the new standard before its operative date, which means that it would be first applied in the annual reporting period
ending 30 June 2014.
AASB 2012-5 Amendments to Australian Accounting Standard arising from Annual Improvements 2009-2011 cycle (effective for
annual periods beginning on or after 1 January 2013). The Group does not expect that any adjustments will be necessary as the
result of applying the revised rules.
AASB 2012-3 Amendments to Australian Accounting Standard - Offsetting Financial Assets and Financial Liabilities and AASB
2012-2 Disclosures -Offsetting Financial Assets and Financial Liabilities (effective 1 January 2014 and 1 January 2013
respectively)
The AASB approved amendments to the application guidance in AASB 132 Financial Instruments: Presentation, to clarify some
of the requirements for offsetting financial assets and financial liabilities in the balance sheet. These amendments are effective
from 1 January 2014. They are unlikely to affect the accounting for any of the entity's current offsetting arrangements. However,
the AASB has also introduced more extensive disclosure requirements into AASB 7 which will apply from 1 January 2013. When
they become applicable, the Group will have to provide a number of additional disclosures in relation to its offsetting
arrangements. The Group intends to apply the new rules for the first time in the financial year commencing 1 July 2013.
There are no other standards that are not yet effective and that are expected to have a material impact on the entity in the current
or future reporting periods and on foreseeable future transactions
(ae) Parent entity financial information
The financial information for the parent entity, Super Retail Group Limited, disclosed in note 40 has been prepared on the same
basis as the consolidated financial statements, except as set out below.
Investments in subsidiaries
(i)
Investments in subsidiaries are accounted for at cost in the financial statements of Super Retail Group Limited.
(ii) Tax consolidation legislation
Super Retail Group Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation.
The head entity, Super Retail Group Limited, and the controlled entities in the tax consolidated group account for their own current
and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a stand
alone taxpayer in its own right.
In addition to its own current and deferred tax amounts, Super Retail Group Limited also recognises the current tax liabilities (or
assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the
tax consolidated group.
The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate Super Retail
Group Limited for any current tax payable assumed and are compensated by Super Retail Group Limited for any current tax
receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to Super Retail Group
Limited under the tax consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the
wholly-owned entities’ financial statements.
Page 46
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity,
which is issued as soon as practicable after the end of each financial year. The head entity may also require payment of interim
funding amounts to assist with its obligations to pay tax instalments.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as current amounts
receivable from or payable to other entities in the group.
Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised
as a contribution to (or distribution from) wholly-owned tax consolidated entities.
(iii) Financial guarantees
Where the parent entity has provided financial guarantees in relation to loans and payables of subsidiaries for no compensation, the
fair values of these guarantees are accounted for as contributions and recognised as part of the cost of the investment.
2
Financial risk management
The Group's activities expose it to a variety of financial risks; market risk (including currency risk, fair value interest rate risk and
price risk), credit risk, liquidity risk and cash flow interest rate risk. The Group's overall risk management program focuses on
the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the
Group. The Group uses derivative financial instruments such as foreign exchange contracts and interest rate swaps to hedge
certain risk exposures.
Risk management is carried out by a central treasury department (Group Treasury) under policies approved by the Board of
Directors. Group Treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating
units. The Board has approved written policies covering specific areas, such as mitigating foreign exchange, interest rate and
credit risks, use of derivative financial instruments and investing excess liquidity.
(a) Market risk
Foreign exchange risk
(i)
The Group operates internationally and is exposed to foreign exchange risk arising from currency exposures to the United
States dollar and New Zealand dollar.
Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a
currency that is not the entity’s functional currency.
The Group’s risk management policy is to hedge between 40% and 75% of anticipated US dollar purchases for the subsequent
4 months and up to 40% of anticipated US dollar purchases for the subsequent 5 to 12 month period.
Forward contracts and currency options are used to manage foreign exchange risk. The Group’s exposure to foreign currency
risk at the end of the reporting period is:
Trade receivables
Trade payables
Forward exchange contracts
- buy foreign currency (cash flow hedges)
Group sensitivity
30 June 2012
USD
$'000
2 July 2011
USD
$'000
917
10,670
60,000
779
9,763
64,000
Based on the financial instruments held at 30 June 2012, had the Australian dollar weakened/strengthened by 10% against other
currencies with all other variables held constant, the impact on the Group’s post-tax profit would have been nil, on the basis that the
financial instruments would have been designated as cash flow hedges and the impact upon the foreign exchange movements of
other financial assets and liabilities is negligible.
Page 47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
2
Financial risk management (continued)
Equity would have been $5,858,000 lower/$7,160,000 higher (2011: $2,951,000 lower/$3,606,000 higher) had the Australian dollar
weakened/strengthened by 10% against other currencies, arising mainly from forward foreign exchange contracts designated as
cash flow hedges. The impact on other Group assets and liabilities as a result of movements in exchange rates are not material.
A sensitivity of 10% was selected following review of historic trends.
(ii) Cash flow and fair value interest rate risk
Group sensitivity
The Group’s main interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to
cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. During 2012 and
2011, the Group’s borrowings were at variable rates and were denominated in Australian dollars.
As at the reporting date, the Group had the following variable rate borrowings and interest rate swap contracts outstanding:
Bank overdrafts and bank loans
Interest rate swaps
An analysis by maturities is provided in (c) below.
30 June 2012
Balance
$'000
2 July 2011
Balance
$'000
390,000
140,000
100,000
40,000
The Group risk management policy is to maintain fixed interest rate hedges of approximately 40% of anticipated debt levels over a 3
year period. The Group utilises interest rate swaps to hedge its interest rate exposure on borrowings.
At 30 June 2012, if interest rates had changed by +/- 100 basis points from the year-end rates with all other variables held constant,
post-tax profit and equity for the year would have been $1,750,000 lower/higher (2011: $560,000 lower/higher), mainly as a result of
higher/lower interest expense on bank loans.
(b)
Credit risk
The Group has no significant concentrations of credit risk. The Group has policies in place to ensure that sales of products and
services are made to customers with an appropriate credit history. Derivative counterparties and cash transactions are limited
to high credit quality financial institutions.
(c)
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding
through an adequate amount of committed credit facilities and the ability to close-out market positions. Due to the dynamic
nature of the underlying businesses, the Group aims at maintaining flexibility in funding by keeping committed credit lines
available.
Financing arrangements
The Group entity had access to the following undrawn borrowing facilities at the reporting date. These funds can be drawn in
Australian dollars at any time subject to the continuing compliance with specified bank covenants.
Floating rate
- Cash advances
2012
$'000
110,000
Consolidated
2011
$'000
90,000
Page 48
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
2
Financial risk management (continued)
Maturities of financial liabilities
The tables below analyse the Group’s financial liabilities and gross settled derivative financial instruments into relevant maturity
groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table
are the contractual undiscounted cash flows. For interest rate swaps the cash flows have been calculated using spot rates
applicable at the reporting date.
Group – at 30 June
2012
Less than 6
months
$’000
6-12 months
$’000
Between 1
and 2 years
$’000
Between 2
and 5 years
$’000
Over 5
years
$’000
Non-derivatives
Trade & other
payables
Borrowings (excluding
finance leases)
Finance lease
liabilities
Total non-derivatives
Derivatives
Net settled (IRS)
Gross settled
- (inflow)
- outflow
Total derivatives
Group – at 2 July
2011
Non-derivatives
Trade & other
payables
Borrowings (excluding
finance leases)
Finance lease
liabilities
Total non-derivatives
Derivatives
Net settled (IRS)
Gross settled
- (inflow)
- outflow
Total derivatives
197,888
0
0
12,488
12,488
414,976
7
210,383
1
12,489
0
414,976
(759)
(759)
(1,239)
(39,374)
39,389
(744)
(19,687)
20,005
(441)
0
0
(1,239)
0
0
0
0
0
0
0
0
Less than 6
months
$’000
6-12 months
$’000
Between 1
and 2 years
$’000
Between 2
and 5 years
$’000
Over 5
years
$’000
122,373
0
0
3,413
3,413
106,825
16
125,802
16
3,429
8
106,833
(78)
(61)
(44,298)
48,001
3,625
(15,388)
16,340
891
34
0
0
34
0
0
0
0
0
0
0
0
Total
contractual
cash flows
$’000
Carrying
amount
(assets) /
liabilities
$’000
197,888
197,888
439,952
390,000
8
637,848
8
587,896
(2,757)
(282)
(59,061)
59,394
(2,424)
0
310
28
Total
contractual
cash flows
$’000
Carrying
amount
(assets) /
liabilities
$’000
122,373
122,373
113,651
100,000
40
236,064
40
222,413
(105)
(59,686)
64,341
4,550
(142)
0
0
(142)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(d) Fair value measurements
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure
purposes.
The fair value of forward exchange contracts is determined using forward exchange market rates at the statement of financial
position date.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to
their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future
contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.
Page 49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
2
Financial risk management (continued)
The following tables present the Group’s entity’s assets and liabilities measured and recognised at fair value at 30 June 2012.
Group – at 30 June 2012
Assets
Derivatives used for hedging
Total assets
Liabilities
Derivatives used for hedging
Total liabilities
Group – at 2 July 2011
Assets
Derivatives used for hedging
Total assets
Liabilities
Derivatives used for hedging
Total liabilities
Level 1
$'000
Level 2
$'000
Level 3
$'000
0
0
0
0
418
418
(3,877)
(3,877)
0
0
0
0
Level 1
$'000
Level 2
$'000
Level 3
$'000
0
0
0
0
142
142
(4,115)
(4,115)
0
0
0
0
Total
$'000
418
418
(3,877)
(3,877)
Total
$'000
142
142
(4,115)
(4,115)
The fair value of financial instruments traded in active markets such as publicly traded derivatives and trading and available-for-sale
securities is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets
held by the Group is the current bid price. These instruments are included in level 1.
The fair value of financial instruments that are not traded in an active market (for example, over the counter derivatives) is
determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market
conditions existing at the end of each reporting period. Quoted market prices or dealer quotes for similar instruments are used to
estimate fair value for long term debt for disclosure purposes. Other techniques, such as estimated discounted cash flows are used
to determine fair value for the remaining financial instruments. The fair value of interest rate swaps is calculated as present value of
the estimated future cash flows. The fair value of forward exchange contracts is determined using forward exchange market rates
at the end of the reporting period. These instruments are included in level 2 and comprise debt investments and derivative financial
instruments. In the circumstances where a valuation technique for these instruments is based on significant observable inputs,
such instruments are included in level 3.
The carrying amounts of trade receivables and payables are assumed to approximate their fair values due to their short-term
nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at
the current market interest rate that is available to the Group for similar financial instruments. The fair value of the current
borrowings approximates the carrying amount, as the impact of discount is not significant.
(e)
Cash flow and fair value interest rate risk
As the Group has no significant interest-bearing assets, the Group’s income and operating cash flows are not materially
exposed to changes in market interest rates.
The Group's interest-rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash
flow interest-rate risk. Borrowings issued at fixed rates expose the Group to fair value interest-rate risk.
The Group manages its cash flow interest-rate risk by using floating-to-fixed interest rate swaps. Such interest rate swaps have
the economic effect of converting borrowings from floating rates to fixed rates. Generally, the Group raises long-term
borrowings at floating rates and swaps them into fixed rates that are lower than those available if the Group borrowed at fixed
rates directly. Under the interest-rate swaps, the Group agrees with other parties to exchange, at specified intervals (mainly
quarterly), the difference between fixed contract rates and floating-rate interest amounts calculated by reference to the agreed
notional principal amounts.
Page 50
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
2
Financial risk management (continued)
Carrying amounts and fair values of financial assets and
financial liabilities at statement of financial position date:
Financial assets
Cash and deposits
Receivables
Forward exchange contracts *
Interest rate swaps *
Non-traded financial assets
Financial liabilities
Trade and other payables
Commercial bill and other financing
Forward exchange contracts *
Interest rate swaps *
Non-traded financial liabilities
Consolidated entity
Carrying amount
Fair value
2012
$’000
2011
$’000
2012
$’000
2011
$’000
47,043
28,114
418
0
75,575
(203,211)
(388,017)
(107)
(3,769)
(595,104)
25,697
22,018
0
142
47,857
47,043
28,114
418
0
75,575
25,697
22,018
0
142
47,857
(129,271)
(99,175)
(4,115)
0
(232,561)
(203,211)
(388,017)
(107)
(3,769)
(595,104)
(129,271)
(99,175)
(4,115)
0
(232,561)
*These amounts are unrealised gains and losses which have been included in the carrying amount and fair value in the
statement of financial position as financial assets and liabilities.
With the exception of the forward exchange contracts and interest rate swaps, none of the financial assets and liabilities
are readily traded on organised markets in the standardised form.
Where assets are carried at amounts above the fair value these amounts have not been written down as it is intended to
hold these assets to maturity.
Fair value is exclusive of costs that would be incurred on realisation of an asset and inclusive of costs that would be
incurred on settlement of a liability.
Credit risk
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial
assets is the carrying amount, net of any provisions for doubtful debts of those assets, as disclosed in the statement of financial
position, and notes to the financial statements.
Credit risk for derivative financial instruments arises from the potential failure by counterparties to the contract to meet their
obligations. The credit risk exposure to forward exchange contracts and interest rate swaps is the fair value of these contracts.
3
Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the
circumstances.
Critical accounting estimates and assumptions
(a)
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Estimated impairment of goodwill
(i)
The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in note
1(o). The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These
calculations require the use of assumptions. Refer to note 14 for details of these assumptions.
Estimated value of intangible assets relating to acquisitions
(ii)
The Group has allocated portions of the cost of acquisition to various intangible assets, such as brand names and supply
agreements. Brand names have been valued using the relief from royalty method. Supplier agreements have been valued
using the multi-period excess earnings method. The calculations require the use of assumptions. In addition, the value of
liability of put options granted as part of acquisitions has been estimated.
Estimated value of make good provision
(iii)
The Group has estimated the present value of the estimated expenditure required to remove any leasehold improvements and
return leasehold premises to their original state, in addition to the likelihood of this occurring. These costs have been capitalised
as part of the cost of the leasehold improvements. This provision was re-assessed during the year which resulted in a $2m
release.
Page 51
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
4
Segment information
(a)
Description of segments
Following the acquisition of the Rebel Group, the Board has determined the operating segments based on the reports reviewed by
the Divisional Managing Directors that are used to make strategic decisions.
This results in the following business segments:
Auto & Cycle Retailing: Retail and distribution of motor vehicle spare parts and bicycle accessories, tools and equipment.
Leisure Retailing: Retail and distribution of boating, camping, fishing, outdoor equipment and apparel.
Sports Retailing: Retail and distribution of sporting equipment and apparel (as a result of the Rebel Group acquisition).
(b)
Segment information provided to the Divisional Managing Directors
The segment information provided to the Divisional Managing Directors for the reportable segments for the year ended 30 June
2012 is as follows:
Auto & Cycle
Retailing
$’000
Leisure
Retailing
$’000
Sports
Retailing
$’000
Total
continuing
operations
$’000
Inter-segment
eliminations/
unallocated
$’000
Consolidated
$’000
2012
Segment Revenue
Sales to external customers
757,949
456,271
441,909
1,656,129
119
1,656,248
Inter segment sales
Total sales revenue
Other revenue/income
(2,139)
755,810
51
0
456,271
22
0
441,909
703
(2,139)
1,653,990
776
0
119
1,505
(2,139)
1,654,109
2,281
Total revenue and other
income
Segment result (pre-borrowing
costs and impairment)
Finance costs
Impairment of goodwill
Profit before income tax
Income tax expense
Profit for the period
Segment Assets & Liabilities
755,861
456,293
442,612
1,654,766
1,624
1,656,390
72,186
32,832
54,477
159,495
(17,318)
142,177
(77)
(21,995)
(77)
120,105
(36,584)
83,521
Segment assets
428,062
234,346
186,966
849,374
536,133
1,385,507
Unallocated assets
Total assets
0
0
1,385,507
Segment liabilities
(277,899)
(178,161)
(148,539)
(605,599)
16,706
(588,893)
Unallocated liabilities
Total liabilities
Acquisitions of property, plant
and equipment and other non-
current segment assets
Depreciation and amortisation
expense
(107,751)
(107,751)
(696,644)
17,755
15,097
656,238
689,090
21,815
710,905
17,628
9,188
8,395
35,211
193
35,404
Goodwill impairment
Other non-cash expenses
77
77
1,873
Page 52
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
The segment information provided to the Divisional Managing Directors for the reportable segments for the year ended 2 July
2011 is as follows:
Auto & Cycle
Retailing
$’000
Leisure
Retailing
$’000
Sports
Retailing
$’000
Total
continuing
operations
$’000
Inter-segment
eliminations/
unallocated
$’000
Consolidated
$’000
2011
Segment Revenue
Sales to external customers
713,332
384,368
Inter segment sales
Total sales revenue
Other revenue/income
(5,099)
708,233
1,772
(280)
384,088
391
Total revenue and other
income
Segment result (pre-borrowing
costs and impairment)
710,005
384,479
63,611
32,042
0
0
0
0
0
0
1,097,700
(5,379)
1,092,321
2,163
0
0
0
273
1,097,700
(5,379)
1,092,321
2,436
1,094,484
273
1,094,757
95,653
(7,028)
88,625
Finance costs
Impairment of goodwill
Profit before income tax
Income tax expense
Profit for the period
Segment Assets & Liabilities
(10,973)
0
77,652
(22,053)
55,599
Segment assets
366,253
171,597
0
537,850
34,198
572,048
Unallocated assets
Total assets
0
0
572,048
Segment liabilities
(206,162)
(115,187)
0
(321,349)
160,587
(160,762)
Unallocated liabilities
Total liabilities
Acquisitions of property, plant
and equipment and other non-
current segment assets
Depreciation and amortisation
expense
Goodwill impairment
Other non-cash expenses
(c) Other information
(107,606)
(107,606)
(268,368)
13,673
13,067
(15,797)
(6,860)
0
0
26,740
11,889
38,629
(22,657)
(145)
(22,802)
0
1,222
The consolidated entity’s divisions are operated in two main geographical areas.
Australia
The home country of the parent entity. The three areas of operation are (i) automotive, bicycles and accessories (ii) boating,
camping, outdoor entertainment and fishing (iii) sporting equipment and apparel.
New Zealand
Supercheap Auto and FCO operate in New Zealand.
Page 53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
5
Revenue
From continuing operations
Sales revenue
Sale of goods
Other revenue
Interest
6
Other Income
Other income
7
Expenses
Profit before income tax includes the following specific gains and
expenses:
Expenses
Net loss on disposal of property, plant and equipment
Depreciation
Plant and equipment
Motor vehicles
Computer systems
Total depreciation
Amortisation and Impairment
Computer software
Brand name
Goodwill
Supplier agreement
Finance costs
Interest and finance charges
Accretion of put option
Finance costs expensed
Employee benefits expense
Superannuation expense
Salaries and wages
Rental expense relating to operating leases
Lease expenses
Equipment hire
Total rental expense relating to operating leases
Foreign exchange gains and losses
Net foreign exchange gains
2012
$'000
1,654,109
1,654,109
1,365
1,365
Consolidated
2011
$'000
1,092,321
1,092,321
1,077
1,077
1,655,474
1,093,398
2012
$'000
916
916
2012
$'000
786
23,409
244
6,844
30,497
4,685
125
77
20
4,907
22,335
(340)
21,995
19,038
270,519
289,557
137,408
8,146
145,554
Consolidated
Consolidated
2011
$'000
1,359
1,359
2011
$'000
294
13,864
30
5,306
19,200
3,457
125
0
20
3,602
10,859
114
10,973
12,273
192,436
204,709
90,879
4,907
95,786
250
1,419
Page 54
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
8
Income tax expense
Income tax expense
(a)
Current tax
Deferred tax
Adjustments for current tax of prior period
Deferred income tax (revenue) expense included in income tax expense
comprises:
Decrease (increase) in deferred tax assets (note 13)
(Decrease) increase in deferred tax liabilities (note 22)
(b)
Numerical reconciliation of income tax expense to prima facie tax
payable
Profit from continuing operations before income tax expense
Tax at the Australian tax rate of 30% (2011 - 30%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable
income:
Tax consolidation adjustments re NZ branch
Business acquisition costs
Goodwill impairment
R & D credits
Sundry items
Difference in overseas tax rates
Adjustments for current tax of prior periods
Income tax expense
Amounts recognised directly in equity
Aggregate current and deferred tax arising in the reporting period and not
recognised in net profit or loss but directly debited or credited to equity
Net deferred tax – debited/(credited) directly to equity (notes 13 and 22)
Tax expense (income) relating to items of other comprehensive income
Cash flow hedges
(c) Tax consolidation legislation
Consolidated
2012
$'000
35,089
1,505
(10)
36,584
(396)
1,901
1,505
120,105
36,032
(382)
3,371
23
(2,672)
51
36,423
171
(10)
36,584
(1,328)
(1,328)
154
154
2011
$'000
23,975
(1,807)
(115)
22,053
(1,771)
(36)
(1,807)
77,652
23,296
(44)
0
0
(1,207)
123
22,168
0
(115)
22,053
(1,228)
(1,228)
(1,463)
(1,463)
Super Retail Group Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation as
of 1 July 2003. The accounting policy in relation to this legislation is set out in note 1(d).
On adoption of the tax consolidation legislation, the entities in the tax consolidated group entered into a tax sharing agreement
which, in the opinion of the directors, limits the joint and several liability of the wholly-owned entities in the case of a default by the
head entity, Super Retail Group Limited.
The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate Super Retail
Group Limited for any current tax payable assumed and are compensated by Super Retail Group Limited for any current tax
receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to Super Retail Group
Limited under the tax consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the
wholly-owned entities’ financial statements.
The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity,
which is issued as soon as practicable after the end of each financial year. The head entity may also require payment of interim
funding amounts to assist with its obligations to pay tax instalments.
Page 55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
9
Current assets - Cash and cash equivalents
Cash at bank and in hand
10
Current assets - Trade and other receivables
Trade receivables
Provision for impairment of receivables (a)
Other receivables
Tax receivable
Prepayments
(a)
Impaired trade receivables
Consolidated
2012
$'000
2011
$'000
47,043
25,697
Consolidated
2012
$'000
18,051
(219)
17,832
4,219
703
5,778
28,532
2011
$'000
13,176
(268)
12,908
3,777
1,818
3,657
22,160
As at 30 June 2012 current trade receivables of the Group with a nominal value of $219,000 (2011: $268,000) were impaired
and provided for. The individually impaired receivables mainly relate to wholesalers who the Group no longer trade with.
Movements in the provision for impairment of receivables are as follows:
As at 30 June 2012
Provision for impairment recognised during the year
Receivables written off during the year as uncollectible
Consolidated
2012
$'000
(268)
(14)
63
(219)
2011
$'000
(210)
(236)
178
(268)
The creation and release of the provision for impaired receivables has been included in “Administration” in the income statement.
Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.
(b) Past due but not impaired
As of 30 June 2012, trade receivables of $4,009,000 (2011: $3,586,000) were past due but not impaired. These relate to a number
of independent customers for whom there is no recent history of default. The ageing analysis of these trade receivables is as
follows:
0 to 3 months
3 to 6 months
Over 6 months
Consolidated
2012
$'000
3,230
297
482
4,009
2011
$'000
2,435
668
483
3,586
Page 56
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
11
Current assets – Inventories
Finished goods
- at lower of cost or net realisable value
(a)
Inventory expense
Consolidated
2012
$'000
2011
$'000
416,719
292,874
Inventories recognised as expense during the year ended 30 June 2012 amounted to $897,904,000 (2011: $583,164,000).
Write-downs of inventories to net realisable value recognised as an expense/(benefit) during the year ended 30 June 2012
amounted to ($735,000) (2011: ($1,388,000)). The benefit has been included in ‘costs of sales of goods’ in the income
statement.
12
Non-current assets – Property, plant and equipment
Plant and equipment, at cost
Less accumulated depreciation
Net plant and equipment
Motor vehicles, at cost
Less accumulated depreciation
Net motor vehicles
Computer systems, at cost
Less accumulated depreciation
Net computer equipment
Consolidated
2012
$'000
237,903
(85,354)
152,549
1,588
(367)
1,221
52,426
(35,333)
17,093
2011
$'000
160,141
(63,964)
96,177
266
(240)
26
45,805
(32,731)
13,074
Total net property, plant and equipment
170,863
109,277
Assets pledged as security are detailed in Note 20
Reconciliations - consolidated entity
Carrying amounts at 3 July 2011
Additions
Business acquisitions
Disposals
Depreciation and amortisation
Foreign currency exchange differences
Carrying amounts at 30 June 2012
Reconciliations - consolidated entity
Carrying amounts at 4 July 2010
Additions
Business acquisitions
Disposals
Depreciation and amortisation
Foreign currency exchange differences
Carrying amounts at 2 July 2011
Plant and
equipment
$’000
Motor
vehicles
$’000
Computer
systems
$’000
26
62
1,499
(122)
(244)
0
1,221
661
0
(413)
(197)
(30)
5
26
13,074
6,902
4,011
(66)
(6,844)
16
17,093
14,683
4,522
(668)
(157)
(5,306)
0
13,074
96,177
48,928
33,485
(2,736)
(23,409)
104
152,549
89,965
23,084
185
(3,390)
(13,864)
197
96,177
Page 57
Total
$’000
109,277
55,892
38,995
(2,924)
(30,497)
120
170,863
105,309
27,606
(896)
(3,744)
(19,200)
202
109,277
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
13
Non-current assets - Deferred tax assets
The balance comprises temporary differences attributable to:
Amounts recognised in profit or loss
Doubtful debts
Prepayments
Employee benefits
Accruals
Inventories
Deferred make good provision
Straight line lease adjustment
Deferred income
Depreciation
Provision for warranties and legal costs
Tax losses
Amounts recognised directly in equity
Cash flow hedges
Foreign exchange revaluation reserve
Share placement costs
Set off with deferred tax liabilities (note 22)
Net deferred tax assets
Movements:
Opening balance
Credited/(charged) to the income statement
Credited/(charged) to equity
Acquired in acquisition
Closing balance
Deferred tax assets to be recovered after more than 12 months
Deferred tax assets to be recovered within 12 months
Consolidated
2012
$'000
2011
$'000
66
275
8,765
1,206
1,858
1,584
5,024
86
5,782
0
844
25,490
1,131
32
1,836
28,489
(28,489)
0
17,473
396
1,410
9,210
28,489
23,835
4,654
28,489
85
0
5,779
312
2,137
257
4,662
127
2,512
13
0
15,884
1,235
0
354
17,473
(6,684)
10,789
14,559
1,771
1,000
143
17,473
14,543
2,930
17,473
Page 58
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
14 Non-current assets – Intangible assets
Consolidated
Goodwill at cost
Less accumulated impairment charge
Net goodwill
Trademarks, at cost
Less accumulated depreciation
Net trademarks
Computer software
Less accumulated amortisation
Net computer software
Brand names at cost
Less amortisation
Net brand names
Supplier agreement
Less amortisation
Net supplier agreement
Total net intangibles
2012
$’000
440,264
(2,077)
438,187
14
0
14
41,808
(24,979)
16,829
267,500
(500)
267,000
400
(80)
320
2011
$’000
78,452
(2,000)
76,452
14
0
14
32,614
(20,294)
12,320
22,500
(375)
22,125
400
(60)
340
Goodwill
$’000
Trademarks
$’000
Computer
Software
$’000
Brand
Name
$’000
Supplier
Agreement
$’000
Totals
$’000
722,350
111,251
Reconciliations – consolidated
entity – 2012
Carrying amounts at 3 July 2011
Additions
Business acquisitions
Disposals/Revision in provisional
accounting
Amortisation/Impairment charge
Carrying amounts at 30 June 2012
76,452
0
361,812
0
(77)
438,187
14
0
0
0
0
14
12,320
6,842
2,364
(12)
(4,685)
16,829
22,125
0
245,000
0
(125)
267,000
340
0
0
0
(20)
320
111,251
6,842
609,176
(12)
(4,907)
722,350
Reconciliations – consolidated
entity – 2011
Carrying amounts at 4 July 2010
Additions
Disposals/Revision in provisional
accounting
Amortisation/Impairment charge
Carrying amounts at 2 July 2011
Goodwill
$’000
Trademarks
$’000
Computer
Software
$’000
Brand
Name
$’000
Supplier
Agreement
$’000
Totals
$’000
74,701
0
1,751
0
76,452
14
0
0
0
14
6,505
9,455
(183)
(3,457)
12,320
22,250
0
0
(125)
22,125
360
0
0
(20)
340
103,830
9,455
1,568
(3,602)
111,251
Amortisation of $4,907,000 (2011: $3,602,000) is included in “Administration” in the consolidated income statement.
(a)
Impairment tests for goodwill
Goodwill is allocated to the Group’s cash-generating units (CGUs) identified according to the group of assets based on
acquisition.
Page 59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
14 Non-current assets – Intangible assets (continued)
A CGU level summary of the goodwill allocation is presented below:-
2012
Goodwill
2011
Goodwill
Supercheap
Auto
$’000
BCF
$’000
Goldcross
Cycles
$’000
Ray’s
Outdoors
$’000
Rebel
Group
$’000
Total
$’000
45,336
12,950
7,877
11,002
361,022
438,187
Supercheap
Auto
$’000
BCF
$’000
Goldcross
Cycles
$’000
Ray’s
Outdoors
$’000
Total
$’000
45,336
12,950
7,954
10,212
76,452
The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use cash flow
projections based on financial budgets approved by the Board of Directors covering a five-year period. Cash flows beyond the
five-year period are extrapolated using the estimated growth rates stated below. The growth rate does not exceed the long-term
average growth rate for the business in which the CGU operates.
Goodwill allocation presented for Goldcross Cycles includes goodwill for Riders Cycles.
Goodwill allocation presented for Rebel Group includes Rebel Sport and A-Mart All Sports.
(b) Key assumptions used for value-in-use calculations
The following assumptions have been used for the analysis of each CGU within the business segment. Management
determined budgeted gross margin based on past performance and its expectations for the future. The weighted average
growth rates used are consistent with forecasts included in industry reports. The discount rates used are pre-tax. The factors
used by each business segment is shown below.
Supercheap Auto
BCF
Goldcross Cycles
Ray’s Outdoors
Rebel Group
Growth rate
Discount rate
2012
%
3.0
5.0
5.0
10.0
*
2011
%
3.0
5.0
10.0
10.0
*
2012
%
12
12
12
12
*
2011
%
15
15
15
15
*
* A value-in-use calculation was not performed for the Rebel Group due to an external valuation being performed as at the date
of acquisition. As with the other business segments, performance of the Rebel Group will be assessed on an ongoing basis.
The initial two year’s of a store operating growth rate is assumed to be 10% for Supercheap Auto, BCF and Ray’s Outdoors and
5% for Goldcross Cycles.
(c) Useful life for brands
The Goldcross Cycles brand has been determined to have a 20 year life and is amortised over this period.
No amortisation is provided against the carrying value of the purchased Ray’s Outdoors, Rebel Sport and A-Mart All Sports
brands on the basis that they are considered to have an indefinite useful life.
Key factors taken into account in assessing the useful life of brands were:
•
•
the strong recognition of the Ray’s Outdoors, Rebel Sports and A-Mart All Sports brands; and
there are currently no legal, technical or commercial factors indicating that the life should be considered limited.
Page 60
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
15
Current liabilities - Trade and other payables
Trade payables
Other payables
Loans from related parties
16
Current liabilities – Borrowings
Secured
Finance leases
Total current liabilities – secured interest bearing liabilities
Unsecured
Related parties
Unsecured bank financing
Total current liabilities – unsecured interest bearing liabilities
Total current liabilities – interest bearing liabilities
Consolidated
2012
$'000
130,672
67,200
16
197,888
2011
$'000
83,050
39,305
18
122,373
Consolidated
2012
$'000
2011
$'000
8
8
0
0
0
8
32
32
0
0
0
32
(a) Cash Advances
Cash advances have been drawn as a source of short-term financing on a needs basis.
(b) Interest rate risk exposures
Details of the Group’s exposure to interest rate changes on borrowings are set out in note 21.
(c) Fair value disclosures
Details of the fair value of borrowings for the Group are set out in note 21.
(d)
Security
Details of the security relating to each of the secured liabilities and further information on the bank overdrafts and bank loans
are set out in note 20.
17
Current liabilities – Current tax liabilities
Income tax payable
Consolidated
2012
$'000
9,199
2011
$'000
11,013
Page 61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
18
Current liabilities – Provisions
Put option provision(a)
Provision for warranties(b)
Make good provision(c)
Employee benefits(d)
(a) Put Option Provision
Consolidated
2012
$'000
409
0
119
19,304
19,832
2011
$'000
871
44
460
10,911
12,286
The put option relates to the acquisition of Oceania Bicycles Pty Ltd. As part of this acquisition, Super Retail Group Limited has
granted the vendor an option to sell the remaining 50% to the Group at an agreed EBITA multiple. This option can be exercised at
any time up to 10 years from acquisition.
(b) Provision for Warranties
Provision is made for the estimated warranty claims in respect of products sold which are still under warranty at balance date.
These claims are expected to be settled in the next financial year. Management estimates the provision based on historical
warranty claim information and any recent trends.
(c) Make good provision
Provision is made for costs arising from contractual obligations in lease agreements at the inception of the agreement. A provision
has been recognised for the present value of the estimated expenditure required to remove any leasehold improvements. These
costs have been capitalised as part of the cost of the leasehold improvements and are amortised over the shorter of the term of the
lease or the useful life of the assets.
(d) Employee benefits
The current provision for employee benefits includes accrued annual leave and long service leave. For long service leave it covers
all unconditional entitlements where employees have completed the required period of service.
(e) Movements in provisions
Refer to Note 23 for a consolidated movement in provisions analysis.
19
Non-current liabilities – Trade and Other Payables
Straight line lease adjustment
20
Non-current liabilities – Borrowings
Secured
Finance lease
Bank debt funding facility
Less borrowing costs capitalised, net
Consolidated
2012
$'000
17,527
2011
$'000
15,538
Consolidated
2012
$'000
0
390,000
(1,991)
388,009
2011
$'000
8
100,000
(865)
99,143
The facilities are secured by first registered floating company charges over all the assets and undertakings of Super Retail Group
Limited and all its wholly-owned subsidiaries in favour of ANZ Banking Group Limited, HSBC, Commonwealth Bank of Australia and
National Australia Bank and by cross guarantees and indemnities between Super Retail Group Limited and all its wholly-owned
subsidiaries in favour of ANZ Banking Group Limited, HSBC, Commonwealth Bank of Australia and National Australia Bank.
Financial covenants are provided by Super Retail Group Limited with respect to leverage, gearing, fixed charges coverage and
shareholder funds.
Page 62
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
20 Non-current liabilities – Borrowings (continued)
The carrying amount of assets pledged as security are equal to those shown in the consolidated statement of financial position.
Financing arrangements
Unrestricted access was available at balance date to the following lines of credit:
Total facilities
- Bank debt funding facility
- Multi-option facility (including indemnity/guarantee)
Totals
Facilities used at balance date
- Bank debt funding facility
- Multi-option facility (including indemnity/guarantee)
Totals
Unused balance of facilities at balance date
- Bank debt funding facility
- Multi-option facility (including indemnity/guarantee)
Totals
Consolidated
2012
$’000
2011
$’000
500,000
17,000
517,000
390,000
8,264
398,264
110,000
8,736
118,736
190,000
7,000
197,000
100,000
3,350
103,350
90,000
3,650
93,650
In addition, the Company has access to a $89.5 million (2011: $132 million) transactional facility for clean credit and foreign
currency dealings.
Current interest rates on bank loans of the economic entity are 5.63% - 6.62% (2011: 6.71% - 6.88%).
Fair Value
Refer to Note 2 for the carrying amounts and fair values of borrowings at the end of reporting period.
Risk exposures
Information about the group’s exposure to interest rate and foreign currency changes is provided in Note 2.
21 Derivative Financial instruments
Derivative financial instruments
The Group is party to derivative financial instruments in the normal course of business in order to hedge exposures to foreign
exchange and interest rate changes.
Foreign exchange contracts
The economic entity retails products including some that have been imported from South East Asia. In order to protect against
exchange rate movements, the economic entity has entered into forward exchange rate contracts to purchase United States
Dollars. The contracts are timed to mature in line with forecasted payments for imports and cover forecast purchases for the
coming four months on a rolling basis.
Page 63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
21
Derivative Financial instruments (continued)
At balance date the following amounts were committed on foreign currency forward exchange contracts:
Buy United States dollars and sell Australian dollars with maturity
- 0 to 6 months
- 7 to 12 months
Consolidated entity
2012
$000
40,000
20,000
2011
$000
47,500
16,500
The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised directly in
equity. When the cash flows occur, the Group adjusts the initial measurement of the component recognised in the statement
of financial position by the related amount deferred in equity. In the year ended 30 June 2012, no hedges were designated as
ineffective (2011: nil).
Gains and losses arising from hedging contracts terminated prior to maturity are also carried forward until the designated
hedged transaction occurs.
The following gains, losses and costs have been deferred as at the balance date:
- unrealised gains/(losses) on foreign exchange contracts (a)
- unrealised gains/(losses) on interest rate swaps (b)
- total gains/(losses)
- realised losses and costs
- unrealised losses and costs on interest rate swaps
- total losses and costs
Net gains/(losses and costs)
310
(3,769)
(3,459)
0
0
0
(3,459)
(4,115)
142
(3,973)
0
0
0
(3,973)
(a)
(b)
Included in other receivables under note 10
Included in other payables under note 15
Interest rate swap contracts
Bank loans of the economic entity currently bear an average variable interest rate of 6.40% (2011: 6.83%). It is policy to protect
part of the loans from exposure to increasing interest rates. Accordingly, the economic entity has entered into interest rate swap
contracts, under which it is obliged to receive interest at variable rates and to pay interest at fixed rates. The contracts are settled
on a net basis and the net amount receivable or payable at the reporting date is included in other debtors or other creditors.
During the year the Group was a party to multiple interest rate swaps for a total nominal value of $160,000,000 (2011: $80,000,000)
of which $20,000,000 expired on 15 January 2012. The Group also entered into a $20,000,000 three year interest swap with a start
date of 15 January 2013. This swap is for a fixed interest rate of 3.53%.
The contracts require settlement of net interest receivable or payable each 90 days. The settlement dates coincide with the dates
on which interest is payable on the underlying debt. Swaps currently in place cover approximately 36% (2011: 20%) of the loan
principal outstanding. The average fixed interest rate is 4.49% (2011: 3.97%).
Page 64
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
21
Derivative Financial instruments (continued)
Interest rate risk exposures
The economic entity’s exposure to interest rate risk and the effective weighted average interest rate by maturity periods is set out in
the following table:
Notes
9
10
15, 17
16, 20
18, 23
2012
Financial assets
Cash and deposits
Receivables
Total financial assets
Weighted average rate of
interest
Financial liabilities
Trade and other payables
Commercial bill/cash advance
Employee entitlements
Total financial liabilities
Weighted average rate of
interest
Net financial assets/ (liabilities)
Notes
9
10
15, 17
16, 20
18, 23
2011
Financial assets
Cash and deposits
Receivables
Total financial assets
Weighted average rate of
interest
Financial liabilities
Trade and other payables
Commercial bill/cash advance
Employee entitlements
Total financial liabilities
Weighted average rate of
interest
Net financial assets/ (liabilities)
Floating
interest
rate
$’000
45,482
0
45,482
3.17%
0
388,017
0
388,017
6.40%
(342,535)
Floating
interest
rate
$’000
24,743
0
24,743
4.28%
0
79,135
0
79,135
Fixed interest maturing in
1 year or
less
$’000
Over 1 to
5 years
$’000
More than
5 years
$000
Non-
interest
bearing
$’000
Total
$’000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1,561
28,532
30,093
47,043
28,532
75,575
207,087
0
24,168
231,255
207,087
388,017
24,168
619,272
(201,162)
(543,697)
Fixed interest maturing in
1 year or
less
$’000
Over 1 to
5 years
$’000
More than
5 years
$000
Non-
interest
bearing
$’000
Total
$’000
0
0
0
0
20,032
0
20,032
0
0
0
0
8
0
8
0
0
0
0
0
0
0
0
954
22,160
23,114
25,697
22,160
47,857
133,386
0
13,863
147,249
133,386
99,175
13,863
246,424
(124,135)
(198,567)
6.83%
5.77%
12.37%
(54,392)
(20,032)
(8)
Page 65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
22
Non-current liabilities - Deferred tax liabilities
The balance comprises temporary differences attributable to:
Amounts recognised in profit or loss
Prepayments
Brand values
Goodwill
Other receivables
Depreciation
Amounts recognised directly in equity
Foreign exchange revaluation reserve
Cash flow hedges
Consolidated
2012
$'000
2011
$'000
9
80,196
126
280
2,471
83,082
125
0
83,207
3
6,638
0
0
0
6,641
0
43
6,684
Set-off of deferred tax liabilities of parent entity pursuant to set-off provisions
Net deferred tax liabilities
(28,489)
54,718
(6,684)
0
Movements:
Opening balance
Charged/(credited) to the income statement
Charged/(credited) to equity
Acquired in acquisition
Closing balance
Deferred tax liabilities to be settled after more than 12 months
Deferred tax liabilities to be settled within 12 months
23
Non-current liabilities – Provisions
Make good provision
Employee benefits
Provision for Oceania future dividend (a)
6,684
1,901
82
74,540
83,207
82,793
414
83,207
Consolidated
2012
$'000
4,467
4,864
132
9,463
6,948
(36)
(228)
0
6,684
6,681
3
6,684
2011
$'000
4,899
2,952
132
7,983
(a) Provision for Oceania future dividend
A provision has been recognised for the present value of the estimated cost of the future dividend required to be paid with respect
to Oceania.
(b) Movements in provisions (consolidated entity) (notes 18 & 23)
Opening balance as at 3 July 2011
Additional provisions recognised
Indexing of provisions
Provision released
Acquisitions
Closing balance as at 30 June 2012
Put option
$’000
871
0
0
(462)
0
409
Warranties
$’000
44
0
0
(44)
0
0
Make good
$'000
5,359
143
55
(1,955)
984
4,586
Oceania future
dividend
$’000
132
0
0
0
0
132
Total
$’000
6,406
143
55
(2,461)
984
5,127
Page 66
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
24
Contributed equity
(a) Share Capital
Ordinary shares fully paid
(b) Movement in ordinary share capital
Issue of shares on incorporation (8 April 2004)
Issue of shares on 23 April 2004
Share split on 19 May 2004
Issue of shares on 8 March 2008
Dividend reinvestment plan issue on 14 October 2009
Dividend reinvestment plan issue on 17 March 2010
Issue of shares on 4 May 2010
Shares issue under share option
Share placement plan on 27 May 2010
Shares issue under share option
Shares issued on 31 May 2010 as consideration for Ray’s
Outdoors Pty Ltd
Dividend reinvestment plan issue on 1 October 2010
Dividend reinvestment plan issue on 5 April 2011
Shares issue under share option
Dividend reinvestment plan issue on 26 September 2011
Institutional equity raising – 17 October 2011
Retail equity raising – 21 November 2011
Dividend reinvestment plan issue on 3 April 2012
Shares issued under share option
Less transaction costs on share issue
Deferred tax credit recognised directly in equity
Closing balance 30 June 2012
Parent Entity
2012
$'000
2011
$'000
541,835
194,541
Issue Price
$’000
1.00
1.69
0
1.97
5.35
4.96
4.80
2.36
4.80
2.42
5.16
5.98
6.40
2.55
5.94
5.34
5.34
7.04
2.45
0
84,233
0
394
3,821
3,279
76,320
1,346
12,143
448
1,548
4,637
6,028
1,966
8,385
283,907
50,349
8,088
2,399
(9,810)
2,354
541,835
Number of
Shares
1
49,697,150
56,732,471
200,000
714,234
661,137
15,900,000
612,500
2,529,809
185,000
300,000
775,040
941,397
770,000
1,411,206
53,166,176
9,428,472
1,148,378
980,000
196,152,971
The October 2011 and November 2011 institutional and retail equity raisings were done to finance the acquisition of Rebel
Group Limited.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
Dividend reinvestment plan
The company has established a dividend reinvestment plan under which holders of ordinary shares may elect to have all or
part of their dividend entitlements satisfied by the issue of new ordinary shares rather than by being paid in cash.
The ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the parent entity in
proportion to the number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present, in person or by proxy, at a meeting of shareholders of the parent
entity is entitled to one vote and, upon a poll, each share is entitled to one vote.
Options over nil (2011: nil) ordinary shares were issued during the period, with 980,000 (2011: 770,000) options being
exercised during the period. Performance rights over 453,151 (2011: 363,427) ordinary shares were issued during the period.
Nil performance rights were exercised during the period. Information relating to options outstanding at the end of the financial
period are set out in Note 38.
Page 67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
24
Contributed equity (continued)
(c)
Capital risk management
The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can
continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to
reduce the cost of capital.
The Group monitors overall capital on the basis of the gearing ratio. The ratio is calculated as net debt divided by total capital.
Net debt is calculated as total borrowings less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in
the statement of financial position (including minority interest) plus net debt.
During 2012 the Group’s strategy, which was unchanged from 2011, was to ensure that the gearing ratio remained below 50%.
This target ratio range excludes the short-term impact of acquisitions. The gearing ratios at 30 June 2012 and 2 July 2011
were as follows:
Total borrowings
Less: Cash & cash equivalents
Net Debt
Total Equity
Total Capital
Gearing Ratio
Consolidated
2012
$'000
388,017
(47,043)
340,974
688,863
1,029,837
33.1%
2011
$'000
99,175
(25,697)
73,478
303,680
377,158
19.5%
The increase in the gearing ratio was due to the acquisition of Rebel Group Limited.
The Group monitors ongoing capital on the basis of the fixed charge cover ratio. The ratio is calculated as earnings before finance
costs, tax, depreciation, amortisation and store and DC rental expense divided by fixed charge obligations (being finance costs and
store and DC rental expenses). Rental expenses are calculated net of straight line lease adjustments, while finance costs exclude
non-cash mark-to-market losses or gains on interest rate swaps.
During 2012 the Group’s strategy, which was unchanged from 2011, was to maintain a fixed charge cover ratio of around 2.0 times.
The fixed charge cover ratios at 30 June 2012 and 2 July 2011 were as follows:
Earnings
Add: Taxation expense
Finance costs
Depreciation and amortisation
Rental expense
EBITDAR
Finance costs (excluding MTM adjustment)
Rental expense
Fixed charges
Fixed charge cover ratio
Consolidated
2012
$’000
83,521
36,584
21,995
35,404
135,844
313,348
21,995
135,844
157,839
1.99
2011
$’000
55,599
22,053
10,973
22,802
84,486
195,913
10,973
84,486
95,459
2.05
The slight reduction in the fixed charge cover ratio in 2012 reflects the financing costs associated with the acquisition of Rebel
Group Limited.
Page 68
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
25
Reserves and retained profits
Consolidated
Reserves
Foreign currency translation reserve
Share based payments reserve
Hedging reserve
TOTAL
Movements
Foreign currency translation reserve
Balance at the beginning of the financial period
Net exchange difference on translation of foreign controlled Entity
Balance at the end of the financial period
Share based payments reserve
Balance at beginning of the financial period
Options lapsed
Options and performance rights expense
Balance at the end of the financial period
Hedging reserve
Balance of beginning of the financial period
Revaluation – gross
Deferred tax
Balance at the end of the financial period
2012
$'000
(3,306)
5,021
(2,421)
(706)
(3,607)
301
(3,306)
3,149
0
1,872
5,021
(2,781)
514
(154)
(2,421)
2011
$'000
(3,607)
3,149
(2,781)
(3,239)
(2,407)
(1,200)
(3,607)
1,932
0
1,217
3,149
633
(4,877)
1,463
(2,781)
Retained earnings
Balance at the beginning of the financial period
Net profit/(loss) for the financial period attributable to shareholders of Super Retail
Group Limited
Dividends provided for or paid
Retained profits/(losses) at the end of the financial period
112,378
88,241
83,521
(48,165)
147,734
38,053
(31,462)
112,378
Nature and purpose of reserves
(i) Hedging reserve - cash flow hedges
The hedging reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised directly
in equity, as described in note 1(k). Amounts are recognised in profit and loss when the associated hedged transaction affects
profit and loss.
(ii) Share-based payments reserve
The share-based payments reserve is used to recognise the fair value of options and performance rights issued but not
exercised.
(iii) Foreign currency translation reserve
Exchange differences arising on translation of the foreign controlled entity are taken to the foreign currency translation reserve,
as described in note 1(e). The reserve is recognised in profit and loss when the net investment is disposed of.
Page 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
26 Dividends
Parent Entity
2012
$’000
2011
$’000
Ordinary shares
Dividends paid by Super Retail Group Limited during the reporting period were as
follows:
Interim dividend for the period ended 31 December 2011 of 13 cents (2011: 11.5
cents per share) paid on 27 March 2012. Fully franked based on tax paid @ 30%
25,331
14,844
Final dividend for the period ended 2 July 2011 of 17.5 cents per share (2011: 13.0
cents per share) paid on 19 September 2011. Fully franked based on tax paid @
30%
Total dividends provided and paid
22,834
48,165
16,618
31,462
Dividends paid in cash or satisfied by the issue of shares under the dividend
reinvestment plan were as follows:
Paid in cash
Satisfied by issue of shares
Dividends not recognised at year end
Subsequent to year end, the Directors have declared the payment of a final dividend
of 19.0 cents per ordinary share (2011: 17.5 cents per ordinary share), fully franked
based on tax paid at 30%.
31,692
16,473
48,165
20,797
10,665
31,462
The aggregate amount of the dividend expected to be paid on 3 October 2012, out of
retained profits at 30 June 2012, but not recognised as a liability at year end, is
37,269
22,753
Franking credits
The franked portions of dividends paid after 30 June 2012 will be franked out of
existing franking credits and out of franking credits arising from the payments of
income tax in the years ending after 30 June 2012.
Franking credits remaining at balance date available for dividends declared after the
current balance date based on a tax rate of 30%
58,030
52,124
The above amounts represent the balance of the franking account as at the end of the financial period, adjusted for:
- franking credits that will arise from the payment of the current tax liability; and,
- franking debits that will arise from the payment of the dividend as a liability at the reporting date.
The amount recorded above as the franking credit amount is based on the amount of Australian income tax paid or to be paid
in respect of the liability for income tax at the balance date.
The impact on the franking account of the dividend recommended by the directors since year end, but not recognised as a liability
at year end, will be a reduction in the franking account of $15,972,456 (2011: $9,751,405).
Page 70
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
27
Key management personnel disclosures
(a)
Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Share-based payments
Consolidated
2012
$
2011
$
4,000,370
222,317
1,103,024
5,325,711
3,556,350
231,763
726,090
4,514,203
The key management personnel remuneration in some instances has been paid by a subsidiary.
(b)
Equity instrument disclosures relating to key management personnel
(i) Options provided as remuneration and shares issued on exercise of such options
Details of options provided as remuneration and shares issued on the exercise of such options, together with terms and
conditions of the options, can be found in the Remuneration and Diversity Report on pages 19 to 29.
(ii) Performance Rights
Details of performance rights provided as remuneration and shares issued on the exercise of such performance rights, together
with terms and conditions of the performance rights, can be found in the Remuneration and Diversity Report on pages 19 to 29.
The number of performance rights over ordinary shares in the Company held during the financial year by each Director of Super
Retail Group Limited and other key management personnel of the Group, including their personally related parties, are set out
below.
2012
Balance at the
start of the year
Granted during
the year as
compensation
0
0
0
0
200,000
Name
Directors of Super Retail Group
R J Wright
R A Rowe
R J Skippen
S A Pitkin
P A Birtles
Other key management personnel of the Group
D F Ajala
S J Doyle
E A Berchtold
G G Carroll
G L Chad
75,160
68,770
0
48,261
54,690
0
0
0
0
100,000
45,977
42,401
0
30,788
26,437
Exercised
during the year
Other changes
during the year
Balance at the
end of the year
Vested and
exercisable at
the end of the
year
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
300,000
121,137
111,171
0
79,049
81,127
0
0
0
0
0
0
0
0
0
0
Page 71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
27 Key management personnel disclosures (continued)
(iii) Option holdings
The numbers of options over ordinary shares in the Company held during the financial year by each Director of Super Retail
Group Limited and other key management personnel of the Group, including their personally related parties, are set out below.
2012
Balance at the
start of the year
Name
Directors of Super Retail Group Limited
R J Wright
R A Rowe
R J Skippen
S A Pitkin
P A Birtles
Other key management personnel of the Group
D F Ajala
S J Doyle
E A Berchtold
G G Carroll
G L Chad
0
0
0
0
200,000
0
250,000
0
100,000
50,000
Granted during
the year as
compensation
Exercised
during the year
Other changes
during the year
Balance at the
end of the year
0
0
0
0
0
0
0
0
0
0
0
0
0
0
200,000
0
200,000
0
100,000
50,000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
50,000
0
0
0
No options are vested and unexercisable at the end of the year.
2011
Granted during
the year as
compensation
Exercised
during the year
Other changes
during the year
Balance at the
end of the year
0
0
Balance at the
Name
start of the year
Directors of Super Retail Group Limited
R J Wright
R A Rowe
D D McDonough (resigned
31 August 2010)
R J Skippen
S A Pitkin
P A Birtles
Other key management personnel of the Group
D F Ajala
S J Doyle
E A Berchtold
G G Carroll
G L Chad
135,000
300,000
0
175,000
87,500
0
0
0
350,000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
150,000
135,000
50,000
0
75,000
37,500
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
200,000
0
250,000
0
100,000
50,000
Vested and
exercisable at
the end of the
year
0
0
0
0
0
0
50,000
0
0
0
Vested and
exercisable at
the end of the
year
0
0
0
0
0
200,000
0
250,000
0
100,000
50,000
No options are vested and unexercisable at the end of the year.
(iv) Share holdings
The numbers of shares in the Company held during the financial year by each director of Super Retail Group Limited and other key
management personnel of the Group, including their personally related parties, are set out below. There were no shares granted
during the reporting period as compensation.
Page 72
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
27
Key management personnel disclosures (continued)
2012
Name
Directors of Super Retail Group Limited
Ordinary shares
R J Wright
R A Rowe
R J Skippen
S A Pitkin
P A Birtles
Other key management personnel of the Group
Ordinary shares
D F Ajala
S J Doyle
E A Berchtold
G G Carroll
G L Chad
2011
Name
Directors of Super Retail Group Limited
Ordinary shares
R J Wright
R A Rowe
D D McDonough (resigned 31 August 2010)
R J Skippen
S A Pitkin
P A Birtles
Other key management personnel of the Group
Ordinary shares
D F Ajala
S J Doyle
E A Berchtold
G G Carroll
G L Chad
Loans to key management personnel
There were no loans to individuals at any time.
Balance at the
start of the year
Received during
the year on the
exercise of
options
Other changes
during the year
Balance at
the end of the
year
46,048
53,671,326
0
10,000
1,692,596
108,436
23,411
0
0
75,000
0
0
0
0
200,000
25,101
3,926,416
0
15,053
0
71,149
56,954,670
0
25,053
1,892,596
0
200,000
0
100,000
50,000
0
(188,910)
0
(10,000)
0
108,436
34,501
0
90,000
125,000
Balance at the
start of the year
Received during
the year on the
exercise of
options
Other changes
during the year
Balance at
the end of the
year
44,274
53,028,254
62,083
0
0
1,542,596
165,136
23,411
0
0
37,500
0
0
0
0
0
150,000
1,774
643,072
0
0
10,000
0
46,048
53,671,326
62,083
0
10,000
1,692,596
135,000
50,000
0
75,000
37,500
(191,700)
(50,000)
0
(75,000)
0
108,436
23,411
0
0
75,000
Other transactions with key management personnel
Aggregate amounts of each of the above types of other transactions with key management personnel of Super Retail Group
Limited:
Amounts paid to key management personnel as shareholders
Dividends
2012
$000
2011
$000
17,479
13,510
Page 73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
28
Remuneration of auditors
During the period the following fees were paid or payable for services provided by the auditor of the parent entity, its related
practices and non-related audit firms.
(a)
Assurance services
Audit services
PricewaterhouseCoopers Australian firm
Audit and review of financial reports and other audit work under the Corporations
Act 2001
Total remuneration for audit services
Total remuneration for assurance services
(b)
Taxation services
PricewaterhouseCoopers Australian firm
Tax compliance services, including review of company income tax returns
Customs Advice
Total remuneration for taxation services
(c)
Advisory services
PricewaterhouseCoopers Australian firm
Business Consulting
Total remuneration for advisory services
Consolidated
2012
$
2011
$
568,314
568,314
568,314
198,373
37,632
236,005
424,468
424,468
424,468
257,749
12,000
269,749
0
0
144,157
144,157
It is the Group’s policy to employ PricewaterhouseCoopers on assignments additional to their statutory audit duties where
PricewaterhouseCoopers’ expertise and experience with the Group are important. These assignments are principally tax advice
and due diligence reporting on acquisitions, or where PricewaterhouseCoopers is awarded assignments on a competitive basis.
It is the Group’s policy to seek competitive tenders for all major consulting projects.
29
Contingencies
Consolidated
Parent
2012
$000
2011
$000
2012
$000
2011
$000
Guarantees
Guarantees issued by the bankers of the Group in support
of various rental arrangements for certain retail outlets.
The maximum future rental payments guaranteed amount
to:
8,109
3,365
2,341
1,469
Page 74
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
30
Commitments
Capital commitments
Commitments for the acquisition of plant and equipment contracted for at the reporting
date but not recognised as liabilities payable:
Within one year
Later than one year but not later than five years
Later than five years
Total capital commitments
Lease commitments
Commitments in relation to operating lease payments under non-cancellable
operating leases are payable as follows:
Within one year
Later than one year but not later than five years
Later than five years
Less lease straight lining adjustment (note 19)
Total lease commitments
Future minimum lease payments expected to be received in relation to non-
cancellable sub-leases of operating leases
The Group leases various offices, warehouses and retail stores under non-cancellable
operating leases. The leases have varying terms, escalation clauses and renewal
rights. On renewal the terms of the leases are renegotiated.
Remuneration commitments
Commitments for the payment of salaries and other remuneration under long-term
employment contracts in existence at the reporting date but not recognised as
liabilities, payable:
Within one year
Later than one year and not later than five years
Later than five years
Consolidated
2012
$000
2011
$000
2,303
0
0
2,303
150,936
424,728
96,734
(17,527)
654,421
1,481
854
0
0
854
81,370
226,318
72,291
(15,538)
364,441
1,861
2,826
6,404
560
9,790
2,270
6,056
444
8,770
Amounts disclosed as remuneration commitments include commitments arising from the service contracts of key management
personnel referred to in the Remuneration and Diversity Report on pages 19 to 29 that are not recognised as liabilities and are not
included in the key management personnel compensation.
Finance leases
The Group leases various plant and equipment with a carrying amount of $199,000 (2011: $199,000) under finance leases expiring
within three to five years.
Commitments in relation to finance leases are payable as follows:
Within one year
Later than one year but not later than five years
Minimum lease payments
Future finance charges
Total lease liabilities
Representing lease liabilities:
Current (note 16)
Non-current
Consolidated
2012
$000
2011
$000
8
0
8
(0)
8
8
0
8
34
8
42
(2)
40
32
8
40
Page 75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
31
Related party transactions
Transactions with related parties are at arm’s length unless otherwise stated.
Parent entities
(a)
The parent entity within the Group is Super Retail Group Limited, which is the ultimate Australian parent.
Subsidiaries
(b)
Interests in subsidiaries are set out in note 32.
(c)
Key Management Personnel
Disclosures relating to key management personnel are set out in note 27.
Directors
(d)
The names of the persons who were Directors of Super Retail Group Limited during the financial period are R J Wright, R A
Rowe, R J Skippen, S A M Pitkin and P A Birtles.
Amounts due from related parties
(e)
Amounts due from Directors of the consolidated entity and their director-related entities are shown below in note 31(g)
Transactions with related parties
(f)
Aggregate amounts included in the determination of profit from ordinary activities before income tax that resulted from
transactions with related parties:
Consolidated
2012
$
2011
$
9,437,318
2,169,680
9,439,979
1,980,928
Other Transactions
- store lease payments – R A Rowe (Director) related property entities
- remuneration paid to directors of the ultimate Australian parent entity
Rent payable on R A Rowe related properties at year-end was $17,560 (2011: $18,168)
(g) Loans to/(from) Related Parties
Loans to/(from) Directors
There are no loans to or from related parties at 30 June 2012 (2011 :$nil)
32
Investments in controlled entities
Name of Entity
Super Cheap Auto Pty Ltd(a)
Super Cheap Auto (New Zealand) Pty Ltd(b)
Super Retail Group Services Pty Ltd(a)
SRG Leisure Retail Pty Ltd (formerly BCF
Australia Pty Ltd(a))
SCA Equity Plan Pty Ltd(b)
Goldcross Cycles Pty Ltd(a)
Oceania Bicycles Pty Ltd
Ray’s Outdoors Pty Ltd(a)
Super Retail Group Trading (Shanghai) Ltd
FCO New Zealand Limited
SRGS Pty Ltd(a)
Super Retail Commercial Pty Ltd
Rebel Group Limited
Country of
Incorporation
Class of
Shares
2012
%
2011
%
Equity Holding
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
China
New Zealand
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
100
100
100
100
100
50
100
100
100
100
100
100
100
100
100
100
100
100
50
100
100
100
100
-
-
(a) These controlled entities have been granted relief from the necessity to prepare financial reports in accordance with Class
Order 98/1418 issued by the Australian Securities and Investments Commission.
(b)
Investment is held directly by Super Cheap Auto Pty Ltd.
Page 76
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
33 Business Combinations
(a)
Rebel Group Limited
Effective from 30 October 2011, Super Retail Group Limited acquired 100% of the issued share capital of Rebel Group
Limited, a retailer of sporting equipment and apparel. Total consideration for the acquisition was $625m, comprising a
$610m purchase price, a $10.4m working capital adjustment and $4.5m net cash acquired. The initial purchase price
has been determined provisionally pending the completion of the final valuation of the fair value of net assets acquired.
The provisional acquisition note is shown below.
Net assets acquired and goodwill are as follows:
Purchase consideration
Cash Paid
Direct costs relating to the acquisition
Total purchase consideration
Provisional allocation of Fair value of net identifiable assets acquired (refer below)
Goodwill
The goodwill is attributable to Rebel Group Limited position and profitability in the sporting goods
market and synergies expected to arise after the Group’s acquisition
Cash
Other receivables
Prepayments
Inventory (net of provisions)
Plant and equipment
Computer software
Tax assets
Brand name
Trade payables
Other payables
Provisions
Deferred tax liability
$’000
624,954
0
624,954
263,932
361,022
$’000
4,517
415
1,695
102,152
38,851
2,364
10,011
245,000
(35,206)
(20,645)
(10,682)
(74,540)
263,932
Acquisition related costs of $11.1 million are included in Administration expenses in the income statement.
The acquired Group contributed revenues of $441.9 million for the period 30 October 2011 to 30 June 2012. If the
acquisition had occurred on 3 July 2011, the contribution to the group revenue would have been $619.0 million, while the
contribution to Group net profit after tax would have been $50.8 million.
34
Net tangible asset backing
Net tangible asset per ordinary share
Consolidated Entity
2012
Cents
$0.24
2011
Cents
$1.40
Page 77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
35
Deed of cross guarantee
Super Retail Group Limited, Super Cheap Auto Pty Ltd, SRG Leisure Retail Pty Ltd (formerly BCF Australia Pty Ltd), Super Retail
Group Services Pty Ltd, Goldcross Cycles Pty Ltd, Ray’s Outdoors Pty Ltd, SRGS Pty Ltd, Super Retail Commercial Pty Ltd, Rebel
Group Limited and SCA Equity Plan Pty Ltd are parties to a Deed of Cross Guarantee under which each company guarantees the
debts of the others. This Deed of Cross Guarantee was amended on 25 June 2012 to include Super Retail Commercial Pty Ltd and
Rebel Group Limited and its subsidiaries. By entering into the Deed, the wholly owned entities have been relieved from the
requirement to prepare a financial report and directors’ report under Class Order 98/1418 (as amended by Class Orders 98/2017,
00/0321, 01/1087, 02/0248 and 02/1017) issued by the Australian Securities and Investments Commission.
(a)
Consolidated Income Statement, Statement of Comprehensive Income and a summary of movements in
consolidated retained earnings
The above companies represent a ‘Closed Group’ for the purposes of the Class Order, and as there are no other parties to the
Deed of Cross Guarantee that are controlled by Super Retail Group Limited, they also represent the ‘Extended Closed Group’.
Set out below is a consolidated income statement and a summary of movements in consolidated retained profits for the period
ended 30 June 2012 of the Closed Group consisting of Super Retail Group Limited, Super Cheap Auto Pty Ltd, SRG Leisure Retail
Pty Ltd (formerly BCF Australia Pty Ltd), Super Retail Group Services Pty Ltd, Goldcross Cycles Pty Ltd, Ray’s Outdoors Pty Ltd,
SRGS Pty Ltd, Super Retail Commercial Pty Ltd, Rebel Group Limited and its subsidiaries and SCA Equity Plan Pty Ltd.
Income Statement
Revenue from continuing operations
Other income
Total revenues and other income
Cost of sales of goods
Other expenses from ordinary activities
- selling and distribution
- marketing
- occupancy
- administration
Borrowing costs expense
Total expenses
Profit before income tax
Income tax (expense)/benefit
Profit for the period
Statement of comprehensive income
Profit for the year
Other comprehensive income
Cash flow hedgings
Income tax relating to components of other comprehensive income
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Summary of movements in consolidated retained earnings
Retained profits at the beginning of the financial year
Profit for the period
Dividends provided for or paid
Retained profits at the end of the financial year
Page 78
Consolidated
2012
$'000
2011
$'000
1,570,473
871
1,571,344
1,020,152
1,343
1,021,495
(868,892)
(547,326)
197,400
(73,228)
(117,272)
(170,588)
(19,792)
(1,447,172)
124,172
(37,376)
(130,895)
(49,136)
(84,189)
(120,780)
(8,712)
(941,038)
80,457
(22,574)
86,796
57,883
86,796
661
0
661
87,457
57,883
(3,414)
0
(3,414)
54,469
109,311
86,796
(48,165)
147,942
82,890
57,883
(31,462)
109,311
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
35 Deed of cross guarantee (continued)
(b) Statement of Financial Position
Set out below is a consolidated statement of financial position as at 30 June 2012 of the Closed Group consisting of Super Retail
Group Limited, Super Cheap Auto Pty Ltd, SRG Leisure Retail Pty Ltd (formerly BCF Australia Pty Ltd), Super Retail Group
Services Pty Ltd, Goldcross Cycles Pty Ltd, Ray’s Outdoors Pty Ltd, SRGS Pty Ltd, Super Retail Commercial Pty Ltd, Rebel Group
Limited and its subsidiaries and SCA Equity Plan Pty Ltd.
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Total current assets
Non-current assets
Other financial assets
Property, plant and equipment
Deferred tax assets
Intangible assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Borrowings
Current tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Trade and other payables
Borrowings
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained profits
Total equity
Consolidated
2012
$'000
2011
$'000
43,238
46,838
377,927
468,003
401
155,210
0
722,340
877,951
1,343,954
160,083
0
10,132
18,752
188,967
16,523
388,009
55,814
9,096
469,442
658,409
687,545
541,662
(2,059)
147,942
687,545
23,521
18,916
267,963
310,400
401
101,117
10,546
111,242
223,306
533,706
89,551
0
11,013
11,051
111,615
15,538
99,135
0
7,983
122,656
234,271
299,435
194,541
(4,417)
109,311
299,435
Page 79
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
36
Reconciliation of profit from ordinary activities after income tax to net cash inflow from
operating activities
Consolidated
Profit from ordinary activities after related income tax
Depreciation and amortisation
Net (gain)/loss on sale of non-current assets
Non-cash employee benefits expense/share based payments
Finance costs
Change in operating assets and liabilities, net of effects from the purchase
of controlled entities and the sale of the service entity
- (increase)/decrease in receivables
- (increase) in inventories
- increase in payables
- (decrease) in provisions
- (decrease)/increase in deferred tax
Net cash inflow from operating activities
37
Earnings per share
Basic earnings per share
Diluted earnings per share
Weighted average number of shares used as the denominator
Weighted average number of shares used as the denominator in calculating
basic earnings per share
Adjustments for calculation of diluted earnings per share options
Weighted average potential ordinary shares used as the denominator in
calculating diluted earnings per share
Reconciliations of earnings used in calculating earnings per share
Basic earnings per share
- earnings used in calculating basic earnings per share – net profit after tax
Diluted earnings per share
- earnings used in calculating diluted earnings per share – net profit after
tax
(a)
Information concerning the classification of securities
2012
$000
83,521
35,404
786
1,872
20,630
(4,047)
(21,279)
17,655
(1,317)
2,022
135,247
2011
$000
55,599
22,802
294
1,222
10,973
(675)
(40,138)
24,914
(2,268)
(1,821)
70,902
Consolidated Entity
2012
Cents
46.1
45.8
2011
Cents
40.6
40.1
Consolidated Entity
2012
Number
2011
Number
181,036,618
1,290,592
136,787,821
1,792,920
182,327,210
138,580,740
2012
$’000
2011
$000
83,521
55,599
83,521
55,599
(i) Options and Performance Rights
Options and performance rights granted are considered to be potential ordinary shares and have been included in the determination
of diluted earnings per share to the extent to which they are dilutive.
Page 80
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
38
Share-based payments
(a) Executive Performance Rights
The Company has established the Super Retail Group Executive Performance Rights Plan (“Performance Rights”) to assist in
the retention and motivation of executives of Super Retail Group (“Participants”).
It is intended that the Performance Rights will enable the Company to retain and attract skilled and experienced executives
and provide them with the motivation to enhance the success of the Company.
Under the Performance Rights, rights may be offered to Participants selected by the Board. Unless otherwise determined by
the Board, no payment is required for the grant of rights under the Rights Plan.
Subject to any adjustment in the event of a bonus issue, each right is an option to subscribe for one Share. Upon the
exercise of a right by a Participant, each Share issued will rank equally with other Shares of the Company.
Performance Rights issued under the plan may not be transferred unless approved by the Board. The table below
summarises rights granted under the plan.
Number of Rights Issued
Grant Date
Consolidated – 2012
1 September 2009
1 September 2010
1 September 2011
(b) Executive Option Plan
Balance
at start of
the year
(Number)
Granted
during
the year
(Number)
Exercised
during
the year
(Number)
Forfeited
during
the year
(Number)
Balance
at the end
of the
year
(Number)
Unvested
at the end
of the
year
(Number)
356,738
363,427
0
720,165
0
0
453,151
453,151
0
0
0
0
17,055
15,669
0
32,724
339,683
347,758
453,151
1,140,592
339,683
347,758
453,151
1,140,592
The Company has established the Super Retail Group Executive Share Option Plan (“Option Plan”). The Company had
established the Option Plan to assist in the retention and motivation of executives of Super Cheap Auto (“Participants”). It is
intended that the Option Plan will enable the Company to retain and attract skilled and experienced executives and provide
them with the motivation to enhance the success of the Company.
Under the Option Plan, options may be offered to Participants selected by the Board. Unless otherwise determined by the
Board, no payment is required for the grant of options under the Option Plan.
Subject to any adjustment in the event of a bonus issue, each option is an option to subscribe for one Share. Upon the exercise
of an option by a Participant, each Share issued will rank equally with other Shares of the Company.
Options issued under the Option Plan may not be transferred unless the Board determines otherwise. The Company has no
obligation to apply for quotation of the options on ASX. However, the Company must apply to ASX for official quotation of
Shares issued on the exercise of the options.
At any one time, the total number of options on issue under the Option Plan that have neither been exercised nor lapsed will not
exceed 5.0% of the total number of shares in the capital of the Company on issue.
Page 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
38 Share-based payments (continued)
Set out below are summaries of options granted under the plan:
Grant Date Exercise date Exercise price
Balance at start
of the year
Number
Consolidated – 2012
27 Jan 2006
27 Jan 2006
27 Jan 2006
17 April 2006
1 July 2006
26 Oct 2006
23 Aug 2007
5 Jan 2009
5 Jan 2010
5 Jan 2011
17 April 2011
1 July 2011
1 Feb 2011
24 Jul 2010
1 August 2008 1 August 2011
Total
$2.44
$2.44
$2.44
$2.25
$2.25
$2.44
$4.37
$2.49
50,000
100,000
100,000
100,000
300,000
200,000
100,000
180,000
1,130,000
Granted
during the
year
Exercised
during the
year
Number Number Number
Forfeited
during the
year
Balance at
end of the
year
Number
Unvested at
end of the
year
Number
0
50,000
0 100,000
0
50,000
0 100,000
0 300,000
0 200,000
0
40,000
0 140,000
980,000
0
0
0
0
0
0
0
0
0
0
0
0
50,000
0
0
0
60,000
40,000
150,000
0
0
0
0
0
0
0
0
0
Weighted average exercise price
$2.55
Nil
$2.45
Nil
$3.23
Nil
Consolidated – 2011
27 Jan 2006
27 Jan 2006
27 Jan 2006
17 April 2006
17 April 2006
1 July 2006
1 July 2006
1 July 2006
26 Oct 2006
26 Oct 2006
23 Aug 2007
5 Jan 2009
5 Jan 2010
5 Jan 2011
17 April 2010
17 April 2011
1 July 2009
1 July 2010
1 July 2011
1 Feb 2010
1 Feb 2011
24 Jul 2010
1 August 2008 1 August 2011
Total
$2.44
$2.44
$2.44
$2.25
$2.25
$2.25
$2.25
$2.25
$2.44
$2.44
$4.37
$2.49
100,000
135,000
200,000
75,000
100,000
55,000
225,000
300,000
150,000
200,000
180,000
220,000
1,940,000
50,000
0
0
35,000
0 100,000
75,000
0
0
0
0
55,000
0 225,000
0
0
0 150,000
0
0
80,000
0
0
0
770,000
0
50,000
0
100,000
0
100,000
0
0
0
100,000
0
0
0
0
0
300,000
0
0
0
200,000
0
100,000
0
40,000
180,000
40,000 1,130,000
0
0
0
0
0
0
0
0
0
0
0
180,000
180,000
Weighted average exercise price
$2.55
Nil
$2.55
$2.55
$2.49
Fair value of options granted
The fair value at grant date is independently determined using a Binomial option pricing model that takes into account the
exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the
underlying share, the expected dividend yield and the risk free interest rate for the term of the option.
No options have been granted in the past two financial years.
The expected price volatility is based on the historic volatility (based on the remaining life of the options), adjusted for any
expected changes to future volatility due to publicly available information.
Expenses arising from share based payments transactions:
Executive Performance Rights
Executive Option Plan
2012
$000
1,860
12
1,872
2011
$000
1,107
115
1,222
Page 82
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 30 June 2012
39 Events occurring after balance date
No matter or circumstance has arisen since 30 June 2012 that has significantly affected, or may significantly affect:
(a)
(b)
(c)
the Group’s operations in future financial years; or
the results of those operations in future financial years; or
the Group’s state of affairs in future financial years.
40 Parent entity financial information
Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Statement of Financial Position
Current assets
Total assets
Current liabilities
Total liabilities
Shareholders’ equity
Issued capital
Reserves
Share-based payments
Cash flow hedges
Retained earnings
Profit or loss for the year
Total comprehensive income
Parent entity contingencies are disclosed in Note 29.
2012
$’000
284,261
1,056,024
83,038
475,542
541,835
5,021
(2,639)
36,265
580,482
48,208
48,208
2011
$’000
199,109
346,862
13,569
112,859
194,541
3,149
100
36,213
234,003
41,284
41,284
Page 83
DIRECTORS’ DECLARATION
Super Retail Group Limited
For the period ended 30 June 2012
In the directors’ opinion:
(a)
(b)
(c)
the financial statements and notes set out on pages 31 to 83 are in accordance with the Corporations Act 2001,
including:
(i)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements; and
giving a true and fair view of the consolidated entity's financial position as at 30 June 2012 and of its
performance for the financial period ended on that date; and
(ii)
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become
due and payable; and
at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed
Group identified in note 35 will be able to meet any obligations or liabilities to which they are, or may become,
subject by virtue of the deed of cross guarantee described in note 35.
Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board.
The directors have been given the declarations by the managing director and chief financial officer required by section 295A
of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
R J Wright
Director
P A Birtles
Director
Brisbane
21 August 2012
Page 84
AUDIT REPORT
Super Retail Group Limited
For the period 30 June 2012
(continued)
Independent auditor’s report to the members of Super Retail
Group Limited
Report on the financial report
We have audited the accompanying financial report of Super Retail Group Limited (the company),
which comprises the statement of financial position as at 30 June 2012 and comprehensive income
statement, statement of changes in equity and statement of cash flows for the year ended on that date,
a summary of significant accounting policies, other explanatory notes and the directors’ declaration for
the Super Retail Group (the consolidated entity). The consolidated entity comprises the company and
the entities it controlled at the year’s end or from time to time during the financial year.
Directors’ responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal controls as the directors determine is necessary to enable the preparation of the
financial report that is free from material misstatement, whether due to fraud or error. In Note 1, the
directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial
Statements, that the financial statements comply with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we
comply with relevant ethical requirements relating to audit engagements and plan and perform the
audit to obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial report in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by the directors, as well as
evaluating the overall presentation of the financial report.
Our procedures include reading the other information in the Annual Report to determine whether it
contains any material inconsistencies with the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinions.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001.
PricewaterhouseCoopers, ABN 52 780 433 757
Riverside Centre, 123 Eagle Street, BRISBANE QLD 4000, GPO BOX 150, BRISBANE QLD 4001
T: +61 7 3257 5000, F: +61 7 3257 5999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation
Page 85
AUDIT REPORT
Super Retail Group Limited
For the period 30 June 2012
(continued)
Auditor’s opinion
In our opinion:
(a)
the financial report of Super Retail Group Limited is in accordance with the Corporations Act
2001, including:
(i)
(ii)
giving a true and fair view of the consolidated entity’s financial position as at 30 June
2012 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards (including the Australian
Accounting Interpretations) and the Corporations Regulations 2001; and
(b)
the financial report and notes also comply with International Financial Reporting Standards
as disclosed in Note 1.
Report on the Remuneration and Diversity Report
We have audited the remuneration report included in pages 19 to 27 of the directors’ report for the
year ended 30 June 2012. The directors of the company are responsible for the preparation and
presentation of the remuneration report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the remuneration report, based on our audit
conducted in accordance with Australian Auditing Standards.
Auditor’s opinion
In our opinion, the remuneration report of Super Retail Group Limited for the year ended 30 June
2012, complies with section 300A of the Corporations Act 2001.
PricewaterhouseCoopers
Cameron Henry
Partner
21 August 2012
Page 86
SHAREHOLDER INFORMATION
Super Retail Group Limited
For the period ended 30 June 2012
The shareholder information set out below was applicable as at 21 August 2012.
A. Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
Ordinary Shareholders
Performance Rights & Option holders
1-1000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 and over
1,616
1,633
317
265
45
There were 277 holders of less than a marketable parcel of ordinary shares.
B. Equity security holders
The names of the twenty largest holders of quoted equity securities are listed below:
Name
SCA FT PTY LTD
NATIONAL NOMINEES LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BNP PARIBAS NOMS PTY LTD
CITICORP NOMINEES PTY LIMITED
JP MORGAN NOMINEES AUSTRALIA LIMITED
MR PETER ALAN BIRTLES
BNP PARIBAS NOMS PTY LTD
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
CITICORP NOMINEES PTY LIMITED
AMP LIFE LIMITED
GEOMAR SUPERANNUATION PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR ROBERT EDWARD THORN
QUEENSLAND INVESTMENT CORPORATION
EQUITAS NOMINEES PTY LIMITED
EQUITAS NOMINEES PTY LIMITED
EQUITAS NOMINEES PTY LIMITED
3
3
0
12
3
Ordinary shares
Number held
Percentage of
issued shares
56,954,670
33,684,229
26,533,413
25,060,914
12,723,890
6,248,801
2,778,595
1,690,000
1,560,570
1,191,853
1,079,649
1,026,412
964,761
884,882
696,165
648,368
626,403
556,128
549,155
547,135
29.03%
17.17%
13.53%
12.77%
6.49%
3.19%
1.42%
0.86%
0.80%
0.61%
0.55%
0.52%
0.49%
0.45%
0.35%
0.33%
0.32%
0.28%
0.28%
0.28%
176,005,993
89.72%
Super Retail Group Limited wishes to confirm that, in accordance with ASX Listing Rule 4.10.4, the substantial holders in the
company as at 21 August 2012 were:-
Name
SCA FT PTY LTD
NATIONAL NOMINEES LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BNP PARIBAS NOMS PTY LTD
Ordinary shares
Number held
Percentage of
issued shares
56,954,670
33,684,229
26,533,413
25,060,914
12,723,890
29.03%
17.17%
13.53%
12.77%
6.49%
C. Voting rights
The voting rights relating to each class of equity securities is as follows:
a) Ordinary Shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share
shall have one vote.
b) Options and Performance Rights
No voting rights.
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www.superretailgroup.com.au